Why is Property considered to be a Leading Wealth Creation Vehicle.

Investment Property

Why is Property considered to be a Leading Wealth Creation Vehicle.

You can invest in many things to create wealth but Property has proven to be the Leading Wealth Creation Vehicle throughout the ages.

Just a few other vehicles to consider are shares, precious metals, precious stones, coins, antiques and other collectibles as well as Commercial and Industrial Property. Some of these investments provide income, some provide capital growth and some provide both.

However, at Priority Invest we have chosen Residential Property as the preferred means of creating sound, long-term wealth for our clients.

Here’s why…

Residential Property is the oldest, most established, most tested and proven vehicle for creating wealth. Property is also the traditional measure of wealth and status, giving rise to the term “landed gentry”.

“Housing is essential. We all need a roof over our heads.”

What you must know to successfully invest in property so you can retire early!

Because property investing dates back for centuries, it has the longest history to better determine cycles and trends. We know more about property than any other investment vehicle.

We know that people need houses to live in. It’s one of the three essential reasons why we work. We need food, clothing and shelter. So housing is one of life’s most important essentials.

“We all need a roof over our heads.”

The population is growing at an ever increasing rate. As our population grows, the demand for housing increases. As demand increases, the value also increases, so housing is worth more.

Not only is property one of the least volatile wealth-creation vehicles and poses a relatively low risk for investors, but it can also provide a hedge against inflation.

Because of the increased demand for property as economies grow, property tends to maintain its capital purchasing power by passing on some of the inflationary pressure to tenants and by soaking up some as capital appreciation.

What this means for you as an investor is that rents get higher, so increasing your income, and that also converts to higher capital value so your property is worth more.

Residential Property is also one of the most easily understood investment vehicles, requiring the least specialist knowledge.

“If you don’t understand your investment you shouldn’t be investing in it.”

Understanding your investment builds confidence and certainty and is essential to pursuing it over time.

“Property not only underpins all successful wealth-creation strategies but is also responsible for creating more millionaires than any other investment vehicle.”

Property also has a solid, well-established industry as well as regulation supporting it. This helps protect investors and reduces the risks compared to other forms of investment. And, of course, many people invest in property without even knowing it. That’s how acceptable property is in this society.

Property is real. It’s something that you can see, touch and own and, because it is familiar, people relate to it more easily and it is more easily understood.

When you buy your own home, you are investing in property. Even though your home doesn’t produce an income stream for you yet, it still grows in value over the years and many people are delighted to discover the amount of wealth they have accumulated in this asset.

What you must know to successfully invest in property so you can retire early!

The banks love the stability of a large home ownership underpinning property values so much that they will loan you 80 per cent of the value of your property so you can more easily invest in it.

The banks lend you as much as they do because they know that over time property will increase in value and that reduces their risk. And this asset provides two things essential to your future: a solid foundation on which to build; and that intangible but vital requirement, peace of mind.

Sadly, many don’t understand how to put that accumulated wealth to work to accelerate their individual wealth-building.

Yet, it’s that very wealth that the wise unlock to produce far greater wealth and income in the future.

When compared to the share market, AMP Capital has reported that, “Over long periods of time Australian residential property has generated similar total returns (i.e. capital growth plus income) for Australian investors as Australian equities.

“For example since 1926 Australian residential property has returned 11.1% per annum, which is similar to the 11.5% per annum return from shares over the same period.” In addition to the similar returns over the long term, you are also able to leverage the growth in property at a higher rate to accelerate your wealth creation. And you can gain that leverage without having to sell your investment so it keeps working for you.

And this result that property achieves is without the huge ups and downs that shares frequently experience.

That’s because some 65 per cent of Australians own their own home, which makes the residential property market more stable and secure. When stock markets plunge, investors rush to sell off their shares. But when the property market drops, as all investments do from time to time, home owners don’t rush out to sell their homes!

The banks love the stability of a large home ownership underpinning property values so much that they will loan you 80 per cent of the value of your property so you can more easily invest in it.

The banks lend you as much as they do because they know that over time property will increase in value and that reduces their risk.

“Property is the oldest, most established, most tested and proven vehicle for creating wealth.”

And that means the entry cost to a high priced, high growth, easily understood income-producing asset becomes affordable for most. And remember, you can insure your investment against most risks—for example, the building against being destroyed, and yourself against tenants leaving, doing damage or breaking their lease.

So property has traditionally been the way many Australians have created much of their wealth.

Property not only underpins all successful wealth-creation strategies but is also responsible for creating more millionaires than any other investment vehicle.

Property provides both income to live on now and growth to ensure you can maintain your chosen lifestyle in the future.

Robert Issell
Director at | | + posts

A smile, laugh, and friendly gesture make for a better day. When you focus on the future you cannot be distracted by the past. Life is an opportunity to achieve great things by helping others. Success in any business comes from a commitment to providing a great service or product. That is why our clients will always be our focus at Priority Invest.

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Robert Issell
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