Are you wondering when the perfect time is to dive into property investment? Debbie Roberts, owner and financial adviser at Property Apprentice, believes that the timing of your property investment decision can have a significant impact on your long-term financial success. In her latest podcast, Debbie explains why delaying your investment journey might not always work to your advantage, depending on your personal circumstances. Here are the top reasons why waiting may cause you to miss out on crucial opportunities.
Reason #1: Missed Opportunities
Trying to time the market can lead to missed opportunities because financial and property markets can be highly dynamic and unpredictable. Prices and market conditions can change quickly due to factors such as economic data, investor sentiment, current events, and market trends. When you try to time the market by waiting for the “perfect” moment to invest, you risk missing out on favorable opportunities that may arise suddenly. These missed opportunities could include buying property at lower prices, benefiting from income or capital appreciation, or taking advantage of favorable market conditions. In essence, attempting to perfectly time the market is not only challenging, but it can also result in lost opportunites for potential gains.
Reason #2: Time Value of Money
The concept of the time value of money is a fundamental principle in finance. It means that a sum of money today is worth more than the same sum of money in the future. This principle is based on the idea that money can earn a return over time, through investments or savings, and that the value of money can reduce due to factors like inflation. Delaying property investment introduces uncertainty about future costs, including property prices, interest rates, and associated expenses. Costs may rise over time, affecting your ability to purchase a property with the same amount of money.
Reason #3: Equity Building
Property investment allows you to build equity over time. The longer you wait to invest, the longer it takes to start building this equity. If your property investment involves taking out a mortgage, delaying the investment means postponing the process of paying down the loan. Mortgage payments contribute to building equity in the property, and the longer you wait, the later you start this wealth-building process. In turn, this means that you may need to wait longer to have enough equity that can be leveraged to expand your portfolio.
Reason #4: Diversification
A well-diversified portfolio typically includes a mix of asset classes, such as stocks, bonds, and real estate. By spreading your investments across different asset classes, you aim to reduce the impact of poor performance on any single investment. If you delay purchasing property, you miss the opportunity to benefit from the unique risk and return characteristics that it can offer. It also offers a nice balance for your KiwiSaver or other investments.
Reason #5: Learning Curve when Investing in Property
Investing in property is a learning process that can take considerable time. The sooner you start, the sooner you gain experience and knowledge about the real estate market, which can help you make better investment decisions in the future.
Reason #6: Personal Goals
Your investment goals and timeline play a crucial role. If you have specific financial goals, such as retirement planning, wealth accumulation or homeownership, waiting too long may hinder your ability to achieve these objectives.
However, it’s important to point out that rushing the process of buying property without doing your own research and financial preparation can also lead to unfavourable outcomes. The timing of your property investment should align with your financial situation, objectives, and the specific conditions of the real estate market in your area. Consulting with a financial adviser or real estate professional can help you make informed decisions about when and how to invest in property.
A qualified Financial Advisor can not only give you advice about Property Investment, but also create a full Financial Plan designed to give you a short cut for your learning curve. At Property Apprentice, we do this and we also provide full coaching support to help guide you during your property investment journey. All this, and more, without any conflict of interest, as we don’t sell property. Feel free to reach out to us.