When it comes to investing, there is a range of methods that people use to make their money work for them. You can buy stocks or shares, invest in index funds or start a business – but few have the potential and allure of property. But why invest? And is property the investment opportunity it’s said to be? Below we explore these two key questions.

Why is investing worthwhile?

Saving and investing are often referred to in the same context, but they are different in some quite significant ways. Saving is, of course, putting aside money from your income towards big purchases or an emergency fund. It should be used as a short-term financial strategy because the value of your savings won’t be impacted too significantly by things like inflation in a matter of a few years. It’s a safe and secure way to collect money in the short to medium term. People typically use savings accounts or bonds to store their money and earn interest.

Investing, on the other hand, should be seen as a longer-term approach. It helps to make your money work for you, potentially affording you the freedom to not have to work so hard for money in the future. Investments can provide you with a passive income or just help to grow your wealth over time – and they can help to protect your money from things like inflation that would erode the real value of savings over years and decades. It’s important to remember that you can’t guarantee your money with any investment – you could lose it but you could see a big return, it’s a game of risk and reward.

Is property a good investment?

So, where does property rank in the list of investment opportunities? It’s actually a very good opportunity if you understand what you are doing and if you have the financial horsepower to get started. Property investment can take various forms – whether it be short-term investments such as house flipping (aka property development), or long-term investments such as buy-to-lets. Even just buying your own home is an investment because the value of your property can increase or decrease in line with macro and microeconomic factors.

Property can generate monetary returns in a variety of ways. As earlier mentioned, owning property can provide you with passive income if you rent it out to tenants and all your costs are covered (and hopefully exceeded) by the monthly rent. If you renovate a property that has the potential to be sold for more money than you paid for it, then you can make a more substantial one-off gain from the sale of the property, but there are a lot of factors to consider. To do either with a property you buy yourself you will need substantial capital to invest, but you can also chip into other people’s investments and get a share of any returns without having to commit thousands or tens of thousands.

Have you considered exploring the exciting world of property investment?

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