There are many other things that you can invest in other than investment properties.
The property market is declining in the key cities of Melbourne and Sydney where around 60% of the country’s property value is located.
Banks like Commonwealth Bank of Australia (ASX: CBA) are being more stringent on lending, which has had a larger impact on property investors – a lot of investment money was focused on Melbourne and Sydney.
But, some people are now learning the expensive lesson that property doesn’t always go up every single year.
I personally don’t think that property declines are going to slow down for at least the next three months. So, where are you supposed to invest? I think businesses are the best place to invest.
The best way to compound your wealth in my opinion is with quality businesses you can find on the Australian Stock Exchange, otherwise known as the ASX.
You don’t have to be a stock-picking whizz to do well with shares. It can as simple as steadily investing every month in ideas such as iShares S&P 500 ETF (ASX: IVV) and MFF Capital Investments Ltd (ASX: MFF) which gives your money global exposure and likely good returns over the long-term.
An investment property is a single asset with one source of income (the tenant). The S&P 500 and MFF Capital have many holdings with earnings from around the world.
Vanguard is one of the world’s leading low-cost providers of exchange-traded funds (ETFs). The lower the fees the more returns are left for us as investors. Two good Vanguard examples to consider are Vanguard MSCI Index International Shares ETF (ASX: VGS) and Vanguard US Total Market Shares Index ETF (ASX: VTS).
Some of the best shares to own in your portfolio could be businesses like Microsoft and Apple. Although they don’t actually trade on the ASX directly, we can access to them via an ETF like BetaShares NASDAQ 100 ETF (ASX: NDQ).
There are plenty of quality investments out there that are quite likely to beat the returns of investment properties, plus you don’t need to take on any debt to invest in shares.
Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.