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APRA  <a target="_blank" href="https://www.apra.gov.au/Pages/default.aspx">recently revealed</a> that the Australian superannuation industry lost $18.5 billion of its clients’ money in the last financial year. 
It’s been a tough year for all types of investments, so let’s look at the returns over the longer term. 
They’re not much better. 
Apparently the average rate of return from the superannuation industry over the last 15 years  (between 1997 and June 2012) was 4.9% a year, and this came with a volatility of 8.4%. 
Not a very good return considering that for most of that time you could have invested in government bonds with minimum risk and received a divided of over 5% and the average return from the All Ordinaries accumulation index for the past 15 years has been 7.03% per annum.
Reality Check
A recent <a href="https://www.rabobank.com.au/Pages/new.aspx">Rabobank poll</a> showed that baby boomers are retiring, on average, on about $200,000.  
While most folks don’t know how much they need in retirement, it’s generally accepted by the financial planning world that you need around $1 million in retirement to live comfortably.
By the way, I think you need much, much more!
The way planners see it is that, assuming you live in retirement for 15 years with no extra income, $1 million would give you an annual income of around $65,000.
So you can see retiring on $200,000 simply won’t cut it.
Little wonder that more and more baby boomers are looking at taking control of their financial future and setting up self-managed super funds (SMSF).
What’s are our options?
If these facts teach us anything, it is that it’s up to each of us to become financially fluent and take charge of our future. 
More baby boomers are setting up their own self-managed super funds and taking their destiny in their hands. Many are investing in shares, but more and more are investing in property. As a matter of fact I have a mixture of both in my super fund.
But my personal preference is for property, largely due to the fact that residential real estate has proven itself to be less volatile than shares or managed funds. 
Combining the security of bricks and mortar with the tax office changing superannuation regulations back in 2007 so that people can borrow within their own SMSFs, it is not surprisingly that real estate is becoming an increasingly popular super fund cash cow. 
Fact is more and more Australians are recognising the benefits of property as a strong, stable asset base for their super funds, given its ability to generate excellent returns and capital gains over the long term. 
Now, not only can you borrow up to 70% (and under certain circumstances even up to 80%) of a property’s value to invest within your SMSF, you can also seek extra funds to make improvements on the residential properties in your SMSF (with some conditions of course and with special emphasis on repair and maintenance versus improvements). 
So what are the main advantages and disadvantages of taking this tact when it comes to building your own retirement nest egg? 
The good
<ul>
<li>
Control – you have complete control over your SMSF rather than entrusting your future financial wellbeing to a complete stranger, who will take your hard-earned cash and invest it in shares and managed funds that may or may not perform.</li>
<li>
Tax savings – If you buy and hold the property within your fund until you retire and your super goes into the pension phase, you will be exempt from paying either capital gains tax if you sell the investment, or income tax on any rental income should you decide to hang onto it. Before you retire, any capital gains or rental income generated by your SMSF are taxed at a rate of 15%, or 10% CGT is applicable if you hold onto the property for over a year.</li>
<li>You could have a diversified investment portfolio that is not reliant on just one investment vehicle, meaning you will have better financial security for your future. </li>
</ul>
The bad
<ul>
<li>
The cost – There can be a significant cost in initially setting up your super fund, and the annual compliance costs could be up to a few thousand dollars. But don’t forget the management fees you’re saving by not leaving your money with a fund manager.</li>
</ul>
<ul>
<li>
Higher borrowing costs – Currently there are slightly higher fees involved in borrowing to buy property through your SMSF.</li>
<li>
The confusion – There’s no denying that managing your own super fund can be a minefield of complicated rules and regulations. Get something wrong and you could end up paying hefty penalties. Of course, you can always pay a professional to manage it on your behalf, and this is something I would advise anyone with an SMSF to do – whether they’re buying real estate or not.</li>
<li>
The money – You generally need a bigger deposit to buy a property in your super fund than you need to buy one in your personal name. How much you need will also depend on the amount of your super contributions. This is not a strategy for someone with a small amount of cash in their super. </li>
</ul>
Be careful
Of course before you go down the route of setting up your own SMSF, it is critical to seek independent advice from a properly qualified financial planner and to ensure you set up things correctly so you don’t fall afoul of the tax man. 
With 5.3 million baby boomers moving transitioning into retirement over the next 15 years or so, I see properties bought in a SMSF as a major driver of property values over the next decade.
Michael Yardney is the director of <a target="_blank" href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a>, a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the<a target="_blank" href="https://propertyupdate.com.au/category/property-investment/"> Property Investment Update blog.</a>
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How investing in property through a self-managed super fund can help you retire comfortably

