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  1. #41
    Join Date
    Mar 2007
    Location
    New Zealand
    Posts
    127

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    Beginner1, you have done remarkably well for a 20 something year old. It also sounds like the poison of monetary gain has not taken over your veins, as it often does to the young or people who suddenly have more money than they ever did. So congratulations on that!

    I agree with other advise here, your next challenge is to KEEP this wealth. Many have made a lot of money but not as many can keep it. Considering you already have significant assets already, your main goal should definitely be to get cashflow. Cashflow will help through the touch times, not your Net worth.

    Of course cashflow can be generated in all ways, so that would be something to think about. But I would suggest that you definitely look at cashflow before taking more debt, to avoid going down the same spiral that lots of people have gone down in the last downturn in 2008-2009 and previous ones. All the best and stay grounded

  2. #42
    Join Date
    Mar 2008
    Location
    Auckland Wide
    Posts
    1,244

    Default

    A million will feel like a hundred thousand in a couple of decades. Keep the debt well padded with passive cash flow to ride out the tides. The rents will also be subject to inflation.

  3. #43
    Join Date
    Sep 2014
    Location
    South Canterbury
    Posts
    513

    Default

    Quote Originally Posted by mortgage broker View Post
    A million will feel like a hundred thousand in a couple of decades. .
    Says the man whose job is to lumber the masses with debt so they can clip the ticket.

    The other way to look at it is that in 20 years $1m debt will still look like $1mill debt if the era of low inflation, or deflation holds as many are predicting. I really doubt the prices doubling every 7-10 years will continue, we are sailing into a new economic epoch thanks to GFC1 and we are simply awaiting the tsunami that will be GFC2- will it be 12, 24, or 36 months away? When (not if) it hits NZ won't be immune this time so my advice is to not get any further into debt that you are comfortable with.

    There is an old addage in property investing that came true for many in 2007/08- speed kills!


    Craig

  4. #44

    Default

    Well since the RBNZ has a mandate to keep inflation going I'll assume they do whatever it takes to hit the mid price of that band, so 2%. Also increased rent costs from the property boom I expect will filter down into costs for other items.

    At 2% over 20 years 1 mil will feel like 670k odd.

    As many say it's a risky proposition to rely on inflation to bail you out. Like growth it's something that will probably happen and is really nice if you've got strong cashflow but if you're paying out of pocket waiting for it can be stressful.

  5. #45
    Join Date
    Mar 2015
    Location
    Brisbane Wellington Auckland
    Posts
    829

    Default

    Quote Originally Posted by Nick G View Post
    Well since the RBNZ has a mandate to keep inflation going I'll assume they do whatever it takes to hit the mid price of that band, so 2%. Also increased rent costs from the property boom I expect will filter down into costs for other items.

    At 2% over 20 years 1 mil will feel like 670k odd.

    As many say it's a risky proposition to rely on inflation to bail you out. Like growth it's something that will probably happen and is really nice if you've got strong cashflow but if you're paying out of pocket waiting for it can be stressful.
    Hi Nick
    Yes I quite agree ...I feel we will be in for a long period of low inflation.
    Relying on CG I believe is not only risky but will be also upsetting when you have a cf- investment (after compulsory principal ) and a few years of limited CG.


 

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