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Passive Investment Income

What are some ways a person can generate passive investment income? There are a number of ideas about it. Everyone has his own ideas about which one can be a passive investment income. We should have our own choice of investment. The wealthy, the marginalized, and the middle class people differ in their own preferences about investing their money. Now, let’s compare ways and opportunities according to some considerations such as safety, profitability, and also liquidity.

Safety means that your investment and the income are stable. The money that you invest could be prone to the changing market condition, economic slowdown, and social unrest. The point is that your passive investment income should always be there. In that case, it is safe to invest.

On the other hand, profitability is what we usually consider when we invest. We are supposed to believe that what is profitable is ideal. That’s right. But is it risky? Is my money stuck? Obviously, everyone would go for whatever gives them profit. Whenever we consider gains, the highest amount is always the best passive investment income. What we should consider here should not have been about the top gainers only. It’s should also be the safer ones.

Another significant factor that must be considered is liquidity. Let us suppose that we earn very attractively from our safe investment. What does that mean to us anyway? When you are ready to use your fund because you really need it and that’s the reason why you invested, is it possible to convert it to cash now? If there is no liquidity, our passive investment income is only an imagination. You would become wealthy only in your dreams. Liquidity is not only about the comfort of making a withdrawal. It is also about how smooth it is to invest.

Now, here are three kinds of investment we may consider whether which passive investment income is better for us. So, let’s talk about three kinds of portfolios such as business, stocks, and real estate.

Business is a personal activity that deals with economic factors that determines future gains. It is the chemistry of work and investment. This means that a businessman does not only wait for passive income, he should also work for it. Therefore, it is an active income and at the same time passive.

In the aspect of safety, business is not that safe. It is exposed to economic cycle. Businesses are under the supply and demand law. If the demand for their goods has been increasing, the price will also increase, and so will the supply. As time goes by, the demand will influence the supply to increase more. So if the supply is much greater, it will then influence the price to decrease. Consequently, businesses are getting more unstable and their future is turning gray. But, businesses may also get more resilient. As this type of investment is a little active, the active control of a businessman can manage a worse situation. Therefore, these two characters of investment regulate the cycle. Because of this, business becomes good. It is definitely a good example of passive investment income when it comes to safety.

In stock market, it’s the other way around. Safety is a very controversial issue here. Obviously, the risk involved here is very high. But the potential return is high, too. Passive investment income is more common in stock trading. Therefore, your income here is not the product of your active participation in the company. It is the product of your decision.

In the area of real estate, the lesser amount you invest, the safer it is. The bigger the investment you have, the riskier it becomes. But land alone is considerably not risky. The reason why real estate becomes a little risky is because the cost of structural materials is getting higher. Structural materials are also subject to the law of supply and demand. So, if we only rely on land for passive investment income by renting it out, our passive income will not be affected by any price fluctuation. Aside from that, structures depreciate over a period of time. Therefore, investing in real estate can be risky or safe depending on the kind.

In terms of profit, it is more attractive in business. In some businesses, you have to spend time before you earn regularly. Usually, the profit is negative especially if they are just beginning to operate. They should promote their brands and strengthen themselves in the market. When the consumers buy their goods, passive investment income begins. On the other hand, other businesses are doing well in the beginning of the operation. During the first stage, their sales shoot up. Subsequently, they grow very early. As time goes by, consumers get sick and tired of their goods. Consequently, these businesses reduce their passive income. Nevertheless, what is nice about business is the resilience to catch up with the competition. In business, the consistency of income is stable. One more advantage in business regarding this is the petty cash. Passive investment income in business need not come after a fixed cycle like that in stocks. There is always readily available petty cash.

On one hand, profit potential in stock investing is definitely high. As the character of stocks is risky, risk appetite causes the value of stocks to go up quickly. On the other hand, risk aversion and profit taking in the intraday trading can cause the value of stocks to go down quickly, too. Risk management in the stock market depends on the traders. Speculators enjoy their passive investment income from the price volatility while non-aggressive traders and investors get their passive investment income from dividends. Therefore, we can’t rule out the risk nature of stocks. When we gauge the balance between the energy we exert and the profit we earn, investing in stocks could be the most attractive one. We must not forget that passive investment income is an income that we could get without extra effort. If stock market really offers this potential, it must be a better option for passive investment income.

In real estate, how can we have a passive investment income? There is no doubt that one may enjoy his passive investment income in real estate without extra effort. The point is whether or not the ratio of profit is balanced with the investment. Surely, we can gain in real estate primarily because the usual investment is big as well. But always remember that you should pay the capital gains tax annually. This might explain why landlords do not solely rely on renting out their lots. Hence, land is usually developed to optimize the gains. Regarding the actual amount of gains, real estate could guarantee a better passive investment income. Therefore, we should really consider the ROI.

