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Friday, 29 February 2008

Real Estate Mastery

Attended the Real Estate Mastery Workshop on Sunday 24th Feb, presented by Empowernet. Here is a summary of some points presented...

1. There are many factors that can influence the price of property:
  • supply vs. demand (scarcity of property, land, materials, labour)
  • population growth and demographics
  • location (of property, amenities, work, schools, shops, etc.)
  • interest rates, inflation and affordability
  • rental market
  • employment and the economy
  • taxation concessions, housing grants, stamp duty incentives
  • finance availability
  • fees (land, council, body corporates)
  • media and market sentiment
2. The value of land has generally appreciated more than that of houses, due to the following reasons:
  • land is scarcer than property
  • land can be subdivided into multiple blocks
  • the "blank canvas" effect - people are looking for the "perfect" piece of land to build their houses (e.g. right land size, shape, gradient)
  • higher fees associated with council costs
  • building depreciates as they age
3. As a property investor it is important to stay up-to-date with the latest news and events. You can do this in a number of ways including reading newspapers, magazines, attending seminars, being part of a property forum/interest group, and using the Internet. You should use the service of Google News Alert to filter out relevant stories related to properties and get it delivered to your email account - this is very useful feature.

4. For property investors, increase in the interest rate usually means higher mortgage (interest) repayment. However, if the property is rented out the increase in interest rate is actually good up to a certain point (up to 10% interest rate or so) , as rents can be increased correspondingly (say every 6 months) and this will more than cover the increase in interest cost.

Thursday, 28 February 2008

How To Live Rich

by Nicola Ruiz from Forbes.Com

When the middle-class millionaire wants to wow her, he buys a diamond. Only the millionaire buys the rarest stone, one no one else will have.

On his travels, the millionaire goes where no one can find him--to an exclusive island resort featuring $185,000 fractional memberships in luxury vacation homes.

And at home, he relaxes not before the plasma TV but in his $150,000 yoga room where he receives massages while gazing at a Japanese-inspired garden outside.

These kinds of expenditures are becoming increasingly common among the fast-growing class of "middle-class millionaires." Sixteen-and-a-half million Americans representing a little over 8% of U.S. households fall into this group, which controls almost two-thirds of the country's wealth. They are baby boomers with a median age of 58 who obviously listened to their mother's advice to get a good education and settle down--because three-quarters earned a bachelor's degree and 82% are married...

Read the full story here.

How To Make A Million Before You Turn 20

by Melanie Lindner from Forbes.Com

While their peers were out making trouble, these young achievers were making bank.

Forever in search of the secrets to entrepreneurial success, we peeked into the inspirational lives of five whiz kids who built million-dollar enterprises before the age of 20.

They partnered with friends, siblings and mentors, or did the work on their own. Three are from the U.S., two from the U.K. All started at age 15 or younger--and one before he broke double digits.
Their common thread: preternatural business sense and demon drive to turn ideas into reality.

While four of the five were making a mint on the Internet, Fraser Doherty was doing things the old-fashioned way. In 2002, at the age of 14, Doherty started making jams from his grandmother's recipes in his parents' kitchen in Edinburgh, Scotland. Neighbors and church friends loved them. As word spread, Doherty started receiving orders faster than he could produce them at home, so he rented time at a 200-person food-processing factory several days a month...

Read the full story here.

Wednesday, 27 February 2008

Buying "Off The Plan"

Source: Consumer Affairs Victoria

Buying 'off-the-plan' means that you buy a project home, apartment, or in some cases, sub-divided vacant land, which is offered for sale before any building has begun or before it is finished. In other words, you make your purchase before the plan has been certified by the local council and registered at Land Victoria.

One problem faced when buying off-the-plan is that you are unable to inspect the actual property you are buying. Instead, you need to rely on an artist's impression of your home, a floor plan and on the builder's reputation to make sure you get what you are paying for.

One advantage is that the amount of stamp duty payable may be less than on an existing property or refurbished building.

When buying off-the-plan, you will sign a contract with the developer and pay a deposit, then pay the balance when the property is completed. A purchaser may end a contract if the plan of subdivision has not been registered 18 months from the date of the Contract of Sale. But some contracts may specify a longer time allowance for registration, so read the contract carefully.

It is also important to understand the rules and regulations relating to insurance. For instance, if your contract is with the developer and not the actual builder, the Domestic Building Contracts Act 1995 does not apply and therefore there is no protection in the form of builders warranty insurance.

