Successfully Reduce Your Investment Risk When Buying Property

There's no doubt that some investments are subject to higher amounts of risk than others are. Even savings plans are risky to some degree. In order to maximise your return on investment you need to consider risk any time you place your money in something new. A good way to reduce your investment risk is to place your money in property.

Property, like all investments, has potential risks as well. At Fruitful Property, we take a strategic approach to risk management. This includes developing individual risk management strategies with each client to make their money work hard at minimal risk.

The major potential risks of property investment include:

  • property prices can, and do, fluctuate
  • interest rates can rise or fall
  • legal ownership and title issues
  • property developer may go out of business or the completion of a development may be delayed (only relevant to off-plan property)
  • properties require maintenance and management
  • cash flow interruptions - there may be periods when the property purchased may be vacant
  • risks based upon the legal, political, currency and economic conditions of other countries you invest in.

Understanding these risks and having a clear risk mitigation strategy is an essential part of any informed investment decision.

Other Types of Investments

For some reason, power investors prefer to place their money in more exciting vehicles. Stocks and bonds are good examples. However, history shows that stock markets are much more volatile and bonds a lot less reliable. It is not that stocks and bonds are a bad investment, but they are too risky and unreliable to make them the centrepiece of a high-yield investment portfolio.

Why does property offer better returns with lower risk? Well, there are two primary reasons.

First, property has historically increased in value over the long term. Even during sustained periods of economic malaise, as we've seen in the UK, property values over 10 or 20 years remain fairly stable. In most cases they rise.

Second, as long as there are people, there will be a need for housing. Property offers the opportunity of investing in something that will return a monthly income year after year. In addition, as a rental rates go up, so does your income. All of this translates into a very good return with a very low risk.

Compound Your Wealth with Property

When you get right down to it, purchasing property is the best way to reduce your investment risk and benefit from compound capital growth at the same time. The secret is to invest in rental property; you do not want to purchase property with the intent to turn around and sell it within six months.

When you buy rental property, you are building a portfolio based on a long-range strategy. Most investors expect to hold onto a property at least for 10 years; some hold on much longer. With every passing year your debt load is reduced, your equity rises, and your rental rates go up. This represents compound capital growth unlike any other investment.

Risks aside, investing in property still is the best way to reduce your investment risk without hurting your yields. If you want to know more, Fruitful Property is more than willing to help you get started. Our years of experience and proven search methods combine to ensure we source only the best properties. We want to help you succeed as a property investor. But you have to contact us first.

Google+

ACT NOW
What Next
Rich Dad's Cashflow Quadrant

Rich Dad's Cashflow Quadrant

by Robert Kiyosaki

a compelling explanation of the core financial principles of behind being successful in work, business and investing.

Nick Hopkinson

Winning!

Winning!

by Sir Clive Woodward

exciting and practical insight into the business skills and sports psychology behind how England won the Rugby World cup in 2003.

Nick Hopkinson

The Art of the Deal

The Art of the Deal

by Donald Trump

like him or loath him, Trump shares his story and the drive that created a self-made billionaire, mainly from property.

Nick Hopkinson

FT Weekend Money supplement

FT Weekend Money supplement

essential weekly reading for UK investors wanting to know the best ways to invest and protect their money.

Nick Hopkinson

Renting Out Your property for DUMMIES

Renting Out Your property for DUMMIES

by Melanie Bien

straightforward advise and practical checklists for managing all aspects of your UK rental property.

Nick Hopkinson

Steve Jobs

Steve Jobs

by The Exclusive Biography

inspired stories and life lessons from the man who created Apple and then changed the world twice!

Nick Hopkinson

Winning

Winning

by Jack Welch

sage advice on business and leadership by the arguably the greatest business leader of the 20th Century.

Nick Hopkinson

Previous Next

Fruitful investor, Nick Kendall is on course to reach his personal equity target from his existing properties by 2014, ultimately giving him financial freedom. Here’s how he did…

Nick Kendall

“Since 2010, Fruitful have helped me buy five post-repossession investment houses close to London. I am very busy growing my company and would never have had the time to find these…

Shelton
read more

got a quick question?

We're here to help! Just fill in the form below and we’ll get right back to you.

Are your investments working as hard as possible?

Earn 15% annual return on your money with off-market bank repossessions.

Access off-market, high yield investment properties.

Act now. Profit from a recovering UK property market.

Fruitful Property Investment
Intrigued call us now
+44 (0)20 7148 5858