Everyone considers every cent detailed in their wages as compensation for the hard work and time they spend in their respective workplaces. Without a budget spontaneous spending can occur. Always pay yourself ‘first’ with a disciplined savings amount.
For small income earners, investing may sound impossible but spending wisely and keeping a budget will surely help out in making sure that every dollar that comes your way counts. Having a small income should not hinder you from achieving your financial freedom through investments.
Check out these tips to get started:
- Be patient. Start off on the right foot by being patient. Know that investing is a long term strategy towards your financial goal. This strategy needs to be done with the right attitude and consistent effort. No matter what the size of your investment you need to be patient before it can bring you yields.
- Create a saving plan. Be a steady saver. Establish a weekly saving pattern; put a set amount or a percentage of your money into savings account that will earn interest. When the time comes where you will want to borrow money for one of your investments, this consistent pattern of saving will go a long way in providing lenders with some comfort knowing you can make regular payments as a committed saver.
- Buy an investment within your budget. You can start your investment small. There are many ways to get started with a small amount of funds without jeopardizing the quality of your investment. One method is to reduce the amount of stamp duty you pay by purchasing a house and land package. Purchasing this way saves on stamp duty as it is only paid on the land, saving you thousands of dollars. You also don’t need to buy the biggest investment that you can, just for the mere reason that YOU CAN AFFORD IT. Begin with a plan in mind. Know what you need to establish and the financial position you need to be in before you buy your own property investment.
- Have a proactive professional team: Seek out and put together a team of experienced advisors to help you plan ahead and give you feedback on your progress, keeping you on track as you move forward. Some of the advisors worth having are;
- An experienced consultant with Investment Properties – like Properties 4U
- A specialist mortgage broker
- A qualified risk advisor
- A proactive property manager
- A competent solicitor or conveyancer
- A positive accountant
- Combine resources with a trusted friend or family member. A joint venture with a friend or family member can help you get started faster. Sharing with the deposit and purchase costs means you need less savings up front, plus your joint incomes can increase your ability to borrow more, affording a better investment property. This method can help you build your property portfolio faster, it will also provide you reduced the cash flow risk by sharing the ongoing repairs and unexpected surprises that may pop up. Nevertheless, to ensure that you are fully protected when buying through a joint venture, here is a list of some things to consider in a joint venture agreement.
- Ensure you have sinking fund that will cover repairs and other fees.
- Confirm who has responsibility on specific roles.
- Make sure that management of insurances, taxes and repairs are clearly stated.
- Know what percentages of ownership you will each have.
- Agree on the time period of holding the property and what will be done after.
- Agree on the consequences if one wants to leaves the joint venture agreement.
- Know how the property will be managed?
- Know the cash flow of the property. When you start your investments make sure that you find something that is manageable within your cash flow budget. Don’t just jump in on any property, know the expected cash flow of a property, both before and after your tax, before purchasing. This way you won’t be hit with unexpected or high running costs. There can be a big difference in the cash flow, especially after tax, between a new home and an older one. Managing your cash flow is the key to achieving your long term investment goals.