7 Steps to Becoming a Property Millionaire, Prt 7 (The Power of Compounding)

It is now 4.5 years since we started, we control 3 properties valued at $1,270,000 with equity of $261,000.

Now we can choose to wait, do nothing else, and in 5 years we will have equity in the property of over $1 million dollars. How is that possible?

The Power of Compounding

$1,270,000 + 10% = $1,397,000 (5.5 yrs)
$1,397,000 + 10% = $1,537,000 (6.5 yrs)
$1,537,000 + 10% = $1,690,000 (7.5 yrs)
$1,690,000 + 10% = $1,859,000 (8.5 yrs)
$1,859,000 + 10% = $2,045,000 (9.5 yrs)

$2,045,000 less $1,009,000 loan = $1,036,000 equity

Not only are we now a property millionaire, 9.5 years after we began, our wealth is now growing at a staggering $204,500 per annum compounding. If you had started on this plan at age 20, you are a millionaire by 30.

Remember, we are buying properties in areas targeted for high growth, and so these returns are very achievable.

Summary: 7 Steps to Becoming a Property Millionaire
  1. Get a deposit
  2. Find a great deal (look for a property that is expected to grow at an above average rate)
  3. Buy off the plan property (save on stamp duty)
  4. Use leverage and deposit bonds (to minimise cash outlay)
  5. Settlement (get loan from lender and use equity from property)
  6. Renting out the property
  7. Buy more property and use the power of compounding

Tuesday, 26 February 2008

7 Steps to Becoming a Property Millionaire, Prt 6 (Buy More Properties)

Step 7: Buy More Properties

Our property is now valued at $330K (10% increase); we have outlaid only $19.5K and are raring to go for the next one. It is 12 months since we started and we have been saving money since we began a year ago. All depending on our savings and availability of cash from other areas, such as equity in our own home we can now do the same again.

If we can't come up with any more cash just now, we just have to wait until our investment grows enough to access some of the equity. Assuming the average 10% growth rate again, the property will be worth $399K two years after we settled on it ($330 x 1.10 x 1.10 = $399K) . We can then refinance and use this equity as deposits.

Our equity in the property is $399K less $297K (loan) = $102K equity. This has taken 3 years so far, but not bad considering we didn't have to work for it.

We now buy 2 more investments off the plan with deposit bonds, for settlement in 18 months. We choose Victoria as the cash outlay will be less. The valuation and purchase price of each property we will say is $350K. We need to come up with cash for two deposit bonds, approximately $7K, other costs and stamp duty approx $5K, so total outlay of $12K for the two properties. Another phone call to our friend the mortgage broker, and we borrow this from the equity in the first property. The repayment increase a little, but we are now controlling another $700K of property.

So now we control $399K + $350K + 350K = $1,099K of appreciating assets. We have a loan on the first property of $297 + $12K = $309K.

Yes within 3 years from starting, we control over 1 million dollars of investment property, an asset that is going to increase in value on average 10% per annum, which is $100K growth.

Eighteen months later our 2 properties are built and we need to settle. The combined value of our properties is now $1,099K + 18 months growth at 10% p.a. = $1,270K.

We can borrow 80% = $1,016K less existing loan $309K = $707K. This is enough to settle as the amount required is $700K.

It is now 4.5 years since we started, we control property valued at $1,270K with equity of $261K (and a loan of $1,009K).


[ In Part 1: Why Choose Property As A Vehicle For Getting Rich? ]
[ In Part 2: The Plan, The Concept and Understanding the Property Cycle ]
[ In Part 3: Get A Deposit, Find A Great Deal ]
[ In Part 4: Buy Off-The-Plan Property, Start up Money Using Leverage and Deposit Bonds ]
[ In Part 5: Settlment, Renting Out The Property ]
[ In Part 6: Buy More Properties ]
[ In Part 7: The Power of Compounding, Summary ]

[Go Back to theKimsta.com Millionaire Quest Homepage]

Monday, 25 February 2008

7 Steps to Becoming a Property Millionaire, Prt 5 (Settlement & Renting Out The Property)

Source: Keith Mason

Step 5: Settlement

After buying the property off the plan, we then wait for settlement. While waiting, time is working on your side. You are now controlling an asset, which is rising in value without having paid for it. Only on settlement is when you need to borrow the money from a lender to pay the balance for the property.

The longer the settlement period, the more benefit you gain. If the market is rising faster than the average like it does in the second half of the property cycle, then by settlement it's valuation should be considerably more than when we initially put down the deposit.

