WHY EVERYONE THINKS PROPERTY IS THE BEST INVESTMENT

I can sum this up in 5 words: ‘Because you can see it…….’

But that would be the world’s shortest blog post, so I should probably elaborate.

Australia has a love affair with property and because of that, the value has steadily increased over time. It’s a widely held sentiment that buying a property in inner city Melbourne or Sydney is basically for the ultra-wealthy and over time Brisbane will likely follow suit.

Property can be an excellent investment if you choose the right one but depending on what you are trying to achieve, it isn’t always the best investment for everyone. The main reason people think that they should invest in property is because they can physically see the asset and they understand how it works (well mainly anyway).

It’s pretty simple. You buy a house, you rent it out, and you collect the money. Hopefully over time the value of the property increases, so that when you eventually sell it, it is worth more than you bought it for. Simple, right?

Yes, and no. There is a little more to it than that, but overall you have the right idea.

When it comes to investing, most people say ‘I want to invest in property’. This is the wrong way to look at it. You first need to say ‘why do I want to invest’.

There are different investments for different reasons. The following are common reasons to invest that I hear on a daily basis:

        I want to supplement my income

        I want to build assets to help me in retirement

        I want to invest but need the money in 4 years

        I want to invest for my children’s education

        I want to invest until I figure out what business I want to start

 

All of the above are valid and personal reasons to invest, but for half of them, property is not the right choice.

You always need to bring it back to the end goal:

What are you trying to achieve?

What do you want out of life?

and What is the purpose of this investment?

It’s like making dinner. You need to figure out what you want to eat before you go and buy the ingredients. If you do it other way round, you may not end up with the most appetizing meal.

This post is from our resident Financial Planner Cara Brett, check out her details in the About Us section.

Posted in: Cara BrettFinancial Planning

About the author: Cara Brett

Cara Brett proudly heads up Bounce Financial - founded in 2014 after a successful, decade-long career in the financial services industry. Cara’s experience encompasses both the financial product and financial advice sides. This gives her a comprehensive and holistic knowledge of all facets of financial planning.