Monday, 15 June 2009

Investment rules

Debt to income ratio (DTR)
- 40 to 50%
- e.g. Monthly liabilities: $3,500. Monthly income: $10,000. 35% DTR

Debt to equity ratio
- 70 to 80%

Compound Annual Growth Rate (CAGR)
- Warren Buffett aims for 15%
- Gross rental yield of 6% in Australia. Best was in Darlington of 8.6% in July 2008.
http://www.realestate.com.au/doc/review/july08/inner-city-yields.htm
- When looking at net rental yield, the interest is calculated on loan amount whereas rent and strata levies are calculated on the total value of the property

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