Mixing investing and immigration – is it sensible?
Filed under: Economics, NZIS & Immigration issues, Property & General Investing, Retirement, Pensions and Kiwisaver
Well, if you are the government of New Zealand trying to wangle investment funds out of foreigners – hell yeah!
If you are a retirement-age person with a million or so in funds that survived the economic meltdown? Ummm- not so much.
The thing that concerns me about both these policies (Parent Retirement and Temporary Retirement Categories) is that they are basically Investor Policies under a different name. And people need to be crystal clear on something:
you could lose that money.
The New Zealand Government are NOT guaranteeing that the investment funds will not lose value.
Now the upside is that you could make money out of this: but the investments are share market based – and there is risk involved here. My concern is that in general people coming up to retirement age are advised to move funds from shares into less risky investments to avoid the peaks and troughs you get with the share market.
As far as I know – the only really “safe” option is the government bonds – and that really isn’t much more than a straight bribe to the government in my opinion.
So my advice is this: if you are looking in anyway at either of these two policies – make sure that you take some stringent financial advice and you know what you are doing. Unless of course you really do have squillions sitting in the bank and you are just bored stiff staring at your large bank balance everyday.
If you are relying on those funds being there in full after the 2 or 4 years you have to tie it up – be very careful.
Share investments we have can cope with the ups and downs – we have time for things to correct. But think about this:
What would you have done if you had invested in this policy 5 years ago, and needed to take what was left of your $1,000,000 about 12 months ago?
This isn’t about Immigration Advice – its about financial advice. There’s a lot of money at stake here, and you need to ensure you don’t lose the lot.
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Kiwisaver Problems: keep your eye on your provider.
Filed under: Avalon's Money Thread, Cost of living, General Budgeting, Property & General Investing, Retirement, Pensions and Kiwisaver
I always thought putting the Inland Revenue in charge of Kiwisaver was a daft idea. Seems I may have had a point. The IRD passes on your information to one of the default providers, and then thats the end of what they care about. It seems that a lot of the default Kiwisaver providers (these are the ones you are automatically enrolled with if you don’t make your own choice), have got the wrong information, and cant get in contact with the people whose funds they are running.
It worries me that there appears to be an awful lot of people who are completely unaware that they have a Kiwisaver fund. There are 200,000 people who cannot be contacted by their fund managers.
The problem means people may not receive the letter telling them who their KiwiSaver provider is or the annual statement on their Kiwisaver balance and annual report explaining the returns of their fund.
McAllister [from ASB Group Investments - the larges Default provider] said some people could be in KiwiSaver for more than a year and still not know because it was new and they did not know what to expect from their provider or Inland Revenue.
“It appears it’s an IRD problem. It raises questions about how accurate IRD’s information is.
You need to be aware about Kiwisaver. You are automatically enrolled into a fund, whether you like it or not, and have to opt out if like us you think Kiwisaver is crap.
Make sure you understand what is at stake here – as immigrants you will face this the minute you start a job,a dn you have 2 weeks to make up your mind about staying in Kiwisaver forever or opting out. Do your homework.
More information on Kiwisaver can be found in Avalon’s Guide: 13 things you need to know, and 17 things you really need to know!
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Tax isn’t fair – deal with it.
Filed under: Economics, Property & General Investing, Retirement, Pensions and Kiwisaver
Over the next year or so, there could be some huge changes to the way you will be taxed in New Zealand. There are a lot of strange assumptions, which are driving the recommended changes. A bunch of “experts” and academics called the “Tax Working Group” have come up with recommendations. However, here I thought it worth going back to one of the basic assumptions – A fair tax.
The headline at the moment is that property investors don’t pay tax, and in fact rort the system by getting tax refunds. This is because if you make any losses in your rental properties (and most of us do because rents in New Zealand are kept artificially low) then you can offset these against your income from a job and therefore pay less Income tax.It is blatantly ignored that you can do this with any business.Property investors (like us) are thought of as greedy “rich pricks” (a term coined by the typically potty-mouthed ex-finance minister Michael Cullen).
Of course, we personally are considered even more evil and greedy because Hubby has a well-paid job. It escapes most people that we worked our arses off to get qualified in order to earn that money. It’s not fair!
So – why do people think it’s unfair that we use a system to allow us to pay less tax?
Because most people have been conned into thinking that Tax is inevitable. Like death. Only it isn’t.
The fact is you do not have to be in anyway rich to legally cut your taxes. You just have to be smart. You also need to get your head round the fact that paying money you earn to someone else is not actually fair, and that the richer you are – the more you pay – is even less fair.
