Savings in Banks Vs Real estate is evergreen.
People generally explore various forms of savings as a way of gaining wealth. However, this attitude in my humble view is more traditional and in current times not reliable to create wealth and financial independence long term.
I recently had the opportunity to talk to a self made multimillionaire , about saving, real estate, and wealth creation in general. As someone with strong views on the matters, she brought up some valuable insights to the table. And I want to share the main points of our conversation with you today.
She said it's not unusual to come across pre-retirees or retirees who have a decent amount of wealth. In particular, she was talking about homeowners with from $500,000 or $1,00,000 in their super.
But if you dig a bit deeper and ask them how they got there, you'll frequently find that their wealth came from property.
Perhaps they bought a property decades ago, held on to the family home, or inherited some property. It then sat in their possession and grew in value.
Almost none of the people in that kind of financial situation built their wealth through saving money. And that's no wonder, considering how much saving and spending habits have changed. the return rate on savings in any financial institution is next to negligible.
Today, we're in a place where consumer spending has revolutionised in the past decade and further changes awaited in the next 5 years.
People accumulate so much debt on their credit cards and there doesn't seem to be a new wave of saving for the future.
In fact, savings might have restarted during COVID phase.
On the other hand, when considering real estate as a means of growing wealth, things look quite differently.
Currently, interest rates are as low as they can be.
Here's an example of investment:
If you can buy a quality asset in a growth area that delivers a 5% or even a 4 % rental yield, and the interest rate is just around 2% to 3%, it pretty much evens out.
When you can buy a great asset that's worth, let's say, $500,000, and you can hold it for as long as you please, what's stopping you?
The only thing that could be holding you back is fear.
But what are people afraid of, precisely?
Property isn't a regulated financial asset. And by default, there's a strong bias against it, especially from people who don't really understand how the market works.
Luckily, the walls around the subject started coming down when financial planners, accountants, mortgage brokers, and other licensed buyers agent professionals opened up their eyes a bit.
And the thing that made them see the whole picture clearly was that they either built wealth or witnessed others building wealth through property.
Savings might be a thing of the past, but real estate is evergreen.
If you are ready to take the step or know someone who needs to take that step, I and my team are here to assist.