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is investing a gamble

For many investors, starting the journey of money making is a nerve-wracking process. The global market has an endless supply of new projects, markets and shares that can be invested in but how do you know whether it is going to stay stable and return finances to you? Is investing a gamble? Would property be the safest way to invest?
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By looking at the history of a market you will see patterns and properties that show whether or not it will be worth it for you in the long run.

 

So, Is investing a gamble? How do I know if my chosen investment is a good investment? 

Good investments will typically have two features.

1. A high capital growth.

2. A secure income, indexed for inflation.

 

While these properties are hard to control or predict when first buying an investment, it should be noted that over decades, property has maintained both these attributes.

 

Property in Australia has maintained a capital growth of 10% or higher per year consistently. It has also managed to stay 2-3 percent above inflation.

 

If one wants to invest wisely, property investing is a good place to start!

 

Buying in an area that is currently increasing in population, has adequate public transport and isn’t isolated from central business districts will ensure capital growth is consistent.

 

Capital growth has been maintained in property for many reasons. Supply and demand has ensured that over the time the Australian property market’s capital growth has maintained well above inflation as our growing population increases housing demand.

 

While the ‘Great Australian dream’ to own your own detatched home on a fenced block of land is still alive, for many reasons, the rental market is growing fast, giving a great opportunity for investors to profit through property.

 

New couples and new families are the largest market for rental properties in the country. Currently, there is more demand for rentals than there is supply. An investment property with features targeted to the typical lifestyle and affordability of a small family or working couple (e.g. 2-3 bedroom, small yard, convenient location near public transport, shops and schools) will ensure capital growth.

 

Not only will the house sell for profit, if you’re renting it out, the mortgage will pay itself!

 

Even though Australia certainly doesn’t have a lack of land, population density and urban sprawl is becoming a big issue in major cities and coastal areas. We are already seeing a huge increase in property costs in locations close to major cities because of housing demand and a lack of land.

 

In Sydney housing prices have increased by around 17% in the last 15 years, while surprisingly,  Sydney is experiencing the smallest property boom in the country it is still growing at a healthy rate; particularly  the cities outer western suburbs.

 

Australia’s property prices have increased consistently for more than two decades.

 

Government incentives such as The First Home Owners Grant and property releases are seeing more and more new homes built – tailored for small families and working couples – and the urban lifestyle is becoming increasingly popular.

 

The market doesn’t look to be slowing and current interest rates favour investors and existing home owners.

 

All these factors make property investment a great method for increased wealth. It almost doesn’t seem a gamble!

Article by James Parnwell & Jordan Cox

wise investing

There are always excuses for people not reaching their full potential financially. One BIG excuse is a lack of knowledge or understanding about what to do to see your money increase.
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This excuse, or lets call it a fear, is in no way wrong. Investing does take a great deal of knowledge and understanding. But it is when the fear becomes an excuse for not doing anything about your financial security that it becomes a problem.

While many think investing is a huge gamble of their finances and life security they have worked so hard for, the reality is it is actually a well mapped an educated decision to be WISE with your finances and not simply live from week to week.

There are three reasons why you may think it is wise investing.

  1. It gives you a plan for your finances, which helps you to keep your weekly budget stable.
  2. It repays with higher ‘interest’ than a bank ever will on a savings account.
  3. You can’t earn returns on money not invested. 

NOW THIS IS WISE INVESTING!

Of course, it is up to you what your ‘returns’ end up looking like. With enough knowledge about the market you are choosing to invest in you will be well on your way to wise investing.

still, It’s no surprise that many people don’t invest because of fear they know too little. Our society values learning how to earn money, but fails to teach us the principals on how to manage that money once we’ve earned it.  In saying that though, we also live in a society where education is literally at our fingertips (are you reading this on a smartphone? Told you!). There are no longer any excuses to be scared to invest.

Some blogs that regularly post great property investing advice include:

Michael Yardney’s Property Update

Michael has a long history in investing success and, along with his team, helps readers to keep up with current changes in the property market as well as gives them tips on how to best invest their finances.

Property Observer

The Property Observer is a great site for current trends and property news specific to your area; or you can read up on international issues. There is also great articles on what to look for when purchasing an investment property so that it will be attract renters.

Australia’s Property Review

Knowing what to look for when thinking about investing whether the property you’re looking at is residential or business is crucial in leading to wise investing. Australia’s Property Review has a great list of articles discussing current properties all over the country as well as success stories and tips from other investors.

these websites are merely a starting block to the world of investing. There are also great books and seminars that give useful tips to investors at any stage of the game. The more you read, the more you’ll know regardless of the current economic situation. The economy tends to run in a circle; like anything, history repeats itself, so advice from people who have already done the full loop is priceless.

Article by James Parnwell & Jordan Cox

 

Good debt and bad debtMany people think debt is the result of poor money management and choices. But what about debts that result in income potential or wealth such as a student loan? or a mortgage?

