Debt is very useful for building wealth and if you own assets then you can access debt at low interest rates for investment opportunities. This is a classic way to build wealth and many have done it sustainably.
You have a totally irrational fear of debt and it will hold you back.
Over the years we have accessed equity through loans for both sensible and not so sensible spending - over the longer term my property just kept giving me more and more back the lending became trivial in a few years. Sure there have been some setbacks eg a 50% price drop in the 90s but those days soon passed and property prices flew higher than ever.
You need to man up Simon and take some risks and lending for good property is one of the lowest risk investments you can make otherwise you will end up a frustrated old doomster renting in the boondocks.
Terry
11 Jan 2017, 12:18 AM
Not about me Roddy. It's about the data.
You never have any data Terry - this report is your usual waffle scaremongering on what are really low default rates by any International comparison.
All old loans are trivial today and all new loans are assessed at much higher interest rates. So those Bondi and Toorak owners have loans that allow them to service the loans at 7%.
You are utterly mad if you think interest rates are going to rise that much anytime soon with our current inflation data.
All you ever do is post stuff you want to believe - you never assess the data NEVER.
Simon_S
11 Jan 2017, 11:34 AM
How do you spend this new found wealth......
Lots of ways - we sold in the UK and bought a great house in Coogee. In a few years when the property market gets going in Perth we will sell some for our retirement and we will rent out the rest for income. We will be well set up.
If we had not bought that first little 0ne bed terrace in the UK 35 years ago we would have nothing today. The vast majority of my wealth is in property and believe me it is very real - I can access that money any time I wish.
You have fallen for a silly doomster myth that tells you that buying a home means that the home just stays at the same value, this is rubbish.
In 1990 someone bought the unit we were renting in Bondi on Lamrock avenue for $250K a couple of teachers could have bought that unit at the time on their wages at that time. That unit is now worth close to $1.5m. It is a different property today - it is much more valuable it is now a unit that only seriously high income people can afford.
The couple of teachers can sell that unit and go buy in the suburbs that teachers buy today and pocket all that money. Or they can enjoy living in millionaires row. It is very very real wealth.
Rufus
11 Jan 2017, 01:56 PM
Are you drunk? Here is what Taleb thinks of behavioural scientists.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Debt is very useful for building wealth and if you own assets then you can access debt at low interest rates for investment opportunities. This is a classic way to build wealth and many have done it sustainably.
You have a totally irrational fear of debt and it will hold you back.
Over the years we have accessed equity through loans for both sensible and not so sensible spending - over the longer term my property just kept giving me more and more back the lending became trivial in a few years. Sure there have been some setbacks eg a 50% price drop in the 90s but those days soon passed and property prices flew higher than ever.
You need to man up Simon and take some risks and lending for good property is one of the lowest risk investments you can make otherwise you will end up a frustrated old doomster renting in the boondocks. You never have any data Terry - this report is your usual waffle scaremongering on what are really low default rates by any International comparison.
All old loans are trivial today and all new loans are assessed at much higher interest rates. So those Bondi and Toorak owners have loans that allow them to service the loans at 7%.
You are utterly mad if you think interest rates are going to rise that much anytime soon with our current inflation data.
All you ever do is post stuff you want to believe - you never assess the data NEVER. Lots of ways - we sold in the UK and bought a great house in Coogee. In a few years when the property market gets going in Perth we will sell some for our retirement and we will rent out the rest for income. We will be well set up.
If we had not bought that first little 0ne bed terrace in the UK 35 years ago we would have nothing today. The vast majority of my wealth is in property and believe me it is very real - I can access that money any time I wish.
You have fallen for a silly doomster myth that tells you that buying a home means that the home just stays at the same value, this is rubbish.
In 1990 someone bought the unit we were renting in Bondi on Lamrock avenue for $250K a couple of teachers could have bought that unit at the time on their wages at that time. That unit is now worth close to $1.5m. It is a different property today - it is much more valuable it is now a unit that only seriously high income people can afford.
The couple of teachers can sell that unit and go buy in the suburbs that teachers buy today and pocket all that money. Or they can enjoy living in millionaires row. It is very very real wealth.
The best behavioral economists are those steeped in psychology, such as Kahneman, whose thinking is applied by the world's leading CPG and media companies. Taleb is right. If suburbanites could understand their own behavior, they would be in a far superior position. Behavioral economists should understand very well how the suburbanites are chained to System 1 thinking--strongly linked to why the suburbanites are bewitched by house prices and targeted at with expensive BBQs with term payments.
This is so the problem with the modern media propaganda methods - they teach idiots that they are superior to normal working people.
You need to lose the superiority complex and take a good long look at how a new migrant from China or India conducts their affairs. They have 10 times the smarts of you. Why? because they are not sitting around waiting around posting arrogant nonsense about how the world is finally gonna change just so that you will be first in line at the Bondi Beach firesales which you have convinced yourself you deserve.
Those migrants will be the next generation with huge property wealth and you will still be renting, still convinced of the nearby firesales that will save your bacon- but by that time you will be priced out to the boondocks.
ozz
11 Jan 2017, 09:48 PM
Problem is in that rarified air, their mindset is different to us normal folk. Some housewives would rather go to the wall than suffer the indignity of being seen in god forbid Target, or even worse Aldi.
Are you kidding me? every woman loves Aldi and Target - you have no idea what your are talking about.
Terry
12 Jan 2017, 12:05 AM
Mother cat giving you a good work out there Roddy
As usual I have you lost for words.
When u get called out you just cry like a baby accusing people of all kinds of silly paranoid nonsense. Everyone is used to you here Mr Sockman.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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