Investment

 

Investment Comparison

Property

Property Investment provides relatively safe capital growth and cash flow in the long term. Buying a property takes a deposit or equity and enough rent/income to service the loan. If you had $50,000 and bought a property today for $400,000 and paid it off over 15 years then you should have $1 mill in equity and passive income of $50,000 year. You can have a management agency look after your property. You can also sell the property or take out loans against it for extra cash.

Shares / Pension

If Investors buy shares outright they can expect them to go up 10% a year. So $50,000 in shares  should be worth $150,000 in 15 years. They will also pay dividends which can vary widely. If it was 10% dividends then an Investor can earn $15,000 a year. However as we have just seen these shares can go up and down in value and companies can cease to exist so the shares disappear and your Investment disappears with it. Even banks can disappear. At least a property can not disappear. 'Never have so many people based their retirement on the share market'. Robert Kiyosaki. As the baby boomers retire and take more and more money out, it will be interesting to see what happens. You can borrow to invest in shares however if you get a margin call you can lose everything you own. So in most cases borrowing to buy shares is far more risky then borrowing for Investment Property. However if you take the time to learn and invest wisely you can make a lot of money out of shares.

Business

Investment in a traditional Business in most cases means you are buying a job. However some businesses are Investments because you can leave them and they still make money without you. If you had $50,000 to invest you could probably buy a business for $100,000. You would ideally look for one that was managed by someone else and generated $50,000 profit for you. In many cases businesses take 7-8 years to generate profit, however it depends on the business and what you can do to improve it. So it is probably quicker then property to generate passive income, but also more risky as 85% of business failure is due to poor management. Do you have the skills? Investing in other forms of business that produce passive income can be much lower. eg MLM companies, direct sales businesses or internet businesses. Like any Investing it will take time. Learning new things is vital for success with anything that is new to you. Business Investing however provides the potential to massively increase the value and cash flow of an asset which is unrivalled with other forms of Investment. Our future will be determined by where we now choose to put our Money.