BiG Tips: Everyone’s an expert! Don’t believe all you see, read or hear – especially when it comes to property investing. You might not realise it, but we’re all under the spell of confirmation bias – we see, listen and hear things that reinforce our existing beliefs. Recognise when you’re doing it and you’ll be much smarter with your money and investing. Investing in You has got some more for you on biases.
Here are some property beliefs and myths, often based on biases, to watch out for:
10 Highly Dangerous ‘Tips’ Investors Get – Margaret Lomas, Destiny in YIP
- Invest in the US
- Use your super
- Buy into a hotel or serviced apartment in a holiday spot
- Buy in one are only
- Buy off-the plan during unstable economic times
- Buy property in an area where there is a single ‘kicker’
- Buy because of high yields alone
- Buy to take advantage of a tax ‘loophole’
- Invest because you saw a property that looks good
- Buy a property with a rent guarantee or other scheme of arrangement over the top
Bad Financial Advice – Jeremy Sheppard, DSRData Debunking “6 Myths” suggested by others: Don’t wait till you’re ready; Interest rates aren’t low; You’ll never go bankrupt; Nobody’s trying to sell you anything; You can afford it
Property Doubles Every 7 to 10 years
How long does it take for your property to double in value? Gerv Tacedena, Your Mortgage
Negative gearing is a good property investing strategy
Property Investing – Strategies and Topics has some links, pros and cons explaining the strategy.
“Negative gearing is where you borrow to invest and the investment income is less than the cost of the investment. Investors negatively gear as they can generally claim a tax deduction for the investment loss. The aim is for the capital growth to offset the loss in earlier years. If you’re making an investment loss, it is still costing you money. You’ll need to have cash from other sources, like your salary, to cover interest and expenses.”
MoneySmart (ASIC) Investing and Tax
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