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Finding financial freedom through property

August 29, 2018 BY

Effectively investing in property can leave people with a steady source of income, while compounding capital growth in the long-term to provide them with options later in life.

INVESTING in property can be a great way to find financial freedom later in life, this is why, according to the Australian Taxation Office, the proportion of investors in Australia reaches its peak for those aged between 55-64, before dropping off again after 65.

Effectively investing in property can leave people with a steady source of income, while compounding capital growth in the long term to provide them with options later in life.

When starting to think about finding financial freedom through property investments, it is important to both get your head around all of the considerations of investing in property, but to understand that there is a common misconception of property investing and the build-up of wealth.

Investing in multiple properties to accrue wealth is not the same as diversifying your wealth. “Diversifying” your investments is a term often used, but it relates to placing your money in various asset classes.

Property is the one type of asset class, investing in multiple properties means concentrating your wealth, not diversifying it, as your money held across multiple properties is susceptible to fluctuations in the one market.

With that in mind, there is diversification possible in your property types, for instance, you may look into investing interstate.

Homes in Hobart continue to maintain their popularity for interstate investors due to their affordability, growth potential (some of the highest in the country) and low vacancy rates.

Switching from long-term growth Relying on your properties as a source of income when retiring often involves a switch in your financial strategy away from one of long-term growth (which has been your strategy for the past 30 years) to one which relies on a larger cash flow.

Properties that attract a higher rental yield as well as low vacancy rates are good options for increasing cash flow, while avoiding the use of negative gearing in your investments will help you keep your cash flow higher.

Switching your property types Move away from energy-hungry investments (those that require you to deal with agents, maintenance, emergencies etc.) to properties with less demand on your time.

Investing in student accommodation, serviced apartments or townhouse investments can be good ways to reduce the amount of time you have to spend on the maintenance of the property.

Issues of liquidity
Using investments as your source of income often means having investment types that can be liquidated quickly to open up a source of cash flow.

Property is certainly one of the strongest long-term generators of wealth, but is famously hard to sell quickly, this is why it is important to diversify your income sources later in life after relying on long-term growth in property earlier on in your career.

Seek advice
You need a solid and well-planned strategy for your retirement, which is where an accredited financial advisor will help.

They can help you calculate exactly what you need come retirement, and how best to reach that destination.

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