Let’s put it this way:
- If someone comes into your house and steals your TV – you go to the police and make a report. You make a claim against your insurance and get the money back to replace the TV.
- You don’t for one minute consider it fair that someone has come into your home and taken something that they may not be able to afford, and therefore have a right to steal it from you, because it’s not fair that you had the money to buy it and they didn’t.
- And yet – the government takes say 30% of the money you earn, and gives it to someone else. And you think this is OK because it’s called tax.
Here is something else to think about:
- While there is no “tax-free limit” to earnings for low income people the way there is in the UK, the bottom 40% of households pay no income tax because they get benefits to compensate.
- Yet the top 10% of earners in New Zealand pay 42% of the total income tax take.
- If you take out the 40% of people that effectively pay no tax because they get refunds distributed from higher tax payers, we are then responsible for a whopping 76% of the income tax take.
And yet we are the greedy ones for not wanting to pay so much of what we work our butts off to earn. Hell alone knows how much we would collectively pay if we didn’t have a way of offsetting tax.
It’s also worth noting that the HUGE tax benefit that property investors fleece off the government in Tax Refunds accounts for just 1.6% of the entire tax take.
Yep – we are about to get nailed to a cross then burned alive for a whopping 1.6% of the total tax budget – which will then be given to other people. I personally don’t think any of this is going to make that 40% who want our blood any richer.
But I could be wrong.
Over the next week or so we will be going over the recommendations (and they are just that – recommendations) and highlighting what they mean – good and bad.
If you want to see a good and funny illustration of why “tax cuts for the rich” are so wrongly maligned – have a look at this blog post: How tax cuts work.
And for some interesting facts about just how many evil greedy property investors there are in New Zealand – read Are Kiwis really obsessed with property?
And for a light hearted look at just what we personally think of the Inland Revenue (in any country) – take a look at Inland revenue Humour.
Avalon’s Money Thread: Working out our net worth.
Filed under: Avalon's Money Thread, Banks, Economics, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Property & General Investing
We’ve done the budget, we’ve made some decisions, our personal Fixed Rate mortgage comes up for renewal in January, and we have decided to rejig the way we pay our mortgages.
All that was left to do was to track what our Net Worth was – which given the economy was a highly daunting task to be honest.
Your Net Worth is basically the value of what you own (assets) minus the value of you owe (debts). Unlike a Budget, which tells you what you are going to do over a month or year – your Net Worth tells you how much you have right now. Today.
It’s not difficult (especially if you have your accounts in order and your paperwork filed)– just a bit depressing at the moment. Because I like spreadsheets, and I’m lazy, I just copy the same spreadsheet from last year and fill in the numbers – its quite straightforward. In fact the only difficult bit to be honest is grabbing the bits of paper that contain the info you need.
On one side I have a list of all the assets: property, banks accounts, savings accounts, shares, pensions, car, and household goods (Insurance value is the best way to determine that).
On the other side are the mortgages, credit cards and any loans.
Take one from the other, and what is left is how much you are worth today.
In our case – about $250,000 less that we were 2 years ago.
I kid you not.
So why am I not crying into my coffee right now?
Well, Net Worth is a really good indicator of how you are doing financially. But it has to be taken in context. Most of that “wealth” is paper money. It doesn’t really exist. I don’t have $250,000 less dollar coins than I had – it’s just that my properties have gone down in value. In time – the value will go up again, and so will my “wealth”.
It becomes an issue if you want to borrow money and maximise how much money the banks will lend you – as they want to know the value of your assets. When I spoke to the valuer to get ours revalued – he said that he’s never been busier with banks insisting on clients getting up to date values on all their properties. While this can be annoying – I have to say I think I’m actually with the banks on this one.
I spoke to ANZ the other day about the possibility of refinancing a rental (the funds to be used to reduce personal mortgage – so no extra lending overall). They won’t lend more than 70% of the value of a rental, and my mortgage was for 75% already. The thing is, while doing this is defiantly for the banks good – it also prevents us as buyers from over extending. I think we personally got lucky that the recession hit so fast just after we bought our 3 rentals and couldn’t buy any more. It prevented us going mad, getting caught up in a storm and going belly-up which has happened to an awful lot of people.
We have “protected” as much as we can of our net worth by paying down as much debt as we can as fast as we can. So while our assets are worth much less, so are our debts. There is actually a lot you can learn from a recession, and if you can get through this and come out the other side – then just think what you will be like when the economic climate improves.
