Long Term Investment Made Easy – the benefits of investing long-term.
Adopting a buy-and-hold strategy is our preferred way to invest and we believe that investing for shorter time frames is less likely to generate lasting wealth.
Investing for the long term will almost ensure you do not make any losses as good, well-positioned property, particularly in our major capital cities, never stays down for very long. We do see “corrections”, particularly after long periods of continuous price growth but invariably the market will surge forward again after a few years of little to no growth.
Long Term Hold should ensure:
- More time in the market
If you are investing in property you should be prepared to hold for at least one full cycle. This may take up to 12 or 14 years. During this time the capital value generally increases. In the past, property values generally doubled every 10 years but this may no longer be the case. Over the long term, property is a very forgiving asset class and if you chose a good property investment in a good location, most property values will increase substantially over a cycle.
- Increasing rent returns
It is always best to buy at the beginning of a growth cycle when yields are high. Investors do not always take into account the long-term benefits of an improving cash flow as rents increase over time. It is important to consider future returns, what will your property be yielding tomorrow, not just what it is achieving today?
If you are receiving a 5% return on your investment today, rental increases over time will lead to your investment providing you with a higher income, very often turning your negatively geared property to a cash positive property putting money in your pocket.
- Potential for above-market capital growth
Successful developers in particular, purchased areas of land very often in the outer areas of our major capital cities. Developers buy for the future potential of the land.
Our recommendations to property investors are to purchase investment property in a balanced way in order that lifestyle is not affected. This makes it easy to hold on to for the long term and allow for maximum growth without unduly affecting lifestyle.
In purchasing investment properties, consider the long-term effect of rent. Always do your own due diligence and check out the information and research you are given as this can give you the edge and provide you with opportunities many investors miss.
