# getting ahead was easy with property, how to stay ahead?



## pernickety (12 Oct 2006)

Most of us on this board are probably feeling lucky if we invested in a property/ies anytime before this autumn. All of us in that category have "built up equity" and feel rich. Some have decided the time is right to get out and bank the profits, I being one of them.

Apart from this generation, have any previous generation in Ireland had it so easy? I worked hard, took a year out here and there, worked not-so-hard, another bit of dossing, and worked quite hard in the years when I decided to buy my home. Decided to move to France 2 years ago but kept property and sold this Spring. Boy do I feel lucky!

So, I have loads of money in the bank, own a house here with mortgage paid, have no debts. I can afford to stay at home with 3 small kids while hubby earns a "good" salary (not close to Dublin salary but pays for a great lifestyle etc)

So my question is "how can I stay ahead?" Obviously I intend to invest my money in the best way possible, not sure exactly how, might buy a property here and shares, and keep an "education and holiday fund" in a high interest account.

Answering my own question I intend to try to live off our income rather than our lump sum, always having the back-up if necessary, never having to consider money when deciding on holiday, education, to buy a CD or not etc etc

Just wondering if anyone else lives like that? Or would you just call me Scrooge?!!


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## Sidewinder (12 Oct 2006)

Well, with the global financial system extremely unstable right now it's almost impossible to guess what a good investment opportunity might be. In the short term anyway. If you have a large lump sum, I'd suspect if you took long positions in gold and commodities (oil and sugar seems like a nice potential double-win over the next 5-10 years), defensive stocks and fixed-income securities you should do fine. Global property and many stocks look wildly overvalued at the moment.


All IMNSHO, YMMV, etc.


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## whathome (12 Oct 2006)

Sidewinder said:


> Well, with the global financial system extremely unstable right now


 
I don't buy that


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## walk2dewater (12 Oct 2006)

I've decided that the best thing I can do is to NOT lose money. Or more precisely, not lose more than the average, that way I (rather perversely) stay ahead.

Generally speaking, I like gold (physical and shares), I like dividend paying Canadian oils sands income trusts, I like healthcare/pharma shares, but above all I like C-A-S-H. That's cold hard moula on deposit in C$, €, CHF.

My theory (currently half baked) is that all assets are fully valued and then some; property, bonds, shares, antiques, you name it. The ocean of liquidity pumped out by western central banks post 9/11 has settled into all corners and "value" as we've historically identified it is now merely relative rather than absolute. As this pool of 'money' is drained we're going to see bubbles pop (deflation) and new ones expand (inflation), with the overall effect being a general dis-inflation. E.g. US housing market pops and suddenly my healthcare/pharma shares, unloved for years, are this months market darlings. Who knew?

I have a feeling that hard work, thrift and saving, the activities that generated the Western worlds wealth in the first place, will once again become the preferred "way to get ahead".


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## ClubMan (12 Oct 2006)

walk2dewater said:


> My theory (currently half baked) is that all assets are fully valued and then some


What *precisely *does this mean? When it comes to equities an efficient market should indeed mean that shares are at the correct value at that point in time but circumstances change and so do share values. Other markets may be less efficient but the same principle applies. It's facile to assume that all markets/assets have reached some sort of stasis requiring some sort of investment paradigm shift if that's what you are implying. By the way your affection for cash is a bit at odds with your affection for other relatively volatile assets!


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## walk2dewater (13 Oct 2006)

Bottom line:  I can't find anything REALLY good to invest in.  Ergo, cash.


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## baby_tooth (13 Oct 2006)

get out of property in ireland, dubai, spain, portugal, eastern europe. germany and italy half decent. scandavian countries not too bad, no cap apprec but decent yield and good rental system.

fixed income is undervalued....good value there as equities will bottom out, esp any linked to usd.

government bonds,
also looking to go short on the dollar....
oil is good, esp as its priced in dollar, when dollar falls nominal price will go up on this. should be an fx opportunity here as don't see dollar dropping by same amt to the euro.

gold over priced and not great returns at moment...

environmental stocks and alternative energy stocks good for a punt.

short american car manufacturers could be worth a punt.