These are healthy debts, or ‘good debts’, and these are debts that you actually want to get yourself into in order to become wealthy in the future!
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The average cost of study has increased more than 50% in the last six years, yet student enrolments are increasing too. This is because, more and more people are using HECS as an avenue to study, resulting in a better or higher paying job after graduating.

Debt can play a valuable role in moving you into a better financial position in the future!

A HECS debt is not the only example of a ‘good debt’. If done the right way, investing in property will lead to wealth in the future.

Despite the Global Financial Crisis, houses in the Western Suburbs of Sydney have continued to increase in value by just over 6% annually in the last 10 years. Adding 6% equity to the value of your mortgage each year is definitely a good debt so looking at an investment property, and maybe your first, or second mortgage could be a great idea.

But where do the lines start to blur?

Good Debt and Bad Debt: How do I know if I am getting into a good debt or a bad debt?

Always remember, when you are looking at borrowing money that you do not need to borrow enough to live an expensive and extravagant lifestyle. The equity in your home is the only asset, so using the money to buy wants instead of needs can quickly turn the ‘good debt’ that is your mortgage into ‘bad debt.’

A great way to differentiate between a good debt and a bad debt is to look at the pattern of your mortgage repayments.

  • Is your mortgage at a price you can manage to pay?
  • Are you able to live a comfortable lifestyle and provide for your and your family’s needs without dipping into the equity of your home or lowering your repayments?
  • Could you cull some luxuries to help pay the mortgage faster?

When looking to borrow money, be mindful that it may not always be wise to borrow all the money that is available to you.

Even if the debt is considered a good debt, you should work to pay off your debts as quickly as possible.

This will allow you to begin to build wealth. It can also help you pursue your dreams, because you will not be as dependent on your paycheck each month.

There are many reasons to get out of debt. If you are serious about getting out of debt, you will need to set up a budget and great a debt payment plan that allows you to apply additional money to your loans each month.

You can pay off your debt more quickly than you think you apply the money correctly.

It may mean taking on an additional job for a short period of time or cutting back your lifestyle, but the sacrifices will be worth the effort.

Article by James Parnwell & Jordan Cox

If you would like some further information on anything related to Investment Property or Investment Finance please contact us

One of our team of experienced Investment Property coaches or Investment Finance Mortgage Brokers will be happy to reply to you with some helpful advice…

Please let me know if you have any questions.

becoming rich

There is a huge misconception in society today: the idea that, in order to become wealthy, you must first have a wildly high-paying job.

Unless one invests and cultivates their finances well, the reality is a six-figure salary will only go so far.

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People, regardless of their wage, tend to always live beyond their means.

Long Term Property Investment

Have you noticed that Doctors continually stress that quick-fix diets won’t sustain weight loss? Their maxim is that a healthy diet and exercise is the only way to maintain weight. Still, each year, the fitness market rolls in billions on fad diets because we live in a society that wants to see results now! Funnily enough, the same goes for building and sustaining wealth. Investing is a process, built over time using key principals. Thinking ‘long term property investment’ is paramount to being a successful investor and becoming wealthy.

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Rather than seeing yourself living in your dream house and driving your dream car in your 20’s or 30’s, a simple change of mind-set and a plan, could be all you need to see yourself retired early and living the life you’ve dreamed of.

Overnight riches seldom results in increased wealth because often the individual doesn’t have a plan for the money and before they know it, they’ve spent it.

Property investing can be one of the safest and most rewarding ways to invest your income and see a great return. Many of the government rules such as age, income, and health history that we see in superannuation investments don’t apply.

Long Term Property Investment is a process of habit and patience

Simply put, long term property investment is a process of habit and patience which results in a return after many years labour. It’s the old story of the tortoise and the hare. The tortoise wins the race!

It’s important to remember that when it comes to property investment, time is on your side. Having to wait for a financial return isn’t a burden, it’s a great opportunity. With patience, and a well thought out plan, you could afford to start investing in property for as little as a couple of hundred dollars a week.

Formulating a strategy regardless of what the market looks like is the first step.

As time passes, and the market turns this strategy shouldn’t change. The only changing factor should be that as property values increase, you refinance so that your debt payments increase with your assets.

This formula, will work for both long-term and short-term property investments. However, long-term investments are rarely affected by down-turns in the economy, high interest rates, or rises in unemployment and living expenses.

Another pro to long term property investing is that – while timing, finding the best interest rate, and negotiating price is vital in short-term investing – time levels out these stresses and consequently makes them less important in the long run.

The beauty of long-term investment and property investment is that it gives average income earners, new starters, even students, opportunity to put the little finance they have in their hand towards building their own wealth.

Risk is always a reality but with a small start you moderate this risk and it becomes more manageable over time.

It could be, that a simple change of our mindset and values is all that we need to be on the way to becoming wealthy in our lifetime.

Article by James Parnwell & Jordie Cox

If you would like some further information on anything related to Investment Property or Investment Finance please contact us

One of our team of experienced Investment Property coaches or Investment Finance Mortgage Brokers will be happy to reply to you with some helpful advice…

Please let me know if you have any questions.