In terms of liquidity, it is somewhat less in business. Of course, liquidity still exists. However, much time is spent to put up a business, to start gaining, and even the time it takes to stop operating. Although the period of time executing all these can be determined according to a business plan, the process is still slower depending on the kind of business. Retail businesses are quite liquid whereas manufacturing industries are not.

Among the common types of investments known to many, investment in stocks is the most liquid one. You can open and close an investment account at your convenience. Moreover, you may select any available stock you wish to invest in. If you wish to have exposure in stock market, to take profit, or to pull out your investment, it won’t take that long. You may do so at any given time wherever you may be.

On the contrary, liquidity is a big problem in real estate. In business, there are still ways to determine it, but hardly in real estate. Usually, it is like a game of chance to sell even a small house and lot. Thus, investing in real estate, earning passive income, and even pulling out your investment will never occur overnight. It won’t matter if it doesn’t affect productivity. For instance, you have found a better opportunity that needs quick decision. Then, you think it best to change your existing investment into such a new one. Perhaps, before you are able to pull out your investment from real estate, your commitment to others will have already been canceled. In similar case, you might get stuck.

These are some ways a person can generate passive investment income. Whether you wish to invest in stocks, real estate, or business, you can always find an opportunity to generate passive investment income.

Best Investment Ideas and Best Safe Investments for 2012

Here we list some of the best investment ideas and tackle the challenge of finding the best safe investments for 2012. What might appear to be one of the best investment ideas to the uninformed could turn out to be one of the worst.

Looking at the big picture for investment ideas in 2012, moderation in asset allocation and a balanced investment portfolio will be the most basic key to success. There are 4 asset classes, and average investors need to spread their money across at least the first three to keep their overall portfolio risk moderate. The 4 categories in asset allocation are: safe investments, bonds, stocks and alternative investments like gold and real estate (optional). Asset allocation can be simplified, because there are mutual funds available to average investors that represent each of the 4 asset classes. Now let’s get more specific about the best investment ideas for 2012 starting with safe investments.

Safe investments earn interest and do not fluctuate in price. You will need to look outside of mutual funds in 2012 to find the best safe investments because record low interest rates have taken yields on money market securities (and hence money market funds) down to just about zero. One of the best investment ideas if you have an account with a discount broker or major mutual fund company is to shop for one-year CDs paying higher rates if you can’t get competitive rates from your local bank. Do not tie your money up for longer periods just to earn a little more interest. One of these days interest rates will go back up and you will be locked in at a lower rate and face penalty charges if you cash in early.

Finding the best safe investments will be truly challenging in 2012, but here are some more investment ideas. If you are in a retirement plan like a 401k that has a fixed or stable account option do not overlook it. You can often get a much higher interest rate there (maybe 4% to 5%) than anywhere else outside of your retirement plan. If you own an older retirement annuity or universal life insurance policy, it might have a fixed account you can add money to that is guaranteed to never pay less than 3% or 4%. Remember, truly safe investments like U.S. Treasury bills and bank money market and savings accounts are paying WAY LESS than 1%!

Over the past 30 years bonds and bond funds have become a favorite with investors because they have been consistent performers and returned on average about 10% per year… basically about equal to what stocks have returned, but with considerably less risk. Many investors have fallen in love with their bonds funds and consider them to be among the world’s best safe investments. Bond funds are NOT safe investments. They have performed well since 1981 (when interest rates and inflation were at record highs) for one primary reason. Both inflation and interest rates have been falling for 30 years, which has sent bond prices higher. Loading up on bond funds now is NOT one of the best investment ideas for 2012. In fact, it is one of the worst investment ideas.

When interest rates and/or inflation turn around and head upward bond funds, especially those that hold long-term bond issues, will be losers. That’s how bonds work. One of the very best investment ideas for 2012 is to sell your long-term bond funds if you own any, and switch to funds holding bonds with average maturities of about five years. These are called intermediate-term bond funds; and average investors should have some money invested here as part of their asset allocation strategy to add balance to their investment portfolio. These are not truly safe investments, but they are much safer than long-term funds.

My best investment ideas in the stock department focus on stock funds. Do not go heavily into the more aggressive funds that invest primarily in growth and/or small company stocks. These pay little if anything in dividend income and tend to be more risky and volatile than the average stock fund. Go with funds that invest in high quality large-company stocks with excellent dividend paying histories. Look for funds that are paying 2% or more in dividends. One of the best investment ideas for 2012 and beyond: invest in no-load funds with low yearly expenses. No-load means no sales charges, and low expenses mean higher net returns to the investor.

Alternative investments include the likes of real estate, gold and other precious metals, natural resources, commodities, foreign investments and so on. One of the best investment ideas for managing a truly balanced investment portfolio is to include this fourth asset class as well. The simplest way for the average investor to add these alternatives to their portfolio is with mutual funds that specialize in these areas or sectors. My best investment ideas here: don’t go heavily into any one area, and don’t chase after a sector (like gold) just because it’s hot. Real estate and natural resources funds would be my picks as two of the best investment ideas in the alternative investments asset class.

