Money

[Walsingham]

In other words we are back to coke and hookers.

 

It always comes back to coke and hookers.

 

I'm against the coke. Unless it was coca cola syrup. And hookers.

[Humodour]

Just because something happened before is no guarantee it'll happen again.

 

Actually, Australia's currency cycles are extremely predictable since our dollar follows the direction of commodities, especially gold and oil.

 

Although this recession has shone a global light on Australia's financial stability (especially in contrast with America and Britain's lack of the same), so the AUD might never be as volatile as it used to be. But it will certainly still fall against the majors again in (probably in 1.5 years).

[Wrath of Dagon]

I don't know about gold, that probably depends on how much of a mess US becomes, but I expect oil to stay up, as China and India have been ramping up consumption.

[Walsingham]

Does investing in hookers count as investment? Surely hookers are a guilt

 

 

*tumbleweed*

[Guard Dog]

On a serious note, Krezack are you familiar with an investment strategy called bottom feeding? The idea is to look for a penny stock (that is a stock whose common share is less than $1 US) that is a little volitile over a three to six month term. If it is bouncing in a somewhat predictable way you put in a buy and sell order at the same time. For example if GD Enterprises has a stock price of $0.75 and during the last six months the price has been below $0.60 and above $0.80 more than once or twice you put in a buy order at $0.60 and a sell order at $0.80. To make this work you need to go big, $10k-$15k. Once the sale triggers you have a positive return of $0.20 per share This is usually best accomplished with penny stocks because they are more volitile and will swing more and you can afford to buy bulk. A $0.20 swing when you own five hundred shares is beneath notice, a $0.20 swing when you own 7500 shares is a happy moment.

 

I have used this in the past and was able to rack up a small but nice sum of cash from time to time. I paid for a tile floor in my first house this way. But it is not for the faint of heart because these companies stocks are low because their worth/performance/stability are low. And you need to do extensive reseatch or you'd be better off with the coke and hookers.

[Hiro Protagonist]

^ My girlfriend does that as well. She'll looks at shares around the 50 to 80 cent mark and do exactly what you've said, put a buy and sell price in at the same time. With some online share companies, they don't take your money for up to three days, so you can buy shares for 60 cents one day and sell them 2 days later for 80 cents and you've made money from nothing, up to thousands, even tens of tousands of dollars. Very risky through and I wouldn't recommend trying to make money through the buy/sell three day no money option. You would only do it if you had a reaonably good idea the price would go up and there are some easy indicators to see if shares are going to go up. eg. Interest rates go up = Shares will usually go up (it can depend on the circumstanes). When the Reserve bank put interest rates up not long ago, the share market took off for a couple of days. It's all risk (I call it gambling) and how much you want to stick your neck out. Some people make money, others can crash and burn.

 

You also have to know when to pull out if your shares are crashing and you have to be brave. When Rio Tinto was over $100 and went down to $75, the girlfriend bought in and the shares kept going down. Realising her mistake, she sold at $60 and waited for the bottom and bought back in at $30 and made up the loss when the shares went back up to about $70 and sold again. Rio is at the moment $67. If she didn't sell at $60, then would still be waiting for those shares to hit $75 to get her money back.

Edited October 23, 2009 by Hiro Protagonist

[Enoch]

With a 5-10 year time horizon, I'd advise to minimize the portion of the funds that go into equities. Currency markets, too. People who have put far more research and work than you ever will into trying to predict trends, time market cycles, and the like have, do, and will continue to lose their shirts on this kind of stuff every day. Unless this is really a luxury windfall that you wouldn't particularly mind losing a good hunk of, I'd put the bulk of it into something with a guarantee of your principal from a reliable source. If your anticipated draw-down of the funds is 20+ years out, a more stocks-heavy portfolio makes more sense. But I still wouldn't do so with more than 60% of the corpus, and I'd do my best to diversify it across lots and lots of companies, countries, and industries.

