Bulletproof Investing

APPENDIX: FAQS

You're going to have plenty of questions. Here, I have dealt with some of the common ones I encounter.

What if I lose my job or my income reduces?

Job stability, and the certainty of income that comes with it, will always be a risk to be managed when it comes to investing. For some, the risk is very low; for others in more volatile industries and professions, it's higher.

When investing in property, we need to balance cash flow and growth. Good properties grow in value and provide cash flow. You can't have one without sacrificing the other. If you want to increase the growth potential, you might buy a bigger block of land. The land is what appreciates, so the bigger the land size and content, the stronger the growth you're likely to achieve. The sacrifice comes in the area of cash flow — your rental yield might be 3.5 per cent, compared with 4.5 per cent you'd be achieving on a smaller block. In practical terms, that could mean forking out $150 per week to fund the property, instead of receiving $50 a week in positive cash flow.

If you're particularly sensitive or concerned about losing your job, you should aim to invest in a property that is skewed more towards cash flow than growth. In many ways, that's the opportunity in front of us today. Low inflation globally means we're very likely to see low interest rates for a few more years, potentially right through the next decade. There are plenty of opportunities to buy properties that will grow in value, as ...