Inflation is that nasty thing that erodes away the buying power of our money. Why 30 years ago, you could buy your lunch and drink etc and still have change out of $5. Hence the idea that keeping money in cash in a Milo tin under your bed is seriously flawed due to the fact that that money is actually losing value every day that it sits there. Even money held in cash in a bank getting interest is maybe just keeping its head above water as the interest received may not even be as high as the rate of inflation.
The idea of investing is to not only to allow your “savings” to keep its head above water but to also significantly beat inflation. You are therefore building wealth.
One of the best ways to do this is to invest in growth assets like property. Property is one of the better assets to invest in because it is very safe but tends to grow consistently much faster than inflation.
For example, the latest national CPI figures for Australia’s capital cities show that during the year ending March 2016, the annual inflation rate was 1.3%.
During this period, the combined capital city home prices increased greatly by 7.3%, close to six times the annual inflation rate.
It is widely known that over a long term, property values have increased at a much faster rate than inflation.
The figures above are important to property investors as they are the key reason why many people decide to invest in real estate. To protect themselves against the impact of rising inflation and to generate personal wealth over the long term.
With the weekly wages in Australia recording very modest rates of growth, property investment is an excellent way for you to build ongoing wealth.
However, when looking for investment property it is very important to undertake careful research and get some qualified advice as to how to structure your purchase and build your portfolio.