{"id":7522,"date":"2016-03-29T01:00:00","date_gmt":"2016-03-28T14:00:00","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7522"},"modified":"2016-03-29T01:00:00","modified_gmt":"2016-03-28T14:00:00","slug":"the-perfect-investment","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/the-perfect-investment\/","title":{"rendered":"The \u2018perfect\u2019 investment – Michael Yardney"},"content":{"rendered":"

 
\nOne thing is certain: there is no such thing as a perfect investment. If somebody tells you they have found \u201cthe perfect investment\u201d be very sceptical and ask lots of question, because chances are they\u2019re trying to sell you something you just shouldn\u2019t buy. In today’s show\u00a0Michael Yardney<\/strong><\/a>,\u00a0from Metropole Property Strategists,\u00a0tells us what to look for in an investment including liquidity and appreciation.<\/p>\n

<\/h4>\n

Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 As the market continually changes, you have to continually be looking at your investments and I guess with all of the strife we\u2019re seeing around the world right now, there would be great temptations to change your strategy. Is it such a good idea? What should you be looking for in a good investment? Michael Yardney from Metropole Property Strategists joins me.
\nHi, Michael.
\nMichael:<\/b>\u00a0 Hello, Kevin.
\nKevin:<\/b>\u00a0 I\u2019d pose that question of you, Michael. What do you think we should be looking for in an investment?
\nMichael:<\/b>\u00a0 One thing that\u2019s certain, Kevin, is there\u2019s no such thing as a perfect investment. In fact, if somebody tells you that they\u2019ve found the perfect investment, be very skeptical and ask lots of questions because chances are they\u2019re trying to sell you something that maybe you shouldn\u2019t be buying.
\nKevin:<\/b>\u00a0 Michael, what should you look for in an investment?
\nMichael:<\/b>\u00a0 Kevin, when I look at my investments, I look at a number of factors. First of all, I look for liquidity \u2013 in other words, the ability to take my money out by either selling or borrowing against it. I look for easy management. I look for strong and stable rates of capital appreciation, so I want them to grow what I call wealth-producing rates of return. I look for properties that give me a steady cash flow, and I look for something that\u2019s going to give me a hedge against inflation, something that\u2019s going to increase faster than inflation, and also good tax benefits.
\nSo Kevin, I think most investors put money in a number of different things. They\u2019ve got some money in their super, in shares, in property, as well. So that\u2019s, I guess, the same criteria I would look at for any type of investment vehicle. When you look at the major categories of investment, you\u2019ll recognize that not many of them fit the bill of meeting all those criteria.
\nIn this new era, as the market is changing a bit, maybe the long-winded answer to your question is look for investments that are powerful and stable. By powerful, I mean I want investments that are going to act as a hedge against inflation, that are going to grow at wealth-producing rates of return, which means I can borrow against them.
\nI also look for stability, especially at this stage of the cycle, Kevin. Property values should grow steadily and surely rather than having the major fluctuations like one tends to get with share markets or properties that aren\u2019t in areas that have a large owner-occupier population creating a stability of continuing demand.
\nKevin:<\/b>\u00a0 I guess in fairness, Michael, just to balance the conversation, we might just have a quick look at what are the investment alternatives?
\nMichael:<\/b>\u00a0 Sure, Kevin. I think if you look at the alternatives, you can either invest in cash, putting your money in a bank as people used to do in the past. I remember, Kevin, getting 12% or 15% interest on my deposits years ago. Now you get 2% or 3%, so I don\u2019t think that\u2019s an alternative for people wanting to grow their wealth.
\nThere\u2019s shares, stocks, which give you a combination of dividends, so it gives you cash flow and also increased growth, but in my mind, the stock market has the liquidity, it means that you can actually sell quickly, but that foregoes the stability. In other words, you can get 10% or 15% fluctuations in values over days or even sometimes within the same day.
\nThen there\u2019s real estate, which, in my mind, doesn\u2019t have the liquidity but because it doesn\u2019t have the liquidity, it gives you the stability of not fluctuating too much in price.
\nThe other thing I like about residential real estate as an investment vehicle is it\u2019s the only investment market not dominated by investors. If you think about it, Kevin, 70% of people who own residential real estate are owner-occupiers, and they don\u2019t make the decisions the same way you and I do regarding what\u2019s going to happen to interest rates, what\u2019s going to happen to negative gearing, what happens if the economy goes down. They keep their houses in the long term.
\nI like investing in a property investment vehicle in residential real estate because, essentially, a market dominated by non-investors, that gives me stability.
\nKevin:<\/b>\u00a0 I guess the other thing, too, at property over shares is that with shares, you don\u2019t really have any control over the value of those shares, whereas with property, you do. You can add value.
\nMichael:<\/b>\u00a0 Correct, Kevin, and that\u2019s another reason why at this stage of the cycle, established residential real estate makes a better investment in my mind because you can add value while buying new properties, you\u2019re at least paying full price or maybe a premium.
\nI also like properties that are more what I\u2019d call \u201chow to\u201d rather than \u201cwhen to.\u201d \u201cWhen to\u201d investments, to me, mean you have to actually know the timing of them. You need to know when to buy, when to sell, timing is crucial for these investments. If you buy low and sell high, you\u2019ve done well; if you get your timing wrong, your money can be wiped out, and in my mind, that\u2019s shares, it\u2019s commodities, it\u2019s futures, they\u2019re when to investments.
\nAs I said, I\u2019d rather put my money to what I call \u201chow to\u201d investments, such as real estate, which increases steadily in value and doesn\u2019t have the wide fluctuations in price. While timing is still important with \u201chow to\u201d investments, it\u2019s nowhere near as important as how you buy them, how you add value.
\nSo \u201chow to\u201d investments are really liquid but they do produce real wealth, while most \u201cwhen to\u201d investments, like the stock market, only produce a handful of large winners and the majority of people getting in those tend to be losers. On the other hand, in my mind, residential real estate produced hundreds of thousands of wealthy people and only a handful of losers.
\nKevin:<\/b>\u00a0 Michael, earlier in our conversation, you were kind enough to tell us what you look for in an investment \u2013 just very quickly liquidity, I think easy management, strong stable rates, and capital appreciation, steady cash flow, a hedge against inflation, and you also said good tax benefits. They\u2019re six great things to look for. Are any of those negotiable, or do you look for all of them?
\nMichael:<\/b>\u00a0 You\u2019re never going to get all of them in the same investment, so more important to me at my stage of life is stability. I don\u2019t need hassles. I\u2019m not a speculator; I\u2019m an investor, so I want investments that are going to grow at wealth-producing rates of return, so I wouldn\u2019t compromise on the capital growth potential of my investments, Kevin.
\nKevin:<\/b>\u00a0 Yes, thank you, Michael. You answered that very well. Thank you, Michael Yardney from Metropole Property Strategists.
\nThanks again, Michael.
\nMichael:<\/b>\u00a0 My pleasure.<\/p>\n","protected":false},"excerpt":{"rendered":"

  One thing is certain: there is no such thing as a perfect investment. If somebody tells you they have found \u201cthe perfect investment\u201d be very sceptical and ask lots of question, because chances are they\u2019re trying to sell you something you just shouldn\u2019t buy….<\/p>\n","protected":false},"author":176692471,"featured_media":7527,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,17,18,25],"tags":[101],"class_list":["post-7522","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment","category-property-management-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nThe \u2018perfect\u2019 investment - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/the-perfect-investment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The \u2018perfect\u2019 investment - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  One thing is certain: there is no such thing as a perfect investment. 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