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Why is customer service getting so bad in New Zealand?
Filed under: Cost of living, General Budgeting, Life in New Zealand, Retirement, Pensions and Kiwisaver
Just this last year – companies in New Zealand seen to have gone absolutely doolally with their customer service. As in there isn’t any. Its always been one of the things I really appreciated about life here – that customer service was generally top notch – so much so that it was really noticeable when you got some bad service.
This year – it seems to be a rare as hen’s teeth that companies won’t try and screw you over, and staff won’t lie through their teeth to cover up their mistakes.
I really don’t get why.
I guess this is probably happening the world over – but to be honest – I don’t see why people in New Zealand have to be arseholes just because the rest of the world is. Why can’t we maintain our “reputation” for being good at customer service in the face of a recession (which the people “in the know” say is over anyway)?
The latest stress-inducing idiocy comes from ING Life – with whom we have (or had) life cover and medical insurance, costing us nearly $300 a month in premiums. They slapped an unfair exclusion on both policies – excluding anything to do with our necks. This is because we (foolishly it seems) take a pro-active approach to our health and see an osteopath to reduce the number of headaches we get. Both of us react the same way to stress – our upper back and neck muscles turn to rods of iron, and compress the nerves – both of which cause excruciating headaches. There are a number of ways of treating this – but basically your choices are down bucket loads of strong painkillers, take preventive drugs which will mostly turn your brain to pudding, or go get an osteopath or chiropractor to release the muscles.
One of those options is sensible, effective and leaves your brain operating at 100% rather than being put to sleep by medication.
We have been trying for 5 months to talk to ING about this – and have met the most astounding belligerence and laziness I have yet seen in my time in New Zealand.
All ING have to do is pick up the phone and talk to either our Doctor or the Osteopath. Instead – they want us to waste the time of an Orthopaedic surgeon (who trust me – has better things to do that pander to the twats at ING – like dealing with people who have real injuries), and of course – we have to pay for that – $300 a month in premiums isn’t enough for them to get off their arses apparently.
This is of course for a substantial amount of life cover – we are not talking peanuts here.
Now – ING have resorted to bare faced lying to our broker about what is going on. Apparently – my visits to the osteopath are due to a recent neck injury that I know absolutely bugger all about. Hmmm. They also claim we did not fill out a form for this – only the lazy gits never sent us a form to fill out. Funny how they screwed this up and it’s magically all our fault.
Thing is – if this is how they behave when we are trying to pay them $300 a month – a not insignificant sum of money) – what the hell will they do when it comes time to make a claim???
So Action 1-
We cancelled the life policy and told them to get a grip or risk losing all the business.
Action 2 –
We are about to start the process of finding another home for Hubbys pension fund. Its only about $40,000 – but these bozos are not fit to look after our future money even it was only 5c.
Action 3 –
They have 1 week to fix this mess – or we cancel the medical cover as well. I refuse to give money to people this incompetent and this prepared to lie through their back teeth. It may be a “good policy” on paper – but in fact it isn’t if you have to be treated like shit when you are trying to do business with someone.
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Avalon’s Money Thread: Can I Invest In new Zealand?
Filed under: Avalon's Money Thread, Property & General Investing, Retirement, Pensions and Kiwisaver
This is an area that I’ve personally experienced a big difference in from being in the UK. I’ve honestly been bowled over by the sheer opportunity available here to invest in our future. This is usually outside what I guess would be considered normal in the UK. Many more people “do their own thing” rather than relying on a “pension scheme”.
The main principle of investing for a future is:
PAY YOURSELF FIRST
or
SAVE FIRST – SPEND SECOND.
The aim is to set aside 10% of your income for your future. (Add that to your budget!)
Investing and wealth creation are huge industries here. And something I found amazing was the number of free seminars available. I think you should always be careful about seminars if anyone is pushy and asking you to sign up for an expensive course, walk out. Not that it’s always a bad course but you should “never sign anything” without sleeping on it first! Some seminars you need to pay for but still be wary. If you are the sort of person who easily gets signed up for stuff, don’t go. Or at least don’t take your credit card or you may end up with that much-hated timeshare in Lanzarote! (Which let’s face it – is not going to be a whole lot of help to you once you are in New Zealand.)
Company pensions are available but most companies will not pay contributions into them because they have to pay Fringe Benefit Tax to the government in order to do so. Also, any contributions you make are done after you have paid income tax on the money earned. So you do not even get that tax benefit. Kiwisaver is a new(ish) Superannoutaion scheme which you join automatically when starting a new job, and have to opt out of if you do not wish to be a member.
