Friday, November 28, 2008


an investment property under construction in Laidley, south east Qld

If you retire with more, and with more options, we’ll have succeeded!


A private client recently asked “with home prices falling, shouldn’t I take advantage of lower prices?”

My response was along the lines “certainly – if you can find a suitable investment $100,000 below the price for new”

Let’s say that to attract a suitable tenant into an established house, you’ll need an investment that’s not too old, say one ten years ago.

It works this way – if you purchase existing housing stock, you’ll pay full stamp duty – that’s $10,000 extra.

Then the difference on the depreciation on a house ten years old compared to one off-the-plan today is probably $40,000.

In addition, repairs and maintenance during the next ten years could well be $50,000 for an investment already now ten years old, compared to virtually zero for an off-the-plan investment during its first ten years.

So that’s the $100,000 difference.

So if I offer you an investment today for say $380,000, to be better off you’ll need to find something that will attract a suitable tenant for less than $280,000. That’s quite an ask.

And you’ll also miss out on the packaging – which regional market will be best over the next five years, and my introductions to an investment- aware funding strategist, to an investment-aware property solicitor, to an investment-aware property accountant, to an investment-aware insurance broker or to an investment-aware management agent.

And now with lower interest rates, an investor on $70,000 will only need to outlay $28,800 over the next six years to be in full control of this $380,000 investment. Which, if the market over the past 150 years is to be believed, should normally double in 7-10 years.

So you outlay this $28,800 now, and your gain should be that extra $380,000. That’s how property investing works!

If you would like me to explain in more detail, contact me – Bernard Kelly – anytime on


How long will your savings last?

By Robert Brokamp of The Motley Fool

There you sit with a finite pile of savings from which you will need to take all or most of the money to support your retirement spending.

The accumulation phase of life is nearing an end.

How much of that stash can you safely take each year to ensure it lasts your lifetime? Will you take the same amount annually? Or will you just buy all the cool toys and vacations you've always really wanted, and let your slightly older self deal with the fallout a few years later?

All of these questions boil down to one over-arching theme that we've thoughtfully put into this question:


The "70% to 80%" rule of thumb is based on the assumption that many of your current expenses will go away in the golden years.

For the most part, this is true. Once you kiss the boss goodbye, you'll no longer endure the following:
Work-related expenses,
Social Security taxes
Contributions to retirement plans
Mortgage payments, (if your house will be paid off)

There are two other ways your expenses might decline.

First, retirees tend to downsize – but the saving might not be there.

With no need to keep the four-bedroom house now that the kids are grown, for example, some pensioners flee the big house for the something smaller. However the cost to move into – and maintain – a new home or retirement village can still be quite expensive.

However, some require the same level of income in retirement they enjoyed while working.

How? It comes down to this: If you're not making money, you're spending money, particularly in the early retirement years.

Another big expense is health care.

A survey in the Journal of Gerontology found that 61% of couples age 70 and older and 54% of single adults spent at least 10% of their retirement savings on health care. A startling 45% of couples spent more than half of their savings to medical bills.

Medical insurance is not free (there are on-going premiums), and it doesn't cover everything (e.g., most long-term care).


So what will retirement cost you?

The best research we've come across concludes the following:
A "safe" withdrawal rate ranges between 4% to 6% of a retiree's starting portfolio.

The accuracy of that approximation depends on your age. If you're 65, then that estimate is quite accurate; if you're 25, thankfully you have many decades to improve your lot.


But the simple answer to all of this is – if you want an income of $50,000, this equates to 5% of $1,000,000.

And only a portfolio of residential real estate is inflation protected.

Let us help you calculate what you can expect (and what you'll need!) when you retire.

Contact me – Bernard Kelly - anytime at


The government of Victoria has published a 52 page guide to Owners’ Corporations.

If you are an investor in a high rise building or in a townhouse complex, you should download and keep this book for reference.

While the Guide relates specifically to Victorian legislation (the Owners Corporation Act 2006) the content is widely applicable.

Owners’ corporations, which manage the building and common property of shared properties, serve up to a quarter of all residential housing in the state of Victoria and manage significant financial assets on behalf of owners.

If you own a unit, apartment or townhouse, you need to know about the laws that affect the management of your property.

Owners’ corporations now have more legal responsibilities for matters including financial management, record keeping, dealing with complaints and meeting procedures.

You should read this Guide if you own, manage or live in a property that has an owners’ corporation.

It is FREE to download. Go to

Bernard Kelly


One of Australia's leading financial forecasters is talking up the health of the nation's housing market in the face of the global economic crisis.

BIS Shrapnel's Robert Mellor said early November that Australian house prices were unlikely to collapse or suffer a sustained decline as has occured in the US and UK.

"I think the fears of a collapsing housing market have been totally overdone," he said.

"There are a lot of things happening out there that are going to support the market."

Mr. Mellor said there was a major difference between overseas' housing markets and Australia's.

"We don't have an oversupply of housing - we have a significant under supply," he said.

"Nationwide we've seen a strong rental growth for going on three years."

He said the current situation in Brisbane was similar to the price peak of 2003-04, before the 2007 surge.

If you would like me to help you explore your options for 20-25 years of dignified retirement, contact me – Bernard Kelly – anytime on