Direct properties seems like a low risk investment, however, how safe is it? Although over the long term it is relatively stable, if you were to evaluate property each day like you do with the equities market, you might be surprised to find fluctuations in the returns.
How can we put this bluntly? Diversification is your friend; and this applies to direct property. When you invest only in direct properties, you are essentially only investing in one asset class. Whilst property has a place in your wealth creation, it should be treated like any other investment option; with caution.
Nearly one third of older Australians in low income households are asset rich and income poor (according to ABS 2016). When you invest all in property, you may be increasing your asset value over the long term, but if you run into money troubles, direct property is the least flexible investment option as it doesn't offer you the ability to withdraw emergency funds i.e. Income Poor.
Focus on creating a diversified investment portfolio in order to reduce your risk while you build your wealth through utilising the four major asset classes, Shares, Property, Fixed Interest and of course Cash. In short, don't put all your eggs in one basket.
Click on the link below to read the full article from FPA. If you have queries about your financial position, contact us today for your free consultation.