Financial advice for a fellow ferner
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<p>The Fern is the gift that keeps giving. Financial and Tinder advice plus revenge tactics. </p>
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<p>not like TSF threads to veer slightly off-topic now is it!</p>
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<blockquote class="ipsBlockquote" data-author="canefan" data-cid="596523" data-time="1468481863">
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<p>Every 8-9 years there is a correction. We're up to year 7 now</p>
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<p>How do you define a correction?</p> -
<p>according to Labour, 98% of NZ is affected by the housing crisis, so buying a rental anywhere except that 2% and you can make hay while the sunshines! </p>
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<blockquote class="ipsBlockquote" data-author="Baron Silas Greenback" data-cid="596527" data-time="1468482820"><p>How do you define a correction?</p></blockquote>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
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<p>I sense a correction incoming :whistle:</p>
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<p>Interesting thread. Like any great novel, I read the start, read the end and will get back to the middle at some point when I've got a bit more time. (Hence, I apologise if I repeat anything).</p>
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<p>Firstly, I wholeheartedly agree with the sentiment of your (ex) missus is a fluffybunny so go for the tinder, beers, porn etc. </p>
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<p>We've done pretty well for ourselves out of the renovating a couple of houses in the Auckland property market. We're now living overseas for a few years, and looking to move back home to Tauranga when we get back so we're gonna cash out of the Auckland market all going to plan in the next couple of months. We're just having the final touches put on our place (currently rented and paying it's own way) before it goes on the market. Our plan is to use the money we have made with one Auckland house to buy a few in Tauranga and put tenants in them. As with most homeowners, I read the dribble on the Herald and stuff and wonder if there will be a crash in Auckland. I don't think there will be a huge correction as such, but I do believe it must be close to a plateau and slight slump. There are still dozens of families looking for places and willing to pay over the odds for places in Auckland. Migration will in some respects ensure that that still happens to a degree. Our pl</p>
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<p>We owned a rental property in Tauranga and sold it at the end of last year. We tried to manage it ourselves, and it was a pain in the ass from a distance. So we've had our current Auckland place in the hands of a rental agent and it has been great. They deal with everything for us, do routine inspections and we get a lump of money in our account on the first of each month for doing not much. All the while our house is increasing in value, and, hopefully not getting meth cooked in it. </p>
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<p>I've got a few friends in property investment who all agree the best time to buy property was yesterday. If you're planning on holding onto an investment property for the long term, you don't have to worry too much about the cyclical nature of house prices because you'll still win in the end. Coupled with the fact that a tenant is paying the mortgage for you, it's hard to lose on it. </p>
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<p>In regards to the meth thing, I think that risk is hugely overstated by real estate agents, drug detection agencies and basically anyone else who makes a profit out of selling shit that is meant to test or "deter" people from it. I spent a good chunk of my time in the Police dealing with high end drugs, and I can honestly say that the risk you buying a meth house is exponentially less than the risk of you buying a house that leaks, has unstable pilings, has shit head neighbours who will cause you problems, or any other myriad of problems. Yes, some people cook meth in their rental properties, but more often than people do it in motel rooms, baches, rural farms of associates, campervans or other things where their neighbour who is 10 metres away isn't going to smell the toxic fumes and call the police. Someone was bleating on our local community facebook grapevine page about how 80% of houses tested for meth come back positive. Probably because if it's being tested, it's because it has all the hallmarks of a house that has had meth cooked in it. There is also a huge difference in a house that has meth smoked in it (almost certainly okay to be lived in), and one that has had meth cooked in it (probably wouldn't want to live in it). I think meth testing is hugely overpriced and bordering on scaremongering. </p>
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<p>In any case, my experience with having rental properties has been great. We made 50k in just under 2 years on our Tauranga house, and the only work we did on it was 3 days worth of cleaning it up and doing a little bit of painting to make it look nice. Plus we had healthy lump sums paid back to us by the IRD at the end of each tax year. My only advice would be to use a rental agent, it takes the hassle out of it. I think between 7 and 8% of weekly rent plus GST is the going rate. </p> -
<p>On topic -</p>
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<p><a data-ipb='nomediaparse' href='http://time.com/4403643/american-financial-literacy-test-fail/'>http://time.com/4403643/american-financial-literacy-test-fail/</a></p>
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<p>2/3rds of americans can't pass a basic financial literacy test. Here's the test (its 6 multi choiuce questions)</p>
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<p><a data-ipb='nomediaparse' href='http://www.usfinancialcapability.org/quiz.php'>http://www.usfinancialcapability.org/quiz.php</a></p>
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<p>Do the test before reading the article.</p> -
<p>Same as jegga, 5/6. Some of the questions I re-read a couple of times as I thought they must be trick questions as it was too obvious.</p>
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<p>Yeah, the bond one was the only one that requires a bit more than basic understanding. I'm not sure it makes sense being in there as its not like average person is in the bond market, tho' with the bond market seen aas the core thing that will cause the next major crash maybe its valid.</p>
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<p>Pass mark is 4/6. And 66% of the US failed. I'd guess it'd be similar numbers UK & NZ.</p>
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<p>And thats post crash. Its pretty stunning eh. Its one of those where you see pay day lenders advertsised & think "who does that?" and the answer is "a LOT of people", Ditto people living on credit cards or not paying down the princeple on their mortgages</p> -
<blockquote class="ipsBlockquote" data-author="canefan" data-cid="596530" data-time="1468485045">
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<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>
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<p>I dont think any suburb in Auckland has dropped 25% in recent memory. Got a real source for that?</p>
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<p>I looked at various sites and noting showed anything like a 25% drop in prices. Maybe I missed something though. Which suburb?</p>
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<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>
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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.