Investing in property has always been a reliable way to build wealth, but the power of compounding growth makes it even more effective. Over the past year, property values have seen significant growth, and while some have missed out on great opportunities, it’s not too late for you to invest.
Procrastination comes with a high cost as our markets continue to rise and hit new highs. A well-structured real estate portfolio is a proven long-term wealth builder. Australia's housing supply is critically low, making investment-grade properties increasingly hard to find. This scarcity presents a remarkable investment opportunity.
The Power of Starting Early
To illustrate the power of compounding growth, let’s compare two hypothetical investors, Penny and Joe.
Penny starts investing at age 23, contributing $3,000 per year through to age 65, earning an average of 9% per year.
Joe starts investing later, at age 32, but contributes $5,000 per year through to age 65, also earning an average of 9% per year.
Even though Joe invests a larger amount annually, Penny’s early start gives her a significant advantage. By starting earlier, Penny allows her investment to compound over a longer period, resulting in a much higher end value.
Here’s how their investments compare:
Penny:
Total Invested: $126,000
Number of Years Invested: 43
End Value of Investment with 9% p.a.: $1,164,423
Joe:
Total Invested: $170,000
Number of Years Invested: 33
End Value of Investment with 9% p.a.: $884,961
Despite Joe investing more overall, Penny ends up with significantly more wealth due to the extra years of compounding growth. This example highlights why starting early, even with smaller amounts, can lead to much greater financial outcomes.
Five Certainties in Our Housing Market
Despite uncertainties in other asset classes, there are five certainties in our housing market:
Inflation will linger longer than the RBA would prefer: Inflation remains a key concern, influencing the overall economic environment and housing affordability.
Interest rates will eventually decrease: While interest rates have been a concern, there is an expectation of eventual reduction, which will positively impact borrowing and investment opportunities.
The scarcity of dwellings will persist: The ongoing undersupply of housing, driven by rapid population growth and slow development processes, will continue to support high property values.
Rents will continue to rise: With demand outstripping supply, rental prices are expected to keep increasing, providing strong returns for property investors.
Strong demographics and population growth will drive ongoing demand for housing: Procrastination is the enemy of building wealth. The data clearly shows that real estate investing remains a strong, proven method for building wealth.
Don't Delay – Start Building Your Wealth Today
Delaying decisions can lead to missed opportunities and reduced returns. By seeking professional advice, you can confidently navigate the complexities of the Australian property market.
Our expertise helps you adopt a disciplined approach and stay informed, ensuring you achieve long-term financial growth and stability. We build portfolios, turning your investment dreams into reality.
Contact us today to fast track your investment journey.
