Wednesday 10 Oct 2018
Investment used to be associated with those with high income or accumulated wealth. Nowadays, that is not the case. The rising cost of living no longer allows us to live comfortably with a minimum wage. As a result, investment has become increasingly relevant for most of us.
Rather than a want, there is a strong need and desire to make our money work even harder for us. Putting our money in real estates, shares, bonds, Crypto and other investment vehicles have become one of the many options that can help us achieve our financial dream.
Should you wait until you earn a certain income?
Statistics reveal that people who live on $50,000 to $70,000 per year usually manage to save more for real estate deposit as compared to those earning $200,000. The reason behind this is middle-income earners have to scrimp and save while high-income earners tend to have less financial worries and are able to spend much more on their lifestyle.
In 20 years’ time, both the middle-income and high-income earners will achieve the same financial results if they keep living on their current incomes without investing a significant portion of it.
When is the right time to start investing?
Now, is the new later. It is essential to start supplementing your existing income with passive income as soon as possible if you plan to achieve your financial and lifestyle goals within 10 to 20 years’ time.
As long as you sit back and wait for the right time to get out of your comfort zone, the longer it will take for you to reach those goals.
Keep in mind that when the market has challenges, and you do not have the right budget, waiting would be the better option. Do not invest just because you want to achieve your goal in 10 years. Seek appropriate professional advice before making any investments.
Is now the right time to invest in real estate?
Is the current market condition a good time to invest or would it be better to keep your money in a Term-Deposit for a couple of years until the market recovers?
From one aspect, if you are able to build a significant real estate portfolio within the next few years, it will increase the chances for you to reach your goals.
However, all investments come with risks. By knowing the risks that associate with the real estate, it will help you to determine which property suits your needs, keep future risks at a minimum and can maximize your returns potential.
Which property should you invest in?
Not every property would give you a good profit. The real estate market is highly fragmented, and your budget indicates your risk and the best place to invest.
For example, if you have $350,000 and you found a luxury one or two beds in the heart of Melbourne CBD, you might be in high risk. It is better to wait until you have more funds or to look at another asset class at a different location that associates with low equity risk.
Always make it a point to seek independent advice and assess the property with proper risk management before you become fully vested in any investment plan.
If your budget associates with high equity or cash flow risk, then it is better for you to wait or change to a different investment vehicle. Form realistic goals that make the most of your investments and consider diversifying your assets to guard against losses.
Would investments secure a better life?
The traditional way of working and saving could still secure a good life, but if you are able to spend a portion of your savings on investments, life could potentially become much better.
The investments would not only serve you for retirement, it could benefit your family even after you are gone.
The gist is, make the effort to plan and invest part of your savings. This simple financial discipline could create substantial wealth for you in the long term.
From time to time, take a proper risk management assessment to understand whether you are in the position to make any investments. If you keep this routine, you will be able to accelerate your wealth faster and smartly.