Property is perfect investment
Mortgage originator MortgageSA says young, investment- savvy South Africans should look to the property market as a first step towards building an investment portfolio.
This should also be a key step towards personal and financial independence, says Craig Deats, national insurance sales manager at MortgageSA.
According to him, as a long-term investment, property offers security because it is less volatile than other asset classes.
He says in periods of continued house-price growth such as now seen in South Africa, property investments can appreciate significantly in value.
"Investing in property can be a route to riches for young people, but it involves sacrifices," Deats says.
"The first sacrifice is to ditch the idea of buying a new expensive car and rather settle for a cheaper second-hand model.
For example, Deats says: "A new sporting hatchback can cost in the region of about R255000 with a monthly instalment of no less than R5000 over a period of five years.
"But if you can afford R5000 a month, that same amount will allow you to service a R440000 bond at current interest rates.
"And though a bond normally has a life span of 20 years, each monthly payment takes you one step closer to owning a valuable asset," says Deats.
Deats advises young people to investigate the option of buying a property jointly.
"Starting small is key to building an investment portfolio, and returns yielded from an investment in property tend to show gains in the long term" says Deats.