Investing Strategies

There are numerous investing strategies available to all investors - no matter whether you are a large or small scale investor! You might like to consider options such as company stocks and shares, real estate (including commercial property or residential investment property) or even low risk, lower return options like a fixed-term deposit. There are many factors worthy of your consideration when deciding how to invest your money - how much money you have to invest, how much risk you are willing to shoulder, and over what time period you are planning on investing your capital. Obviously a higher risk gives you the potential for a higher return. For example, a term deposit has no associated risk, but returns will be low - particularly with the current interest rates, which are extremely low.

Investing Strategies

At present, company stocks and shares represent an extremely risk, as the market is volatile. A huge number of investors have recently experienced massive losses as a result of the downturn in the global economy, and the related drop in shares prices almost right across the board. That leaves property investment as a middle option, and this is a road that many investors are choosing to head down right now. People have always felt safer about investing in residential investment property than in less tangible investments like shares. Being able to see the solid evidence of your investment can be comforting. There is also a belief that there is less to learn about real estate investing strategies than there is about shares, but there is in fact still a great deal of research to do in order to find the right property and even the right property investment mortgage product.

Finding the Right Property Investment Mortgage

If you are purchasing your first residential investment property, you will almost certainly require finance. Unfortunately, the days of being able to purchase a property outright are long gone for most of us. Instead, more often than not we lock ourselves into mortgage lasting up to 30 years! This can seem daunting at first, but if you consider that the value of your property is likely to increase substantially during the time you own it, and your monthly mortgage repayments can be largely offset by your rental income, it doesn't seem quite so scary after all. There are many different kinds of loans with each financial institute and it worth spending some quality time looking into all of the available options. It can be tempting to simply opt to remain with your existing bank or credit union, but your residential investment property portfolio will almost certainly comprise the biggest purchases you ever make! It's not as simple as choosing what to have on your sandwich, or even deciding what car to buy! Each financial institution has a range of mortgage products to suit home buyers and property investors. They range from low interest options with limited features to higher interest options with many more features. The features can include the ability to make additional payments, to have your salary paid directly into your mortgage account, to redraw additional funds as required if you are ahead, to make fortnightly payments rather than monthly, to switch to interest only for a set period of time, and to pay the loan out early. You will need to work out which features will be valuable to you - think about the fact that each of them can reduce the total amount that you will end up paying over the course of the loan. You will also notice that some loans have higher establishment fees than others, some have an annual fee, and some even have a monthly fee. Don't forget to include these extra fees when calculating the best property investment mortgage product for your situation.

Finding a Property

Your first residential investment property will be the most difficult to choose. What is crucially important is to keep in mind that this is an investment - not a home. Try to avoid allowing your personal preferences and taste to colour your judgement. You will make money on your investment properties in two ways: in the short term, you will get a rental return. This will help you to make your mortgage repayments. In some cases it can even cover all of your repayments, particularly if you have a substantial deposit and relatively small mortgage. Compare the rental returns and shifting values over recent years of properties in different suburbs. Also look into various types of property - condominium versus freestanding house - to help decide on the right property for you.

In the long term, you will increase your wealth as your property value increases. This is more speculative, and may take more time. As your property value does rise and the amount you owe on your mortgage decreases, you could choose o sell the property and re-invest your money elsewhere. Or, you could borrow against the equity of your first property to buy another. In this way, you can begin to build a portfolio of investment properties.

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