+1 for respectfully disagree...
In fact, this uber-conservative strategy is probably the best if you kick it hard early and get a few paid off IPs under your belt. The massive cash flow positive outcome means your portfolio is self-servicing and you can acquire more even when the bills roll in and you get dependents and have to reduce the amount of your personal income you devote to the portfolio. If you lever too high too early and the bills roll in then you're in much worse shape. Only downside which is covered already is its a tax ineffective strategy. Most investors I've met tend to maintain an LVR around the 50% level which makes the portfolio marginally positive and they buy again when that LVR starts dropping and the cash flow gets too high and tax starts to bight. Keep doing that and you've got maximum exposure to the market whilst still being cash flow positive and getting the maximum benefit from capital gains. When it comes time to live off your accumulated wealth then you sell down one or two and turn it into massive cash flow positive, albeit tax ineffective. But by that stage you're in retirement and consumption mode, not growth mode, so of course its all about income (which will be taxed).
Cheers,
Michael
In fact, this uber-conservative strategy is probably the best if you kick it hard early and get a few paid off IPs under your belt. The massive cash flow positive outcome means your portfolio is self-servicing and you can acquire more even when the bills roll in and you get dependents and have to reduce the amount of your personal income you devote to the portfolio. If you lever too high too early and the bills roll in then you're in much worse shape. Only downside which is covered already is its a tax ineffective strategy. Most investors I've met tend to maintain an LVR around the 50% level which makes the portfolio marginally positive and they buy again when that LVR starts dropping and the cash flow gets too high and tax starts to bight. Keep doing that and you've got maximum exposure to the market whilst still being cash flow positive and getting the maximum benefit from capital gains. When it comes time to live off your accumulated wealth then you sell down one or two and turn it into massive cash flow positive, albeit tax ineffective. But by that stage you're in retirement and consumption mode, not growth mode, so of course its all about income (which will be taxed).
Cheers,
Michael