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TIP Don't wait to long Buying Property, Imagine this... over 5 years you buy 5 houses, each worth about $200,000. Now also assume that you have used none of your own money for the purchase, except a small amount on each as a deposit. Property inflation has been sitting between 5% and 25%. For this example we will assume the worst and use a 5% increase on our 5 houses worth above $200,000 each. This is $50,000 a year in equity being built up each year to put towards your retirement. Remember that in most cases it is best to only take out an IO (interest only) loan to purchase an investment property to maximise your tax savings. 
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HINTS, TIPS AND TRICKS TO MAKING MONEY 1. Multiple sources of Income. I cannot stress the importance of this enough. By having multiple sources of income you reduce the risk of your income stream drying up. Say if you get income from 4 different sources, if one of those for whatever reason is no longer able to continue generating income you still have your other sources. Examples of different income streams might be: Salary, Rental properties, Shares / Options, Small business, Selling on eBay….etc 2. Make money from Shares. There are numerous ways to make money from the Stock Market. The most popular of these ways are to directly buy and sell shares or, as more and more people seem to be doing these days, to buy and sell stock options. To buy and sell shares all you need to do is join up with a stock broker (usually free). I joined with Comsec from the Commonwealth Bank of Australia because it was free to join, I did not have to open a bank account with them, they dealt with both shares and options and they have some pretty good software to use called “Professional Trader”. Once you have joined up you will be given the details to log into your share trading account. From here you would most likely add several stocks to watch into your watch list. Your watch list is just a screen to place all the stocks that you are interested in, so that you can see them all in one place. A few of the main stocks I deal with are WBC, NAB, CBA, ANZ, PBL, QAN, CML, QAN…… At this point when you feel that it is a good time to buy shares in a company you may, if using the online system just highlight the stock you want to buy and select “buy”. You will be asked how many to buy and at what price you are willing to buy. Once you have clicked “submit” the system does the rest. If you are out and about and you get the urge to buy or sell and you are not near a computer, you may simply call up your broker on the phone and they will place the order for you. Once you own shares you will receive income from these shares in the form of dividends, usually about every 6 months, but this can vary from stock to stock. Another way to make money from your shares is to sell them at a profit. Beware!! When you make money from the sale of shares governments will usually expect to be paid tax on your profit in the form of CGT (Capital Gains Tax). There are circumstances where you will be able to reduce this, for example the Australian Government allows people to reduce the tax they pay by half if they have owned the shares for over a year. 3. Make money from Options. Options are a great way to make money from shares without the large cost of buying the shares directly. Options can be used to make money in all kinds of market conditions, including when share prices are falling. There are 2 main types of options, Call and Put. With each of these you can use buy or sell methods to make money. Here are some examples to show you the effects that share price movements have over options. In each example we will assume that share XYZ is trading at $20.00 per share and we will be buying/selling 10 contracts. (99.9% of the time 1 option = 1000 shares. 10 options will = 10000 shares) a) Buy Call Options Use if you don’t want great risk and when you think share prices will increase. Buy a XYZ $21.00 Call Option for 20c per share. If / when the XYZ share price goes up to $21, the options you bought for 20c will then be worth 70c. Buying 10 of these options would have cost you $2000 plus a small commission to your stock broker. When you sold them at 70c you would have been paid $7000 minus a small commission to your stock broker. This works out to be a profit of about $4900. If in this example the share price reaches the exercise price (strike price) of $21 while it is at or above this exercise price you could alternatively choose to buy the shares for yourself at that fixed price of $21. This may be an attractive option for you if the share price has increased a large amount above the exercise price. This is only possible if you don’t sell the options, you may only use one of the above methods not both. b) Sell Call Options Use when you think share price will fall, has a medium-high risk. Sell a XYZ $21.00 Call Option for 30c per share. If / when the XYZ share price goes down towards $19, the options you sold for 30c will then be worth 5c. Selling 10 of these options would have made you $3000 minus a small commission to your stock broker. When you bought them back at 5c you would have been paid $500 minus a small commission to your stock broker. This works out to be a profit of about $2400. If the share price stays well below the exercise price (strike price) of $21 and looks like staying below the exercise price, you may decide not to buy back the options at all and just let them expire on their expiry date. This may be an attractive option for you if you would like every cent possible from your options. Doing it this way means you would make a profit of about $2950 but you would have to be confident that the share price will not reach or go above the exercise price before the expiry date. The risks with selling call options would be if the share price goes up towards or even beyond the exercise price of the option. This could mean that you will have to buy back your options at a large loss so to avoid the possibility of having your option exercised. In this example if your options were exercised it would mean you would have to provide the buyer of your options 10000 XYZ shares and they will pay you just $21.00 per share, but you will need to buy them at market price which could be $22.00 or more. This could mean you’re out of pocket $10,000 minus of course the $3000 you were originally paid for selling the option. c) Buy Put Options Use if you don’t want great risk and when you think share price will fall. Buy a XYZ $19.00 Call Option for 20c per share. If / when the XYZ share price falls to $19 or somewhere close, the options you bought for 20c will then be worth 70c. Buying 10 of these options would have cost you $2000 plus a small commission to your stock broker. When you sold them at 70c you would have been paid $7000 minus a small commission to your stock broker. This works out to be a profit of about $4900. People also use Put options to protect their portfolios from a heavy loss. So instead of selling the options for 70c they may decide to exercise the option if the share price is either at or below the exercise price. This could mean that if they owned 10000 XYZ shares they could sell them at $19.00 per share regardless of how low the share price has dropped. Think of this as like an insurance