What is your money worth?
In today's world, it is important for everyone to consider a wealth growth plan. With the current shape of the economy and the legislative changes taking place around Property Investing, what was once a sure shot way of creating wealth is no longer as simple as it once used to be.
Growing your personal wealth is everyone’s responsibility and no none should ever have to apologise for that. Putting aside the woke notions (these days) about asset ownership, income inequality and wealth dynamics, if you have some, not only do you have the right to “keeping it”, but you also have the right to “grow it”. In fact, for posterity’s sake, you actually have a moral responsibility to grow it.
However, you don’t have to go too deep into the economics of the country to know that in the last 15 months, factors have emerged that have eroded personal wealth at a gargantuan scale. Not only that, new policies have emerged (in the last few days alone), whereby asset ownership now comes with a whole new bunch of strings attached.
Is Property Investing Still the Key?
Short answer: YES. However, there’s a caveat. If you already have a foot on the property ladder, then yes. If you don’t yet, then you have to seriously consider whether it is better to put your efforts somewhere else and grow what you have, instead of trying desperately to get onto the property ladder.
This is all the more true for people living in the “so-called”, western countries, specifically, Australia, New Zealand, UK, USA and Canada.
Either way, every investor must fully assess each investment opportunity on its own merit and not apply a blanket rule that says “property investing” is the key – it no longer is in some cases.
Property investing in New Zealand
Take Ms. Ardern for instance. In order to “cool down” an over-heated housing market, she introduced a bunch of new legislative policies last week. Among others, 2 key policy objectives are as follows:
- If you buy a property and sell it within 10 years, then you’ll have to pay THE tax (based on the nominal tax rate, which is akin to a capital gains tax).
- Starting later this year, you will no longer be able to claim mortgage payments (for investment properties) as a tax expense.
She said, it is to deter property speculators from the market. Prior to this announcement, in her first term, she already introduced this Bright Line test which was at 5 years. Now it’s 10 years.
Now, tell me, which one of you “speculates” on an asset over 5 years? If you said 2 years, I’d get it. But if 5 years isn’t enough to supposedly deter the speculators then how can she say that 10 years will be enough?
That is if you buy the idea that the reason property prices are overheated is due to property speculators
There’s always someone else or something else to blame… isn’t it?
Never mind the fact that there’s a deeper… much deeper economic problem in any country that has an over-priced housing market.
At any rate, if you’re in New Zealand, you REALLY have to ask yourself:
- Is it worth putting money into an asset that’s going to be pretty much locked in for 10 years?
- What could you do with that money in 10 years?
- Is there any other way for you to create/grow your personal wealth because no one knows what the next 10 days will hold (in this post-pandemic shit show), let alone the next 10 years.
Furthermore, if you have the deposit (5% to 30%, depending on your circumstances), does it make fiscal sense to put it into an asset for 10 years with little to no tax benefits after the first 4 years of ownership?
This, of course, leads to “If she is trying to cool down the housing market, then is your money really going to grow as much as you think it would over the next 10 years?”.
If you have to buy and hold, then why not buy and hold alternative assets that have higher growth potential?
If your idea (originally) was to have an additional income (from the rent component of the property), then isn’t it better to look at another cash flow opportunity?
What if you could put money toward something that offers both asset growth as well as interim liquidity?
Is there such a thing?
You bet there is. You probably interact with such an asset class every weekend or multiple times during the month.
When was the last time you visited your nearest shopping mall? I’m talking about a big mall, not a small plaza of shops. Malls like Westfield.
What if you could own a piece of Westfield, without ever having to worry about any of the headaches that come with owning such a massive portfolio of properties?
Real Estate Investment Trusts
You’ve probably heard me talk about REITs in the past. I don’t understand why everyone doesn’t just focus on these in the short term. To me, it’s a no-brainer.
REITs are listed on the stock market. They offer instant liquidity (unlike properties, which have to be sold before you can cash up, and then, there’s the issue of capital gains tax). REITs pay dividends every quarter or every 6 months and most importantly, REITs are backed by real assets (such as shopping malls, hospitals, hotels etc.) and you can get access to the growth in those assets without ever being tied to any of the headaches.
You’re simply buying shares in REITs – listed companies on the stock market. I recently published a handbook explaining how REITs work. It’s 100% free and you can have a read to see how REITs work.
A lot of people I speak to have a stigma around investing in shares. Lots of bad experiences etc. Be that as it may, everyone needs to come to a point of realising that the speed at which the investing landscape is changing, if you don’t change your ways with it, you’re likely to be left behind.
There’s nothing wrong with “not doing anything” – you have the right to sit on your money and do absolutely nothing about growing it – its your choice.
After all, you sure won’t be putting it in a savings account at 1.5% per year – would you?
You probably wouldn’t invest it in bonds either at between 1% to 4.5% per year – would you?
You’re unlikely to want to speculate on shares, because even in the best of times, they only offer 7-9% – here’s the 10 year forecast for you to check out.
So no bonds, no term deposits, no share-market speculation, where does that leave you?
Look, REITs are shares. Yes. Share market has risks. Right now, so does going to the supermarket – you never know who’ll sneeze on you and Covidify your existence within minutes.
As a smart investor, you’ve at least got to take the time and make the effort to learn about how these REITs work.
Our REIT Masters program offers significant training and ongoing support to help smart investors learn about REITs like smart money does.
However, you should take a moment to understand a common paradigm among share investors. Most people think that you buy shares into things that go up in value – like every other asset investment strategy, otherwise known as a “buy and hold” strategy, or commonly called HODL (Hold onto Dear Life) principle.
Sure, that’s one way to look at investing in an asset. You bet on the value going up. But what if you knew that the asset value is going to fall – could you bet on that instead of it going up? You sure can.
This is known as “Shorting” the stock. Most people don’t know that you don’t always have to buy things that go up in value. You can also reserve the right to sell something once the price has fallen to a certain low.
The difference between the price where you set your initial bet (say $5.00) and the reserve price (the low point, say $3.00) is what constitutes your profit ($2.00).
A different way of looking at things… isn’t it?
So with Covid and the madness that continues to fold (Hell… its been more than 12 months already), several industries (that operate as REITs) are likely to experience downturns – does that mean you can bank on their value going down and profit from it as it does? You bet.
Buy low, sell high, repeat. At the same time, Short the stocks and cash out when the value has fallen low enough for you to have earned a profit.
You will learn this and a whole lot more in the REIT Masters Program and I’ve got a webinar that explains the whole program quite simply.
99% of folks that come to the webinar, walk away knowing a strategy they never even knew existed. So if you’re interested in finding out a growth strategy that isn’t as over-crowded, over-priced, over-hyped as everything else, then you’ve got to register for the free webinar.
There’s nothing to lose.
What else are you going to do?
EVERY DECISION FOR SOMETHING IS A DECISION AGAINST SOMETHING ELSE
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Learn How To Short Real Estate Industry Stocks To Make Money From Them As They Go Further Down In Value
MULTIPLE SESSION TIMES AVAILABLE.
We have now got all our webinars in one place. Choose the one that’s most relevant for your present circumstances and take action. The worst you could do right now is to do nothing, knowing that there’s an opportunity for you to use the current crisis to your advantage.