Moderation and diversification across the asset classes will be the key to asset allocation in 2012. I have also listed some specific best investment ideas for keeping the average investor in the game and out of serious trouble should the investment scene turn ugly. Above all else memorize this: long-term bond funds are not among the best safe investments for 2012. They are not safe investments, period.

Investing – How To Choose The Best Option

Investors are increasingly forced to choose from a proliferation of investment options. They also have to deal with contradictory advice on how to achieve their financial goals and how to invest the savings they have accumulated during their lifetime. If you consider that there are more than 7000 mutual funds available in the United States alone, and thousands of insurance products worldwide, making the choice that will satisfy them ever after is daunting, to say the least.

No wonder people so often ask the rather general question: Which investment is best? The first part of the answer is easy: No single investment is ‘the best’ under all circumstances for all investors. Personal circumstances, goals and different people’s needs differ, as do the characteristics of different investments. Secondly, one asset class’s strength in certain circumstances could be another’s weakness. It is therefore important to compare investments according to relevant criteria. The art is to find the appropriate investment for each objective and need.

The following are the most important criteria:

  • the goal of the investment
  • the risk the investor can handle
  • liquidity required
  • taxability of the investment
  • the period until the financial goal is reached
  • last but not least, the cost of the investment.

THE GOAL

Goals determine the characteristics sought in an investment. You will be in a position to choose the most appropriate investment only when you have decided on your short-, medium- and long-term goals. The following generic goals are normally involved:

Emergency fund

Emergency fund money should be readily available when needed, and the value of the fund should be equal to about six months’ income. Money market funds are excellent for this purpose. While these funds do not perform much higher than inflation, their benefit is that capital is saved and is easily accessible.

If you already have a ready emergency fund covering more than six months’ income, you could consider a more aggressive mutual fund

Capital protection

If your primary aim is capital protection, you will have to be satisfied with a lower growth rate on the investment. Those above 50 are normally advised to be conservative in their investment approach. While this may for the most part be sound advice, you should also keep an eye on the risk of inflation, so that the purchasing power of your money does not depreciate. It is not the nominal value of the capital that should be protected, but the inflation-adjusted one. At an annual inflation rate of 6%, $1 million today will buy the same as $174 110 in 30 years’ time. A 50 year-old with $1 million would therefore have to lower his living standard substantially if he only retains the $1 million until he was 80.

Conservative investments like those listed above should form the normal basis for providing an income. Because of inflation risk, investments should be structured so that they can at least keep up with inflation. This means that at least a percentage of the investment source providing the income should be made up of other asset classes like property and equity mutual funds. The percentage would differ according to individual and economic circumstances.

Investors fortunate enough to have their basic budget provided for by a conservative fund could consider increasing their income with commercial property funds and tax-free income from dividends paid out by listed shares.

Capital growth

If an investor’s primary goal is to achieve capital growth, the real rate of return should be higher than inflation. This implies greater risk to capital in the short term. Investors aiming at capital growth should not be apprehensive, as they will reap the rewards in the long term.

The history of equity prices over the past 100 years proves equity investments to be the best performer, followed by property. This does not mean you should buy either of these investments blindfolded. Wait until the quality shares in which you are interested are trading at inexpensive price levels.

RISK

The investment with a history of the highest growth is not necessarily the one to choose. The Standard Bank’s Gold Fund increased by 178% during the period 13 August 2001 – 24 May 2002 (284 days). Judging only on the growth of the fund during this period, it performed exceptionally well. But would it be the right investment for a retiree? During the 805 days following this, the same fund experienced a negative growth rate of 44%! The problem with an investment that decreases by this percentage is that it will not reach its previous peak by increasing again by 44%. This is because the growth this time will take place from a lower base, so in fact the investment would have to increase by approximately 80%.

LIQUIDITY

Hard assets like Persian carpets, works of art and antique furniture may be good investments in the long term, but unfortunately they are not very liquid. The same is true of certain shares in smaller companies. Money market funds, on the other hand, are very liquid, but the returns may not always be as good as those from other investments. The need to liquidise the investment quickly is therefore also a criterion to consider when evaluating investments.

TAXABILITY

The taxability of an investment has a considerable impact on its value to the investor. When comparing the returns on different investments, the return after tax has been deducted should be used. The investor should always ask what will be left in his pocket after tax deduction.

PERIOD

Conservative investments with no potential for high returns are suitable for shorter periods, while investment-objectives with longer time horizons aspire to achieving higher returns. Money market funds are suitable for periods of one or two years. Income and conservative asset allocation funds for three or four years and flexible asset allocation funds, commercial property funds and value equity funds may be chosen for longer periods, dependent on the economic and interest cycle and the propensity of the investor to accept risk.

COSTS

The costs involved in an investment are normally things like administrative cost and commission. The percentage of the costs to the investment amount directly affects the value of the investment. Many of the currently available investment products are structured in such a way that investors can negotiate commission.

