Home' Navy News : July 21st 2011 Contents NEW ADF INTERACTIVE
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‹ Easy, accurate planning
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Who said finances are boring? This whole exercise will help all
ADF members and their families manage income and expenses,
create personal balance sheets, and understand progress towards
financial independence. Check it ou
July 21, 2011
or maybe not
ASIC chairman Greg
some of your options
if you are thinking
about investing in the
SAFE AS HOUSES?: Investing
in the US property market is
much riskier and potentially more
expensive than investing in the
The Australian Securities and
Investment Commission has
received a number of com-
plaints about promoters who
are encouraging Australians to invest
in the US property market.
The distressed property market
there means you can buy a house
much more cheaply than in Australia.
Investing in overseas property,
however, is a lot more risky than
investing in property in Australia.
It is much more difficult to make
sure the investment suits your needs
if you do not have local knowledge
and you cannot regularly inspect the
We have heard some horror sto-
ries about people who have lost a lot
of money in the US property market.
Investors can be sold properties that
need extensive renovations and repairs.
Or they buy properties in neighbour-
hoods which are prone to squatters and
vandalism, making it almost impos-
sible to find reliable tenants or property
While you might think investing in
property in the US is a cheap way to
enter the property market, it can actu-
ally end up being very expensive.
You must also factor in Australian
tax laws, local property taxes, insurance,
management costs and ongoing repairs.
If you've been 'invited' to invest in
a supposedly cheap overseas property,
ask yourself why they need someone
in Australia to invest.
Buying an Australian property to
rent out is a popular form of invest-
ment. But before you enter the prop-
erty market, check if this type of long-
term investment would suit you.
Property can be less volatile than
shares or other investments and you
can earn rental income as well as ben-
efit from capital growth if your prop-
erty increases in value over time.
If you take out a loan to purchase
an investment property, the interest on
the loan is generally tax deductible.
Though you should never invest in
something purely because there is a
tax benefit -- it pays to know what tax
rules apply to your investments before
you jump in.
One of the big benefits of investing
in property is that the physical proper-
ty is something you can see and touch.
You can add value by making physical
improvements to the property.
Rental income does not usu-
ally cover your mortgage payments
or other expenses so you may have
to use your regular income to cover
A jump in interest rates will also
affect your return. There are also very
high entry and exit costs associated
with property (for example, agent,
legal and conveyance fees).
You may not have a tenant for
periods of time and will have to cover
all costs yourself. Unlike some other
investments where you can offload
some of the investments, you can-
not sell off a bedroom if you need to
access some cash in a hurry.
For more information visit www.moneysmart.
gov.au or email me your articles suggestions
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