22:05: Peter, you make an incredibly important point, of which I've yet to see anyone in government understand. The role of incredibly high housing prices in curtailing labour mobility. I've been banging on this, on social media for a couple of years now.
USA helped solve this problem by building their interstate road system. It helped the country spread out. I also think our gov system favors capital cities, the simplest solution is to create more states.
@@AussieZeKieL 'Creating more states' wouldn't solve the problem if there are not enough jobs in those newly created areas to attract people to move there.
@@AussieZeKieL I wish I had as much faith in the government as you do. It's unrealistic enough to simply 'create more states', it's even more unrealistic to expect the government to create 'plenty of gov jobs' in those new areas.
Peter is the Nan! Ever since my wife and I read Motivated Money we live by his philosophy. We do own our house freehold but have borrowed against it and pliéed it into shares along with all our savings and will never look at property again! It’s a shame we had to buy our owner occupied home as … as Peter says it’s worth nothing other than guaranteed tenure in this “ Lucky” country… hahaha
What makes no sense especially with the doubling of interest rates is how are Peter's returns faring now? Secondly as a financial expert why would peter have to use his apartment as security for a loan to trade/invest in shares when his title would suggest he should be awash with other monetary sources which should cost and risk nothing to invest in shares. Just a question
Nailed it. I think the question towards the end, tech companies blowing away industrials, he didn’t understand. Tech companies that can reinvest their free cashflow into themselves and get a ROIC of 20%+ are better off not paying a dividend and reinvesting in themselves. That’s why the average pay out ratio is 20-30% v Australia 70-80%. And it’s also why the SP500 has blown away the ASX. Compounding at 20%+ on money that’s reinvested in a business returns better over time.
Chris: could you please articulate more on what you said on margin loan /margin calls between min 14.40 to 15? Peter: I reinforce Veronica, I d vote for you 👍🏻
I can answer that, having personally experienced margin calls. If you buy say 10K worth of shares on Commsec, with a margin loan, the highest Commsec will lend is 75% of the value of 'good' shares. I.e. BHP, WBC, CBA, RIO etc. So let's say you've done just that. You bought 10k worth of BHP with a $7500 margin loan. But if say, the value of those shares falls to 8000 dollars, you now have $7500 of loan against $8000 'worth' of shares. Commsec now needs you to pay $1500 dollars to get that loan down to $6000, or 75% of the now $8000 dollars worth of shares. And you only have 1 day to fix it.
I wish Peter had a better line than "It's because all our politicians are Australian". It sounds witty but it's meaningless. Of course they're Australian; they have to be by law. I think Peter's trying to say that they are just as property obsessed as the average Australian but who knows...
One big issue is that banks really don't like shares. Banks such as WBC will accept 75% of the rental income of a house, when assessing loan serviceability. Banks, almost none, even accept share dividends as income! Not 50%, or 25%. Zero!
We've borrowed $80k from NAB and used $20k worth of shares as security. It's called Equity Builder and there's no margin call. I think it's a NAB experiment, but so far so good. Leveraging into shares without using property as security.
@@neilbenson NAB Equity Builder doesn't have margin calls, but it requires you to pay off P&I, doesn't it? Also, if I understand correctly, the types of investments you can put your money into is restricted to managed funds, ETFs and LICs.
I’m glad this guy will never be the PM. Our system has many advantages. He just doesn’t acknowledge that. Why invest in stocks when all your super is already in stocks.
I reckon this comment demonstrates what he’s talking about. Productive enterprise versus speculation. But if you’re into diversification in that regard that’s up to you. He’s got a book out and a 50 minute presentation on RUclips that goes into more detail on this. I don’t think negative hearing will make much difference over the long term, every country has property prices going up and the property is difficult to afford for younger people there too. Though it encourages investment in housing, which 1/3 of australia needs to rent, plus air BnB is needed where demand is. So incentives to build are needed, and that was the reason for negative gearing in the first place (wasn’t it keating too?) I’d love a much lower tax rate for individuals and corporations.
I'm like a kid on Christmas morning when I see a new Peter Thornhill video. Yes!
Peter talks 1000% sense. Good video.
22:05: Peter, you make an incredibly important point, of which I've yet to see anyone in government understand. The role of incredibly high housing prices in curtailing labour mobility.
I've been banging on this, on social media for a couple of years now.
USA helped solve this problem by building their interstate road system. It helped the country spread out. I also think our gov system favors capital cities, the simplest solution is to create more states.