CONCLUSION

No investment strategy blueprint is going to be perfect for everyone’s circumstances. Investment opportunities should therefore be examined critically before any decision is made. It should also be kept in mind that there are different companies managing specific funds under the investment categories referred to above. Some are more effectively managed than others. Investors should therefore research investments as well as the managers thoroughly before investing. Otherwise, they could appoint professional asset managers to do so on their behalf. Time spent determining the type of investment you really need is time invested in your future financial well-being.

A New Way to Invest in Property

The two most frequently asked questions by investors are:

  1. What investment should I buy?
  2. Is now the right time to buy it?

Most people want to know how to spot the right investment at the right time, because they believe that is the key to successful investing. Let me tell you that is far from the truth: even if you could get the answers to those questions right, you would only have a 50% chance to make your investment successful. Let me explain.

There are two key influencers that can lead to the success or failure of any investment:

  1. External factors: these are the markets and investment performance in general. For example:
    • The likely performance of that particular investment over time;
    • Whether that market will go up or down, and when it will change from one direction to another.
  2. Internal factors: these are the investor’s own preference, experience and capacity. For example:
    • Which investment you have more affinity with and have a track record of making good money in;
    • What capacity you have to hold on to an investment during bad times;
    • What tax advantages do you have which can help manage cash flow;
    • What level of risk you can tolerate without tending to make panic decisions.

When we are looking at any particular investment, we can’t simply look at the charts or research reports to decide what to invest and when to invest, we need to look at ourselves and find out what works for us as an individual.

Let’s look at a few examples to demonstrate my viewpoint here. These can show you why investment theories often don’t work in real life because they are an analysis of the external factors, and investors can usually make or break these theories themselves due to their individual differences (i.e. internal factors).

Example 1: Pick the best investment at the time.

Most investment advisors I have seen make an assumption that if the investment performs well, then any investor can definitely make good money out of it. In other words, the external factors alone determine the return.

I beg to differ. Consider these for example:

  • Have you ever heard of an instance where two property investors bought identical properties side by side in the same street at the same time? One makes good money in rent with a good tenant and sells it at a good profit later; the other has much lower rent with a bad tenant and sells it at a loss later. They can be both using the same property management agent, the same selling agent, the same bank for finance, and getting the same advice from the same investment advisor.
  • You may have also seen share investors who bought the same shares at the same time, one is forced to sell theirs at a loss due to personal circumstances and the other sells them for a profit at a better time.
  • I have even seen the same builder building 5 identical houses side by side for 5 investors. One took 6 months longer to build than the other 4, and he ended up having to sell it at the wrong time due to personal cash flow pressures whereas others are doing much better financially.

What is the sole difference in the above cases? The investors themselves (i.e. the internal factors).

Over the years I have reviewed the financial positions of a few thousand investors personally. When people ask me what investment they should get into at any particular moment, they expect me to compare shares, properties, and other asset classes to advise them how to allocate their money.

My answer to them is to always ask them to go back over their track record first. I would ask them to list down all the investments they have ever made: cash, shares, options, futures, properties, property development, property renovation, etc. and ask them to tell me which one made them the most money and which one didn’t. Then I suggest to them to stick to the winners and cut the losers. In other words, I tell them to invest more in what has made them good money in the past and stop investing in what has not made them any money in the past (assuming their money will get a 5% return per year sitting in the bank, they need to at least beat that when doing the comparison).

If you take time to do that exercise for yourself, you will very quickly discover your favourite investment to invest in, so that you can concentrate your resources on getting the best return rather than allocating any of them to the losers.

You may ask for my rationale in choosing investments this way rather than looking at the theories of diversification or portfolio management, like most others do. I simply believe the law of nature governs many things beyond our scientific understanding; and it is not smart to go against the law of nature.

For example, have you ever noticed that sardines swim together in the ocean? And similarly so do the sharks. In a natural forest, similar trees grow together too. This is the idea that similar things attract each other as they have affinity with each other.

You can look around at the people you know. The people you like to spend more time with are probably people who are in some ways similar to you.

It seems that there is a law of affinity at work that says that similar things beget similar things; whether they are animals, trees, rocks or humans. Why do you think there would be any difference between an investor and their investments?

So in my opinion, the question is not necessarily about which investment works. Rather it is about which investment works for you.

If you have affinity with properties, properties are likely to be attracted to you. If you have affinity with shares, shares are likely to be attracted to you. If you have affinity with good cash flow, good cash flow is likely to be attracted to you. If you have affinity with good capital gain, good capital growth is likely to be attracted to you (but not necessary good cash flow ).

You can improve your affinity with anything to a degree by spending more time and effort on it, but there are things that you naturally have affinity with. These are the things you should go with as they are effortless for you. Can you imagine the effort required for a shark to work on himself to become sardine-like or vice versa?

