Your Investment Starts with a Deposit of Cash Or Equity - (from some-where)
A deposit from money saved or available equity upon which you can borrow money for investment is the very start to creating your retirment nest egg and can mean that you have to set clear cut goals.
This however needs personal dicipline, followed quickly by a budget to match. This is particularly so for the majority of us on a salary who are in turn the pawns in a multi-billion dollar advertising mechanism that wants to get every last cent that we earn, and more, out of our pockets into theirs.
If you want to know the magical value of goals and how to set them take a look at
However, let's look at all the options for building a retirement nest egg through either income generation that requires your time, work, blood sweat and possibly tears or investment in a capital growth asset called property.
1. You can start a business
The goal of a business is to make money. (Statistically, the reality of this is not very encouraging! We know that Michael Gerber stated, “that 80% of businesses fail within the first five years. Eighty percent of those survivors will go on to fail within the next five years!”)
2. You can become a successful entrepreneur
As an entrepreneur you'll be in the business of creating lots of money with good ideas. (Statistically, this is not very encouraging either when only 4% of those that start a business survive the first 10 years. The truly successful number falls to below 1%.)
3. Or very simply you can maximise the investment potential of the wage you receive from your job
Yes. Your job enables you to be a passive investor. The one condition is that you are active enough to become a passive investor which again starts at a deposit upon which to actually invest.
Option 3 will require you to spend the time, effort, and money needed to gain the knowledge that will enable you to build your wealth with property investments.
These expenses can be small such as buying books on the subject, getting professional advice or seemingly large, such as a accumulating your deposit. This is not a free ride and in the end that is probably the reason that so few will be sunning themselves on Resort Islands in retirement.
Passive investment works for you day and night with little input from you. Your passive input will amount to monitoring your investments at a distance. This will include checking monthly bank and rental statements, canvassing insurance providers, doing or checking property inspections from time to time and collating your paper work for your accountant.
A computer helps with this organization, but it easily done without one initially. Passive investment is essential for a wage earner who is busy working all week. It works because investment is not about what you earn but rather what you do with what you earn. To achieve this, you will need investment goals; start with your deposit.
Your need for a deposit
You need this ever so important element to get started. Banks need a safety margin to lend you money. This is some of the insurance needed against your failure to meet interest payments. All forms of investment need your input of either cash or equity as security. Leveraging that security to borrow and buy investments that earn more than the interest, is simple investment logic.
You need to decide where that 'important element' is going to come from.
It is hard in a consumer lifestyle to save significant cash on an average income, but equity in your home can be used instead. Presumably, the value of your home has grown in the years since you bought it, and the loan hasn’t. This means the part that you own is probably now big enough to be offered as security on another loan for an investment property.
If you need cash, you need a written plan and definate goals to save it. Does goal setting work?
You really do need to save your bickies if you have not bought a home yet. You may even qualify for the first home owners government grant.
Certainly, if you earn more, then you can do more with what you earn. However, many people who earn more than average simply spend more than average. The priorities of saving a deposit for investment are discipline, attitude and knowledge! These are more important than the size of your income.
If part of your income is not dedicated to wealth accumulation, which is unfortunately usual, then all of your money is feeding somebody else’s pocket by funding your lifestyle.
The majority of us unfortunately simply live beyond our means. Don't you be a victim to a consumerist life style.
The hardest part to your investment life will be saving a deposit at the start. Once you have a deposit upon which to borrow you will be well and truely on your way to finacial freedom.
It is simply a matter of then understanding how money works, particularly borrowed money when it is left to compound, to be able to accelerate your returns.
Let's look at how
building wealth with just one property investment
of $300,000 can vary greatly over a short space of time.
Return from Your Deposit (this page) to Wealth with Property home page