Trading vs investing
In much of the financial literature, a distinction is drawn between investing and trading. The main difference is that an investment time frame is over a long period (years) whereas trading can occur within seconds in the case of the sharemarket, and within just a few weeks or months in the case of property. Both trading and investing are valid ways of making money, but generally speaking, trading is inherently riskier. One of the reasons that (short-term) trading is riskier than (long-term) investing is that the trader doesn’t have time on their side to make up for any mistakes they might make as an investor would have.
Investing in property
When most people invest in property, it generally means that they buy property and hold it for a number of years. There is no doubt that this can be the best way to make money in property, as there are fewer and lower transaction fees and no capital gains tax liabilities, unlike trading in property.
The most common reason people will buy and hold property is to achieve the goal of retiring richer. Following is an illustration of how buying and holding property can assist in creating a wealthier retirement.
Real value
If you bought a $480 500 property, borrowed the whole amount and took out a 20-year principal and interest ...
