How to build wealth outside of property | Job Binary

Our national obsession with property has many Australians owning an investment property. But this is not the case at all. Only about one in five households has a property investment.

The real action is found in the stock market. Directly owns more than 6 million Australian shares.

A carefully selected, well-maintained property can definitely return long-term returns. The point is that buying real estate, whether as an owner occupier or an investor, is a significant financial commitment. And entering the market can be very difficult these days.

syfe sponsored foreign property investment

High property values ​​mean buyers can find it difficult to raise the necessary deposit. Furthermore, the RBA’s repeated interest rate hikes will not only make property more expensive to pay for, but higher interest rates will also eat away at buyers’ borrowing capacity.

Fortunately, 6 million Australian shareholders know there are ways to build wealth and financial security that don’t involve bricks and mortar.

Even better, accessing non-property investments has never been easier or cheaper. Digital investment platforms allow everyday Australians to start investing in shares and exchange traded funds (ETFs) as low as $1.

More loving than bricks and mortar

If you feel that you are undervalued in the real estate market, it may be worth exploring other investment opportunities as a means of building wealth because, frankly, property has its drawbacks.

Real estate involves significant upfront costs, including stamp duty, legal fees, pre-purchase inspections and loan application fees.

Paying these expenses requires a large chunk of cash—money that could otherwise be invested to grow wealth.

Buying real estate often involves taking on significant debt. Of course, whether you’re buying a place to live or a rental investment, you’re always involved in maintaining the place.

This could be a deal breaker for many investors.

Syfe’s investor survey found that a lack of time to invest is the main concern of many Australians. If you have limited time to invest, you may struggle to find time to manage your property. Especially if you’re already studying, working a 9-to-5 job, or taking care of a family.

The main point is that property is not a set-and-forget investment – a key difference compared to stock and ETF investments.

As a shareholder, you are not responsible for keeping the business in good shape. This is the work of the company’s management and management team. Investors simply sit back and reap the rewards of dividend income and/or long-term capital gains. There is no demand for your time. There are no additional requirements for your wallet. And by choosing an investment platform with low commissions, all your capital will work for you from day one.

How do returns compare?

When it comes to property and shares, patience is a virtue. The best rewards are given to investors with a long-term perspective.

While past returns are no guide to the future, a CoreLogic report shows that home values ​​in our state capitals have increased 453% over the past 30 years. Units have increased by 306% in 30 years.

They are impressive results. But they pale in comparison to stocks.

Fidelity analysis shows that $10,000 invested in Aussie shares 30 years ago would be worth $155,506 today – a gain of 1,555%. $10,000 invested in global stocks in 1992 would be worth about $107,179 30 years later, according to Fidelity.

Build a diverse portfolio

One of the basic rules of investing is to create a diverse portfolio. It’s a proven way to smooth out returns while reducing the overall risk of your portfolio.

The interesting thing for real estate investors is that costs make diversification difficult. This leaves investors vulnerable to changes that may affect the property’s value over time. It’s not just about market fluctuations. Something as simple as changes in zoning laws or transportation links can affect property values.

Building a diversified stock portfolio is much easier and more affordable, especially with the new breed of investment platforms that offer a powerful set of features such as repeat purchases and retail trading. This makes it an easy way to spread your money across a variety of stocks and ETFs, perhaps with a touch of cryptocurrency in the mix.

The bottom line is that you don’t need property to grow wealth. By partnering with the right platform, you can start investing with small changes and grow your portfolio over time with little investment or personal effort. Many investors like it.

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