Whilst they know that they need assets such as shares and property to generate returns to replace their income, I’ve found most don’t actually think about how they’ll actually achieve financial freedom. They don’t have a strategy. They don’t have a plan. They just hope it will happen.
With a solid plan one can build a portfolio of assets leveraged by debt – and over a period of time reducing the debt , which will reduce the interest payments while the income from these assets will increase over time .
So while earning high incomes – assets are acquired using debt – and over time, the debt is significantly reduced , so that by the time you retire – your asset base is significant giving you strong cash flow , and your debt has been paid down.
Because Property is a long term investment and not easily bought and sold (unlike shares) it seems a lot safer to leverage property vs shares.
Banks tend to be more comfortable lending against property (80pc lvr is not uncommon)
However as a long term strategy – it could be a good idea to also build a portfolio of shares as well (higher returns, franked credits etc)
This should be modelled by a financial planner to suit your specific needs
This paper is about creating a property asset base.
1. Build a substantial asset base
2. Lower Debt over time
Ways to lower debt