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Here is an article that may help a little:
Investing Made Simple
Content supplied by Sorted.org.nz | Thursday, 26 April 2007
Investing might seem like it's only for rich people, but it's really just a flash word for what to do with your savings to make your money grow. This could be anything from putting it in a bank account, to buying shares or joining a workplace retirement savings scheme.
If you're thinking about investing, it's important to understand some basic principles, so you can make sure the investments you choose are right for you. Some investments earn more than others. Some are riskier than others. Some are good for long term savings but aren't so good if you're saving for short term goals, like an overseas trip or a deposit on your first home.
Good investors also don't put all their eggs in one basket. They develop a diversified portfolio of investments. This means they have investments which are spread across the four main "asset types":
Short term deposits - savings accounts, term deposits etc. often called "cash".
Bonds - you lend a government or company some money and they promise to repay it after a certain time, at a certain interest rate.
Property - for many people, their home is their biggest investment but "property" can include rentals, a bach or commercial property.
Shares - essentially you buy a small stake in a company and may be entitled to receive regular dividends.
There are two main ways of getting into these investments. You can take the 'DIY' route and invest directly, by choosing and buying the investments yourself. Or, you can invest in a managed fund where you pay fund managers to invest your money for you.
So, how do you decide what type of investment to go for? Try following these four steps:
Step one
Work out your "investment profile" what you want out of your investment and how much risk you feel comfortable with.
Step two
Find the types of products or schemes that suit your profile.
Step three
Get good quality financial advice or information. You can get investment advice at financial institutions like banks, or brokers, or from an independent adviser.
Step four
Compare products, then make your choice.
The Investing section of the Retirement Commission's free and independent website Sorted.org.nz has tools and information to help you through this process. Sorted is packed with helpful information, tools and calculators to help you manage your personal finances.
I would suggest that you avoid any PI software at this stage. It is much more important that you get at least a basic understanding of how a rental business works from a broad overview sense. The detail is of secondary importance at this stage. A good book and reading this site will help enormously in this.
Even when you have an understanding of the way it all works you will need nothing more than a pen and paper, a calculator and a competant knowledge of maths. A computer with a simple package (eg m/s office' will give you all the formulas and spreadsheets you will ever need.
Those analysis programs can blind you with unnecessary detail and stop you from taking an overview of what is happening.
CJ, any techie worth his salt would make it look LOADS more complex than that. Double indirection, pointers, multi-threading & cache handling should feature strongly if you want to impress the punter. Or at least, make it look like you know what you're doing.
CJ, any techie worth his salt would make it look LOADS more complex than that. Double indirection, pointers, multi-threading & cache handling should feature strongly if you want to impress the punter. Or at least, make it look like you know what you're doing.
I have my own spreadsheet which works pretty well. If I wanted to market it, all I would need to do is add some awful colour, a few graphs and it would be pretty much the same as what others offer.
In the end though, a quick yeild calc as shown above (which can be done in your head) is all you need to get a first impression.
...I would suggest that you avoid any PI software at this stage. It is much more important that you get at least a basic understanding of how a rental business works from a broad overview sense...
I disagree with the first statement, but obviously agree with the good common sense in the latter.
It wasn't till I got RevIQ (no financial affiliation or connection whatsoever) that I finally figured out the myth of negative cashflow on tax. It was the only source that told me that when I paid $2,000/yr in pretax negative cashflow, I would get a tax refund at the end of the year of $2,000.
Myth busted.
Obviously this was on my sums and circumstances, but it was the revelation that turned my investment thinking around. Yet no-one else had been able to tell me, on this forum, or from the large number of books I've read over the years.
I believe profitable property investment is not as simple as many people make out. And this is obvious from the 80% I'm told who barely scratch by... except for exceptional times as has just passed. I would never figured this out without this program.
Hiya,
I've spent a fair bit of time this morning searching for an old spreadsheet that Pitt St posted a while back. (Found it, eventually.)
While doing this, I was thinking it might be a good idea to have a 'sticky' thread with all of the spreadsheets that people have contributed to the...
"There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx
I disagree with the first statement, but obviously agree with the good common sense in the latter.
It wasn't till I got RevIQ (no financial affiliation or connection whatsoever) that I finally figured out the myth of negative cashflow on tax. It was the only source that told me that when I paid $2,000/yr in pretax negative cashflow, I would get a tax refund at the end of the year of $2,000.
Myth busted.
Obviously this was on my sums and circumstances, but it was the revelation that turned my investment thinking around. Yet no-one else had been able to tell me, on this forum, or from the large number of books I've read over the years.
I believe profitable property investment is not as simple as many people make out. And this is obvious from the 80% I'm told who barely scratch by... except for exceptional times as has just passed. I would never figured this out without this program.
Hello kevinR,
I'm glad you now understand what negative cash flow means. However there never is or was any mystery or myth to it, just some pretty basic understanding of maths. A doodle on a scrap of paper could explain it just as well as an elaborate piece of software.
I fail to see how nobody on this forum was unable to explain what it meant while this computer software could.
Of course investing in property is not as easy as some people think. One of the major difficulties faced by many newcomers is realising that it is really little more than hard work and common sense and that all these seminar people with all their spreadsheets, software and manure tarted up to look like Christmas cake mix really are nothing but an obstacle to overcome on the road to successful investing.
I'm glad you now understand what negative cash flow means...I fail to see how nobody on this forum was unable to explain what it meant while this computer software could....
I have read many book examples by promoters of this strategy on how negative cash flow is meant to reduce taxes. Yet I could never make the sums work in real life.
I'm not alone. Even our friends at the Infernal Revenue are similarly blessed with this lack of comprehension. I recall recently (though not the exact wording), an IR rep quoted in the New Zealand Herald talking about high income earners buying negatively cashflowed IP to reduce their income tax.
I was almost about to ring them and ask how, since I couldn't find the answer elsewhere. But something stopped me...
I'm not alone. Even our friends at the Infernal Revenue are similarly blessed with this lack of comprehension.
Your not exactly rating yourself up with rocket scientists. thought it does beg teh question, if they aren't hired for their tax knowldege, what are they hired for?
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