To Buy or to Rent: That is the Question. The Great Australian Dream, Fact or Fiction.

This work is the intellectual property of Dileepa Ethapane and may not be copied or disseminated in any form without written permission from the author.

ISBN 0-646-44910-9

eISBN: 9781483503271

DISCLAIMER

Information in this book is intended as a guide for you to consider when thinking about your financial situation. The information does not take account of your objectives, Financial situation or needs. Before making any decision about your financial future using the information in this book, we recommend that you see a financial planner.

Dileepa Ethapane

Dip FS (FP) Adv Dip FS (FP)

Blue Orange Solutions Pty Ltd

[email protected]

Dedication

I dedicate this book to my wife and my children.

Without their love and inspiration I would never be what I am.

Forward

One of the main problems I have encountered in the financial planning industry in Australia is that most people are not educated about day to day financial planning issues that people have, and will face in their lifetime.

Most of the current information available is written in financial planning jargon, which makes it difficult for ordinary people to understand. Therefore when a person makes a financial decision, they rely on their workmates, family or friends to basically confirm what they want to do in the first place. Since these people themselves are not able to comprehend the issues, they tend to either agree with the person asking the questions or simply say what they are doing is the best strategy.

This book is written for ordinary people, in very simple and easy to understand English. By taking the time to read this book, you will become an educated decision maker. You will also gain the knowledge of how to make emotion free, calculated financial decisions that will place you in the direction of a financially prosperous future.

Contents

Forward

Chapter 1

Overview

Chapter 2

Duffy and Barney

Duffy’s Story

Chapter 3

Barney’s Story

Comparison of Duffy’s & Barney’s financial commitments in the next 25 years

Chapter 4

Barney’s Advantages

Chapter 5

Investment houses?

Chapter 6

Managed Investments

Risk Profile

Time Horizon

What are the risks in investing in managed funds?

Chapter 7

Margin Lending

Chapter 8

What if you have already have bought a house?

Appendix 1 Home loan planner

Estimated home loan expenses

Interest rate assumptions

Appendix 2 Typical equity trust: growth

Dependence of illustrations upon trust assumptions

Effects of inflation

Appendix 3 Capital gains calculation

Figures

Figure 1 Household savings ratio

Figure 2 Accounts and credit cards

Figure 3 Market returns to 2012

Figure 4 All Ordinaries movement

Figure 5 Gearing vs non-gearing

Figure 6 Best and worst performing asset classes

Figure 7 Sample interest rate accumulation

Figure 8 Illustrated investment value at end of each year

Figure 9