Financial advice for a fellow ferner
-
<blockquote class="ipsBlockquote" data-author="canefan" data-cid="596530" data-time="1468485045">
<div>
<p>I won't be drawn into a debate Baron. It's all based on my failing memory but in 2008/2009 I lived through house prices dropping by about 25% in the Auckland suburb I was trying to buy into. I was stoked</p>
</div>
</blockquote>
<p> </p>
<p>I dont think any suburb in Auckland has dropped 25% in recent memory. Got a real source for that?</p>
<p> </p>
<p>I looked at various sites and noting showed anything like a 25% drop in prices. Maybe I missed something though. Which suburb?</p>
<p> </p>
<p>In NZ a correction is usually just a slow down in house price increases. Sometimes dipping by a few percent. That is a correction in the NZ sense.</p> -
<blockquote class="ipsBlockquote" data-author="Baron Silas Greenback" data-cid="596757" data-time="1468564695"><p>
I dont think any suburb in Auckland has dropped 25% in recent memory. Got a real source for that?<br><br>
I looked at various sites and noting showed anything like a 25% drop in prices. Maybe I missed something though. Which suburb?<br><br>
In NZ a correction is usually just a slow down in house price increases. Sometimes dipping by a few percent. That is a correction in the NZ sense.</p></blockquote>No I don't, just the dollars and cents I paid for the property I bought. But you are nothing if not predictable -
IMO the biggest risks to the Auckland property market are potential external shocks. The government has made it clear that they don't want to crash prices and in fact it's debatable if the RBNZ could do so even if they wanted. You <br><br>
To dramatically decrease prices they'd have to cut demand (unlikely) whilst increasing the costs for people who already hold mortgages to such an extent that they can't afford to make their mortgage repayments any more. Because I can't see any way of increasing the supply of housing so fast that all of a sudden people are discouraged from buying the existing houses that go to market.<br><br>
They will probably increase interest rates but they will be under a lot of pressure to ensure that they don't lift them by so much that they make it even less affordable for new buyers and the lower paid, who for some reason the media sees as worthy of special treatment (which is bollocks by the way).<br><br>
I suspect the most likely scenario is a flattening off of prices in Auckland and an increase in the more affluent regional centres. <br><br>
I'd avoid the stock market altogether unless there are specific stocks you particularly like.<br><br>
You need to decide whether each thing you buy is because you expect the company to grow (so you expect to be able to sell them at a profit) or to generate regular dividend income. If it's the latter (a value stock) be prepared to hold onto them for some time so make sure you do your homework - you're looking for good companies with decent management who know where they are taking the company. The last thing you want is for the company to lose more in its share price than it generates for you in dividends.<br><br>
If you are looking at growth stocks generally only buy into companies that actually make something, preferably products that aren't faddish as they will be less dependent on trends. Set yourself a target price and when you hit that price unload and take your profit. Don't look back afterwards, even if the price continues to rise after you sell, and tell yourself that you should have held out for a better price. You've made what you wanted so be content with that, you can always reinvest.<br><br>
If you are buying overseas stocks keep an eye on the exchange rates. If the company is based in a market whose currency is weakening against the NZD you will get less than you expected when you sell or when you get a dividend payment.<br><br>
NZ shares are a minefield. The NZX is just too small so it's overexposed to movements in a handful of companies. I'd avoid it until it can secure more constituent companies.<br><br>
In any case playing the stock market isn't hard work but it does need constant attention. You need to know what you want to get out of ownership of any stock and be ruthless if you're not achieving it. But that means you need to keep track of where each of them is by comparison to your expectation,s so you need to set up spreadsheets to track progress and be diligent in keeping them filled in. You should get and read the annual reports of any companies you are considering and don't be shy about asking for help on investor forums if there are things in there you don't understand. <br><br>
DO NOT do the bloke thing and bluster your way through it if you are confused, ask the questions. What do you care if people think you're a newbie so long as you get the return you want.<br><br>
My only actual tips are:<br><br>
If you've got a bigger appetite for risk find companies with a lot of cash on their balance sheet in the hope that they will join the buyback trend<br><br>
Don't buy banks at the moment.<br><br>
Avoid bonds unless you know what you're doing, there's a dip coming. -
<blockquote class="ipsBlockquote" data-author="canefan" data-cid="596904" data-time="1468575661">