policy for your shares. d) Sell Put Options Use when you think share price will increase, has a very high risk. Sell a XYZ $19.00 Put Option for 30c per share. If / when the XYZ share price goes up towards $21, the options you sold for 30c will then be worth 5c. Selling 10 of these options would have made you $3000 minus a small commission to your stock broker. When you bought them back at 5c you would have to pay $500 plus a small commission to your stock broker. This works out to be a profit of about $2400. If the share price stays well above the exercise price (strike price) of $19 and looks like staying above the exercise price you may decide not to buy back the options at all and just let them expire on their expiry date. This may be an attractive option for you if you would like every cent possible from your options. Doing it this way means you would make a profit of about $2950 but you would have to be confident that the share price will not reach or go below the exercise price before the expiry date. The risks with selling Put options would be if the share price goes down towards or even beyond the exercise price of the option. This could mean that you will have to buy back your options at a large loss to avoid the possibility of having your option exercised. In this example to have your options exercised would mean you would have to buy from the buyer of your options 10000 XYZ shares and you will pay them $19.00 per share, even though the market price for these shares may be worth $17 or worse. This could mean you’re out of pocket $190,000 minus of course the $3000 you were originally paid for selling the option. 4. Negative Gearing Negative Gearing of investments refers to a situation where the interest and
the other costs incurred to acquire that investment are more than the income
received from that same investment. This cash loss is offset against other
sources of income, reducing the amount of income tax payable. In other words,
with a negatively geared investment you make a cash loss, but the effects of
this cash loss are reduced by the tax system. Put simply, Negative Gearing is
when: 5. Positive Gearing Positive Gearing of investments refers to a situation where the interest and the other costs incurred to acquire that investment are less than the income received from that same investment. This cash profit is added to your yearly income, and tax will need to be paid on this profit unless you have losses in other areas to compensate for your profit. 6. Beware of Tax Cuts While the term ‘tax cuts’ to most people means a helping hand or a little extra cash in their pocket each week or maybe some new clothes for the kids, if you are one of the many people with investments, particularly those which are negatively geared you may be in for a very rude shock. Instead of getting a bit of extra money to take home during the year, you could ultimately be no better off or even out of pocket. An example of this would be if you are earning $70,000 and claiming around $20,000 of combined expenses as deductions. If you slip from 42 down to 30 cents in the dollar on the income tax table, you would go from getting a tax refund of $7,300 (approx) down to $5,900. That is a loss of about $1,400 just because you changed tax brackets. You will however pay a little less tax on your taxable income, but in this example it would only be about $300 less, leaving you still well out of pocket. 7. Tax Tips In order to get more out of your tax return think about if you are claiming all possible deductions. One of the best ways to get money out of a property is to use depreciation. If your investment property was built after 17 July 1985, you can claim 2.5% of the cost of construction each year over 40 years. If built between 17 July 1985 and 15 September 1987, you are able to claim the higher amount of 4%. Another way to reduce tax in a year is to defer income so that you receive the income in the next financial year. You may also think about bringing forward expenses, such as pre paying interest on a loan or carrying out repairs on an investment property. Things like bringing forward expenses can be even more important when you take into account tax cuts such as in point 6 above. To get the biggest refund possible you would be better off claiming all the deductions you can while you are in a high tax bracket, which means your deductions are that much more valuable. 8. Buying and Selling on eBay Buying and Selling on eBay is one of the easiest ways to set up a small business buying and selling. The advantages for doing this over more conventional ways of trading in a small business are - next to zero start-up cost, no costly overheads such as a physical shop, and no need to employ staff as eBay sells your items 24 / 7. Even while you're sleeping eBay can be making you money. 9. Buying Property Buying Property, Imagine this... over 5 years you buy 5 houses, each worth about $200,000. Now also assume that you have used none of your own money for the purchase, except a small amount on each as a deposit. Property inflation has been sitting between 5% and 25%. For this example we will assume the worst and use a 5% increase on our 5 houses worth above $200,000 each. This is $50,000 a year in equity being built up each year to put towards your retirement. Remember that in most cases it is best to only take out an IO (interest only) loan to purchase an investment property to maximise your tax savings. 10. Build a Website Building a website is very easy and inexpensive these days and can give you an opportunity to get income from multiple sources. You don’t even have to be selling anything on your website, it could just be all information, perhaps a hobby or something else that interests you. From your web site you can then place adverts for other web sites and business on your own web pages. While you can deal directly with a business to place an add on one of your pages, most people are joining up with sites like ‘google’ or ‘amazon’. These business’s let you become a member and they will supply you the code to put into your web page. You can also customise what type of content is shown and you can check on-line to see how much money you are making from different links or adds. Please take the time to visit one of my sponsors by clicking on one of the ads shown on this page. 11. Get Paid to Surf the Web This is an easy way to earn a little extra cash but can be an even better idea for web site owners to advertise there business for free. Joining up with sites like ‘First Place Traffic’ or ‘Cash Clicking’ is fast and free so you can be surfing for credits in no time at all. 12. Individual Tax Rate Scales 2005 - 2006
13. Individual Tax Rate Scales 2006 - 2007
14. Individual Tax Rate Scales 2007 - 2008
15. Individual Tax Rate Scales 2008- 2009
16. Individual Tax Rate Scales 2009- 2010
17. Individual Tax Rate Scales 2010- 2011
Tell me your idea If you have a way of making money (must be legal) that you feel people should know about please let me know so I can list it on my page. Disclaimer Neither the author or "Grant's Investment Property Solutions" takes any responsibility for the information provided on this site and the onus is on the individual to seek professional advice to ensure that any money making method listed above is suitable for you. Home
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