For anyone who feels overtaken by Australia’s ever-accelerating property market, this one is for you. There are other ways to secure your financial future ….
Let’s be honest – buying property in Australia right now is out of reach for millions. With median house prices booming in Perth and soaring well past the $1 million mark in major cities like Sydney and Melbourne, far too many Aussies are feeling like they’ve missed the homeownership boat.
But here’s some good news, despite all the doom and gloom: while property has long been a cornerstone of wealth building, it’s not the only path to financial security. If you’re feeling left behind right now, there are plenty of other investment streams that can help you build wealth and lock in your financial future.
Here are seven of my favourites that I reckon you should spend a bit of time looking into.
1. Embrace the power of compounding through investments
If buying a home isn’t feasible right now, think about whether you could direct some of your savings into investments that will benefit from compound growth. Exchange-traded funds (ETFs) and managed funds are super-accessible options that let you invest in a diversified portfolio of assets.
Here’s a simple example: investing just $500 a month into a diversified ETF with an average annual return of 7 per cent could grow to around $88,000 over 10 years. Think about it as a way to not just build your wealth but also get that flexibility that property investments seriously lack.
2. Try rentvesting
If you’ve not come across this term yet, rentvesting is all about renting a home in your preferred location while investing in property in more affordable areas. In other words, you get to enjoy all the perks of your desired lifestyle while building equity somewhere else.
Let’s say you rent in an inner-city suburb for convenience and invest in a rental property in a regional area with lots of growth potential. You’ll get the best of both worlds – lifestyle and investment growth.
3. Look at real estate investment trusts (REITs)
Direct property investments might be out of reach, but REITs aren’t. As an alternative way to invest in real estate, REITs are companies that own or finance income-producing real estate across different sectors.
Buying shares in an REIT means you can earn a portion of the income generated through commercial real estate ownership – without having to manage those properties yourself. See it as a more affordable and liquid way to get exposure to the property market.
4. Supercharge your superannuation
Your super is one of your most powerful tools for building wealth over the decades. So see if you can make some additional contributions and take advantage of tax benefits and compound growth.
Even small, regular contributions can make a huge difference over time. Contributing an extra $50 every week will add thousands to your super balance by retirement age, so start small and work your way up.
5. Diversify with alternative investments
Beyond shares and property, there are lots of other investment types that can deliver attractive returns. Peer-to-peer lending platforms and private credit funds, for example, lend money directly to people or businesses in exchange for interest payments.
While these investments do carry higher risks, they also have the potential for sky-high returns. As always, make sure you take the time to do your due diligence, and always get professional advice from your financial adviser or accountant before diving into something new.
6. Spend time building an emergency fund
It might sound boring, but emergency funds are the foundation of every financial success story. So before making any investments, make sure you have a solid safety net in place. An emergency fund covering around six months of living expenses can give you the peace of mind to invest with greater confidence – knowing you’ll be secure even if things go south.
Having a buffer also means you’re less likely to need to liquidate your investments during market downturns, which can be as frustrating as they are expensive.
7. Get professional financial advice
The investment world takes no prisoners, and I reckon you should be prepared for all eventualities. A certified financial adviser can help create an investment strategy to match your personal goals and risk tolerance.
They’ll give you insights into all sorts of investment options, explain any tax implications and share strategies to help maximise your returns while managing risks.
Sure, feeling like you’ve missed out on being a property owner can be disheartening, but it’s well worth remembering that there are multiple avenues to building wealth with a robust financial plan that doesn’t rely solely on traditional home ownership.
My advice? Start where you are, use what you have and do what you can. Having the right strategy and mindset is the first step to achieving financial security.
