You've probably heard that individual savings accounts (ISA) are great investment tools for the average consumer. They're actually not. They are a good investment, but not a great one. The difference comes down to the amount of yield a savings account offers as compared to other investments.
There's another type of investment that offers comparable stability but higher yields than savings accounts: property investment. To help give you a clearer picture, we'll compare the yields of both. By the time we're through, you'll see that even high interest savings does not compare to the potential yield of investment property.
If you have a savings account, hopefully you shopped around to find the best interest rate available. At the time of this writing, the highest rate we could find was 2.67%; most accounts were closer to 2%. Believe it or not, some of them were not even offering 1% interest.
If you are depending on savings and investments to secure your financial future, interest rates this low are unacceptable. However, it gets worse. Throw in the rate of inflation and it turns out you are actually losing money in the long run.
For the better part of three years, inflation has been about 5%. It wasn't until the second quarter of 2013 that had dipped below 3%. By allowing your savings and investments to depend solely on low interest accounts, you are not making money fast enough to keep up with what inflation is taking away.
Investment property is an entirely different enterprise. When savings and investments include property, the potential exists to generate returns as high as 8% per year. What's more, investors who hold onto their properties for 10 years or more can actually double their money.
How is this accomplished? By purchasing buy-to-let property.
To be clear, we are not talking about purchasing bargain homes only to turn around and sell them six months later. Such a short-term strategy does not yield the high profit margins we are after. For the greatest yield, it's better to hold on to properties and rent them year after year.
This is a long-term wealth building strategy proven to be successful. All you need to make it work for you is some sound advice, quality properties, financing, and a will to adopt a new strategy for your savings and investments.
The process for making investment property work is straightforward. The following is a brief outline of the steps most investors take:
There is obviously more to investing in property than what's listed here. However, this is a start. Fruitful Property is here to help you add rental properties to your savings and investments. If you are ready to build a dynamic and powerful portfolio for the future, call us today.
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