Most of us have never been taught how to save, let alone invest. It is a long while since I went to school and I’m not sure what they are teaching kids these days, but I doubt that it will be anything to do with creating wealth.

Younger generations are living differently to their parents; they’re marrying later, spending more on “lifestyle” and many fearlessly take on credit card debt. As a result, they have significant earning capacity, but few assets.

I must admit that when I was young, I couldn’t spend money fast enough! But inevitably a time comes when you need to manage your finances better.

To be financially independent you need to build an asset base that generates passive residual income, like a sound property portfolio.

So what are you doing about it? I am here to remind you and to nag you to get started. If you don’t know how all you have to do is ask.

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The average Australian has been taught to invest in superannuation or set aside 10% of their income to build a retirement nest egg.

This is fine if your goal is to be a middle-income earner – but it will never make you wealthy.
The trouble is the concept of building a “nest egg” is inherently flawed.

Your goal shouldn’t be to accumulate a lump sum to slowly spend during retirement, hoping you don’t outlive your money.
Rather you should build an asset base that generates ongoing passive income; a self-perpetuating money machine – like a portfolio of well-located income producing properties.

As I have pointed out before we are living longer and as such we will need more income for longer. At the current bank interest rates paid on deposits you will be lucky to get 4% on your money, but if we use 4% in the calculation; to receive an income of $52,000 ($1000 per week) in your retirement you will need $1,300,000 in savings today, which will have to be indexed as time goes on.

So can you save $1.3M? That will mean saving $65,000 for 20 years with after tax income. Surprised? Not many people think about this and we certainly are not taught any of this in school.
So what is your plan?

As I have said before I am biased towards property, because I have assisted people to use property to create wealth.
It is an established fact over the last 50 or more years that property in Victoria doubles every 7 to 10 years. So why go past it! Add to this capital growth a return of 4% or 5% and you have your answer to the dilemma of how to provide for your retirement with a total return of 10% per annum rent plus capital growth), that will index by virtue of rental increases.
But be aware! Although more than 30 locations across the country now have rental yields in excess of 10 per cent, with all but one of the states and territories offering the impressive returns these top-performing suburbs are locations that are susceptible to seasonal fluctuations, including the tourism-based economies.

There is no substitute for the tried and tested suburbs that keep on keeping on. As I said in a previous post, it is not about ‘hotspots’ it is about doing your homework to find suburbs that have remained steady and doubled in the 7 to 10 year timeframe. Either that or look at where the growth suburbs are that have shown a steady capital growth over the last 10 years. It is hard to conceive that Caroline Springs was a paddock ten years ago.

The journey of a thousand miles begins with the first step.

Nothing beats gaining the right knowledge, planning the right strategy and then taking the right action.

The fact is that we will live longer and healthier and consequently need to think carefully about how we will sustain ourselves in our retirement. In fact, you are never too young or old to think about this. In fact the sooner you start the better.

So, ask yourself this question; ‘What does my retirement look like’ and work backward from there. Start with the end in mind. How much income would you need in retirement? What sort of lifestyle would you want for yourself? These are important questions to ask yourself.

I read somewhere recently that; Superannuation saved over 12-15 years is spent in 6 years. So how much would you need to retire on and how will you get there?

I might be biased, but property has always been my focus. In Victoria it has always been ‘steady as she goes,’ with property doubling in value every 7 to 10 years. So why would you consider anything else?

Plan ahead

A savvy way to look to the future is to “hope for the best and prepare for the worst.” Look at where you are; think about where you want to be, and set a course that will help you reach your destination.

In this economy it takes about six investment properties to achieve financial freedom. If you purchase wisely, across a number of marketplaces, with generous buffers and quality insurance in place you’ll not only take advantage of the great wealth creation that property investing is, you’ll hedge against falling values by keeping your portfolio diversified.

Ask for help. You “don’t know what you don’t know.” That’s why it’s important to ask for help from people who are where you want to be, such as active and experienced property investors.

People LOVE to share what they know. Don’t you?

Do what you love ?It’s been said… and it’s so true… that if you do what you love you’ll never work a day in your life!

Property investing can give you the financial freedom to chase after your dreams and do what you love to do.

Make property work for you, not you work for the property.

From my observations many people believe that the way to become rich is by increasing their income. So they work harder and longer and manage to survive on a basic wage and everytime they get a raise they use the extra money to buy “stuff” – a bigger car, a new TV or a bigger house. It is called a consumer society. Buy more stuff.

And on it goes – the more they earn the more they spend and now even their substantial salary wouldn’t cover their increasingly expensive lifestyle.

You see…when you focus on income you fall into the trap of spending all you earn.
More income, without the right financial understanding, habits and skills, is as dangerous to your financial success as too little income.

The solution is to earn passive income; money you make when you don’t work. Robert Kiyosaki in his books mentions the Cashflow Quadrant; with the ultimate goal; where the money makes the money and you are not exchanging hours for dollars, but where your dollars are making the dollars. The dollars work for you and you are not working for the dollars.

The question is; have you thought about this? If so, what are you doing about it? Putting your money into a savings account or Superannuation will not do it for you.

Call me biased, but I always say and will always say that you cannot go past ‘Property.’ The above diagram says ‘why.’
So I hope that this might spur you onto making some changes to your life; for the better.

Nothing changes till you change.