Our research shows that most women do not believe that they have any investments. But if you have any ownership in a house then you are already an investor.
Would you be surprised to know that PROPERTY is quite a high risk investment?
Most women are surprised because they don’t think of property as being a risky investment and because they don’t expect to see things like Bonds, Unit trusts and Managed funds below property on the risk pyramid.
It’s quite a significant realisation for most women who are cautious about investing.
Why does property feel OK as an investment vehicle. Is it because you are more familiar with it? is it because it feels more tangible- it’s something you can see and touch and feel? Is it simply that you don’t understand other types of investment so you steer away from them?
Be curious and see what comes up as you ask yourself these questions. It may help you discover some of the barriers that hold you back from growing your financial wealth.
Property has a valid place in any diversiﬁed investment portfolio. There are two main ways to gain exposure to the property market:
Directly, by purchasing an investment property, and
Indirectly, by investing via a property fund or trust.
Let’s look at both in turn......
Purchasing an investment property is like buying a home to live in, but in this case you are buying a property to rent out, and eventually sell for a proﬁt – that’s the idea behind an investment property. It’s an easy concept to grasp. It is not as abstract as the concept of bonds or shares. And because it’s a simple idea to grasp, I’m sure this has helped explain its great popularity as an investment. But the concept of bricks and mortar being “as safe as houses” is not the case. Property is not a guaranteed source of investment growth and has a medium to high risk attached to it as well as being very illiquid.
Investment in property is different from other asset classes. With shares and bonds you pay your money and then sit back and wait for the investment to start producing gains and/or income. With property it is a different story. You hand over money, and then you hand over some more and some more. Just like your main home, a property investment requires ongoing expenses.
Successful property investment is absolutely dependent on good rates of capital growth. Also remember that if you buy directly into an investment property it is an illiquid investment; meaning it’s hard to sell quickly.
Find out all the pros and cons and tips to investing in property in our Kindle e-book.
Indirect Investment, by investing via a property fund or trust.
For many small investors a less expensive and hassle-free way of gaining exposure to the property market is to buy indirectly via a property trust. This is a type of unit trust fund where a number of smaller investors can buy into a pooled fund.
When you buy into a property fund, you effectively become a part owner of the underlying assets held by the fund. These would typically include shopping malls, ofﬁce blocks, industrial properties, residential estates, hotels and apartment buildings.
A minimum investment of around $1,000 is all that is required, so it is a lot less expensive than buying directly into an investment property. Also the units or shares you hold in the fund can be sold on the open market quickly. The investment is much more 'liquid' than if you have it directly invested in bricks and mortar.
Property funds have a unique nature and can add diversiﬁcation to an investment portfolio. As property is not so linked to the share market, it often can move in the opposite direction. So if the share market is down the property market could be going up. In the last few years however, both have been down at the same time!
There is more information on investing in property in our Kindle e-book . Download it and give it a good read BEFORE considering any property purchase.
As women ,homes and houses are familiar territory whereas bonds and shares may not be.
If you are already in the property market or have ever considered entering it then you have the intentions of an investor and there are other asset classes that may offer you greater returns, lower risk, greater ease of managing the investment and more liquidity than property.
To learn more about these different types of investment download the Kindle e-books or take an online learning course. Find out all the answers to the questions you need to know!