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## walk2dewater (13 Oct 2006)

baby_tooth said:


> get out of property in ireland, dubai, spain, portugal, eastern europe. germany and italy half decent. scandavian countries not too bad, no cap apprec but decent yield and good rental system.
> 
> fixed income is undervalued....good value there as equities will bottom out, esp any linked to usd.
> 
> ...


 
BT you make good points, but shorting anything is hard work, and it’s 99% timing.

I've been investing successfully for years.  Like, 20 years.  I have no need for financial advisors or the (insidious) financial industry, except for tax and legal advice.  I’ve dabbled in every conceivable asset type imaginable.  You name it and I’ve either taken a punt or had a seriously hard look at it before declining.  If I'm honest, with the exception of last 2yrs, I've probably grown my net worth 10-15% p.a. through investing alone.  And yes I too have made money in property (but not a massive double or triple like people here).  In recent years my investing returns have exceeded my returns from working.  The last 2yrs my returns have been outrageously good.  Last 3mths not so good.

*That’s my context.*

Right now I am really really flumoxed as to where to invest, i.e. where to put my pile to make a bigger pile.  And I know from talking to my peers in same situation that they feel the same way.  CASH is my largest % holding right now.


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## room305 (13 Oct 2006)

baby_tooth said:


> get out of property in ireland, dubai, spain, portugal, eastern europe. germany and italy half decent. scandavian countries not too bad, no cap apprec but decent yield and good rental system.



Agreed. Anywhere yield is good is a good place to invest now - before the global hunt for yield begins after the liquidity party ends. I see German property as a possible good investment but I'm not the only person who thinks this. Perhaps in a global property downturn, even better property investment opportunities will present themselves, as it is hard to imagine any country going unscathed.



baby_tooth said:


> fixed income is undervalued....good value there as equities will bottom out, esp any linked to usd.



... though the time to buy is probably not now.



baby_tooth said:


> government bonds,
> also looking to go short on the dollar....
> oil is good, esp as its priced in dollar, when dollar falls nominal price will go up on this. should be an fx opportunity here as don't see dollar dropping by same amt to the euro.



Averaging into crude now is probably not a bad idea. If OPEC have said $60 is the price they are happy with then any falls below this will probably be temporary be the upside potential is massive should there be any problems on the supply-side.



baby_tooth said:


> gold over priced and not great returns at moment...



On what basis is it overpriced?



baby_tooth said:


> environmental stocks and alternative energy stocks good for a punt.



Agreed but I wouldn't put too much money in. Potential returns are huge but there is something very dotcom about the whole alternative energy arena.



baby_tooth said:


> short american car manufacturers could be worth a punt.



The American car industry is assuredly doomed, especially a certain large Detroit car manufacturer. If the industry is not killed by high oil prices it will be killed by a credit crunch, but as w2dw pointed out - shorting is 99.9% timing.

My portfolio for the coming months and years is 50% cash, 20% gold, 20% soft commodities and 10% silver.


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## baby_tooth (13 Oct 2006)

don't get me wrong, i'm not questioning anyones opinion on this, you both know what your at and it's not for me to blow wind up anyones £$%^.

personally:
305: i think gold is overpriced, in what context you may ask, it's a hard one to call, it yo-yo's alot and is a tricky play. but it derives no earnings from your capital, it just sits there being itself....it has it's plus points but i'm not currently sure if these outweigh my other concerns on it.

shorting has a large element of timing, but one can use various instruments to make this a long play, 

oil, safe bet, as is gas, we are going to need more and more of it...

asian manufacturers, health care and pharmas worth looking into, resource/exploration companies worth a small %.

defensive contracts/co: might also be worth looking at.

like yourself i hold, at the moment cash and fixed income all in eur area currencies, shorted out of oil over last month and not going back into it just right now, did the same with gold.

looking (company names removed-note our Posting Guideline), others with infrastructure standings. also considering maybe mid term carry trades in usd to buy eur stock/f.inc

have been looking for some alternative investments for alpha moves but slow long process.

but overall agree that cash is the main move at the moment.

or might just put it all under the bed in my rented house!