<div>
<p>No I don't, just the dollars and cents I paid for the property I bought. But you are nothing if not predictable</p>
</div>
</blockquote>
<p>Ok, so your statement was bullshit. </p>
<p> </p>
<p>No Auckland suburb dropped by anywhere near 25%</p> -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="596949" data-time="1468626344">
<div>
<p>Because I can't see any way of increasing the supply of housing so fast that all of a sudden people are discouraged from buying the existing houses that go to market.</p>
</div>
</blockquote>
<p> </p>
<p>There is a generational transition still to occur. I can't speak to NZ, but anecdotally almost every boomer I know still lives in the same 4 bedder they raised their three kid family in. Many of these have been empty-nesters for 5-10 years. They all stay for some reason or another can't be arsed moving, still have transient kids coming and going, took equity out of the house to help kids purchase, still think the market is going to run - whatever reason.</p>
<p> </p>
<p>It's fine an manageable at 55, 60, 65 even - but at some point boomers have to sell and downsize. Now it is a choice - eventually it will be a necessity. They will either to fund their lifestyle in retirement because they have not enough super and the pension won't cut it or for medical reasons.</p>
<p> </p>
<p>Immigration obviously changes the equation a lot, but given who comprises domestic home ownership in Aus/NZ I can't see how their won't be a natural increase of supply in line with the Baby Boomer birth curve. What knock on effect that has if we get a flat or heaven forbid a down year I don't know...</p> -
<blockquote class="ipsBlockquote" data-author="rotated" data-cid="596968" data-time="1468629101"><p>
There is a generational transition still to occur. I can't speak to NZ, but anecdotally almost every boomer I know still lives in the same 4 bedder they raised their three kid family in. Many of these have been empty-nesters for 5-10 years. They all stay for some reason or another can't be arsed moving, still have transient kids coming and going, took equity out of the house to help kids purchase, still think the market is going to run - whatever reason.<br><br>
It's fine an manageable at 55, 60, 65 even - but at some point boomers have to sell and downsize. Now it is a choice - eventually it will be a necessity. They will either to fund their lifestyle in retirement because they have not enough super and the pension won't cut it or for medical reasons.<br><br>
Immigration obviously changes the equation a lot, but given who comprises domestic home ownership in Aus/NZ I can't see how their won't be a natural increase of supply in line with the Baby Boomer birth curve. What knock on effect that has if we get a flat or heaven forbid a down year I don't know...</p></blockquote>
True, but that doesn't change the supply side at all, that's simply a reorganisation of existing supply. Until the overall supply of housing stock increases of course, but it doesn't seem as though we have the capacity within the building industry to sin crease that supply at such a rate as to crash the market. I'd bet there will be a levelling off of prices in Akl followed by a modest drop which will look worse when compared to inflation. And that is exactly what we want. A crash would be hellish for the entire country. -
<br><blockquote class="ipsBlockquote" data-author="mariner4life" data-cid="596486" data-time="1468467997"><p>tinder is a fuck-ton cheaper than buying 12 RTDs and 2 shots of tequila as well</p></blockquote>
<br>
Finding new chemists for rohypnol is a hassle, too... -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="596973" data-time="1468630135"><p>
True, but that doesn't change the supply side at all, that's simply a reorganisation of existing supply. Until the overall supply of housing stock increases of course, but it doesn't seem as though we have the capacity within the building industry to sin crease that supply at such a rate as to crash the market. I'd bet there will be a levelling off of prices in Akl followed by a modest drop which will look worse when compared to inflation. And that is exactly what we want. A crash would be hellish for the entire country.</p></blockquote>
That is operating under the assumption that the current market is a product of chronic under supply and not rampant speculation. Demographics could well produce that first domino.<br><br>
Housing inventory to population has been increasing in all these red hot markets (Sydney, Auckland, Vancouver etc) yet prices increase at even higher rates.<br><br>
Ireland was massively oversupplied for years as the market raged on. They key is getting a glut of supply big enough to cause a downturn in pricing enough to spook the speculators. Then captiulation. -
<blockquote class="ipsBlockquote" data-author="Baron Silas Greenback" data-cid="596965" data-time="1468628646"><p>Ok, so your statement was bullshit. <br>
<br>
No Auckland suburb dropped by anywhere near 25%</p></blockquote> You must be the angriest poster on here -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="596973" data-time="1468630135"><p>
