Wednesday, August 31, 2011

Investment Strategies 1 September 2011


If you’re intrigued why the current doom and gloom isn’t reflected in my writings, it’s because I’ve decided not to participate.


Our long-term savings rate in Australia has been just 5 cents in every $100 dollars earned.
However we are good at paying our bills.

And a mortgage is just another bill – so when you put in place an investment property with a mortgage, it’s just a form of savings towards a comfortable retirement.


Westpac is advertising “an investment property for less than you think”.

Well, if you’re thinking anything above zero – think again.

The reality today is that if you’re paying too much tax, when you combine the tax savings available with the $10,000 government cash grant, then your personal out-of-pocket contributions will be around zero for a four bedroom + ensuite family home, with air conditioning and double garage etc.

So – in this instance - I agree with Westpac.


Here is a typical investment that I’m currently sharing with my private clients in the south west suburbs of Brisbane.

It’s a four bedroom + ensuite family home with air con on its own block in a family suburb, within an easy drive to diversified economic zones (where the jobs are).

It is brand new, yet to be sold by the developer, and currently rented at $370 per week and priced to sell at $399,850.

On an income of $105,000 your tax credit would be $10,458 (which you get back proportionately every payday) and your out-of-pocket contributions in the first year would be $93 per week.

On the basis that rents increase $30 per week per year, in the second year your contributions would be $63 per week, then $33 then in the fourth year it would be done to $3. These total $9,984 and – with your $1,000 deposit – your total outlay would be just $10,984.

Now the Queensland government has a $10,000 cash grant available, payable on the day you acquire ownership i.e. a month from now. So in effect you would hardly be putting your hand into your pocket at all!

And you keep doing this whenever the bank says you can afford another.

Let me know if you need more information – phone me (Bernard Kelly) anytime on 0414 778 518


With the new banking rules that limit the maximum term of a loan for anyone over 50, the logical outcome is that those suburbs which people in late career tend to favour (i.e. those inner city suburbs) will have less growth, because finance for homes in those suburbs will become progressively harder to find.

Fortunately the very successful investment strategy that I share with my private clients will benefit from this seismic change in property values.

To understand property investing better, contact me – Bernard Kelly – anytime. My mobile is 0414 778 518


It’s a statistic that the gloom merchants won’t acknowledge, but the most affordable end of Brisbane's property market is shrinking rapidly with house sales under $300,000 dropping 95 per cent in five years.

Brisbane's Affordable Market Overview report, from PRDnationwide research analyst Josh Brown, reveals sales below $300,000 have dropped from 2,307 transactions over six months to December 2005 to 125 sales in December 2010.

"The Brisbane market has definitely seen a shift in what is considered affordable," Mr Brown said.

Acknowledgements: The Sunday Mail (Qld) 10 July 2011


I was quite impressed with this commentary that I received recently from Michael Yardley at Metropole Property Strategists in Melbourne.

Let me quote from it:

“The idea for writing this message to you today came to me when I read an interview with a leading property economist who admitted one of his big regrets was that he didn't own an investment property, yet for years he predicted the next property hotspots.

“This is a common trend amongst economists and financial advisers. While they are meant to know which way the economy is turning and where to find the best investments, it is interesting how many people have the theoretical knowledge, but very few have actually taken action.

“To do well financially in this new more turbulent phase of our property markets, you are going to have to educate yourself so that you can make your investment decisions based on facts, not on headlines, guesses or speculation.

“If you want to improve your investment knowledge, let's look at the options of who you could ask and who you should listen to when you want to become a better educated investor:-

1. Family - How many millionaires do you have in your family?

2. Friends - Are they financial experts? How much do they have?

3. Your accountant - Has your accountant become rich specifically by applying his own investment advice?

4. Lawyer - Has your lawyer become rich following his own investment advice?

5. Financial planners - Be aware that financial planners make commissions based on the investments they sell. How many of them have personally invested in property? You should realise that many financial planners come from the background of having been in the insurance industry and have done some extra study to get a financial planner license. They understand insurance and superannuation and managed funds, but in general do not have a good understanding of real estate.

6. Stockbroker - What returns have they received on the shares they have invested in?

7. Real Estate Agent - How many properties do they own and over what period of time have they bought them? According to the Australian Bureau of Statistics, the average estate agent earns less than $40,000 per annum.

8. The financial media - How much research have the journalists actually done and what investments have they got?

9. Investment books - Is the author independently wealthy from the information that is being taught or is their income derived from selling books?

10. Investment seminars and workshops - Is the person an investment expert in their field? How long have they been financially secure or do they make their money teaching others?

“When recently reading the BRW Rich 200 List, I found it interesting that there were no economists or stockbrokers in the Rich 200 List.

“Over the years I have found it fascinating how many people have the theoretical knowledge but very few have the right "mindset" to take action.

“So when you look at it this way, it’s not really the average Australian property investor’s fault that they don’t develop the financial independence they desire.”


"The game of life is not so much in holding a good hand as playing a poor hand well."

-- H. T. Leslie (19th century British hymnist)


In our next issue, I’ll keep you up-to-speed with what’s happening with retirement planning.
Remember, even if an investment property doesn’t increase one penny over the next ten years, you’re still going to be $100,000 better off.


You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at

At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage.


My blog is at

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Bernard Kelly mobile 0414 778 518
Australia’s Retirement Strategist®

“expect to reap an extra $449,999* when you’ll really be needing it”.
PS As I don’t spend my advertising budget on traditional media, I’m able to pay you $5000 for successful referrals

About Bernard Kelly:

Bernard Kelly BEcon MBA CRPC Australia’s Retirement Strategist®, is a highly sought-after advisor, retirement authority, thought-leader, author and radio commentator because he makes the complicated and mundane topics of investing and retirement fun! Bernard has over 20 years’ experience providing families with financial thought. He is the author of Live Your Dreams in Retirement, Property Investing for Couples, Goolwa by Breakfast and Raising Decent Kids into Substantial Wealth and publishes a fortnightly newsletter that reaches thousands of subscribers worldwide.

19 Prospect Street, Box Hill 3128 Australia. Tel 61-3-9899 8577 mobile 0414 778 518


Following my own advice, I have now established my own “profitable hobby” – a webhosting service. Go to

and also