 

And keep an eye on the two things that most retail investors don't pay enough attention to: fees and taxes.

 

With regard to fees, be a skeptic-- assume that professional fund managers are all tossers who have lucked into market-beating returns in the past and have no greater-than-average likelihood of doing so in the future. Thus, target funds (like the S&P 500, or whatever the Aussie or international equivalents are) that are simply automatic indices of equities, rather than ones that have fancy investment bankers managing which investments to buy and sell. With such funds, you may not know whether the market is going to go up and down, but you do know that a certain percentage of your returns aren't going to buy some fund manager a new Lexus every year. Be very wary of financial advisers who try to push you into high-cost managed funds-- kickbacks of fees are not uncommon. And avoid making frequent trades-- most brokerage houses take a cut on every transaction.

 

The one expert I would advise consulting with is a tax adviser (a tax accountant or the like). It's easy enough to set up a low-cost investment account on your own and buy some low-fee broad-market indices-- you can do that by yourself and be no worse off than with a high cost broker or financial adviser (so long as you're not picking your own individual equities). But before you do so, talk to a tax expert, tell him/her when you want the money and what for, and he/she should have advise on what sorts of accounts to set up, and how to minimize the portion of your gain that the taxman takes. (e.g., in the States, there are tax-sheltered accounts that one can set up for educational expenses, first-time homebuying, and retirement)

Edited October 23, 2009 by Enoch

[I want teh kotor 3]

Buy shares of Apple or Google.

[theslug]

You know I've been meaning to ask this question for a long time but how are you so smart enoch? Where do I acquire these vast knowledges from?

[Humodour]

With a 5-10 year time horizon, I'd advise to minimize the portion of the funds that go into equities. Currency markets, too. People who have put far more research and work than you ever will into trying to predict trends, time market cycles, and the like have, do, and will continue to lose their shirts on this kind of stuff every day.

 

Certainly I'm no expert and I am aware of that, but AUD has been an especially cyclical currency with predictable movements in the 36 years since it was first floated: http://www.rba.gov.au/marketoperations/int...a_role_fxm.html

 

Hovering around an average of 0.6 to 0.7 USD over that 36 year period, it's current highs (and predicted record-breaking future highs over the next year) against the Euro, Pound, Yen, and USD are extreme anomalies. The chance of the AUD staying above parity permanently with the USD for example is so minimal to economists at the moment (in fact none of them have even suggested it is possible) that I think buying one of the majors when the AUD begins to fall from its high poses an acceptable risk.

 

You probably think that's ****y. So does my mum.

 

Unless this is really a luxury windfall that you wouldn't particularly mind losing a good hunk of, I'd put the bulk of it into something with a guarantee of your principal from a reliable source. If your anticipated draw-down of the funds is 20+ years out, a more stocks-heavy portfolio makes more sense. But I still wouldn't do so with more than 60% of the corpus, and I'd do my best to diversify it across lots and lots of companies, countries, and industries.

 

I was thinking of playing around with $5K to $10K or so, get a feel for things like currency markets, and then maybe going higher if I don't mess up. Even then, I only plan to do that over the next 1 or 2 years, and then invest in long-term, lower-risk things like bluechip shares on the ASX or such.

 

And keep an eye on the two things that most retail investors don't pay enough attention to: fees and taxes.

 

With regard to fees, be a skeptic-- assume that professional fund managers are all tossers who have lucked into market-beating returns in the past and have no greater-than-average likelihood of doing so in the future. Thus, target funds (like the S&P 500, or whatever the Aussie or international equivalents are) that are simply automatic indices of equities, rather than ones that have fancy investment bankers managing which investments to buy and sell. With such funds, you may not know whether the market is going to go up and down, but you do know that a certain percentage of your returns aren't going to buy some fund manager a new Lexus every year. Be very wary of financial advisers who try to push you into high-cost managed funds-- kickbacks of fees are not uncommon. And avoid making frequent trades-- most brokerage houses take a cut on every transaction.

