Saving a deposit for your next property investment can seem like a huge chore. There are some savers that put money into their piggy bank every week without fail, those people are so dedicated and committed.
But if your like the rest of us, you will find a way to spend that money and then tell yourself ‘I’ll save double next week”. Only next week rolls around and you have found another way to spend that money – oops!
Whichever savings habit you can relate to, all of us could use a hand to make our deposit savings grow a lot faster. This is how investment can help.
Have you ever heard the term ‘spend money, to make money’? It actually means, Invest money to make money. Nobody ever got rich spending money.
Here is how it works:
- Look for a small investment which won’t break the budget and will earn a good return
- Use gains to reinvest
- Watch deposit savings grow
It’s a pretty simple method really. It’s small scale investing to practice for the main event – purchasing a property.
Here are some ideas of where to invest your money, to make your deposit savings grow faster:
- Do you own your own home? Check your equity, you might already have a deposit!
- No useable equity available yet? Consider what your property would be worth if you do some renovations. This is a risky action and needs to be done in the right market at the right time, but a good quality renovation can increase your property value and create more equity than what it cost you to do the renovation
- Do you have a granny flat or ground floor unit? Consider renting out your additional space to earn extra cash for your deposit. If you don’t have extra space, consider building a granny flat for this purpose
- Try your hand at shares. This requires knowledge of the share market or a good share broker to guide you. Savings might grow slower than expected, but you may find it produces better returns than a savings account
- What are the current term deposit rates? Term deposits normally offer higher rates than a savings account, depending on what rates are on offer. It also only requires a few thousand dollars. Check the rates of all lending institutions, to find the best place to invest your cash
- Alternative investments such as carparks and ATMs. These specialised investments require a smaller investment of cash, normally anything up to $25,000, sometimes more for car spaces in central CBD locations. Be aware there are maintenance costs and other fees. Speak to a specialist to work out if the yields are worth the investment
- Fractional investment is a new investment concept using online platforms as the middle-man, to purchase property as a share or unit. The yields are based on full ownership, only the investor receives much less, because you have to share the profits with other shareholders. A slow way to increase your deposit, but much better than a savings account
If you need help planning your budget to increase your savings, speak to us here at JR Prosperity. We help our clients to save their deposit faster and get into the property market sooner. Contact us on 1300 522 562.