One of the reasons why our company has spent a lot of time lately to work on our client’s cash flow management, is because if our clients have low affinity with their own family cash flow, they are unlikely to have good cash flow with their investment properties. Remember, it is a natural law that similar things beget similar things. Investors who have poor cash flow management at home, usually end up with investments (or businesses) with poor cash flow.

Have you ever wondered why the world’s greatest investors, such as Warren Buffet, tend only to invest in a few very concentrated areas they have great affinity with? While he has more money than most of us and could afford to diversify into many different things, he sticks to only the few things that he has successfully made his money from in the past and cut off the ones which didn’t (such as the airline business).

What if you haven’t done any investing and you have no track record to go by? In this case I would suggest you first look at your parents’ track record in investing. The chances are you are somehow similar to your parents (even when you don’t like to admit it ). If you think your parents never invested in anything successfully, then look at whether they have done well with their family home. Alternatively you will need to do your own testing to find out what works for you.

Obviously there will be exceptions to this rule. Ultimately your results will be the only judge for what investment works for you.

Example 2: Picking the bottom of the market to invest.

When the news in any market is not positive, many investors automatically go into a “waiting mode”. What are they waiting for? The market to bottom out! This is because they believe investing is about buying low and selling high – pretty simple right? But why do most people fail to do even that?

Here are a few reasons:

  • When investors have the money to invest safely in a market, that market may not be at its bottom yet, so they choose to wait. By the time the market hits the bottom; their money has already been taken up by other things, as money rarely sits still. If it is not going to some sort of investment, it will tend to go to expenses or other silly things such as get-rich-quick scheme, repairs and other “life dramas”.
  • Investors who are used to waiting for when the market is not very positive before they act are usually driven either by a fear of losing money or the greed of gaining more. Let’s look at the impact of each of them:
  • If their behaviour was due to the fear of losing money, they are less likely to get into the market when it hits rock bottom as you can imagine how bad the news would be then. If they couldn’t act when the news was less negative, how do you expect them to have the courage to act when it is really negative? So usually they miss out on the bottom anyway.
  • If their behaviour was driven by the greed of hoping to make more money on the way up when it reaches the bottom, they are more likely to find other “get-rich-quick schemes” to put their money in before the market hits the bottom, by the time the market hits the bottom, their money won’t be around to invest. Hence you would notice that the get-rich-quick schemes are usually heavily promoted during a time of negative market sentiment as they can easily capture money from this type of investor.
  • Very often, something negative begets something else negative. People who are fearful to get into the market when their capacity allows them to do so, will spend most of their time looking at all the bad news to confirm their decision. Not only they will miss the bottom, but they are likely to also miss the opportunities on the way up as well, because they see any market upward movement as a preparation for a further and bigger dive the next day.

Hence it is my observation that most people who are too fearful or too greedy to get into the market during a slow market have rarely been able to benefit financially from waiting. They usually end up getting into the market after it has had its bull run for far too long when there is very little negative news left. But that is actually often the time when things are over-valued, so they get into the market then, and get slaughtered on the way down.

So my advice to our clients is to first start from your internal factors, check your own track records and financial viability to invest. Decide whether you are in a position to invest safely, regardless of the external factors (i.e. the market):

  • If the answer is yes, then go to the market and find the best value you can find at that time;
  • If the answer is no, then wait.

Unfortunately, most investors do it the other way around. They tend to let the market (an external factor) decide what they should do, regardless of their own situation, and they end up wasting time and resources within their capacity.

I hope, from the above 2 examples, that you can see that investing is not necessarily about picking the right investment and the right market timing, but it is more about picking the investment that works for you and sticking to your own investment timetable, within your own capacity.

A new way to invest in properties

During a consultation last month with a client who has been with us for 6 years, I suddenly realised they didn’t know anything about our Property Advisory Service which has been around since April 2010. I thought I’d better fix this oversight and explain what it is and why it is unique and unprecedented in Australia.

But before I do, I would like to give you some data you simply don’t get from investment books and seminars, so you can see where I am coming from.

Over the last 10 years of running a mortgage business for property investors:

  • We have executed more than 7,000 individual investment mortgages with around 60 different lenders;
  • Myself and our mortgage team have reviewed the financial positions of approximately 6,000 individual property investors and developers;
  • I have enjoyed privileged access to vital data including the original purchase price, value of property improvements and the current valuation of close to 30,000 individual investment properties all around Australia from our considerable client base.

When you have such a large sample size to do your research on and make observations, you are bound to discover something unknown to most people.

I have discovered many things that may surprise you as much as they surprised me, some of which are against conventional wisdom:

Paying more tax can be financially good for you.

This one took me years to swallow, but I can’t deny the facts. The clients who have managed to get into a positive cashflow position have paid a lot of tax and will continue to pay a lot of tax, whether it is capital gains, income tax or stamp duty. They don’t have an issue with the tax man making some money as long as they continue to make more themselves! They regularly cash in the profits from their properties and reduce their debt, but always continue to invest and park their money where the return is best. In fact, I can almost say that the only people who enjoy positive cashflow from their investment properties are the people who have little concern about paying taxes as they treat them as the cost of doing business.