@@AussieZeKieL 'Creating more states' wouldn't solve the problem if there are not enough jobs in those newly created areas to attract people to move there.
@@uberboiz plenty of gov jobs would be created in a new state and tax money would be removed from the existing capital cities to fund it.
@@AussieZeKieL I wish I had as much faith in the government as you do. It's unrealistic enough to simply 'create more states', it's even more unrealistic to expect the government to create 'plenty of gov jobs' in those new areas.
This was a great interview - Peter brings the logic
Peter is the Nan! Ever since my wife and I read Motivated Money we live by his philosophy. We do own our house freehold but have borrowed against it and pliéed it into shares along with all our savings and will never look at property again! It’s a shame we had to buy our owner occupied home as … as Peter says it’s worth nothing other than guaranteed tenure in this “ Lucky” country… hahaha
Where's the transcript? Couldn't find it on the website?
Interesting Chat. There is something really nice about owning your own home. Once paid off, rent free for the rest of your life. Gold.
"20% of property value in this country is debt, and 80% is equity". That's an interesting stats, would love to see the source of that for my benefit.
Corelogic monthly data pack
What makes no sense especially with the doubling of interest rates is how are Peter's returns faring now?
Secondly as a financial expert why would peter have to use his apartment as security for a loan to trade/invest in shares when his title would suggest he should be awash with other monetary sources which should cost and risk nothing to invest in shares.
Just a question
Nailed it.
I think the question towards the end, tech companies blowing away industrials, he didn’t understand.
Tech companies that can reinvest their free cashflow into themselves and get a ROIC of 20%+ are better off not paying a dividend and reinvesting in themselves. That’s why the average pay out ratio is 20-30% v Australia 70-80%. And it’s also why the SP500 has blown away the ASX. Compounding at 20%+ on money that’s reinvested in a business returns better over time.
Chris: could you please articulate more on what you said on margin loan /margin calls between min 14.40 to 15?
Peter: I reinforce Veronica, I d vote for you 👍🏻
I can answer that, having personally experienced margin calls.
If you buy say 10K worth of shares on Commsec, with a margin loan, the highest Commsec will lend is 75% of the value of 'good' shares. I.e. BHP, WBC, CBA, RIO etc.
So let's say you've done just that. You bought 10k worth of BHP with a $7500 margin loan.
But if say, the value of those shares falls to 8000 dollars, you now have $7500 of loan against $8000 'worth' of shares.
Commsec now needs you to pay $1500 dollars to get that loan down to $6000, or 75% of the now $8000 dollars worth of shares.
And you only have 1 day to fix it.
Better off debt recycling your mortgage than a margin loan.
@@williamcrossan9333great explanation
I wish Peter had a better line than "It's because all our politicians are Australian". It sounds witty but it's meaningless. Of course they're Australian; they have to be by law. I think Peter's trying to say that they are just as property obsessed as the average Australian but who knows...
Nice articulation, thank you :)
One big issue is that banks really don't like shares.
Banks such as WBC will accept 75% of the rental income of a house, when assessing loan serviceability.
Banks, almost none, even accept share dividends as income! Not 50%, or 25%. Zero!
We've borrowed $80k from NAB and used $20k worth of shares as security. It's called Equity Builder and there's no margin call. I think it's a NAB experiment, but so far so good. Leveraging into shares without using property as security.
@@neilbenson Actually, I'm doing a concept called debt recycling, which is a similar concept.
@@neilbenson NAB Equity Builder doesn't have margin calls, but it requires you to pay off P&I, doesn't it? Also, if I understand correctly, the types of investments you can put your money into is restricted to managed funds, ETFs and LICs.
Did you have to go see a financial planner to setup debt recycling??@@williamcrossan9333
Debt recycling is the way to do it if that’s an option
First to like 😀
I’m glad this guy will never be the PM. Our system has many advantages. He just doesn’t acknowledge that. Why invest in stocks when all your super is already in stocks.
I reckon this comment demonstrates what he’s talking about.
Productive enterprise versus speculation.
But if you’re into diversification in that regard that’s up to you.
He’s got a book out and a 50 minute presentation on RUclips that goes into more detail on this.
I don’t think negative hearing will make much difference over the long term, every country has property prices going up and the property is difficult to afford for younger people there too.
Though it encourages investment in housing, which 1/3 of australia needs to rent, plus air BnB is needed where demand is. So incentives to build are needed, and that was the reason for negative gearing in the first place (wasn’t it keating too?)
I’d love a much lower tax rate for individuals and corporations.