Tag: Leverage

Passive Income – what’s your target?

Passive Income

In my last post I explained the primary reasons as to why you should consider buying investment properties. You can create long term wealth, set yourself up for financial freedom and take full responsibility for a self-funded retirement by creating a Passive Income.

In this post I am going to outline how a portfolio of properties could achieve this, but first lets reiterate what financial freedom is:

Financial freedom is achieved when your Passive Income is greater than all your expenses after tax.

Everyone has a different personal situation and future goals. You should work out what level of Passive Income you would like to achieve to meet your future goals. You might want a modest Passive Income that just supplements your regular income or you may aspire to replace your entire salary.

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Compound Growth and the Snowball Effect

Snowball Effect

Following on from my last post about leveraging your savings or equity, I am going to demonstrate the Snowball Effect, where the growth of an investment property is allowed to compound year after year.

Compound Growth simply occurs when the growth of your asset from one year is added to the previous balance and the combined larger asset value is exposed to further growth the following year, and so on.

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Increase your wealth using Leverage

Leverage

One of the most attractive elements of property investing is the ability to Leverage a smaller amount of your own money to control a much bigger asset. Banks will allow you to fund the deposit on a property purchase and lend you the balance in return for paying them regular interest.

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