If you have R35,000 available to invest and you consider buying shares, you can buy them on the stock market directly or through a broker.
The best advice would be to find an experienced broker to assist you with research and investment.
The problem is that R35,000 only buys you shares to the value of R35,000, says de Waal.
Noting that R35,000 can be used as a deposit on a property selling for R1m.
The balance being paid for by the bank or OPM!
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You can use a tenant to pay for the property finance and expenses in full.
You can also receive the full income and capital upside.
In essence, you get the property for free.
Coming back to your R35,000 worth of shares: If you invested wisely and your R35,000 share portfolio grows by 6% per year, after two years you will be about R4,200 richer.
If your R1m property grows in value by the same 6% per year, you will be R60,000 richer, says de Waal.
Thus, your return on capital invested (the deposit only) is 171%, and not 6%.
This is also not taking into account your rental income on the property. This should deliver around an additional 12% gross income yield per year.
Your rental income also escalates annually by more than inflation. If you buy a cashflow-positive property from day one, your property will pay YOU, with the rental amount increasing every year.
If you want to draw money from your share portfolio, you need to draw from your growth and/or capital, taking you back to square one.
Your property, however, still grows in value and does not lose equity, according to Anton Breytenbach, CEO of Empire Wealth.
Do your own research to become and expert investor, says de Waal.
One hears horror stories of brokers who invest a portion of a pensioner’s money in a high-risk investment to achieve maximum returns, and then loses most of portfolio when the share prices come down.
Author: M De Waal
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