If you’re wondering whether you should invest in property, the answer is simple: Yes. This line graph shows the performance of different investment options over time. The results speak for themselves and show that property is an excellent method to build wealth.
The figures in the comparison are assuming an initial investment of AU$30,000 and that any profits are immediately reinvested. When historical data is available we used that data. Otherwise we made projections assuming an annual average.
Invest in Property
To indicate performance in this sector we’ve used a typical Melbourne investment property purchased in 1996 and held until 2016. The graph measures equity growth less debt owed from the mortgage. It does not account for the costs of owning a property for 20 years or relevant capital gains tax or land taxes.
Our Property Developments
Many of our property developments target returns between 20-40% over 24 months. For this example we have simplified the data to 30% over two years (15% per annum) and made some reductions to account for taxation and costs.
Stock Market
To represent the Stock Market we’ve used historical data of the S&P/ASX 200 Index Fund starting from 2001. This Index incorporates the 200 biggest Australian stocks. Please note, the graph represents two shares in ASX 200 which could be purchased for approximately AU$30,000 in 2001. As a result, this example only indicates 15 years of performance.
Savings Account
To represent the performance of a Savings Account we use a typical Savings Account that does not require extra activities from the account holder and provides a 1.6% return per annum.
Term Deposit
To show the performance of Term Deposits we have used four sequential 5-year term deposits with a return of 2.8% per annum.
Property is the clear winner by a huge margin. In initial investment of $30,000 in 1996 to purchase a home would grow into nearly $650,000 in equity growth over 20 years. The runner-up was our Property Development investment model which is more accessible at present. With consistent reinvestment in this model you can 10x your money (after tax).
If you’re thinking to yourself “I wish I had bought sooner to capitalise on that growth” than don’t delay any longer. Every day you don’t invest in property is another day that you aren’t profiting and living a more secure life.
While all reasonable care has been taken in the preparation of this article, we accept no liability for any direct or indirect loss or damage as a result of reliance upon this article. Always consult an expert before making investment decisions or property purchasing decisions.
