Best Way to Invest Money Blog

In Australia over the past 50 years property has averaged around 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 has averaged growing at 2 – 4% p.a. higher than inflation, making it a very solid investment.

It seems apparent that one of the most effective ways to build riches is to accumulate a portfolio of investment properties (over the space of 7 to 10 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 else’s money (a bank loan) to secure an investment of a far greater value than you could have, using only you own money.

If you invested $10,000 directly into shares that were growing at 10%, then in 7.2 years they would be worth around $20,000. On the other hand if you had used that $10,000.00 as 5% deposit on a $200,000.00 property and borrowed the remaining 95% plus establishment costs. If this also grew at 10% then in 7.2 years your investment would be worth $400,000.00. Meaning that by leveraging your investment you have gained an additional $190,000.00.

It is possible to borrow 100% of the purchase price of a property plus expenses by securing the deposit against your own home, so that you don’t need a cash deposit.

There are two types of Debt. Good Debt is where you borrow funds to secure a capitally appreciating, income-producing asset. Bad Debt is where you borrow to buy a capitally depreciating, non-income producing item such as a car, boat or holiday.

There are many different strategies for property investing, which suit different people depending on their current income or financial position.

A combination of using Good Debt to buy property and then allowing Compounding to do its work – is probably the most effective way of creating wealth. But this is definitely not a “Get rich quick scheme”, on the contrary it is a “Get rich slowly” scheme which works most effectively over a 10 to 20 year period. It takes patience and perseverance, but after having spoken to dozens of other property investors, many of whom have become multi millionaires within the space of 10 to 15 years, I am certain that it is worthwhile.

In these days of the ever-present Internet, there is almost nothing that we can’t do online. Making and managing your investments is no exception. Online investing offers many benefits as compared to traditional methods. For one thing, decisions can be made instantly and transactions are swift, allowing the investor to take advantage of rapidly changing conditions.

Another advantage of online investing is the commissions on trades are frequently much smaller. If you’re an active trader, that can add up to substantial savings in any given month. With an online account, you can study your portfolio at any time, instantly, twenty-four hours a day from anywhere in the world that has Internet access.

There is, of course, a downside to all this convenience and instant trade orders. You need to exercise discipline because online investing does make it extremely easy to plunge into a bunch of trades pretty much all at once. Depending on your risk tolerance, this can be a very dicey proposition.

In any case, step number one is choosing a broker. You’ll need to choose either a full service or a discount broker. If you’re looking for help and advice, the full service broker should be the choice. Their commissions are typically higher, but if you’re new to investing, especially investing online, you might feel more comfortable with a safety net that such brokers can provide.

If you’re experienced, the discount broker may be the way to go. Discount brokers usually don’t provide the research and insight that full service brokers do, but if you know what you’re doing it’s the more economical way to go.

Most of the major, household name type brokerage houses offer online investing. There are many others who have blossomed since the advent of online investing and specialize only in virtual investing. Communicate with several of both varieties before settling on the broker you feel most comfortable with. For in depth information about the fascinating world of online investing, visit my site through the link in my resource box below.

The amount of money that you must deposit to open an account varies widely from broker to broker. Allowable margin accounts also vary greatly. You’ll have to do your homework to gather information on these topics with the various brokers you contact. Here, too, you don’t have to talk with anyone if you don’t care to. Most of the information you seek is available online.

The world of online investing is a modern day adventure that can bring great rewards is the waters are navigated intelligently. Exercise caution in your investing and follow the old advice to never invest more than you can afford to lose.

So perform your due diligence, open an account and start trading the modern way and the smart way - start trading online. Good luck.