About the only benefit is that when you finally do take the pension out you aren’t taxed on the income.
A lot of Kiwis seem to go it alone with investment planning and do it with residential property. Property is big; shares not so much as people got badly burned in 1987 and won’t look again. Besides there are nice tax advantages (at the moment) to buying property and holding on to while renting it out. If you want to buy property and “do it up” a la Property Ladder you will get taxed on the profit but if you “buy and hold” you don’t get Capital Gains tax! (Yet)
If you want to get into investing in property, the best place to go is a forum called Property Talk because there’s just too much info and they are active investors.
Do be aware that most people “negative gear” property, which means they make a loss week to week. (We are in this position). This is because the Government pays you some of that money back if you are a taxpayer. But you do need to have spare cash to “prop up” a property if you are going to do this, and it does limit how many properties you can buy.
I will be looking at property for this year but I also invest in shares now. I do this by buying Direct Shares rather than what most people do which is to pay money each month into a Managed Fund. The difference is that I save up $5000 at a time and then decide on a company to invest in, and buy shares in that company. Whereas with a managed fund, I would put say $500 a month into a fund, and then the fund manager takes all the other $500 that everyone else paid in that month, and he picks a load of shares to buy with all that money (having taken some of the money out for fees). I read somewhere recently that if you throw darts at a list of shares you would probably pick just as well as the fund managers do!
Is it risky?
Well yeah, to a point. But I work with a company that advises me on which shares to buy and they use a method called Value Investing. This means ignoring the share price. Most people buy shares because they are “popular” and this means the price is higher. Value Investing means looking at the company and deciding what the company is worth. Then buying shares in that company when the share price is lower than it should be. Basically it’s buying shares at a sale price. It does require education, but then to be honest I’m now a firm believer in the fact that if you want a good financial future, you have to get educated about money. I find it odd that we are not allowed to drive a car without some education but we are allowed credit cards and allowed to invest without it!
We work with a company called Wise Planning But I strongly suggest that if you want to look at this, go to an evening seminar first. The program we did was expensive and you really need to work hard at it and I wouldn’t recommend it for everyone. Be assured that the one thing Wise Planning wont do is any Hard Sell which strangely is exactly why I joined them, so you can be sure your credit card is safe and you won’t end up with said timeshare in Lanzerote!
(Update: Wise Planning hiked thier fees up by a ridiculaous amount, and I now wouldnt recommend them, as the owner of the company was actually quite snotty and rude to us when we objected to a 100% fee hike with no warning. but if the Introductory seminar is still free – then it’s worth going to.)
The main thing that makes investing risky is ignorance. If you don’t understand what you are doing and the exact risks involved, you shouldn’t do it. There has to be an amount of personal responsibility taken for your future so if this is all gobbledygook, then read some and understand it.
Update: We headed firmly aware from share investing and into property, which for me was much more fun, much more interesting, and easier to understand. Ive made a lot of friends along the way, and learned huge amounts, not just about investing. Its worth joining a local Property Investors Association if you want to go to into this – they hold monthly meetings were you can network and learn.
Whatever you do, if you want to invest – make sure you get some advice. A lot of people have lost an awful lot of money in the last few years, and while no amount of knowledge or advice could have stopped all the problems, many people have lost everything because they just “invested” in something without understanding what they were doing or what they were signing.
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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Avalon’s Money Thread – should I pay off my home loan as fast as possible?
I have always thought that paying your mortgage off as quickly as possible is a ‘given’. Not according to these guy’s. That did worry us.
I actually heard a rather good explanation of this from the ASB advisor. I had always thought that getting the mortgage off your back was to be our first priority, and for many people it may still be the best option so I wouldn’t discount it out of hand. That really depends as far as I can see on your personal circumstances, finances, and how good you are with money. I fully believed in this principle when I came here purely from reading the Anita Bell books. I had never really appreciated just how much money you actually pay for a house when you take into account the interest payments over 25years.
Our house cost $595k to buy. But over 20 years taking a 265K mortgage will add 269K to the cost so it will actually have cost us $864k to buy! Interestingly – if you are me anyway – by paying fortnightly for the whole 20 years we save a whopping $53,000 on the cost of our house- that’s a whole lotta coffee!
15142 cups to be precise
However where the advisors are coming from is that if you pay off your mortgage and only do that, you still have no savings with which to live on, so you still have to work to earn an income. Whereas if you were to save / invest at the same time as overpaying a bit on your mortgage you get rid of the debt earlier (and save money on interest charges) but you also have money set aside that you can now live on (or investments that generate an income). That’s the idea anyway!
