Property Investment - A Business Decision
For most people there are 3 ways to create wealth: Money in the bank, investing in the share market (superannuation) and property investment.
You need to wear your business hat if you want to make your money work for you, create wealth in the long run and ultimately secure yourself a comfortable retirement. Leave your emotions aside.
Any form of investing your hard earned cash is a very personal affair: Deciding what works for you largely depends on your current circumstances, your age, your income, your risk tolerance and your goals for the future. For this you need to consider two main principles: Diversification and Risk/Return Ratio.
Diversification - You surely know of the saying: Never Put All Your Eggs In One Basket. In this respect keep some money in the bank for a rainy day. Your employer superannuation contributions are invested in the share market by default. It is your choice now whether you want to invest further into the share market or diversify into property. Property investment done the right way is a low risk investment vehicle and most of the world's wealth is based on property. Why? Because you can insure it.
Real estate investment lets you leverage the bank's money to make a gain for yourself in the long term. Property investment within your superannuation fund is another way of diversification and can have significant tax advantages. That's how you spread your money and investment risk over these 3 asset classes.
Risk/Return Ratio - The higher the risk the greater the return should be. It works the other way round as well. High returns usually carry high risk. The question is at which risk level are you starting to sweat in your sleep?
Now a word of warning: there are a lot of players in the investment industry that all want to get their hands onto your money and they all claim to act in your best interest. Some will but many won't.
In property terms these are the project marketers and 'wealth through property creators' and many of them nowadays call themselves 'buyers agents'. One simple question will separate the wheat from the cuff: who is paying their commission? If it's not you then they are NOT acting in your best interest.
There is a whole lot more to discuss before you can assess what works for you, so please contact us to explore further on the subject of property investment.