People invest for all kinds of reasons. Some wish to retire earlier, some wish to work part-time and others may want to stop working all together.
Depending on how much risk you want to take and what your investment goals are, the types of assets you should invest in will vary. Different assets have their advantages and disadvantages.
Your investment goals should dictate the type of asset you invest in. However, if your main investment goal is to supplement your regular income with frequent investment returns; property is the investment for you.
Why consider real estate?
Investing in property, whether it is commercial or residential will provide the most frequent and stable returns of all the asset types.
Here’s a few reasons why real estate investment is so popular:
- Capital growth
- A frequent and regular income
- You can insure your asset
- Tax benefits and incentives
- It’s accessible to anyone
So we’ve outlined the reasons why property can a great stable earner, but how does it compare to other popular asset types?
High interest term deposit
Let’s start with an example of investing in a high interest term deposit.
When investing in this way, the investor may not have access to the interest earnt until the term deposit matures. This could be anywhere between one month, two months, six months or even two years! Be prepared to wait – and wait – for access to funds while your term deposit matures.
If you’re looking to supplement your income with regular returns, a term deposit probably isn’t suitable.
Shares are one of the most popular assets in which to invest. They provide good capital growth, the entry and exit fees are relatively low and in terms of being able to diversify a portfolio, they provide great opportunities.
However, shares aren’t the best asset class if you want a frequent and regular income. Shares often have restrictions so they won’t always provide frequent returns.
Firstly, some companies do not offer income in the form of dividends, such as mining companies. For those companies that do offer dividends, the company may withhold them from investors and decide to re-invest any profits back into the company. Secondly, if they do distribute dividends, it will probably be quarterly or every six months.
While shares can be a great investment, they may not be suitable for those expecting more frequent returns.
How real estate delivers
Investing in property has many benefits, one of which is the frequency of returns.
If you own a commercial property that’s being leased, you’ll probably receive rent every month. This regular payment is in addition to the capital growth your property is likely to provide down the track.
A property investment provides regular returns, as well as capital asset growth. Commercial property is considered by some to be a high risk investment but its appeal is due the fact it can deliver very high returns. It all depends on where you buy, the expected yield and how you’ll weather a period without tenants.
Residential property can provide even more frequent returns than a commercial investment since tenants generally pay rent monthly, fortnightly or weekly.
Not only are the returns more frequent, they’re also far more reliable than dividends. So long as there’s a tenant in the property, you’ll receive a regular rental return.