The property cycle is generally 7 to 10 years long. In the latter part of the property cycle, values may rise 15 to 20% p.a. or more. In 2007, Melbourne house values rose by 25% while Brisbane rose by 20%.

Let's assume that the market has risen only 10% since we put down the deposit 12 months ago, so the property is now valued at $330K. We can approach the lender prior to settlement with the new valuation and ask for a higher loan.

Assuming the bank was initially prepared to lend 90% of the original value of $300K, this loan would have been $270K. Now they may lend 90% of the new value of $330K, which would be $297K, and so we only need another $3K of our own cash to settle. Our total cash outlay has been only $19.5K approximately (or as little as $6.5K in Victoria).

In a faster rising market, this amount can be reduced even more due to the increased value and extra borrowing capacity, to the point where it is possible to purchase and get back all the cash outlaid at settlement. This would allow us to get started on the next property straight away and repeat the process.

Note that the loan we take out is interest only, so that the repayments are lower. We don't need to pay off any of the principal at this stage.


Step 6: Renting Out The Property

Finding a good property manager is important. It's not recommended that you manage it yourself especially if you own multiple properties in different locations.

It's really important to do the numbers on your property before you sign a contract. You need to know if it will give you a net positive or negative cashflow after all expenses and tax deductions are taken into account.

Your serviceability of the loan on the property will be affected by this. If you are not on high income, it's probably better to look for a property which will break even after tax deductions.

However, if it is slightly cashflow negative and you are earning good income then this is not a bad thing. As an example, let's say your property is negative cashflow $50 per week, this would only be $2,600 per year.

This is also generally tax deductable and could reduce your tax (see your accountant). Your $300K property is increasing in value by approximately $30K per year, so you are outlaying $2,600 each year to get a return of $30K each year.

Go to the next part: The Power of Compounding, Summary.

Go Back to theKimsta.com - Make Money, Get Rich, Retire Young, Become Millionaire

Sunday, 24 February 2008

7 Steps to Becoming a Property Millionaire, Prt 4 (Buy Off The Plan With Deposit Bonds)

Source: Keith Mason

Step 3: Buy off the plan property

The strategy is to buy new off-the-plan property to benefit from leverage. By this I mean buying property prior to, or during its construction phase.

The time that lapses between signing the purchase contract and the property settling can be months or even years. During this time, if the property is positioned in a sought-after area where high capital growth exists, the value could appreciate by tens of thousands of dollars.

It is probably better to buy low rise developments which do not have lifts or gymnasiums as these additions increase the body corporate costs, and affect our return on investment. There are arguments for and against any type of property, but new property is always in demand by tenants, has great tax deductions, and you should not have to spend money on maintenance for quite a while.


Step 4: Start up money using leverage and Deposit Bonds

Lets assume that we find a great deal for $300K. Because it is off the plan, due for settlement in 12 months, we only need to put down a 10% deposit, which does not have to be cash. Deposit bonds are used by many investors to put up the deposit, costing approximately 5 to 10% of the deposit only. So for a $300K deposit for 12 months it would cost only around $1,500 using deposit bonds.

Other costs to pay are stamp duty and legal costs, which combined are usually 5% or less (approximately $15,000) depending on which state you buy in. So the total cash outlay is around $16,500 max. (Another alternative to deposit bonds is a bank guarantee)

In some states like Victoria (Australia) a major benefit of buying off the plan property is that stamp duty is only payable on the value at the time of contract, which is basically land value, so for a property purchased at $300K you only pay about $2K on stamp duty instead of about $14.5K.

This might just tempt us to choose Victoria for our first property. Our start up money could be only about $3,500 which is a big incentive for some of us. New Zealand is also very attractive as there is no stamp duty to pay at all, which makes getting started even easier.

See a mortgage broker for qualification requirement on deposit bonds.

Next step: Settlment, Renting Out The Property.

Go Back to theKimsta.com - Make Money, Get Rich, Retire Young, Become Millionaire

Friday, 22 February 2008

7 Steps to Becoming a Property Millionaire, Prt 3 (Get A Deposit, Find A Great Deal)

Step 1: Get a Deposit

If you have an average paying job, or are self-employed, and can saved a deposit of say $30,000 that's usually enough to get started. Otherwise if you have your own house, can access this amount from the equity in your house. Many people starting out have used their parent's equity or guarantee.

Most property investors have completed dozens of property deals using none of their own money, so it can be done.

