Comments on: An “Investment Experience” from Commonwealth Bank

By: Nick

Nick — Sat, 23 Jan 2010 23:20:06 +0000

drew so did my parents…they lived through WWII, Nazi occupation of their country with the associated horrors. They endured the depression in their youth. That’s why they left for a new life. Could not speak english, just a suit case in hand, to a land on th opposite side of the earth. they ended up owning severl properties and educating 3 kids to University level. But even after all that, they have always preached to me that the way things are going they have all the similarities of what they witnessed prior to the depression. What I am saying is that you cannot look at the past 10 or 20 years and assume that the next 10 years will be just the same. Think of it like a Credit Card that someone has given to you as a gift with $100,000 credit limit. For quite some time you can look really good buying up what you want and party, i.e. follow the crowd. Then one day that credit you have spent needs to be paid back and you havn’t prepared yourself for that day. Well, that day has come for the world and all the governments are doing is extending your credit limit so you can “spend” your way out of your debt???
This is where we are now in history. My suggestion to you is read as much as you can on what is going on world wide and visit sites like these, and apply your own logic to all the info. Especially, take notice of those few who do not follow the popular trend and have a contrarian view point. Are you aware that out of all the economists & “experts” in the world only 12 predicted the recent crash? Steve Keens was one of them. Now why should I listed to all those who couldn’t see this coming and rely on them to be able to tell me how to get out of this mess.

By: GB

GB — Sat, 23 Jan 2010 23:08:37 +0000

drew – i have always used the maths. i.e. use excel and put into your disposable incomes so take out taxes, bills and especially ask her how much she wants to spend on shopping and going out etc….

then work out the mortgage repayments and see how much is left, use a higher interest rate though because if you can afford it at higher rates you can afford it at lower rates – i have always believed that to be important – and also check at what interest rate your cash is gone

then if there isn’t anything left over start trimming her shopping and going out budget

By: Drew

Drew — Sat, 23 Jan 2010 22:09:07 +0000

Whoa, talk of divorce or separation of money won’t be necessary –we’re just about to get married!

OK, I think she’s raving mad on this issue but so is most of Australia and, to defend her, she just taking the advice of her parents who came to Australia with nothing and now own their own home and an investment property.

By the way, the savings are from both of us.

By: Nick

Nick — Sat, 23 Jan 2010 13:13:48 +0000

drew…who’s money is being risked here. Is it yours or hers? Have you guys commited to marrage of just “partners”? Do you have kids? if not will she still be working when you do? generally when someone makes a claim like “maybe we should buy an investment property as well as a house to live in”..it sounds to me like she is using your money and not hers!! As someone who has earned and saved would be far more cautious with how they spend their own cash. It’s always easier spending someone elses!!!. If you can afford to do what she says then you must have a fair bit of cash putr aside. In which case why not put it all into your home as the interst on that is not tax deductable so there is no benefit to keepin a loan open on your home. It’s your life. you have had some genuine advice on this site…..but something tells me something is not right with your picture.

By: cb

cb — Sat, 23 Jan 2010 12:46:25 +0000

Drew, my commisserations = she is raving mad. At the very least, she will ruin you. It just depends on how agressively pushes for these things. If she sulks and gives you the cold shoulder for saying No to her, then she is trouble. Only you know.

Advising couples is a dangerous thing, but this is what I would do: I would insist on diversification of investments and finances. For added protection, separate your finances. She can go ahead and buy as soon as she is ready, but only on her own account. Make sure that you do not sign, and in fact make sure that you provide a legally prepared disclaimer, and advice to her lender, that they cannot come after you, your income or your assets if and when she defaults and the house is sold out from under her. Protect yourself, and safeguard half of your finaces so that if disaster strikes the two of you will still have you free and unencumbered.

If she threatens divorce on such a stance, this would be a good time to let her go. You give in now, and in the fullness of time, she will take you for everything, and you can start afresh, with nothing. I hope it does not happen to you, but you would be unwise to ignore the fact that such is a common experience.

By: Drew

Drew — Sat, 23 Jan 2010 10:38:56 +0000

PuntPal, GB, BB, CB, PF and Nick, thanks for the advice – you guys are legends.
PF, yep, not only did I make my beloved read ‘bubblepedia”, I got her to read these comments too.
Her verdict – maybe we should buy an investment property as well as a house to live in.

By: Nick

Nick — Fri, 22 Jan 2010 07:59:08 +0000

Vlad…one thing you nad your wife MUST realise is that most of the population is oblivious to the current world economic situation. They have no clue as to why we are in this mess and they will go on with their debt ridden life as if it will continue forever. It is tough “living outside the fire” but take it from someone who has done so and secured a comfortable life as a result. Not only that but whatever lies ahead with the economy I, and others like me who look at the big picture and not the immediate gratifications, will cruise comfortably through the storm. One thing I guarantee you is not one of those “peers” who “don’t bother with all this analysis and world-wide trends” will be there to help you when you are drowning as they will have already gone under.

By: Vlad

Vlad — Fri, 22 Jan 2010 06:49:36 +0000

Thank you for the answer, Nick.
I do keep deposit at 5.62% NAB’s UBank at the moment. But I also have the same pressure from my wife as Drew has. She is chatting at work with peers and they don’t bother with all this analysis and world-wide trends. There are dozens of peers saying one thing that she wants to hear and me alone telling her what she doesn’t want to hear. Alas!

By: Nick

Nick — Fri, 22 Jan 2010 06:01:44 +0000

Vlad…good question. I tormented myself for some time before I made the decision to sell. My case may be a little different to yours as I have no debt. I am buying gold.
In your situation, my opinion is that banks are not going to close in 12 months. However, I do feel that you will be in a better bargaining position in 12 months time real estate wise. So don’t think that you’ll “miss out”.
You can earn pretty good interest in “on call” accounts. Just as a hint NAB has a 5.15% interest on an internet saving account. Just a suggestion. Others have similar. Interest will rise over this period so you will earn more while you wait. I sold some property because I have a very strong feeling that if I waited, I will not get the prices I got if I waited any longer, and as I followed up later, indication are that I made a very wise move.

By: etch

etch — Fri, 22 Jan 2010 03:58:40 +0000

all the local rags here in melbs west burbs are full of vacant props about 7 pages
so debate seems back in the bears corner……………

yeah wages suck big time unless u work 7 days a week & then she will say “oh ..his in love with his job ..never home ..or having an affair ”
then shes gives ya the big “d”
if ur rent payments will be almost the same as a mortgage …buy .

if the payments are really going to stretch /blow the budget forget it

the problem is they want all the latest new things/gadgets ON TOP of that
sit down & work a thourough monthly budget & try stick to it

wats the price of a “green-card ” these days ?????????