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## baby_tooth (13 Oct 2006)

walk2dewater said:


> BT you make good points, but shorting anything is hard work, and it’s 99% timing.
> 
> I've been investing successfully for years. Like, 20 years. I have no need for financial advisors or the (insidious) financial industry, except for tax and legal advice. .


 

runnig joke that has alot of truth...

watch certain traders and if the short, go long, if they go long get the hell out.

one of my mates sticks to this and does suprisingly well...

can't say here what tradeing co: to watch...but reckon ya have a fair idea.


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## room305 (13 Oct 2006)

baby_tooth said:


> personally:
> 305: i think gold is overpriced, in what context you may ask, it's a hard one to call, it yo-yo's alot and is a tricky play. but it derives no earnings from your capital, it just sits there being itself....it has it's plus points but i'm not currently sure if these outweigh my other concerns on it.


 
Gold is a currency even if currently it is being viewed as a commodity. Why tie yourself up in knots trying to short the dollar in the long term when you can buy and hold gold for the same play?


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## baby_tooth (13 Oct 2006)

room305 said:


> Gold is a currency even if currently it is being viewed as a commodity. Why tie yourself up in knots trying to short the dollar in the long term when you can buy and hold gold for the same play?


 

ya can get greater leverage and hence upscale playing two currencies, thats one off the other.

with gold, it moves relative to all currencies and there is alot more variable at plays, like central bank holdings, velocity of money, regulation, holding costs, trans costs etc...

not sure if i'm following/seeign what your saying?


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## room305 (13 Oct 2006)

baby_tooth said:


> not sure if i'm following/seeign what your saying?



You think the dollar is going to weaken relative to all other currencies. I agree. So how do you play this as an investment? Your options are:

1) Buy and hold the currency you think will appreciate most against the dollar
2) Trade the fx markets

For option 2 you need astute timing. For option 1 you tie up capital that is perhaps better served being placed elsewhere.

I'm picking option 1.


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## futisle (13 Oct 2006)

> fixed income is undervalued....



What do youmean by fixed income?



> My portfolio for the coming months and years is 50% cash, 20% gold, 20% soft commodities and 10% silver.



Do you see no place for shares? not questioning your methods but I'm not so knowledgible on these things (as my 1st question may suggest) and I'm always hearing how the stock market outperforms every other asset class over time. I'm sure you've heard this too, is it that you think shares are overvalued right now??

Thanks


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## joe sod (13 Oct 2006)

walk2dewater said:


> I've decided that the best thing I can do is to NOT lose money. Or more precisely, not lose more than the average, that way I (rather perversely) stay ahead.
> 
> Generally speaking, I like gold (physical and shares), I like dividend paying Canadian oils sands income trusts, I like healthcare/pharma shares, but above all I like C-A-S-H. That's cold hard moula on deposit in C$, €, CHF.
> 
> ...


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## room305 (13 Oct 2006)

futisle said:


> Do you see no place for shares? not questioning your methods but I'm not so knowledgible on these things (as my 1st question may suggest) and I'm always hearing how the stock market outperforms every other asset class over time. I'm sure you've heard this too, is it that you think shares are overvalued right now??



Long term, shares will always win (if you re-invest dividend) because a good company will deliver for shareholders irrespective of the economic climate. At the moment though, stocks seem to be inflated with too much liquidity sloshing around the globe and looking for somewhere to rest, pushing up prices. Previously it was housing and commodities, now it seems to be large cap stocks. I'm only guessing but most of this money seems to be invested with the expectation of further capital appreciation rather than any long term faith in the companies in which the money is being invested.

