"I am a 30-year-old childcare worker, earning $50k per year. I would like to invest, have always thought about property, but not sure if that will be the best strategy"
- Hannah in Canberra, ACT
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The most important step is to determine what is the most appropriate type of investment for you. As a financial adviser, our job is to discuss and weigh up the pros and cons of the various options on offer. Property is a popular choice of investment due to the attractive nature of being able to see and touch it.
However, it has its disadvantages such as the fact that it normally requires a significant amount of capital to purchase to cover a deposit and other relevant costs. Another disadvantage is its illiquid nature - essentially if you needed to take money out of it, you would have to sell the whole property, which is never an overnight process. If you are purchasing a single property, there is also the lack of diversification of being invested in a single asset, a single asset class and a single location.
Despite highlighting those potential disadvantages, property does have its advantages that cannot be ignored. The key really is what is the right approach for you.
I would say one of the biggest mistakes I see around investing is when one invests purely ‘for the sake of it’ without considering their goals. Your investing is most effective when it is tied to a goal as it will help you determine the appropriateness of the way you invest your funds. Your approach should tie back to your goals.
A vital factor in determining an appropriate investment vehicle is going to be how much you can afford to initially contribute and how much you would be able to invest on a monthly basis.
Another point to consider would be your investment timeframe. You need to ask yourself how long you can afford to invest the money for without accessing the funds.
It is also important to take into account your risk tolerance as you need to determine how much risk you are willing to expose your funds to as this will help determine the right investment to choose. Some people are very comfortable with risk while others would not be able to sleep at night if markets were to fluctuate or be volatile or their investment was to fall in value in the shorter term.
I actually have an episode on this topic as part of my podcast show titled ’Sharing More Than The Sheets’. It is a financial and lifestyle podcast to help couples make better financial decisions so that they can focus on the things they love. You can listen via Apple, Spotify and all other podcast platforms.
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