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 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.
EBS 20 Buying at the Bottom: Why It Rarely Works Out
Some professionals advise investors to buy at the bottom. Get in before the rise. Capture the full growth cycle. It sounds reasonable. Buy when prices are lowest. Ride the wave up. The historical data tells a different story. Bottoms are only obvious in hindsight. They can drag on for years longer than anticipated. The opportunity cost is massive. When reduced to a tested formula, buying at the bottom usually underperforms buying in a boom.
EBS 19 Desirable Areas: Why They Don't Deliver the Best Growth
Selling agents repeat the line. This area has great features and therefore will always be in high demand. The implication is that features dictate demand, so affluent suburbs must be the best performers. The data shows that is not true. Affluent areas grow in cycles. They fall harder than cheaper markets in corrections. They are not outperformers over time.
EBS 18 Buying Under the Median: Why It Doesn’t Give You an Edge
Investors spend a lot of time looking into properties listed below the suburb median. They believe the median will drag their property's value up. Cheaper properties surrounded by more expensive ones should benefit. That is the claim. It is not how property valuation works.
EBS 17 Public Housing: Does It Really Hurt Capital Growth?
Experts tell investors to avoid suburbs with a high percentage of public housing. The claim is that it suppresses growth. It sounds reasonable. Disadvantaged residents. Discounted rents. Government stock mixed with private. We researched historical data across four census years and every suburb in Australia. We found that public housing has no impact on growth.