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Switzer’s favourite investment

I’m starting to build up my wealth and I read your column all the time. While you talk about many different types of investments, what is your favourite?

There are lots of great investments and I think over time you should build up a collection of assets that spreads your exposure, reduces your tax bill and helps you get richer. It is smart to have property, shares and cash, but the proportional mix can vary person to person depending on their risk profiles. But to the question – my favourite? I like to buy a home that I live in which is in a great suburb and that has a good history of capital gain.

On average, in metropolitan cities the average annual increase is between 10-12 per cent per annum. This figure is made up of suburbs that perform better and worse than 12 per cent.

Lots of experts think properties inside 10kms around the CBD are good ones, but check groups such as Residex or Australian Property Monitors to see the good performing suburbs or towns. Look for the worse home in the best street and renovate it. Make sure you know what is fashionable in your area, use quality products and great tradespeople.

Use experts or do lots of homework on colours and landscaping but don’t over-capitalise. I recommend you become an expert on your desired suburb and hunt for a great buy.

Get an estimate of necessary renovations before buying and work out if it will be a good deal based on the average rise in values in the area. This investment is capital gains tax free and as it grows in value and your equity in the home increases you can use this to borrow for shares and investment properties which will give you tax deductions.

I would also recommend either going to an adviser for a plan or else do the research and turn yourself into a DIY self-adviser.

For advice you can trust, book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

 

Published on: Tuesday, January 05, 2010

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