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Should you have money in your super or savings in the bank or should you have properties?
It’s not uncommon for us to talk to people who have savings of up to 500K sitting in the bank waiting to purchase a family home.
How long has it taken to save that much money, 10 years or more?
What if when they had reached 100k they had bought a 500K investment property in a good growth area, would that have boosted their savings?
Yes, it would have!
Say someone has done very well and saved 50K per year for the last 10 years. If in year 2 of their saving plan they had purchased an investment property, it could have doubled in value over the next 8 years while they were saving the other 400K. That means instead of having 500K savings in the bank after 10 years of saving, they would have 400K saved and 500K extra in profit from the investment. That’s 900K, almost double.
You see, this is the simplicity of property investing. It makes accumulating wealth easier.
What if in year 4 they had bought another property with their next 100K saved? That would mean at the end of 10 years they could have 300K in savings, 500K profit from the 1st investment (plus its rental income) and possibly 350K profit from the 2nd investment. That’s a total of $1,250,000.
I’m not sure how that looks to you, but it looks great to me.
That is the power of money at work, not man at work.
If you had 500K saved in 1990 you would have been able to pay cash for 2 Sydney properties.
In 2017, 500K will get you half of one property. What will you be able to get in 2030?
Now what about if you put $50 or $100 per week extra into your super for your retirement, would that be better than spending under $50 per week on an investment property?
I don’t think so!
The fact is, money loses value. You can put any amount you want into your super, but at the end, you are left with dollars that are losing value.
If you were to retire with $1,000,000 in your super right now, how long is that going to last you?
Sure, it might be invested at 5% and you get $50,000 a year to live on. But what is the inflation rate, is that about 4% as well? So yes, you get 5% on your money but your money is worth 4% less each year in terms of what it can get you. How long is that going to work for you?
Wouldn’t it be better to put investment properties into your super so you not only have an income from them, but you have assets that go up in value rather than down in value?
It really doesn’t matter how you look at it, investing in property is a win-win.
It’s a win for you, a win for the government, the developers, the builders, the economy and the tenants.
Overcoming the fear to get started with property investing is well worth it.
