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  • Property-a-holics

    7 financial rules that should never be broken

    I’ve broken them all.

    Only once.

    I may be slow but I’m not stupid.

    1. Never buy depreciating assets on credit. Cha ching goes depreciation. Cha ching goes interest. Cars, RV’s, appliances, clothes, trips. Oh, and this goes for leasing, too. Still financing. Cha ching. Quick way to get rich. Just won’t be you.
    2. Stop trying to get rich quick. It’s hard enough to get rich slow. You don’t need to be a millionaire by 30. Just try to be one by 60. To get rich quick you need to take long bets. That more often than not implode. And every time you go backwards. Makes for a long trip.
    3. Stop chasing “quick, easy and sure”. I’ve said many times, “Pick two.” In other words, you can build wealth easy and sure. But not quick. Or quick and easy. But I’ll guarantee you it sure as hell won’t be sure. Except for the guy selling the scheme.
    4. The best time to save is now. Not when the kids finish braces, cars, and college. Not after you buy the travel trailer, the new truck to haul the it and the boat to tow behind it. I mean, what the hell? That doesn’t even sounds fun. Now is today.
    5. Never invest with emotions. “I’ll get out now while the market is down and get back in when it looks better.” “I’ve got a hunch about this investment.” “I think the market is going to crash.” I’ve heard them all. Hell, I’ve said some. Read carefully. Never!
    6. Never chase the hot dot. “All my friends are investing in it.” “It’s all over the financial TV news.” “This is the future.” “This is the next Apple.” “You can’t lose money.” By the time you hear it there’s no secret. If you follow the crowd you’ll mirror the crowd.
    7. Never forget 1 through 6. Building wealth isn’t fast, easy or sure. It doesn’t happen because you find a magic investment. Or get lucky. It takes time, effort and education. And it’s doable. I know not very sexy. Or exciting. But then frankly, I like boring wealth.

    You too can build wealth. The way the wealthy have always.

    Full/source article

    What financial rules would YOU never break?

    SEE ALSO  -        Buying property with none of your own money

    UP NEXT -            Is there a time to stop buying property?

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    My Golden rule:

          Never buy Lease hold or where its cold.

    If it means I am missing out on the Northern Gold rush, then so be it, but it will end it tears. IMHO

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    Nothing wrong with traditional leasehold houses. I have three. 999 year leases initially and fixed ground rents of a peppercorn, £1.50 and £40.

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    Are deals like that still about Peter?

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    Rachel 

    "Change is a prerequisite to longterm survival".

    The establishment is rigged so that the rich stay very rich, and the poor get poorer.

    Yes. Such houses were very common in the North Wes. I am currently in the process of buying another.  However modern leasehold houses  tend to have increasing ground rents (as do flats). The ones that are linked to inflation don't seem too bad, but the ones that double every so many years look horrible, My sister bought one of the worst I have heard of- double after 11 years then every 8 years.

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    I agree. I have long leasehold houses in the NW and in Yorkshire. The ground rents are so low the Freeholder never collects.

    The trick is to buy old leases. I have a lease dating from 1971 in London. Ground rent is 'ten guineas' with no provision for uplift. In those days inflation wasn't a factor

    Time is also a factor. One of my possible later life scenarios involves buying a very short lease in an expensive area and letting it run out and revert to the landlord. I will have had some time living in an area I could never afford to pay full price for. A short lease reduces the price well below MV. Someone I know had a relative live close to Regent's Park on a 20 year lease; she died after 18 years of living in that nice location. It's a bit of a gamble but worked for her

    New leases however can eat you alive with ground rents doubling every few years

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    I agree. Most terraced houses Ive bought are leasehold...999 year leases, my solictior buys a indemnity cover if the leaseholder is absent for a few pounds (£30ish?) at the sellers expense. The one leaseholder I have to pay its £0.26p per year (Victorian house). However I do see the point of avoiding newer property leases that have shorter terms, or escalating costs.


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    The one I have to pay is for my own home at £40pa (from the 1980s)

    I also pay for my 90s flat in Reading, reviewed ebery 21 years in line with the total value of the development. It has just gone up from £100pa to £350pa. The review was a couple of years late but they back dated it.

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    I'd disagree with rule 1 re leasing a car in a limited company set up.  Far better than buying one and taking a hit on depreciation and tying up working capital.

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    so spot-on! especially quick, easy and sure. laughed hard

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    Buying cars on credit I think is quite sensible for certain types of individual

    Firstly it depends on what rate of return you get on your funds - if you are getting around 6% on your capital I would rather use say £50k of capital to buy an investment and use the income to pay towards the monthly payments on a car worth around £50k

    also by paying monthly you are reminded what the true cost of owning the car is

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