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Is it all worth it?
Recently Ive spent some time sitting outside at a friends house on the edge of Canberra, looking out at over the valley. Eight years ago they purchased a lifestyle property that was pretty run down. They really wanted to have their own little piece of the country. Having only got married in their late 30s with little behind them financially when they meet it was all they could afford. Over the years they have worked really hard to
renovate the house and property, consuming many of their weekends. Now with all the major stuff behind them, a big mortgage still looming in front of them, in many respects they are living the dream life. Quiet country living, 10 acres, free roaming chickens and every meal has something hand grown in their garden.
They do have financial worries like most people. Although in many respects they have the dream, approaching their 50s they have still have a pretty substantial mortgage to pay off. Has all the hard work been worth it.? Asking them you would get a resounding yes. Although in the same
breath they also might say that if they knew ahead of time how much work was involved it might have been a no!
Ive just finished reading Kevin Milnes book The Life and Times of a Brown Paper Bag. Its a biography about his life and his 27 years on Fair Go. He seems to me an incredibly down to earth person who values a combination of hard work and fun, who wants to do things that he finds
valuable, and above all else his family is the center of his world. When he was first married he bought a couch for $25. He figured he didn’t want to spend his time yelling at his kids to stop jumping on the couch so he bought one that he didn’t care if they jumped all over. This says to me that he cares more about the experiences of his family than he does having a new quality couch that says to others he is doing well financially.
There is no ideal answer to “Is it worth it?” Each person has to find the answer within themselves as to what something is worth to them. I think the key is to ask yourself the questions about what you really want and what is important to you. Too many people bumble through life and end up having so many regrets. Granted really hard work can be stressful and tiring but often the rewards on the other side are well worth all the
effort. Have you asked yourself lately what is really important to you?
Are you being too focused?
It’s Saturday and I’m sitting in a room of around 150 people all eager to learn how to improve their financial position. It takes a lot of commitment to be in a seminar room at 8.30am on the weekend and spend the entire day learning. I have spent many a weekend and evening attending similar events over the years.
What I found interesting is how many seemed to be so singularly focused on acquiring properties without giving some thought to what it actually means to them – everyone just wants to rush in and buy. I was the first presenter of the day talking about the importance of getting your financial foundations strong and robust. I’ve seen so many people come a cropper, especially in the last few years, because they didn’t spend enough time on the basics and building the right foundations.
The second speaker Keith Mason spoke on money beliefs. It was really interesting to watch the faces of the audience as he delivered his presentation. He held them spellbound as he pointed out many insights about themselves that you could tell had never even crossed their minds.
He talked about our lives being a bit like an iceberg. The bit on top of the water is what you see and that’s what many of us spend time managing and operating from. However the part of the iceberg under the water, the biggest part which is our subconscious, is what really drives us. This is the part that we know the least about and what can really sabotage our ability to get ahead.
It was great to see a property seminar company inviting speakers along who can help people learn about how to take a more holistic approach to building their wealth. I totally agree with Kieran Trass’ recent comments in the media about the numbers of property educators who are far more interested in lining their own pockets with mentoring fees that a genuine interest in helping educating people.
If it sounds too good to be true it probably is – after all if investing was so easy the average financial net worth of kiwis would be a lot higher than it is.
New tax changes for property investors
I thought this was a good summary that I received from my accountant Acorn Solutions about the forthcoming tax changes. The changes introduced following the Government’s budget announcements are not pretty and they require decisions to be made, some of which must be made before 31 March 2011.
Here are some of the things you need to be aware of:
• LAQC’s are not able to attribute losses to shareholders for income years starting after 1 April 2011.
• Shareholding changes in LAQC’s after 1 April 2011 will trigger depreciation recovered issues.
• LAQC’s can elect to ‘morph’ into another tax entity such as a Look Through Company (LTC), sole trader, partnership or limited partnership in the two years after 1 April 2011 with no tax consequences. There is of course a specific process to go through.
• There are limitations to the amount of losses the shareholders in an LTC will be allowed to claim.
• The depreciation changes introduced during last year’s budget will have the effect of reducing the amount of losses claimed, and as a result, the tax refund received.
Unfortunately, as is often the case with such wide sweeping changes, there is no ‘one size fits all’ and each case must be looked at based on your individual situation. Talk with your accountant to ensure you are well prepared and dont have any nasty and expensive surprises down the track.
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