Real Estate Investor Magazine South Africa February 2015

FINANCE By Koos Du Toit AchieveGoals your Financial A proven system to create wealth A mong your New Year’s resolutions, many investors will have set financial goals with the aim of creating wealth. However, as with all New Year’s resolutions, it is difficult to achieve these goals without implementing a proven system that delivers results. The traditional way The most common way of investing is via traditional investment vehicles, which simply cannot deliver the results that create true wealth. Over the very long term - going back 100 years and more - the average real return on traditional investments is barely 1% per annum. At a real return of 1%, and after the deduction of management fees, commissions, administration fees and the like, you can – at best - preserve your hardearned money, but it will not create wealth. Things are unlikely to improve: investors have been warned that traditional asset classes will struggle, even to beat inflation over the next few years by more than a percent or two. So, where can investors turn for a proven system that delivers results? What the wealthy do One of the resources investors have at their disposal when looking for a system of wealth creation that delivers results is the investment choices of the world’s wealthiest. There is no doubt that the wealthy continue to favour direct investments in property. This allows them to generate both an ongoing, passive income that keeps pace with inflation as the annual rental escalates, and ongoing capital growth, while requiring a minimal investment of money, time and effort. 30 February 2015 SA Real Estate Investor How you can do it A direct investment in an income-generating and capital growth-producing property is a proven system to create wealth. The question, however, remains: how can ordinary South African investors implement this system? Few investors realise that a direct investment in an entry-level, buy-to-let property requires little money, time or effort, allowing investors to replicate the proven system used by the world’s wealthiest. “The average real return on traditional investments is barely 1% per annum.” Firstly, you do not need a lump sum investment or large monthly contributions to invest in a buy-to-let property, because you can acquire the property through a mortgage bond. The monthly bond repayments, along with the other property expenses, are covered by the rental income generated by the property (provided the property is well-chosen). This means that even an ordinary South African investor can acquire a property asset, with little - or even no - out-of-pocket investment contributions. As the annual rental income increases, you start receiving an ever-growing monthly income that will keep pace with inflation, while the property is generating steady capital growth over time. Secondly, building and managing a portfolio of income-generating and capital growth-producing property assets requires no qualifications or experience. Very little time and effort is needed, if the right system www.reimag.co.za

Real Estate Investor Magazine South Africa February 2015 | Page 30