A mix of commodities and cash is essentially me trying to hedge my bets on the economic outlook - deflation or stagflation. I lean towards stagflation (rising inflation with low economic growth) simply because real interest rates have been negative for an incredibly long time and economic growth in the US is slowing as American consumers find themselves unable to take on any more debt. Coupled with little prospect of wages rising in real terms over the next few years, they will be forced to cut back on spending dramatically to service that debt.


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## tyoung (13 Oct 2006)

Avoid property. Avoid bonds. Both all risk no reward.
 large cap blue chip stocks reasonable. Divesify out of Ireland. Too dependent on property market. Modest overweight Asia/Japan.
 I don't own gold silver or any commodities but I am interested in oil. The projected supply/demand Nos  suggest higher prices ahead. I would buy the oil majors. 
 I'm very bearish on the dollar longterm But I think the main beneficiaries will be Asian currencies which will add a tailwind to their stockmarkets.
 The pound is also way overvalued.
 The major bet is whether we have a global recession(hard landing) versus a slowdown(soft landing) and how the US imbalances get unwound(if they get unwound at all)
 I don't know the answer but a mainly  large cap stocks with  an modest overweight in  energy and Asia with a decent dollop of cash offers a reasonable balance.
 If we did get a selloff I'd be looking to buy stocks.
Regards


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## joe sod (14 Oct 2006)

room305 said:


> Long term, shares will always win (if you re-invest dividend) because a good company will deliver for shareholders irrespective of the economic climate. At the moment though, stocks seem to be inflated with too much liquidity sloshing around the globe and looking for somewhere to rest, pushing up prices. Previously it was housing and commodities, now it seems to be large cap stocks. I'm only guessing but most of this money seems to be invested with the expectation of further capital appreciation rather than any long term faith in the companies in which the money is being invested.
> 
> A mix of commodities and cash is essentially me trying to hedge my bets on the economic outlook - deflation or stagflation. I lean towards stagflation (rising inflation with low economic growth) simply because real interest rates have been negative for an incredibly long time and economic growth in the US is slowing as American consumers find themselves unable to take on any more debt. Coupled with little prospect of wages rising in real terms over the next few years, they will be forced to cut back on spending dramatically to service that debt.


 
I agree with you on this one I believe high levels of inflation is what we are going to get. Inflation is less bad than deflation to over borrowed western countries. Deflation would cripple America and would result in a rapid swing in power and wealth towards Asia. This is because with deflation the huge savings in asia would be rising in value and the debts owed to them would also be rising. Therefore if there is the slightest hint of deflation then the Fed will ease off on interest rates. However this will not result in investors rushing back into property. I believe the high inflation rates will reduce the real debt load over time but also the real value of property because I believe that inflation will be much higher than interest rates or property. I think the property all over the world will resemble Japans bear market of the last 15 years and the bear market in gold and commodities which lasted 20 years. Therefore I think the winners with high inflation will be gold and commodities and the housing bubble will take 20 years to unwind. I think it will be much worse than what happened in britain in the 1980s because this is a global bubble not a local one.


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## markowitzman (14 Oct 2006)

asset allocate and rebalance and hold for long term..........the same old boring stuff.........going into cash is not for me.....too much risk of missing further growth.
property.....demographics is destiny in the long term.


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## Dipole (14 Oct 2006)

Sorry, I did a quick keyword search of this thread and couldn't find a mention of pension.
Taking an example of someone selling up. Mid forties, mortgage of 200,000 outstanding on a house they just got 450000 for. They're paying income tax at the higher rate.
The first obvious place to invest is in your pension up to the max tax free cut-off point.  25% when you are in your forties.
I assume people bought their investment properties as their pension(early or not). So...... wouldn't it be best to maximise your pension contributions even if it means dipping in to your lump sum for day to day living expenses and try to funnel as much of the income in to a pension for the next few years and just keep it on deposit in the meantime.

