At The Bayside Investor we like to position ourselves as a “Property Friendly Financial Adviser”.  That may sound like a strange statement but let us explain what we mean.  If you speak to someone in real estate, they will tell you that Property is and has always been the only way to build wealth.  If you speak to a lot of other Financial Planners or Stockbrokers, they may suggest to you that shares are the “only way to build wealth”.  We like to take the practical middle ground and take a balanced approach. 

It starts with understanding your cashflow and equity position, your attitude towards debt and risk, and your investment timeline.  It is also important to consider a clients asset mix before looking at next steps.  As the debt involved with Property Investing can be higher, they can often work well with longer investing timelines, providing a better opportunity for the asset to increase in value.  Shares can work well if a client would prefer to invest with cash or a smaller loan, or may not have as long of an investment timeline.

Another important consideration is the use of cash vs debt to invest.  Clients on higher incomes and with longer investment time frames may get amplified returns from using debt to invest.  Others who are closer to retirement may be better off focussing on using available cash to invest, rather than taking on large amounts of debt.

A lot of people will often perceive shares as a higher risk asset vs property but that is not necessarily the case.  Shares are valued everyday, and as such their value does rise and fall with market conditions and the news cycle.  Property is only valued every time it is bought and sold which can make it appear as a “lower risk” investment.  We like to see our clients work towards a diversified portfolio of property and shares, inside and outside of superannuation so they can benefit from the amplified capital growth from property, together with the lower transaction costs and liquidity available with share investments.   

Also to be clear, we cannot provide specific property advice (i.e. which property type to buy in which area and when) but we do consider property as part of a broader investment strategy.  This can include how much debt to take on at what stage of your life, pro’s and cons of property vs shares, encouraging client to take a long term view to avoid paying too much in transaction costs if they buy/sell or move too frequently.

Finally, it is really important to have a good Mortgage Broker in your corner to support you along your investing journey.  If you already have one that’s fantastic.  If not we can introduce you to one of our referral partners.