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Capital Growth V’s Cash Flow

The age old argument about Capital Growth V’s Cash Flow.  Which is better for our portfolio, or are we best have en even balance of the two?

I see Investment Properties as an asset we buy for Capital Growth.  If I wanted income then I’d be better placed with my money in a good blue chip share portfolio with fully franked dividends.  This is why most retirees have their savings in cash and shares as they are looking to generate an income in retirement.  Now the only way they can generate that income is to have some capital assets to use to buy the shares or store as cash.  So how do we go from nothing to someone that has enough equity and assets to live off?  Property!

This is where I see property fitting in and why I would always recommend that you buy an investment property for Capital Growth and not rental income.  Don’t get me wrong it’s always good to have a high rental return which helps pay for the mortgage on the property but don’t sacrifice capital growth to get this.  Do you think an extra $100/wk in rental income is going to help you retire early?  No.

As such I would always see property as a capital growth asset and try to maintain at least a 10 yr outlook when purchasing.  The property cycle can be as quick as 7yrs but can also take up to 14 years in some locations so don’t ever buy into an asset where you may need to sell inside the 10yr mark.

Property also allows you to leverage fairly safely in order to get ahead.  If you go into a share portfolio you can set up a margin loan but this can be very risky and no where near as safe as purchasing an investment property and obtaining a loan.

If you have any questions at all about Capital Growth V’s Cash Flow please contact me anytime.