Investment Strategies to Build Wealth

Buy Real Estate in New Neighbourhoods

You can turn a loan into a real estate investment by researching growing real estate markets. The secret to identifying growing markets is to talk to people. Ask people who are new to your area where they live, especially young people. If they mention somewhere that you’ve never heard of, ask more questions, get the lay of the land. There is a good chance that the property values will increase as these young people’s earning potential increases. If rent goes up once you own property, you would be silly to sell. Instead, use it as an additional source of income.

Know Why You’re Investing

Building wealth isn’t all about building the most diverse stock portfolio. Knowing why you are investing in something, will ultimately allow you to reach your goals more easily. Find something that motivates you and is connected to your passion.

If that leads you to invest in a business or launch one of your own, planning and passion are essential. Look at all of the information available to you to support your investment. Have a clear goal that you are working towards and a strategy for exiting the investment. In other words, have a roadmap for your investment journey from start to finish.

Rent Out Residential Property

Everybody needs somewhere to live. It’s a universal need that is timeless. Investing in the types of property that will maintain their value in the event of a drop in the market is the most sound strategy you could follow when investing in property. Single-family homes, townhouses, apartments and units are easy to rent, sell and finance. A one-off property is more flexible than other types of real estate. As always, ensure that any purchase you make generates cash flow and will increase in value over time.

Time the Market

Timing is everything. No one can see the future but you can generally predict what the highs and lows are when you are monitoring the market. People often make the mistake of buying during a market high, buying into the hype and trying to get onto a train that has already left the station. It’s much better to buy during a market low when people are selling. While it’s not realistic to know when a market is going to be at its absolute lowest, the next best option is to buy at the start of the rise.

Research, Then Follow Your Instincts

Regardless of what you are investing in, always do your homework and research as much about your potential investment as possible. Once you have the data, then you can make informed decisions. Some of the best deals you make will be based on your instincts. Some of the worst can come when you ignore them. Just ask anyone who passed on some of the largest internet companies when they launched like Google, Apple and Netflix.

Continually Improve Your Cash Flow

By employing the process of continual improvement you can increase your cash flow by slowly increasing your monthly base by three percent every month. Using your previous month’s returns, you can increase returns for the next month. For example, starting with a monthly base of $5,000

  • Month 1: $5,000 x 3% = $150
  • Month 2: $5,150 x 3% = $154.50
  • Month 3: $5,304.50 x 3% = $159.135

After 2 years, you would be making $9,867.93 which is a 97% increase.

Make Money When You Purchase

Most people look forward to the money that they will make on something at the selling phase. Smart investors look at how to get the best price for something before money changes hands. Your purchase price is the biggest factor that decides how much profit you will get after you sell.

For real estate, identify the potential value by doing research into similar properties based on size, location and value. When buying a property to invest in, determine what the realistic sale or rental price is after any repairs or maintenance. Then assess what the scope of work is to reach the potential value. Do not bring emotion into your decisions. While you should have passion and interest in your investments, too much emotional investment can cost you a great deal of money.

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.