 

Does fund manager = financial adviser?

 

The one expert I would advise consulting with is a tax adviser (a tax accountant or the like). It's easy enough to set up a low-cost investment account on your own and buy some low-fee broad-market indices-- you can do that by yourself and be no worse off than with a high cost broker or financial adviser (so long as you're not picking your own individual equities). But before you do so, talk to a tax expert, tell him/her when you want the money and what for, and he/she should have advise on what sorts of accounts to set up, and how to minimize the portion of your gain that the taxman takes. (e.g., in the States, there are tax-sheltered accounts that one can set up for educational expenses, first-time homebuying, and retirement)

 

Tax adviser as in accountant? I need to discuss my income tax with one anyway for various reasons so all the better. If not an accountant, where would I find a tax adviser?

 

Anyway, cheers for your intelligent replies Guard Dog, Hiro and Enoch. Plenty to think about. I've booked with a financial adviser for next Friday (first hit is free).

[Humodour]

You know I've been meaning to ask this question for a long time but how are you so smart enoch? Where do I acquire these vast knowledges from?

 

I imagine it's in the same manner that your average computer programmer knows lots about maths, computers and networks like the back of his hand: he likes what he does, and/or he did a degree in it or worked in that field for many years.

 

If I'm not mistaken Enoch is a public servant, so he'd be dealing with things like tax, law, politics, foreign relations, economics on a daily basis and these are also likely areas that interest him in his idle time.

 

Not to belittle his intelligence, just that he is probably very active in the areas he draws his knowledge from.

[theslug]

You know I've been meaning to ask this question for a long time but how are you so smart enoch? Where do I acquire these vast knowledges from?

 

I imagine it's in the same manner that your average computer programmer knows lots about maths, computers and networks like the back of his hand: he likes what he does, and/or he did a degree in it or worked in that field for many years.

 

If I'm not mistaken Enoch is a public servant, so he'd be dealing with things like tax, law, politics, foreign relations, economics on a daily basis and these are also likely areas that interest him in his idle time.

 

Not to belittle his intelligence, just that he is probably very active in the areas he draws his knowledge from.

Not to belittle your intelligence but you're wrong, there must be a logical explanation behind this. My theories are some sort of magic and/or tomfoolery, in which case we are all ****** because a monkey's paw revenge is like the scorn of a wild mountain cat that has tasted flesh and comes upon you in the night while your in your sleeping bag, asleep, defenseless, and likely with an erection.

 

btw thanks for starting this thread krezack, I too made a post somewhat similar to this many moons ago however from what I recall I got pretty crappy responses and ended up going into the market, scared and alone. However, I did come out of it relatively unscathed, at least financially that is. I'm pretty sure in the future I will stick to just simple ETF's, mutual funds and, if I can get my hands on some, bonds. I kind of like the idea of getting a little check in the mail semiannually for not doing a whole lot.

 

Also if you do happen to invest in market and come out with a net loss (capital losses are greater than capital gains), you can deduct up to $3,000 annually of capital loss from ordinary income and any excess can be carried into the next tax year where again you can deduct up to $3,000.

Just a friendly neighborhood tip from your local tax accountant in training slug.

Though really I doubt I will go into tax. It's pretty hardcore stuff.

Edited October 23, 2009 by theslug

[Humodour]

You know I've been meaning to ask this question for a long time but how are you so smart enoch? Where do I acquire these vast knowledges from?

 

I imagine it's in the same manner that your average computer programmer knows lots about maths, computers and networks like the back of his hand: he likes what he does, and/or he did a degree in it or worked in that field for many years.

 

If I'm not mistaken Enoch is a public servant, so he'd be dealing with things like tax, law, politics, foreign relations, economics on a daily basis and these are also likely areas that interest him in his idle time.

 

Not to belittle his intelligence, just that he is probably very active in the areas he draws his knowledge from.

