Your money devalues over time. £10,000 today will buy you a lot more than £10,000 in ten years. The reason for this is inflation, which pushes up the cost of everything.
There are many things you can invest in, to stop this erosion, and actually increase the value of your hard earned money over time, the reasons I love property are:
1: Its real, and I can touch it
Investing in stocks, shares, precious metals can be done, but what you buy is often very difficult to quantify, with property, you have control over the asset. This means you can maintain it how you want, increase value and if there is an issue, you can deal with it personally. Personally I love this level of control/
Maybe this should have been number 1! I don’t know of any other investment where you can borrow money from the bank, secured against that asset.
The massive advantage of this is if a property costs £100,000, and you put down £20,000 to buy it, then the value goes up 2%, so the new value is £102,000. This means you have made £2000, from your initial £20,000 investment. This is a 10% return on your investment, and if you have bought correctly, then the tenants of the property are paying the cost of borrowing, and giving you positive cash-flow at the same time!
The only reason that the banks would lend on property is if they felt that it was a safe bet. If banks think its safe, then chances are that it is safe (over the long term – remember the negative equity? This is when you owe more than the value of the property!)
3: Supply and Demand
The one thing that they are not making, is land. Population is always rising, and demand will always be there (as long as there are jobs in the area)
With other assets, more can usually be made (well, maybe not gold)… With property, we only have the land we have. And with UK planning law, new building is often quite hard.
4: So many options
The whole point of this blog and Podcast is to educate about the so many ways that you can make money from property, from the high work input short term gains (like buying a run down house, improving and selling), to the long term wealth building strategies, like buying and holding, and a whole bunch of techniques in between!