Just about every property strategy works. It just depends on who does it, how it is done, when it is done and where it is done.

When I first started investing, I went and read many property investment books and attended many investment educational seminars. Just about every one of them was convincing and this confused the hell out of me. Just when I was about to form an opinion against a particular property strategy, someone would show up in one of my client consultations and prove that it worked for them!

After testing many of these strategies myself, I came to realise that it is not about the strategy,(which is only a tool) but rather it is about whether the person is using the tool appropriately at the right time, in the right place and in the right way.

There is no such thing as the best suburb to invest in, forever.

If you randomly pick a particular property in what you think is the best suburb over a 30 year window, you will find that there are periods during which this property will outperform the market average, and there are periods when this property will underperform the market average.

Many property investors find themselves jumping into historically high growth suburbs at the end of the period when it is outperforming the average, and then stay there for 5-7 years during the underperforming period. (Naturally this can taint their view of property investing as a whole!)

There is no such thing as the worst suburb to invest in, forever.

If you pick a property in the worst suburb you can think of from 40 years ago, and pitch that against the best suburb you can think of over the same period of time, you will find they both grew at about 7-9% a year on average over the long-term.

Hence in the 1960s, a median house in Melbourne and Sydney was valued at $10k. The worst property around that time may have been 30% of the median price for then, which was say about $3k. Today, the median house price in these cities is about $600k. The worst suburb you can find is still around 30% of that price which is say $200k a house. If you believe a bad suburb will never grow, then show me where you can find a house today in these cities, that is still worth around $3k.

Median Price growth is very misleading.

Many beginner property investors look at median price growth as the guidance for suburb selection. A few points worth mentioning on median price are:

We understand the way median price is calculated as the middle price point based on the number of sales during a period. We can talk about the median price for a particular suburb on a particular day, week, month, year, or even longer. So an influx of new stocks or low sales volume can severely distort the median price.

In an older suburb, median price growth tends to be higher than it really is. This is because it does not reflect the large sum of money people put into renovating their properties nor does it reflect the subdivision of large blocks of land into multiple dwellings which can be a substantial percentage of the entire suburb.

In a newer suburb, median price growth tend to be lower than it really is. This is because it does not reflect the fact that the land and buildings are both getting smaller. For example, you could buy a block of land of 650 square metres for $120k in 2006 in a newer suburb of Melbourne, but 5 years later, half the size block (i.e.325 square metres) will cost you $260k. That’s a whopping 34% annual growth rate per year for 5 years, but median price growth will never reflect that, as median prices today are calculated on much smaller properties.

Median price growth takes away people’s focus from looking at the cost of carrying the property. When you have a net 2-3% rental yield against interest rates of 7-8%, you are out-of-pocket by 5% a year. This is not including the money you have to put in to fix and maintain your property from time to time.

Buying and holding the same property forever doesn’t give you the best returns on your money.

The longer you hold a property, the more likely you will achieve an average growth of 7-9%. But you will be bound to hit periods where your property outperforms the 7-9% growth and periods where it under performs the 7-9% growth.

The longer you hold a property, if its growth is at or above average, the lower its rental yields will become.

The longer you hold a property, the higher the capital gains tax you will need to pay when you sell, and the less likely you will be able to sell it.

The longer you hold a property, the more likely there will be a need for an expensive upgrade of the property.

The longer you hold a property, the more likely you will forget which part of the equity actually belongs to the tax man, AND the more likely you will be to try to leverage the equity that doesn’t belong to you. This can get you into a negative equity position with a negative cashflow forever, unless you have proper financial guidance.

A Brief History of Professionals

Paint Trends – Get The Best Help From Painting Contractors

House painting is one of the many things that have changed in the past decades. The goal of house painting is to make your home’s exterior look better and with the advances of today, house painting is now even better than ever. You have to understand that there are a lot of professional pain contractors and house painters that provide up to date painting services. That is what most professional pain contractors have because it is important for the business. A lot of people will have different requests when it comes to home painting which means the painting companies have to make sure that they can cater to all different types of painting needs their clients have. This is why professional pain contractors try to offer more than just one type of service like exterior home painting. Painting includes a little carpentry as well which means being a professional pain contractor, having this type of service can help your clients.

If you want to get a little art for your home, make sure you hire a good home painting company. You should try and get a touch of art for your exterior design; you will need a good home painting company for that type of want. Be sure to do some research so that you can pin point the home painting companies that are capable of providing you the services you need. They have to be able to provide different services like parchment sponging, murals, metals and the likes. You should pick a home painting company that can provide different services that you will need. To find this, you can always look into their portfolio. You have to understand that checking the home painting company’s portfolio is going to help you find out whether they are worth hiring or not. You need to understand that a good home painting company can offer different types of painting themes without any issues.

