Crown Money Management

Everyone wants to retire very comfortably, and it’s as simple as following a recipe.

The first part of the recipe is all about having your house paid, that’s why we’re so focused on getting you debt-free as fast as possible. Being debt-free is a very powerful position to be in financially, as it doesn’t just save you money in interest each month, it buys you your time back and gives you Freedom!

If you have no debt, that means you’ve got all your income to do what you want, when you want, and with who you want.

It’s smart to begin to invest some of your PRE-TAX cashflow into your super fund (salary sacrificing), or into other investments such as property, index funds, or shares at the same time as paying your home loan off.

You shouldn’t wait until you retire to start investing, you need to start investing as soon as you are able to.

Those clients of ours who have got to retirement, and won’t be able to spend all the money they have accumulated before they pass away, had one thing in common.

They had a debt-free house and they bought and HELD two investment properties before they retired. I’m not saying they paid them off… they just acquired two investment properties before they retired from working.

Do not wait until you get debt-free to start investing, the earlier you get compound interest kicking in for you the better.

The longer you hold property, the bigger the compound interest effect is, and the bigger that snowball becomes. For the first 10 years, your investment property is not going to shoot the lights out financially, but for the second 10 years, it’s going to be providing impressive gains and cash flow. By that third decade, the cash flow and growth on the property starts to become really magical.

Time is the sacred ingredient. You always want to make sure you hold the property, and you want to make sure that you’re buying properties where the land component is at least 66% of the price/value.

What does that mean? That means if you’ve got a 1 million dollar property, you want to make sure that the land value of that property is at least $660,000.

Because the land (dirt) is the only part of the property that goes up.
The building goes down in value…It depreciates.

You want to buy as much dirt near transport, shopping centers, schools, or ideally anywhere near water. Australians are obsessed with living near water => High Demand and Low Supply.

We aren’t saying you should be purchasing a property now, what we are saying is you need to know your numbers. You should know what you can / can’t afford to buy and borrow, only when you feel the time is right. It’s all about that time IN the market, and if you don’t feel comfortable buying a property now, wait for the rates to come back down in a year or so…

If you’re able to have the discipline to hold your investment property into retirement, you will have an additional income stream that continues to fund your lifestyle in retirement.

It’s about consistently putting your additional surplus cash flow into a place where it’s going to be working very hard for you. When your money is sitting in your VISA DEBT/ Savings Account it is losing you money, as it’s not even keeping up with inflation. It’s not doing any for you.

One of my mentors, a guy called Robert Kiyosaki wrote a book called Rich Dad, Poor Dad, and he says “Savers are Losers”.
Why is that? Because if you’ve got money in your everyday savings account, the banks are paying you 0.1% interest, it’s not even keeping up with inflation at 5%.
You’re actually losing 4.99% every year.

By having your Income/Salary banked into your home loan, it’s working really hard for you. It’s saving you interest, which means it’s making you interest. You also need to be investing some of your surplus cash flow into other assets along the way, not just your home.

Ideally, you begin to dollar cost average into investments along the way, and not waiting until you’re debt-free to begin your investing journey.

The price of that investment property today, compared to what the price of it will be when you’re debt-free, is going to be much cheaper.

So follow the recipe of paying your house off before you retire, buying 2 investment properties before you retire, and begin dollar cost averaging into super (Salary Sacrificing) and you’re never going to be able to spend all the money you have accumulated.

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