Hi, everyone, pardon me if I’m asking a silly question but from reading the forum, I have this feeling that most people take up mortgage loan of about $200K to purchase a house, even though they may have the spare cash. Can anyone enlighten me on the reason for such arrangement?
Well, I can’t exactly answer that as for a start if I had $200k in cash hanging around – I would have used it to buy the house instead of taking a mortgage. However – there are 2 theories that could explain at least why some people would do it.
Firstly – revolving credit mortgages are popular here. We have one of these, and part of our mortgage is on this scheme. (About $100k) Now we didn’t actually need the whole 100k, as we have some extra savings, so at the moment only about 60k of that is being used. A revolving credit facility is like a big (huge) overdraft limit. So in our case we have an overdraft limit of 100k, but the balance is only about 60k overdrawn. There are 2 reasons that we have done this:
(1) we don’t pay interest on the portion of the “mortgage” that we don’t use, we only pay it on the 60k,
(2) If we need that money in a hurry we don’t have to ask the bank for a new loan, it’s already “approved” and that money is available at mortgage rates (though please see post on revolving mortgages for why you need to be very careful of doing this).
The other thing that we do that goes against the “get rid of the mortgage fast” is that we are saving to invest alongside paying extra on the mortgage. This money will be used to buy shares to start with and this was a really big thing to get my head round. It’s all very well having no mortgage but do you have any money to live on as well. My parents are a good example of this. They have used $200k to buy a stake in our house. With our money, and our mortgage plus their 200k, we bought 1 big house. They have the money to get rid of at least a huge chunk of our mortgage but they would have nothing to live on (as they have very little income).
Something else I did remember if you are buying now, the exchange rate is very poor (2.5 @ time of writing*), and in some cases it may actually be better to leave some money in the UK, pay an NZ mortgage and then bring the cash over when the rate improves. I can’t remember the numbers, but we worked out that if the exchange rate £-$ went up to 2.85, it would be worth us leaving money in the UK for up to 2 years.
* Oh for the days of an exchance rate of 2.5! Its 2.2 today – and thats up a bit.
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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Kiwis don’t know much about Finance. Who would have thought?
Filed under: Economics, General Budgeting, Property & General Investing, Retirement, Pensions and Kiwisaver
Today is apparently the start of Financial Awareness week. Being made aware of it before it happened might have been an idea – but better late than never. And shock, horror – there’s an article in the Dom Post today about how little Kiwi school children know about financial stuff.
A questionnaire commissioned by the Young Enterprise Trust and tackled by hundreds of secondary school students has provided a damning indictment of financial knowledge levels among New Zealand’s future workers.
Despite the survey being packed with basic themes like compound interest, income tax and GST, returned forms were littered with an alarming number of mistakes only half managed to register eight correct answers out of 40 questions.
Errm – did we need a survey to tell us this? How exactly were they supposed to know the answers about income tax and GST? Who the hell cares when they are at school? It’s just not relevant. Ok, Compound interest is – because it shows you that saving is good and debt is bad, and besides – it should be in the Maths curriculum anyway.
But knowing GST rates isn’t something a school kid really needs to understand. Learning how to handle money: save a bit, spend a bit and keep on eye on your finances – that’s what they need to learn.
It’s a bit worrying that only half managed to get 20% right. Statistically – if you guess at the answers (multi-choice out of 4 choices) everyone should have got 25% correct.
The questions that registered the highest number of incorrect answers centred on credit card interest, the types of investment that return the highest growth over time, and dollar cost averaging.
Now, credit card interest – yep – lets sit down and make sure every student leaves school knowing exactly how bad credit cards can be, and how they are seen as easy prey by the credit card companies once they leave school. This is in my opinion vitally important for them to grasp. And an understanding of investment returns is not a bad idea. I didn’t know what Dollar Cost Averaging was until about 4 years ago when I went to an investment seminar here in New Zealand. I had made use of it in the form of investing in an Endowment fund in the UK, but hadn’t got the foggiest idea that this is what I was doing – or why it was a good thing.
The article is actually rather good, and makes some good points about how we really need to start financial learning at school age. Unfortunately it finishes with whacking adult Kiwis over the head for insisting on investing in Property (which as you know is not actually the case at all). They seem to think we do it because we are too stupid to invest in shares, rather than because we are actually semi-intelligent and weighed up the risks and the benefits and worked out which was better for us. I know that’s what I did. But only after I had the basics sorted. Theres no point in learning about investing if every month you continue to spend more than you earn. Let’s teach people this first.