It is important that you understand how essential it is to spot a home painting company that can provide different exterior painting services because good art is pretty hard to come by these days. These professionals are also specializing in making a ton of homes look better. Additional services like architectural detailing as well as repairs will be a huge plus. This is a huge advantage because you no longer have to hire other professionals to handle the parts that your painting contractor can’t handle. The add-on services your home painting company provides is going to be a huge help. This is why you have to choose wisely.

How I Became An Expert on Wellness

The Role of Massage Therapy.

In cultures all over the world, one of the practices that have a long history is the massage therapy. Different types of massage therapy are being practiced by people in the 21st century to achieve the numerous health purposes. Even though massage does not have a conventional use in America, it is evident that it is reflected as part of a corresponding and also alternative medicine. Besides stress management, sport injuries rehabilitation and also increased relaxation, there are other reasons why people want to go for a massage therapy. It is important to note that having some wonderful massage will be great for your general welfare.

Choosing the best massage therapy spot will ensure that you get the best services to take care of your needs. You are assured that visiting Glen Cove Massage spot will ensure that you get the right massage therapy services you desire. Upon visiting Glen Cove massage of Roslyn Massage therapy, you are assured that they will help you relax and also feel good. It does not matter the unresolved issues that could be affecting you because massage therapy will play a key role in relieving the pain. For the different issues such as recent injuries, illnesses, accidents as well as surgical operations and trauma, you are assured that Glen Cove and Roslyn massage therapy ha got you covered.

It has been proven that for patients who are suffering from cancer or other serious illnesses will requires some massage therapy, it is, therefore, crucial that you consider the best location with the professional staff. For your massage therapy solution to make you feel good, it is crucial that you consider visiting Roslyn and also Glen Cove massage therapy spots. A number of health benefits are tied to regular massage therapy and you should not wonder why you need some massage. Whether a message therapy relaxes you, energizes you, relieves the tension on your back, it is important to realize that massage has more benefits that you should consider.

Countless studies have shown that massage therapy always play a key role in fighting Fibromyalgia symptoms which is a condition that is categorized by the muscle discomfort, fatigue as well as tenderness. For you to relieve some stress as well as eliminate the pain from the muscles, you will be able to deal with this conditions once you begin your Fibromyalgia massage therapy session. If you have been through a surgery, it is important that you go through the massage therapy session since this will help in reducing the postsurgical adhesion and also swelling. Going for massage therapy will help you in relieving stress and also elevate your feel good moods.

8 Lessons Learned: Paving

What Are The Finest Benefits That One Can Get From Sealcoating?

You should know by now that driveways as well as parking lots are one of the vital and integral investment that we will ever have in our property. For the purpose of making sure that your establishment will look beautiful and that your investment will be protected as well, surely, you would want to ensure that your asphalt is protected from the effects of natural elements that can be damaging which includes moisture and ultraviolet oxidation. Not only that, we want you to know as well that elements, regardless of whether they are man made or natural, has the ability to cause crack halfway into the asphalt and this circumstance will only take as little as five years to do so. If you have parking lots or driveways, the surely you know that when it rains, there is a high chance for asphalt to create small cracks which will act as tiny storm drains from the rain and these small cracks will cause raveling between the asphalt as time goes on. As for potholes and larger cracks as well, they may rise in the base in as timely as eight to ten years, unless, of course, certain precautionary measures are being taken. That is why it would be best for you to apply sealcoating onto your asphalt as doing so is something that can be compared to when you are applying sun block on your skin to protect it from the sun’s harmful rays and varnishing the wood to prevent termites from damaging it.

In the remainder of this article, what we will be doing is that we will discuss with you the best possible benefits that one can get from sealcoating and a whole lot more. We want you to know that when it comes to advantages, one of the major advantages that you are abound to enjoy when you apply sealcoating to your asphalt is the protection of your investment by extending the life of your asphalt, leading you to save as much money as you can in the long run. Furthermore,you have to know as well that asphalt sealers, or sealcoating as what many of us would pertain to it as, have the tendency of beautifying your driveway or your parking lot and enhancing not only its overall look, but also its function and life, giving your pavement and dark black color and making it look new and wear new as well. You should know by now that a black parking lot or a black driveway has the ability of offering tons of positive image on how clean your company really is or how clean your residential home is.

Where To Start with Marketing and More

Guidelines On How To Pick An Ideal SEO Company

If you are planning to improve your business productivity; it is essential that you think of investing in online marketing. You see, things are changing fast in the business world. And you need to keep up with the pace. Online marketing should help you achieve your business goals.

You are handling customers who prefer to make their purchase through the internet. So, you want to harness these potential clients. And you want to increase your customer base because you know it will increase your sales, and ultimately, your returns.

Develop a business site and a blog – that is what you need. Consider the great benefits that come with connecting your social media followers to your business website. It is simply immense.