On a property valued at say $300,000 this would be a $30,000 deposit. Some lenders will lend a higher percentage, so you would need less deposit.

Before you start saying, "How the heck am I going to come up with $30,000??" I will show you how to get started with far less than this, using the power of leverage in the following posts. So read on.


Step 2: Find A Great Deal


You need to find a great property deal - one that will grow in value faster than the average, so that your wealth can grow quickly. You can learn to do this yourself by reading books, attending seminars and spend time analysing properties in a suitable area.

Or you can do it the easy way, find someone you can trust who can find a great property for you (and hopefully they won't charge you too much for their time and skill). The strategy proposed here uses the power of leverage to buy property off the plan.

What makes a great deal? It means a quality property, in a good suburb that has shown above average capital growth over the last 5 to 10 years, and looks stable enough to continue.

It is more likely to be a one or two bedroom unit or townhouse. A property that has a unique or scarcity factor (that is, not a unit in a large tower, or a house in a new subdivision, where more and more identical houses are likely to be built. It would usually be located within 5-12km of the city.

It should appeal to a target market of tenant who fits the following profile.
  1. Young professionals in the 26 to 35-year age group, generally have lack of time, and enjoy socialising and eating out, so need to be close to restaurants, cafes, public transport etc.

  2. "Migrating empty nesters" - those who are 50+ years old, looking for proximity to service and security.

Thursday, 21 February 2008

7 Steps to Becoming a Property (Real Estate) Millionaire - Part 2: The Plan & Concept

Source: Keith Mason

The plan is to create a million dollars net worth in property, starting with little, in 10 years or less. Most working people living in Australia, New Zealand, the UK, the USA and Canada (and probably many other countries) should be capable of achieving this goal, if they set their minds to it.

The time frame of the plan will vary depending on which part of the property cycle you are beginning. The ideal time would be a few years after the top of the previous property cycle, when prices have had a correction and started to increase again, see diagram below.


The concept to get across is that to become wealthy in property, we need to be able to control an appreciating asset/s of large value, which over time will increase in value. It is the increase in value that makes us wealthy.

This is a really important concept that many people overlook, trying to find a more complicated hidden secret of a strategy. There are no secrets. Simply control appreciating assets of large enough value, and in a short time you will become wealthy.

For example, well located residential property generally increases in value at around 10% per annum, so a $1million property will increase at $100K per annum. When you take into account the compounding effect of growth, the property doubles in value in 7 years. It was Albert Einstein who quoted: “the most powerful force in the Universe is compound interest”.

Many people believe you need to own the property outright, without having debt against it, and will work really hard to pay off the mortgage. This is not the most financially smart way to go. By putting your cash into more assets, rather than pay off an existing one, you increase the value of the assets you control, which will compound for you, creating wealth much faster than paying off just one asset.

Now, let's go to the next step: Get A Deposit and Find A Great Deal.

Go to theKimsta.com - Make Money, Get Rich, Retire Young, Become Millionaire

7 Steps to Becoming a Property Millionaire, Part 1: Why Property?

Property or real estate has been and always will be one of the best ways for creating and holding wealth. So, I will now focus on the topic of property investment and how to create a million dollar net worth in property in a few short years.

At present I don’t actually have any property investment but looking to get into it within the next year or two. However, Keith Mason is a successful property investor who has outlined the plan and steps required to creating a million dollar in property in his very informative e-book, which you can download for free.

Before we get into the details, let’s have look at some of the reasons that make property investment a great option for building wealth.
  • Anyone can do it. Studies show that over 80% of the world’s millionaires hold their wealth in property. A large portion of the rich 200 in BRW made and are continuing to create their wealth from property.

  • Easy to understand. Property investment is generally easily understood and doesn’t require an in depth technical knowledge as compared to share trading. However, it does require a certain level of sophistication and strategy.

  • Tangibility. Property investment provides tangible evidence of where your hard earned money is going. It can be very satisfying to walk through your own property.

  • Potential to add value. Property provides the investor with the opportunity to improve value either through renovation or development.

  • High Gearing. Property enables investors with relatively small amounts of money to obtain exposure to relatively large assets.

  • High long term results. Property has historically provided high long term returns, in the order of 9-12% return per annum on average.

  • Tax efficiently. Property has a high degree of tax efficiency for a number of reasons. Firstly, its returns are comprised of growth component that may be concessionally taxed (if held for over 12 months) using the capital gains tax discount. Secondly, property can be highly geared which results in a tax deductible interest component. Thirdly, property allows the deduction of a depreciation component for building write off and plant and equipment, which improve tax return.
Now let's find out how to create a million dollar net worth in real estate in just a few quick steps...

