Knowledge Centre

The knowledge center is your guide to becoming an expert investor.

 

Is Property Better than shares

Is property better than shares?

Outside of superannuation, property and shares are the two most common ways of building wealth in Australia, 

What is wealth

Wealth can be defined as….” How many days, weeks, months or years one could live to the level of their dreams IF they were to STOP working!”

If you’ve always wanted to retire early, but you also love money, setting up a passive income stream could help you realize your dream. Whether you choose to invest your money to make it work harder or start a low-input business, using your free time to set up a reliable stream of income that doesn’t require you to work actively is the key to financial freedom. 

Whether you wish to boost your income or plan to retire early, here are some ways that may help you earn money passively. 

Invest in real estate – Depending on the real estate market in your area, buying property could be a great way to earn passive income. But purchasing an investment property means getting a home loan, and your rental income won’t necessarily cover the loan repayments in the initial years. But once a substantial part of your loan is paid down, you’ll start generating income from the property as your mortgage expenses go down.

Invest in shares and funds – Investing in shares could help you build a passive income stream. The success of your investment strategy depends upon your ability to select good quality shares in line with your risk appetite and goals.

Rent your shares – Not only can you buy shares, but you can also rent them out to other investors who pay interest and take a short position. Financial success doesn’t guarantee happiness, but it provides a kind of freedom. Imagine having a passive net income that can more than adequately cover your desirable lifestyle expenses; where you are able to live without financial restrictions.

Our job is to get your money to work for you, not you to work for your money. At Simply Wealth, this is exactly what we show you how to do.

Please contact us for clarification, or further advice, regarding any of the topics covered in this knowledge center.

Why Simplywealth PM

Our aim is simple. We are here to help you create financial security so that you can live your goals and dreams, never having to worry about money again.

We have been helping investors build wealth through safe and secure quality property investments solutions. When you make an obligation free appointment with one of our investment advisors, we will discuss the benefits to YOU, of investing in residential property and how it will create financial freedom for you and your family. As part of our strategic wealth plan for each client, we recommend only select properties that meet our strict criteria, delivering strong capital growth and rental yields with minimum risk.

In Australia, there are not enough people paying attention to their financial wellbeing. Too many take the “she’ll be right” approach, hoping that financial security somehow magically drops into their lap one day. The sad fact is that once most people stop (working), so does their income.

In a recent study released by the Australian Bureau of Statistics, it was found that for every 100 Australians today, by the time they reach the age of 65: 

54% will be living on less than $15,000 per year

16% will have to continue working as they will not be able to afford to retire 24% will be deceased

5% will be financially independent

1% will be wealthy

I’m sure that you’ll agree that these numbers are quite scary. My question is simply: Which category will YOU be in at 65?

1

A deposit equivalent to 12% – 20% of the property purchase price is preferred if one is looking to safely invest in a property.

This can be in the form of a cash deposit, equity in a home, or any other form. If one was looking to purchase an investment property worth $600,000, a deposit or equity amount of $100,000 would be ideal. This would allow for a 12% ($72,000) deposit and what is also known as purchase costs ($ 20,000) depending on the type of property purchased.

 
These purchase costs generally include stamp duty fees, solicitors fees, and loan costs and are payable by the investor upon settlement of the property.
2
Home equity refers to the current market value of your home (which won’t necessarily be the price you purchased it for), minus the amount of money still owing on your home loan.
 
To give you an example, say your home is valued at $800,000 and you still owe $300,000 on it, you’ll have $500,000 of equity. Keep in mind that as the market value of your property can go up or down, so too can the equity you have in it rise and fall.
 
To find out how much equity you have currently, you can organise a property valuation through various banks, lenders and independent agents.
 
Also note, even if you do have equity in your home, you won’t always be able to borrow against it. Your lender will look at additional factors, such as your age, income, debt levels, the property’s location and whether you have any children. This is because all of these factors could affect how much you can afford in repayments.
 
With that in mind, if you do have equity, you’ll want to find out how much of it is ‘usable’.
3
With any investment strategy, there is always going to be a degree of risk. Anyone that approaches you with a risk-free investment strategy is probably not from planet earth.
 
The key is how to mitigate your risk when looking at any type of investment. Risk by the way is another word for “I have no idea what I’m doing”. it’s like when you first learned how to cross the road, you looked left, you looked right and if safe, you crossed.
 
Why? Looking, enabled us to mitigate (to reduce or lessen) our risk. So when investing, it is best when we approach this with our eyes wide open and do more “Looking”. So what can go wrong and how do we mitigate our risk?
Some quick examples are as follows:
 
1. Can’t find a tenant? Reduce your rent
2. What if interest rates increase? Fix your interest rates.
3. What if I was to lose my job? Take out income protection. 
 
A good sound investment strategy carefully planned out with a Simply Wealth Investment Advisor will address and mitigate any risks associated with each particular type of investment. The one thing you must be aware of is to do nothing and just sit back and watch the parade go by.
Remember, if you do nothing, one thing is for sure, you will have nothing. And that in our view is the greatest risk of all.

Delivering solutions that make personal sense. Not just financial sense.​

We are an elite team of property professionals who are full time property investors with proven results. We also value an ethical approach when it comes to property investments, laying out all the considerations, so that you have information beyond numbers when taking decisions.