You’ve been with me for a while. Saving is the first level of wealth, but it’s slow and low risk. Conventional wisdom says that to increase rewards you need to increase risk. While this has a value when you look at it’s face value purpose, the risk is reduced in direct proportion to how much knowledge you gain.
Knowledge is power
We also know that knowledge is power. Nowhere is this more important than in investment products.
Build yourself a menu of financial products and grade them from perceived risk low to high and rate them according to interest. The range of investment products is large from paper assets (products derived from the stockmarket – unit trusts, EFTs, equities etc) to art, precious metals and property. learn more here.
Many asset classes
Property is an asset class that is easy to understand. Everybody needs a place to live and therefore it is fairly safe to assume that land will endure over time.
There are two kinds of property – residential and commercial. For new investors I feel residential property is the ‘softer option’.
Read and learn
My first foray into property was prompted by Rich Dad Poor Dad the bestseller by Robert Kiyosaki. His principles based on the four quadrants ESBI – Employee, Self-employed, Business Owner and Investor – show clearly that money is made from the B and I quadrants. Obviously the book goes into a lot more detail and I recommend reading it to get clear on these concepts.
Make the investment when you are young
My property portfolio started out with a few lucky purchases. I moved out of home at the age of 26 and bought my first property which I sold for a small profit. I used the profit portion as a deposit on the next property which I paid off as quickly as possible. This required living below my means and putting any spare money into the mortgage.
It is by no means a get rich quick scheme – it’s a slow steady disciplined approach – but it will give you some financial security in later years.
moneyfor2morrow 