MyMoney Online

How to invest in multiple properties (even if you can’t get a home loan)

(Click here for more personal finance articles.)

Other articles by the author:

- How much you should save for retirement

- Savers rejoice! South Africa gets tax-free savings accounts on 1 March 2015

- Why medical aid is woefully inadequate (and how affordable gap cover helps)

The best way to protect your wealth from big losses is to diversify your investments. In other words; don’t keep all your eggs in one basket.

Diversify to spread risk

You can do this by spreading your investments over a broad spectrum of assets such as cash, property, bonds and equity (i.e. shares or stocks). You can (and should) diversify these even further. For example, instead of owning one share only, it’s best to spread your investments across shares in multiple companies in various sectors such as, for instance, mining, finance, retail, high-tech, etc.

Property can be divided into residential or commercial.

Collective investment schemes (i.e. unit trusts) were originally introduced to help people spread their investments amongst and within various asset classes. It gave ordinary people access to the Johannesburg Stock Exchange by allowing them to pool funds to buy a range of stocks necessary to reduce risk.

The problem with property (and the unit trust solution)

The problem when it comes to investing in property is that very few people can afford to diversify a property portfolio over several different property investments.

In the same way as with equities, property unit trusts can offer investors a share in a range of buildings owned by a management company. Because of the resources available to large management companies; they can afford to buy shopping malls, factories, office blocks and so forth.

You do not need to own the home you live in to invest in property. You don’t need much money and you don’t need a home loan.

Property unit trusts have far lower barriers to entry than buying a residence as an investment while offering vast diversification benefits.

There are risks (as with any investment)

The convenience of investing in a property unit trust obviously comes at a price and in the next article I’ll compare costs, liquidity, risk and returns of buying-to-let vs. investing in property unit trusts. In a third article we’ll discuss the practicalities of investing in property unit trusts.

Stay tuned!

Claude Hannah is a financial planner for Venn-Sure Consulting. He completed a degree in Financial Risk Management from the University of Stellenbosch in 2006 as well as a post graduate diploma in Financial Planning. Claude helps to organise and simplify the often complicated and busy financial lives of his clients. He takes great pride in providing the highest level of service to help his clients build and protect their wealth.

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
How to avoid this festive season’s trending scams

How to avoid this festive season’s trending scams

From electricity cuts while drawing money to avoiding phishing and card skimming scams; how to keep your money safe.

How to choose the right medical aid option

How to choose the right medical aid option

Financial fitness coach Paul Roelofse on how to go about choosing the correct medical aid option for you and your family.

How to turn R1000 into a thriving business

How to turn R1000 into a thriving business

Valerie Pole took R1000 and turned it into an extremely profitable business (and then wrote a book about it).

Do you really earn peanuts? Use this handy salary comparison calculator

Do you really earn peanuts? Use this handy salary comparison calculator

Use this calculator to compare your salary to the world average and averages of 72 countries (including South Africa).

How to make the most of a financial windfall (tax refund, bonus, gift, etc.)

How to make the most of a financial windfall (tax refund, bonus, gift, etc.)

Make the most of an unexpected (or expected) windfall such as a bonus, inheritance or (we can dream, can’t we?) lottery jackpot.

Why medical aid is woefully inadequate (and how affordable gap cover helps)

Why medical aid is woefully inadequate (and how affordable gap cover helps)

It may come as a shock (but it’s all there in the small print); medical schemes do not fully cover you when you’re hospitalised.

Savers rejoice! South Africa gets tax-free savings accounts on 1 March 2015

Savers rejoice! South Africa gets tax-free savings accounts on 1 March 2015

Savers rejoice! On 1 March 2015 government introduces tax free savings accounts. Financial planner Claude Hannah explains…

How much you should save for retirement

How much you should save for retirement

You know you should save for retirement, but do you know how much? Financial planner Claude Hannah breaks it down in simple terms.

Popular articles
[WATCH] Guy eye-rolls after girlfriend takes selfie, has social media talking

[WATCH] Guy eye-rolls after girlfriend takes selfie, has social media talking

Khabazela shares tweets and Facebook posts that have gone viral.

'The problem is incompetent SAA management staff and thieving'

'The problem is incompetent SAA management staff and thieving'

SAA Pilot's Association former chair, Captain Piet Taljaard says the core does all the work while management is clueless.

Schools don’t teach personal finance - how to raise a future millionaire

Schools don’t teach personal finance - how to raise a future millionaire

Personal finance expert Warren Ingram (Galileo Capital) on how to raise financially free children.

What is better - money in the bank or investing in shares?

What is better - money in the bank or investing in shares?

Personal finance expert Warren Ingram offers a definitive answer with an explanation ordinary people can understand.

How to retire while you’re still young(ish)

How to retire while you’re still young(ish)

If you do things differently, it’s possible stop working far earlier than you ever thought possible, says Warren Ingram.

[LISTEN] Steinhoff explained: 100 times more looted in Steinhoff saga than VBS

[LISTEN] Steinhoff explained: 100 times more looted in Steinhoff saga than VBS

Steinhoff’s Web of Deception: An Explainer with Financial Mail journalist Warren Thompson.