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How not to be a property developer.
I just can’t help it – but I’m watching old episodes of How to be a Property Developer on Living TV. How sad is that?
This UK based program follows 2 teams of budding property dealers who get given a rather lovely £300k to get started and have one year to make as much profit as they can out of doing up and reselling property. All under the watchful Gary McCausland – who has been doing this for years and runs his own successful property empire.
While one of the teams (The women 
) are doing really well, and have so far made over £60k profit, and churn out one good deal after another – it is just sheer agony to watch the blokes lose money on deal after deal.
I have made my family promise to shoot me if I start behaving in such a tosser-ish way as these two. I’m all for investing in property – I have three already and plan on buying many more, but for crying out loud – there is a hell of a lot of work to do. These guys seem to think it’s all about saying you want to make money and that’s it. And while I am the first to admit that I think one of the joys of the property business is sitting around drinking vast amounts of coffee – I also understand that this does not let you off the hours upon hours of trawling websites, dealing with agents, viewing anything from sheds to palaces, and getting to grips with making offers. And maybe getting your hands dirty with some hard labour now and then. One of the guys seems to stop at the coffee bit! The other one seems to dream a lot and talk about how it’s all a matter of getting this bit or that bit right – he just doesn’t seem to do much of it.
Something that does annoy me with the program, is that although the presenter does swoop in to offer his opinion – he doesn’t seem to be actually mentoring the teams, rather just telling them what they should do once they have bought the place. With the girls that works out OK, as they tend to do their homework before they buy. The guys team however just keep buying lemons, and they need to be taught how to spot one! What is worse –is that when the presenter does tell them what they should do with the property they just bought – the blokes completely ignore him, and the girls tend to at least listen and do as he suggests most of the time.
I’m pretty sure either of the two property mentors I have had, Trev and Steve, would have taken me aside and told me to stop being such a plonker before I actually paid money over for a property that was no good. (Steve has a more colourful turn of phrase – but gets the message across!). I thought it was especially important to get help from a mentor as I was a migrant and I needed help to really understand how the property market works over here. It is very different from the UK way of doing things, and when you are buying to invest rather than buying a house to live in it is even more vitally important to understand exactly what you will be dealing with. While there is certainly money to be made in property – if nothing else the guys team show that it is all to easy to lose a lot of money if you don’t understand what you are doing.
I dread to think what kind of mess we would be in if we had tried to go it alone and buy investment properties. As it is, one of ours isn’t doing too well, though the other two turned out to be really good buys. I read today on Property Talk that everyone buys a lemon from time to time, so it’s nice to know I got mine out the way early. Funnily enough, while there are people out there who will abuse the position of being a mentor, and persuade investors to art with cash for any deal, both Trev and Steve have actually advised me against buying many properties because they either knew something I didn’t, or just through sheer experience could tell me what was a bum deal. I actually listen when they tell me this!
Hopefully it won’t be too long before I can buy my next Investment Property.
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Watching the exchange rates like a hawk.
This is one of the many banes of the Migrant life: when to move your hard earned cash over to your new country. The exchange rate has a huge impact on your ability to start your new life comfortably – especially if you plan to buy a house. The difference between $2.50 and $3 per £1 is significant, and gets more so when you are looking at bringing the proceeds from a UK house sale over.
When we bought our house, the rate was sitting at 2.5 – 2.6 which had the effect of meaning we had to take out about $30,000 more on our mortgage that we would need to if the rate had been nearer $3.
We have recently sold some shares: some in £UK which are sitting in our UK bank account, and some in $US which we have as a cheque. Unfortunately, the rates for both currencies are in the floor again. On the plus side, we don’t have a deadline of a house purchase that we need the money for, so having cashed in the investments, we can afford to sit and wait a while and track the exchange rates.
I’ve learned over the past few years that it does no good to look back at your currency exchanges with a view to “if only I had waited a few more days I could have got more.” I think it is much more useful to track the rate on a daily basis when you have money to move, and work out before hand what rate you would be happy with. When the rate gets to that point – move the money and then STOP LOOKING AT THE RATES. It just does your head in otherwise.
I still use HiFX to do all my tracking and currency exchange as you just get more $$$ at the end of the day. Do remember though – you need to set up your account before you need it. It takes time to set up because they have to get ID confirmations, so don’t leave it till the last minute.
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