What is your investment strategy?
News from the property market continues to give us some positive recovery signs, even if any upswings may not be to the levels seen previously. Revealed this week is that the number of overdue payments on home loans are continuing to fall. This is a positive recovery indicator as it means that there are less borrowers out there who are struggling to pay their mortgages. It could also follow on that more people are in a position to take out new mortgages.
Once again, buyer activity has been strong in the nation’s capital cities, with Melbourne and Sydney again seeing the most movement. Property prices are seeing growth, although it is not expected to reach the same heights as previous upswings. Still, the smart investor can find some good prospects for capital growth.
Speaking of growth, the investment strategies of those in the property game have also been in the spotlight. Property investment tends to perform the best as a long-term investment strategy rather than as a way to make a quick buck. Capital growth happens over time and, as discussed is unlikely to see the sharp rises of the past. It pays to focus on areas that have a strong history of growth and further potential for capital gains as they are attractive areas for people to live.
How do you identify these attractive areas? The capital cities are a good start, with their population bases and economic prospects. Look at suburbs that are historically good performers, as well as those that are becoming ‘gentrified’ and those which are in close proximity to high-demand features. These may include popular schools, transit corridors and public transport options.
Of course, your personal risk profile will determine the investment strategy you choose to take. This translates across all investments, not just property. Those with less years until retirement tend to prefer a lower-risk or conservative investment while those with more time have more opportunity to make up for any loss that may occur through investing so can go with higher risk options such as growth funds or international shares. The rule of thumb tends to be the higher the risk, the higher the potential return, however with the increase in risk you need to weigh up what strategy you should take. It may simply be based upon what you are personally comfortable with which will be different for everyone.
Regardless of where you sit in terms of risk preference, we recommend that you seek advice from a professional financial advisor, particularly if you are unsure as to what you should be doing. Remember, there are a lot of people out there who will freely give out advice and opinions on property and investments, but in the end it is your money and your future. Investing a little in professional advice may save you a lot in losses and regrets later.