Property or Cash
Written by Johnny El-Halabi
Property is a hot topic at the moment! Government stimulus, share market volatility, interest rates nearly at 0%... What an attractive asset class property looks to be at the moment, or is it?
The last month we have seen an influx of enquiry, looking at properties that our agency has listed across the state.
One would say that with the current economical climate and the MASSIVE $440Billion printed by the government and supplied to different parts of the economy thus far (with more money still to come!) to prop up the economy, why would you hold on to cash?
That is a question that is open for deliberation. Money is becoming less and less valuable with every interest rate reduction, and investment into property is looking more and more attractive.
So, do you keep your $200K in savings in your bank account earning you approximately $3K in interest per annum?
Do you use that same money as a deposit for a property, and leverage DEBT to potentially ride another double digit growth in prices? The answer seems so distant yet so far away, right? Are we approaching the next property boom?
Just remember, in times of inflation, debt becomes irrelevant.
As your $200,000 deposit and $500,000 debt on a $700,000 property moves through time, your debt will decrease with time, but your asset position will obviously increase at a certain rate. $200,000 in the bank earning you $3,000 per annum OR $200,000 on a property earning you equity of potentially $63,000 per annum (at 9% average capital growth).
So why do you still have money sitting in your bank account? Contact The Realest Estate today, let us unlock your future.
* please note that this is not financial advice.
28 May, 2020