Challenging the advice that hurts investors
This series aims to refute a lot of the rubbish that might ruin an investor's financial future. It re-assesses long-held beliefs with historical evidence.
Hosted by Jeremy & Damien
All Episodes
EBS 29 Be Greedy When Others Are Fearful: Was Buffett Right for Property?
Warren Buffett's famous quote pops up whenever there is fear in the property market. Talk of war, economic mayhem, an interest rate cycle, or a real estate professional spotting a slow-down and reaching for the maxim: "Be greedy when others are fearful, be fearful when others are greedy." Buffett's advice is good for share investors. We tested whether it works for property in Australia, across 35 years of historical data. It does not.
EBS 28 Buy in an Overheated Suburb? Yes!
Some investors and even some professionals call some markets "too hot" or "overheated." They warn against buying in such locations. There is no such thing as a market that is too hot. The phrase describes a buyer's discomfort, not a market's condition. A hot market is what an investor wants.
EBS 27 "Investment Grade" Is a Myth
Fake experts use the term "investment grade" to describe suburbs and properties they say are destined to outperform over the long term. Cafes nearby. Privacy. Views. Affluent owners. Above-average historical growth. Buy these, the story goes, and the market will do the rest. Historical data has something different to say.
EBS 26 Demographic Deception: Why the Majority Doesn't Matter in Property
A lot of experts read demographic statistics as a guide to demand. If 80% of properties in a suburb are houses, they say the demand is for houses. Buy a house. Do not buy a unit. The statistic does not say what they think it says. 80% houses is a fact about supply, not demand. Confusing the two is one of the worst mistakes an investor can make.
EBS 25 Yield Focus Mistake: How Chasing Yield Can Hurt Your Investing
A lot of experts advise investors to seek out cashflow positive properties. They say you can get both yield and growth. That is true to some extent. But a focus on genuinely cashflow positive properties can cause more harm than good. Capital growth is the ant's pants of property investing. A drift away from a growth focus will usually harm investment returns.
EBS 24 Rent Money Is NOT Dead Money: Rent for Lifestyle, Own for ROI
For decades the saying has been "rent money is dead money." The idea has been to own your home rather than rent it. That doesn't make sense from a financial perspective. It is more likely that home mortgage money is dead money, not rent money. It is more beneficial from a financial perspective to rent where you live than to own. Out of the thousands of suburbs around Australia, what chances are there that the suburb you want or need to live in is also the best suburb for your investment dollars? The problem with owning your home is that it is highly unlikely to be the best asset your money could buy at any point in time. Once that property market falls out of favour, perhaps goes through a slump, will you offload it like any other underperforming asset? Or will you be tempted to hang on since you live in it?
EBS 23 Save for a Deposit ASAP: Why This Holds You Back
The standard advice is to save for a property deposit as fast as possible. Cut expenses. Bank the surplus. Wait for 20% to land in the account. It sounds disciplined. It is also slow. A bank account earning 2% interest typically cannot keep up with a share market that historically returns 8 to 10% per annum. The faster way to a deposit is to invest for it.
EBS 22 Market Cycles: Should You Pivot to a Better Market?
Every few years a familiar claim resurfaces. This cycle is different. You need to pivot to a better strategy. What worked before will not work now. It sounds like new insight. It is not. Australian property is diverse. There is almost always a market in a boom somewhere. The strategy was always to find it. A change in one market’s condition does not change the investment strategy.
EBS 21 Land Size Myth: Why More Land Doesn't Mean More Growth
Investors are told to focus on land. Buy houses, not units. Buy bigger blocks. More square metres equals better performance. The principle that land appreciates and buildings depreciate is correct. The mistake is what gets assumed next. Bigger does not usually mean better. Square metres are not the metric. Dollar allocation is.