I'll assume these people are busy living their lives and don't have time to actively manage an investment so a pension really seems to be a good place to invest.
Also they're selling up on the assumption the market has topped and may drop so how many good investments will be left locally?


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## walk2dewater (14 Oct 2006)

Dipole said:


> Sorry, I did a quick keyword search of this thread and couldn't find a mention of pension.
> Taking an example of someone selling up. Mid forties, mortgage of 200,000 outstanding on a house they just got 450000 for. They're paying income tax at the higher rate.
> The first obvious place to invest is in your pension up to the max tax free cut-off point. 25% when you are in your forties.
> I assume people bought their investment properties as their pension(early or not). So...... wouldn't it be best to maximise your pension contributions even if it means dipping in to your lump sum for day to day living expenses and try to funnel as much of the income in to a pension for the next few years and just keep it on deposit in the meantime.
> ...


 
Me confused.  Whats the difference between a 'pension' and pile of assets giving off cashflow?  Are you talking about an Irish PRSA?


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## walk2dewater (14 Oct 2006)

joe sod said:


> I agree with you on this one I believe high levels of inflation is what we are going to get. Inflation is less bad than deflation to over borrowed western countries. Deflation would cripple America and would result in a rapid swing in power and wealth towards Asia. This is because with deflation the huge savings in asia would be rising in value and the debts owed to them would also be rising. Therefore if there is the slightest hint of deflation then the Fed will ease off on interest rates. However this will not result in investors rushing back into property. I believe the high inflation rates will reduce the real debt load over time but also the real value of property because I believe that inflation will be much higher than interest rates or property. I think the property all over the world will resemble Japans bear market of the last 15 years and the bear market in gold and commodities which lasted 20 years. Therefore I think the winners with high inflation will be gold and commodities and the housing bubble will take 20 years to unwind. I think it will be much worse than what happened in britain in the 1980s because this is a global bubble not a local one.


 
Bingo.  This is also line with my view....


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## Dipole (14 Oct 2006)

walk2dewater said:


> Me confused. Whats the difference between a 'pension' and pile of assets giving off cashflow? Are you talking about an Irish PRSA?


No mention of PRSA either up until now.

No cash coming out of a pension in the near future but most people aren't looking for a big pile of cash(at least that's my experience of the people I know), if they are already comfortable they are just looking for security, an earlier retirement and the potential to pass on the money they put in to their pension to their children which depending on what they decide to do with the pension fund on maturity is quite possible.


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## room305 (14 Oct 2006)

Dipole said:


> No mention of PRSA either up until now.



I think w2dw's point was "what is a pension"? When you say you are investing in a pension you mean you are giving the money to a pension fund manager to invest in an asset class (or in several) on your behalf. This may be more tax efficient than investing yourself but that is a side issue. It still doesn't answer the question of in what asset classes should that money ultimately reside.


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## Dipole (15 Oct 2006)

room305 said:


> I think w2dw's point was "what is a pension"? When you say you are investing in a pension you mean you are giving the money to a pension fund manager to invest in an asset class (or in several) on your behalf. This may be more tax efficient than investing yourself but that is a side issue. It still doesn't answer the question of in what asset classes should that money ultimately reside.



OK. point taken but with the tax relief on pensions it's hard to find investments that perform as well and that's my main point; it's at that point that most people would stop considering actively investing and start concentrating on the merits of individual pension plans.


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## ucancoco (15 Oct 2006)

Did selling property in france hit you in the pocket tax wise as i too have a property over there??


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## room305 (15 Oct 2006)

ucancoco said:


> Did selling property in france hit you in the pocket tax wise as i too have a property over there??



You bought property in a country without checking out the tax implications of selling?


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