Wednesday, 20 February 2008

Investment Strategy: Managed/Mutual Funds

The chart below shows the performance of one of my managed funds, Perpetual’s Geared Australian Fund over the last 24 months. As the name implies, this fund invests in the Australian share market, mainly buying blue-chip stocks. It is internally geared up, which means it also borrows some money to increase the size of the fund – potentially magnifying all returns (both positive and negative) on investment.

During the last 24 months, the fund was up as much as 65% at one point (from $2.50 to $4.20). There have been 3 sizable corrections so far: May-July 2006, July-Aug 2007, and Nov 2007-Feb 2008. The latest correction is the biggest, nearly erasing all of the previous 24 months gains – enough to make me sweat when looking at it!

But if we look at the fund’s performance over a longer period, there is a different story - it has been doing great, returning a total of 170% over the last 4 years or an average of 42% per year even after the current market correction.

Had you invested $100K in October 2003 in this fund, your investments would be worth $270K now - a profit of $170K in 4 years, or $42K per year. The fees you would have to pay would be less than 2% a year in fund management cost.

So clearly managed fund is an good investment strategy if you can leave it for 5+ years, as any stock market corrections will likely be smoothed out over time. Plus, minimal effort is required to maintain the portfolio as you don't have to monitor it everyday or even week.

Burnt From Shares/Stocks

The recent volatility in the share/stock market has burnt many, many people. Some of my friends have lost or are losing a great deal of money on their shares.

The situation is especially bad for people who uses leveraged products like margin lending and Contract for Difference (CFD) to increase the size of their portfolios through borrowed money.

One friend, Fillip, has lost $10K in the last couple of months trading shares on the CFD platform. That's easily a few months worth of salary down the drain. With CFD accounts, you can turn $500 into a $10,000 position; that's a loan of $9,500 or 95%! The risk from this is so huge. Only a small change in the underlying share price against you is needed to give you a sizable loss (and vice versa). So when the share market crashed, the losses were greatly magnified.

Another buddy, Khris, is losing $12K on his portfolio, but he hasn't sold any shares yet. So technically he hasn't made any real loss. Some of the shares he bought a few months ago are now down upto 70% in value! But Chris is more optimistic than most people as he sees his investments as a long term strategy and believes that prices will recover sooner or later. You might have to wait a while though Chris! But good luck mate.

As for myself, I have some managed/mutual fund investments which haven't been doing too good either. As I said in my earlier post (Share Market Plunge), the fund dropped 18% in value in January alone or $8,000 on my portfolio. And the fact that I also geared my fund means that the drop in share market is magnified in my fund portfolio. But it doesn't worry me too much as it is a long term investment.

Every investor right now is wishing and hoping that things will improve, but only time will tell.

Tuesday, 19 February 2008

What is Financial Freedom?

Dr. Stephen Covey suggests that if a person was financially independent, it doesn't mean that they are financially wealthy at all. Some wealthy people are financially very dependent upon their wealth; and if the wealth is spent, lost or devalued for some reason, they are wiped out.

Rather, a financially independent person is one who has so many skills and capacity; there are many options that they can take for employment or producing income. They are capable of making a livelihood for themselves and their loved ones in many different ways and circumstances.

So, even if I were to win a million dollars from the lottery today, I wouldn't be financially independent because I am very much relying on that money to be a millionaire. If that money was lost, I would no longer be a millionaire and there would be no way for me to make it back again.

For me to become financially independent, I would need to be able to produce a constant stream of income that can support my desired lifestyle. That's the only sustainable way of being a millionaire. And I believe this is what true financial independence means.

Monday, 18 February 2008

How To Find A Millionaire (Or Billionaire) Partner

By Wendy Tanaka from Forbes.com

Google co-founders Larry Page and Sergey Brin are gone. So is Oracle Chief Executive Larry Ellison.

They're all no longer billionaire bachelors.

But don't fear. If a high-net-worth mate is your ideal, a plethora of dating sites offer an inventory of men who say they earn at least six figures annually. You can troll sites such as MillionaireMatch.com, Sugardaddie.com, DateAMillionaire.com or the humorous Marry-An-Ugly-Millionaire-Online-Dating-Agency.com to find deep pockets. (Men seeking sugar mamas on these sites typically have fewer choices because profiles of wealthy men tend to outnumber profiles of wealthy women.)

