Consider these investment alternatives and you may just end up being better off...

Buying a home has been hailed for generations as an essential part of the Australian dream. But with house prices increasing faster than earnings, getting into the property market seems more like an impossible dream for first home buyers. You may even be better off renting in the meantime before attempting to get into the property market.

Australian capital city house prices soared by almost 8 per cent in 2014(1) while wages growth fell to 2.5%(2)  - a record-low.

…move into other areas

If property seems out of reach for you at the moment, consider investing in other assets instead of buying a home now or in the future - or to save a home loan deposit more quickly.

You can aim to build wealth with shares, managed funds or a fixed-term investment. And if you’re saving a deposit, some investments could give better returns than a basic savings account.

Some investment options 

Consider these options and remember that all investments involve some risk.

1. Shares 
When you buy shares - which you’d normally do through a stock broker or online stock broking service - you’re essentially buying part of a company. You can normally buy and sell shares anytime with no minimum time limit imposed on the investment term.

Building a portfolio of shares in different companies and industries can be financially rewarding. But because markets go up and down there are risks - your investment balance is likely to either increase or decrease, and so on throughout different market cycles. 

Start by gaining an understanding of share market cycles and your own attitude to the risks they present.

2. Managed funds 
When you invest in a managed fund, your money is pooled with other investors’ and managed by an investment manager. The manager buys and sells shares or other assets on your behalf that ideally increase in value. The fund then distributes income - often called distributions - at predetermined intervals.

Managed funds can be offered by managers specialising in a particular investment technique or industry (sector). They can provide access to assets and markets normally unavailable to individual investors. And you can often invest with a relatively small amount of money and make regular contributions to build your investment over time.

Some managed funds specify a minimum investment term, although investment returns and risk levels cannot be guaranteed.

3. Fixed-term investments 
Rather than investing for an undefined period, you may want more certainty.

Fixed-term investments offer opportunities for predetermined periods at declared rates of interest so you know exactly how much you’ll end up with at the end of the term. The downside is you’ll generally earn less than you would with other types of investments and if you withdraw your money before the end of the agreed term, a penalty will apply.

Fixed-term investments can include unlisted debentures, secured or unsecured notes, bonds and term deposits. Each type will offer specific terms, conditions and investment characteristics, normally outlined in a prospectus.

4. High-risk investments 
High-risk investments can be complex, even for the most experienced investor. It’s important to consider the potentially high levels of risk before investing in assets like exchange traded products, futures, options, warrants, hedge funds and others.

Some high-risk investments are offered with the potential for higher returns, which can be tempting for investors aiming to make money in a short period of time. The reality is that you can lose money very quickly.

What’s right for you? 

Investing to build wealth or buy a home can be rewarding. Whatever you choose to invest be sure to seek financial advice to ensure the investments you make match your own risk tolerance.

And ask your financial adviser about borrowing to invest - while the interest on a home loan for a property you live in is not tax-deductible, borrowing to invest (gearing) in shares or managed funds can be.

Source: amp.com.au

1 ABC News, 2 Jan 2015, abc.net.au/news/2015-01-02/home-prices-rise-nearly-8pc-in-2014-boosted-by-strong-december/5996972
2 Business Insider Australia, businessinsider.com.au/wages-growth-in-australia-is-at-2-5-the-lowest-since-records-began-2015-2

I've come to the conclusion that 5 weeks is a really short period of time... I have completed runs of 25km, 33km, 30 km and 21 km in that time with shorter runs in between. I feel like the bigger battle has been recovering in between runs and letting my body adapt to the stresses of long distance running.

Realistically I can now see how marathon training has been used as an analogy for wealth accumulation you really do need time to achieve results next time I'll give myself more time to train!! Clearly the earlier you start the better the results, exactly the same with wealth accumulation (or debt reduction for that matter)

Fortunately I have come through unscathed apart from walking gingerly the whole time trying to recover in between runs. 

I'd like to take this opportunity to ask for a few dollars to help the children, if you can spare anything please follow the link below. I feel that my wife Katie summed up why I am doing this quite well on her facebook page - 

Hi All,

Sean's running in the Blackmore's Sydney Marathon on Sunday. He's running 42.195km (that's a long way). He's been training for 5 weeks now, which means some very early mornings starting at 4.30am, working super hard and often isn't home before 8pm, spending time with his crazy kids and helping me.

He's been doing this to raise money for the sydney children's hospital, as one of Coop's mates in his class, Hugo has Neuroblastoma stage 4. He was 10 months old when diagnosed, and he had 5 tumours each the size of a peach in his tiny little body. 1 behind each lung, 1 in each adrenal gland and 1 around his spine. He has had 8 rounds of chemo, numerous surgeries , lost a kidney and had part of his bowel removed .
The last surgery in,July 2015, to remove part of the tumour that has invaded his spinal column compressing his spine. He still has 5 tumours - you can't remove neuroblastoma fully - it isn't a solid tumour - it's like chewing gum and sticks to everything it touches.

I'd really appreciate it if you could donate even just a small amount to his cause. It would also boost his spirits a bit. I've inserted the link below.

Kt xx


http://bsrf2015.gofundraise.com.au/page/SeanThomas