Not to belittle your intelligence but you're wrong, there must be a logical explanation behind this. My theories are some sort of magic and/or tomfoolery, in which case we are all ****** because a monkey's paw revenge is like the scorn of a wild mountain cat that has tasted flesh and comes upon you in the night while your in your sleeping bag, asleep, defenseless, and likely with an erection.

 

I guess that would make more sense.

 

btw thanks for starting this thread krezack, I too made a post somewhat similar to this many moons ago however from what I recall I got pretty crappy responses and ended up going into the market, scared and alone. However, I did come out of it relatively unscathed, at least financially that is. I'm pretty sure in the future I will stick to just simple ETF's, mutual funds and, if I can get my hands on some, bonds. I kind of like the idea of getting a little check in the mail semiannually for not doing a whole lot.

 

Also if you do happen to invest in market and lose, you can deduct up to $3,000 annually of capital loss from ordinary income and any excess can be carried into the next tax year where again you can deduct up to $3,000.

Just a friendly neighborhood tip from your local tax accountant in training slug.

Though really I doubt I will go into tax. It's pretty hardcore stuff.

 

Cheers bud, I'll see if there's a similar law here in Oz!

[theslug]

Oops. Forgot you were an Aussie. I tried looking through yous guyses ATO for a quick second but didn't see any such deduction. Sorry champ. :'(

[Humodour]

Oops. Forgot you were an Aussie. I tried looking through yous guyses ATO for a quick second but didn't see any such deduction. Sorry champ. :'(

 

A quick read of this thread suggests we actually do, but it's all in accountant speak. Am I correct?

 

http://au.messages.yahoo.com/finance/finan...ocktalk/114401/

 

Also: http://www.ato.gov.au/individuals/content....ntent/36586.htm

Edited October 23, 2009 by Krezack

[Enoch]

A fund manager is someone who runs a fund for an investment bank or similar institution. A financial adviser is someone who consults with individuals and might recommend buying into a fund for an investment bank. If you're being pitched "GiantBank Mutual Fund" as a financial product to buy, take a close look at how much of your money will be going to pay the people who run GiantBank Mutual Fund. Fees are really the only thing that you have complete advance knowledge and control of when you're making an investment decision, so they should be at the top of the list of things to pay attention to.

 

I said 'tax adviser' as a general term, not knowing if Aussies had a different word they used. But, yeah, an accountant who works in personal taxation is what I'm talking about.

 

 

I owe my wisdom and wit to years of patient study, hard work, and drinking the blood of my vanquished enemies.

[theslug]

Oops. Forgot you were an Aussie. I tried looking through yous guyses ATO for a quick second but didn't see any such deduction. Sorry champ. :'(

 

A quick read of this thread suggests we actually do, but it's all in accountant speak. Am I correct?

 

http://au.messages.yahoo.com/finance/finan...ocktalk/114401/

 

Also: http://www.ato.gov.au/individuals/content....ntent/36586.htm

Sorry friend but I still see no such deduction.

 

This guy wraps it up pretty much straight out of my notes:

(except for the capital gains tax of 50%, we don't have that in America as far as I know.)

 

"Capital losses can only be offset against Capital Gains. If you have no capital gains - you carry forward the losses until you do. You carry forward the full amount of the loss and offset it against the gain. If the asset was held for over 12 months - you then pay cgt on 50% of the remainder.

 

You cannot offset capital losses against normal income."

 

Example: You have $5,000 of capital gain in 2009. You also happen to have $6,000 of capital loss in the same year. Thus you have a total $1,000 capital loss. In America you would be able to take that loss and deduct it straight out of your AGI or Ordinary income. If the loss exceeded $3,000 then you would simply carry the loss into more tax years. These losses continue to offset capital gains and if again you have excess loss you can take the deduction up to $3,000.

 

As far as I see, you guys do the same thing except you don't get the $3,000, you can only offset your capital gains in future years. However, you guys do only have to pay tax on half of your capital gains once they've been netted with capital losses, which is pretty cool.