Sure, these find-a-rich-guy sites might sound dubious, but they insist they provide a valuable service to wealthy people who are too busy running businesses to hang out at bars, clubs and other social venues. "It's a matter of convenience", says Steven Pasternack, chief executive of Miami-based Sugardaddie.com. "These guys work a lot of hours. It's very convenient to sit in your office and look through a catalogue of women" on your computer. Lucky them...

Read the full story here.

Saturday, 16 February 2008

How to Get A Pay Rise

In my previous post on Ways to Get Rich - Part 2, I mentioned that work alone won't make you a millionaire anytime soon, unless you are really ambitious and well on your way to the top.

But getting a good pay rise every year will certainly help you build up more capital faster, which you can then use to make even more money from various business ventures, and investments in the shares or property markets.

I have been lucky enough to work for a good company that offers good pay for good performance. Over the last 3 years my salary have increased by an average of 20% per year; not to mention that I also get handy performance incentive payments on top of that. The annual pay increase of 20% is not set in my contract but I have had to negotiate and work for it.

It is not hard to get a good pay rise every year, here is a few tips:
  • Make sure that you become good at what you do - the quality of your work must be as high-a-standard as possible, this is a great way to grab your manager's attention and boost your chance of a good pay rise each year.

  • Make sure you are worth more than what the company is paying you - that is, do more than you are required to do, show initiatives, and be willing to help around the company at all times.

  • Continually develop yourself to become multi-skilled and take on more responsibilities.

  • Don't be afraid to negotiate your salary increase. You can subtly do this during individual performance reviews by marketing and selling yourself at every opportunity. Otherwise you can be direct; however, make sure that you can justify your request for an increase.

  • Keep a look out for better offers from other companies. If you have the right skills and experience, you will be highly sought after and highly paid.
We tend to work most of our lives, so may as well become good at it and get rewarded!

Wednesday, 6 February 2008

Earn Extra Income - Prepare Tax Returns

Want to earn extra income from part time work? Then become a Tax Preparer. It's quite easy and you don't need a diploma or degree!

You can start by doing a tax course conducted by companies like H&R Block or ITP. The course usually starts around February in Australia and runs for 16-17 weeks until June (there are 1 x 3hr session per week).

theKimsta.comIf you are able to complete the course successfully and get pretty good marks for the assessments then you have a good chance of being offered either full-time or part-time work preparing tax returns with the company conducting the course.

Another benefit is that you will be able to prepare your own tax returns and also help your family and friends with theirs so that you and they can save money by not having to go to the accountant, you might be able to make a bit of extra money too.

Knowing how to prepare tax return professionally is a great skill to have as it is never outdated and it is required by everyone every year that has an income. So lots of opportunity exists there. And everyone can do it!

I am about to start such a course next week with H&R Block. My goal is to get part-time work with them once I finish the course. So, it will keep me quite busy for the next few months! But sounds like a good challenge.

Friday, 1 February 2008

Progress Report - 31 Jan 08

Capital on 31 Jan 08:

1. Net Value of Managed Funds: $12,300
2. Cash Savings: $29,158
3. Internet Revenue: $10
------------------------------------------------------------------------
TOTAL $41,468
====================================

Notes:
  1. Managed funds are geared; invests in Australian shares; funds' performance is dependent on share market performance
  2. Net Value of Managed Funds ($12,300) = Market Value ($34,200) + Excess Equity ($8,300) - Debt ($32,000)
  3. Cash investment is currently growing at a rate of 6.40% with ING Savings Maximiser; rate is dependent on the RBA Cash Rate, currently 6.75%
  4. Monthly contribution from salary is expected to be $1,000

Monthly Change:

1. Net Value of Managed Funds: -$8,000
2. Cash Savings Interest: +$158
3. Contribution From Salary: +$1,000
4. Internet Revenue: +$10
------------------------------------------------------------------------
TOTAL CHANGE -$6,832
====================================

Remaining:
  • A further $958,532 is required within 119 months in order to reach account size of $1,000,000.
  • An average monthly income of $8,055 is required from this point forward.
Summary:
  • A bad month for Aussie (and world) share markets, losing as much as 18% during January alone, see previous article. Although, it did recover somewhat and finished the month 11% lower.
  • The impact on my managed fund investments were major due to geared position, it reduced in value by $8K. Fortunately, I had enough equity in my trading account to prevent a margin call.
  • Internet revenue of $10 were entirely from the experiment with Google Adsense program.