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Carefully Decide on Your Investment Plan …
AND Then Stick to it!
As an individual investor, you need to work out exactly what your goals are. Will they include:
- To earn a good cash flow?
- To provide a profitable overall yield?
- To benefit from tax savings?
- To be a hedge against inflation?
Your aim may be to achieve all four goals, although one or two of them are likely to rate higher than the others. And it’s important for you to convince yourself, that property actually represents the best vehicle to maximise your overall wealth.
Basically, you have two fundamental concerns. You will need to …
- Protect your original Equity; and then
- Achieve a worthwhile, on-going return from it.
With those as your key requirements, they will tend to knock out several of your other investment alternatives.
Let’s Take a Look at Your Investment Options
Some people have done well by collecting stamps, or paintings, or first editions; and others by buying gold and diamonds.
However, collectibles only “deliver” when they are sold for a capital gain or loss … they cannot give you a regular income.
Other people go the fixed-interest route in bonds and bank deposits; but that rarely works, because these investments cannot deliver you an adequate after-tax return.
Indeed, they can fall victim to inflation; and, therefore, cannot always promise safety for your initial investment either.
Therefore, you’re really left with only two principal alternatives, which are capable of meeting your requirements: Shares and Property.
Investing in Shares
There are several ways you can invest in shares. You can trade on the stock exchange as an individual (either by yourself or through a broker); although you may have read that …
“The amateur who finally leaves the share market with the same purchasing power as he or she brought to it, does better than most.”
You could also take the indirect route into shares, by putting money into a listed Trust.
The advantage of a listed Trust is that you get strength by pooling your money with others; and can get a wide spread of shares to give you protection, should one or two go down the gurgler.
The trouble is that you hand over your money to a manager, who may or may not be any good. You see, many of these Funds do not perform as well as the Market Index; and some would probably get better results by simply buying a portfolio of shares for their unit holders, and leaving them strictly alone.
So, Why is Property Your Better Alternative?
The main attraction of property lies in this simple proposition.
If you have $350,000 you can buy that amount of shares. And apart from a very narrow portfolio of shares, you would find it hard to borrow against them.
Whereas, if you have the same amount to put into real estate you could actually buy (or, more accurately, control) up to about a million dollars worth of property, because you can leverage property using borrowed funds.
Furthermore: While fixed deposits give you an income and an oil painting can give you capital growth, real estate can provide you with both. It also provides you with security and future collateral, for additional investments in the years ahead.
The track record for Property is first class. In Britain: history shows that it has delivered 9% average compound growth, over more than a thousand years. And here in Australia: it has been just over 11% compounded, for the past hundred years or so.
Okay then.
Have you now decided it’s worth trying your hand at property investment? In that case, you’re now ready to move onto RULE #2 … which you’ll be receiving in a day or so.
In the meantime, feel free to contact me if you have any queries at all. Otherwise, do enjoy the rest of this mini-course.
All the best …
?You can now go back to …
Property Edge Australia
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Commercial Property Made Easy