What if I can’t work or lose my job?
This is one of the ‘best’ procrastination reasons for doing nothing about your financial future. The ‘bad’ news for you procrastinators out there is that there will always be a chance of maybe losing your job or being sick but it does not necessarily mean you should not invest. In fact, arguably, because of the chance of you needing future asset to live on, it is all the more reason to take action now while you can.
Losing your job can create the fear that prevents you ever investing and getting ahead. The number one protection you can have is to ensure that when you purchase your investment property, you have your borrowing structured to take account of any eventualities. If a ‘safety net’ of say $20,000 is built in to your investment loan then this should take care of any eventualities for a year or so. Think about this – you are investing in say a $500,000 property in the belief that in 10 or 12 years it should be worth $1 million+. You have an ‘extra’ $20,000 set aside in your investment loan for unforseen emergency and you use most of it over a 12-18 month period while you find a new job. You decide to sell after 12 years or so of ownership and you get your $1million. Would it really be such a huge hardship if you were now paying a loan of $520,000 back rather than just the initial $500,000 borrowed? … And yet you have had no worries and peace of mind through using the emergency funds put in place at the time of purchase of your investment property.
There are, of course, very necessary insurance options that will replace your income if you stop work due to accident or illness.
Even job loss from redundancy, which is often only short term, can be covered by insurances.