However, you need to see to it that you have a website that has a good ranking. You should always strive to have a website that is optimized. That is why it is crucial for to hire a Search Engine Optimization professional – it is inevitable.

These professionals will help you build and sustain traffic so that you can get the clients you want. The traffic will eventually convert, and then you have a more significant customer base.

There are plenty of SEO companies on the market; it can’t be challenging to find a service provider that will be sensitive to your needs. Nevertheless, it can be an uphill undertaking when you do not have the slightest idea on how to locate one as nearly all the SEO companies you will find out there will promise you exceptional packages that you need.

Here are fundamental concepts that you need to have at your fingertips when selecting the SEO firm that will take care of your needs.

To start with; you should look at the reputation of the SEO agency. An SEO professional with a good name is always willing to offer you great packages that you deserve. They can’t put their reputation and brand that they have invested in into jeopardy.

Shop around; talk to trustworthy individuals; such as your business counterparts, friends, relatives and even your neighboring individuals. Concentrate more on the individuals who have first-hand experience with the SEO professional you look to hiring. Let them offer you the recommendation you need.

It is also paramount that you evaluate their experience before hiring an SEO professional. Look at the past projects they have delivered – pay attention the websites they have created and their rankings. Look at their websites also – determine if they are attractive.

And more importantly, analyze their reviews. Most of the reviewers are candid when reviewing; there is every reason for you to believe their opinions.

What is more, you should look at their portfolio – profile, accomplishments and the clients that they receive.

The Best Advice About Homes I’ve Ever Written

Why You Should Get Interior Designers?

Interior design is now starting to be really famous all across the world. You can really enjoy nothing more than just be able to relax in your home that is well designed and organized.

A lot of people are aware of the bland carpeting and stark walls every time they will buy a new home. So if you want your newly bought house to be well organized and decorated, you should consider hiring the service of a professional interior designer. The professional interior designer will always make sure that the interests and tastes of your family members will be included on how your house will be decorated. You will really be enjoying a lot of benefits if you hire the service of a professional interior designer.

There are some important reasons on why you should be hiring the service of a professional interior designer. Interior designers need to finish school in order to know more about their profession and craft. A lot of home is different places have been decorated by these interior designers with a ton of experience in the field. Professional interior designers are aware on the things that will look good and those that needs to be avoided.

There are so many new home owners that do not have an idea on matching colors with the right pattern in order for a room to look nice. If you will try to decorate your home on your own, there will be a chance that you might ruin the whole look of the house.

It would be easier for you to decorate your house if you hire a professional interior designer.

You should be aware that the task of hiring an interior designer is actually really worth your time and effort. An interior designer will always make sure that the tastes and interests of the home owner will be the main focus in the decoration of the home.

The interior designer will always ask the home owner about the pattern and color that he or she likes especially when it comes to the overall look of the house. Some home owners will ask their interior designers to create a more country feel look or modern type of home decoration, all of which will depend on the area where he or she is living as well as his or her interests. The professional interior designer will always create a look that the home owner will find really unique especially when it comes to his or her taste.

Before the interior designer will be including some ideas that he or she might like for the overall decoration of your home, he or she will always be asking you to take a look at those ideas first. Before the walls will be painted by the color that the interior designer will suggest, he or she will always show it first to the home owner.

Why No One Talks About Providers Anymore

How To Effectively Choose The Best Business Internet Company

These days, most investors will depend on the internet when running their businesses. The internet will come in handy when in service or production industry. With the internet, you will be able to protect your business as well as communicate well.However, for this to happen, you will have to choose the best business internet service providers you can think about. This indicates that you should not rush into having any company without doing a good research on it. If you will be getting the internet for the first time, ensure you do everything correctly.Below are important points to factor in when involving any service provider.

You should begin with learning accurately what the company will offer. Today, you have many choices you can take. Some choices seen today are the satellite, cable, fiber optic and others. The said choices will be different in various ways. Some will make it easy to use your office telephone when communicating. It is shrewd to understand your investment necessities when choosing the supposed options.It is also right that you confirm what kind is accessible from your location.

The following vital point is the need to learn the speed of the internet you are going to get.In most cases, this will entirely depend on the amount of speed your business requires. After noting this, it should be good to look for the company to meet your needs. This is ideal to be certain your job will not be affected while in the office.It is here that talking to the experts will be sensible to you.The consultants you will include should give you direction on the sort of speed that you may want to pick.

Your internet ought to be secured any time you are using it. This is what will determine the data you have in the company. This should lead you to finding the most competent company that will secure your data as it ought to be.Another thing that will make sense is to have a reliable support from the internet you are going to get. It is sad to work and realize your internet connectivity is not up to the expected services. In order to find services you can trust, ask other local people where they get their internet services.

Although having the internet is paramount for the company, it is intelligent to see the costs to incur with the services. Several of the expenses you will get will involve maintenance and installation services.It is at this idea that you need to recognize the most affordable company that will present high quality services for the business.