When people look at investing, there are three main areas to choose from; shares, property or cash deposited in interest bearing accounts.
Why has property proved to be the most effective choice?
In Australia and many other places around the world, over the past 50 years property has averaged 10% p.a. compound growth. (Carefully selected properties have averaged even greater returns). Not forgetting that investment properties also generate an income from rent.
Median priced property in Australia have averaged growing at 2 4% p.a. higher than inflation, making it a very solid investment.
One of the most effective way to build riches is to accumulate a portfolio of investment properties (over the space of 7 to10 years) and then let the power of Compound Interest work to your benefit.
The main reason that property can be utilised more effectively than shares as an investment, is due to the added benefit of being able to highly leverage an investment property.
Leveraging is where you use a small portion of your own money along with a large portion of someone elses money (a bank loan) to secure an investment of a far greater value than you...