True, but that doesn't change the supply side at all, that's simply a reorganisation of existing supply. Until the overall supply of housing stock increases of course, but it doesn't seem as though we have the capacity within the building industry to sin crease that supply at such a rate as to crash the market. I'd bet there will be a levelling off of prices in Akl followed by a modest drop which will look worse when compared to inflation. And that is exactly what we want. A crash would be hellish for the entire country.</p></blockquote>
<br>
It changes the supply if the boomers are moving into rest homes though, as that's new supply. -
<blockquote class="ipsBlockquote" data-author="rotated" data-cid="596981" data-time="1468633630"><p>
That is operating under the assumption that the current market is a product of chronic under supply and not rampant speculation. Demographics could well produce that first domino.<br>
Housing inventory to population has been increasing in all these red hot markets (Sydney, Auckland, Vancouver etc) yet prices increase at even higher rates.<br>
Ireland was massively oversupplied for years as the market raged on. They key is getting a glut of supply big enough to cause a downturn in pricing enough to spook the speculators. Then captiulation.</p></blockquote>
Not really. The under supply at the moment doesn't seem to be chronic, even in Auckland, but there is evidently enough of an undersupply to move the prices upwards. But my point isn't really about the the how under supplied the market is now, it's about how much and how fast that would have to change to precipitate a crash of, as one poster suggested, 25%. All things being equal industry will eventually build enough houses, and enough people will leave Auckland, and enough boomers will downsize, to create an oversupply, but so long as that is orderly it doesn't need to be catastrophic.<br><br>
Boomers may relocate or downsize but you'd need to know what's driving it to understand the likely impact. If people truly want smaller homes there will be a different impact to what you'd see if they wanted the same size house but smaller gardens for example. If their kids and families have moved away they may be inclined to follow, but might want to stay put if the kids are close. We don't know. But the chances of everybody doing the same thing and selling up at the same time seems comparatively unlikely unless, as I say, there is an external shock that triggers people into action. -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="597366" data-time="1468669052">
<div>
<p>Boomers may relocate or downsize but you'd need to know what's driving it to understand the likely impact. If people truly want smaller homes there will be a different impact to what you'd see if they wanted the same size house but smaller gardens for example. If their kids and families have moved away they may be inclined to follow, but might want to stay put if the kids are close. We don't know. But the chances of everybody doing the same thing and selling up at the same time seems comparatively unlikely unless, as I say, there is an external shock that triggers people into action.</p>
</div>
</blockquote>
<p> </p>
<p>Does it affect their pensions or other government benefits in any way?</p>
<p> </p>
<p>Here, some Boomers AREN'T downsizing because primary residence isn't means-test for pension. So you've got a few old duffers living in Rose Bay in multi-million dollar houses, still getting a part pension because they've squirreled their cash into the house or elsewhere.</p> -
<blockquote class="ipsBlockquote" data-author="NTA" data-cid="597375" data-time="1468673134"><p>
Does it affect their pensions or other government benefits in any way?<br><br>
Here, some Boomers AREN'T downsizing because primary residence isn't means-test for pension. So you've got a few old duffers living in Rose Bay in multi-million dollar houses, still getting a part pension because they've squirreled their cash into the house or elsewhere.</p></blockquote>
<br>
NZ Super isn't means or asset tested, so there's no impact from that perspective. However, rest home subsidies are means and asset tested, so eventually they will probably have to sell. -
<blockquote class="ipsBlockquote" data-author="Godder" data-cid="597456" data-time="1468711314">
<div>
<p>NZ Super isn't means or asset tested, so there's no impact from that perspective. However, rest home subsidies are means and asset tested, so eventually they will probably have to sell.</p>
</div>
</blockquote>
<p> </p>
<p>If they don't gift the house to their kids..?</p> -
<a data-ipb='nomediaparse' href='http://i.imgur.com/2AnXF27.gifv'>http://i.imgur.com/2AnXF27.gifv</a>
-
<blockquote class="ipsBlockquote" data-author="antipodean" data-cid="597464" data-time="1468712631"><p>
If they don't gift the house to their kids..?</p></blockquote>
MSD take that into account when determining the subsidy levels, and likewise for gifting into trusts.<br><br>
Exempt gifting is $6000 per partner, per year for 5 years, and then $27000 per year after that. Anything above that is added back onto the available assets for the financial means assessment.