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Despite our property markets having turned the corner and the lowest interest rates for many, many years, the fact that first-home buyers (FHBs) have been sitting on the sidelines rather than buying into the market has confounded many property watchers.
It hasn’t surprised me for a number of reasons:
<ol>
<li>
Looking back at previous cycles, FHBs haven’t been as active at the beginning of the property cycle as later on unless they were induced to buy through enticements like the extra home buyers boosts they received recently; and
</li>
<li>The incentives given to FHBs a few years ago brought forward demand and depleted the pipeline of potential FHBs. 
</li>
</ol>
FHB commitments down 10.6% year-on-year  
While the number of first-home buyer finance commitments rose 17.0% in May, the figures are still down –10.6% year-on-year.
 <img alt="yards_aug_29" height="221" width="470" src="/images/stories/2013/08/yards_aug_29.jpg">      
Based on finance approvals it seems that currently around 12% of property purchasers are first-homebuyers, around 33% are investors and 55% are people buying their second or subsequent home.
 <img alt="yards_aug_29_two" height="329" width="470" src="/images/stories/2013/08/yards_aug_29_two.jpg">  
But they’re not buying new homes…  
While many of the government incentives encourage FHBs to buy a new dwelling, it seems that only 18% or so of them are buying a new home, with most choosing to buy an existing property.  
In many cases they find that they can purchase a two or three-year-old home in the outer suburbs cheaper than they can get a new dwelling or they find an established apartment with a superior floor plan cheaper than they can buy a new apartment.  
According to an interesting report by Westpac:
“The dominant reason FHBs are missing is because of the 'shadow effect' of earlier pull-forwards in activity associated with changes in government assistance. Although these were not as large as the 2009-10 pull-forward they have effectively depleted the pipeline of potential FHBs which could take over a year to rebuild.”  
Also…  
“The Westpac-Melbourne Institute Consumer survey suggests buyer perceptions have also been a restraining factor, most likely relating to affordability issues. Overly conservative assumptions around mortgage interest rates may be muting the response to what is otherwise a reasonably positive picture on affordability.”
 
Is housing really unaffordable?  
Housing affordability has been in the headlines again, however, while first-homebuyers might find it hard to believe, housing affordability conditions in Australia are among the best we’ve seen for decades.  
While house prices may in general be on the up, weighing against that are lower interest rates and rising incomes, which make for a better outlook for those trying to buy.  
Let’s face it, it’s never been easy for FHBs to get their foot on the property ladder, but some are making it harder for themselves by wanting the type of property today that it took their parents 30 or 40 years to afford.  
Many are looking for a three-bedroom home with all the modern appliances and a big front and backyard, while others are looking for a swish apartment in lifestyle suburbs, while their parents are likely to have had more modest expectations for their first property.  
Before you call me unsympathetic to the plight of FHBs…  
Now don’t misunderstand me, I have six children in my blended family, some who own their own homes, but most are still waiting to get in the property market.  
However, only last week one of my sons was offered finance and a mortgage for 95% of the value of his first property, because he’d had a credit card with a major bank for six months. Of course he also passed their other lending criteria.  
The banks are back to lending money again and those who practise the age-old discipline of spending less than they earn, investing the balance and then reinvesting until they have a sufficient deposit will be able to join the ranks of home owners in the future.  
Fact is the property cycle will move on and real estate values will increase.  While some will get on board and buy a home, others who spend money they haven’t got or keep buying the latest toys and gadgets are more likely to remain tenants.
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Michael Yardney is a director of <a rel="nofollow" href="https://www.metropole.com.au/">Metropole Property Strategists</a>.
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Where have all the first-home buyers gone? Michael Yardney

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I’ve heard it said that investing in property is simple, but it’s not easy.
Now this is not a play on words. Let’s face it: each year hundreds of thousands of Australians turn to property investment as a way of developing financial freedom, or getting more choices in their life or building a retirement nest egg. But very few achieve their goals.
Let’s look at the facts. About one in four property investors sell their property within the first year and almost half have sold within five years. Of those who remain in the game, less than 10% own more than two properties and less than one in 200 own six or more investment properties.
Putting it bluntly: most property investors fail to reach their objectives.
My concern is that in the current environment, this will only get worse.
The good news is that there is a way to make property investment work. I’ll explain how in a moment, but first let’s look at eight sure-fire ways to lose money in property.
Currently our property markets are a confusing place, yet property investors are being bombarded with messages of easy money which leads to a worrying trend where some investors are so keen to do something, or do anything, that they are heading for property investment disaster.
Even if they don’t have enough money, or haven’t developed the discipline to save, or they’ve already borrowed to their limit, some potential investors feel they’ve got to do something and in their bid to get into the property market, they are now speculating rather than investing.
I understand why they are keen to share in the profits others have achieved through property, but sometimes the right thing for an investor to do is nothing. I’ve made more money by the things I’ve said no to than the things I’ve said yes to. That’s because all my investments have been made as part of a planned strategy.
So here are eight ways to lose money in the current property markets.
1. Off-the-plan purchases
Sure, it sounds enticing: buy at today’s price then settle or on-sell at a profit in a few years’ time. Sound’s good, but does it work?
One of the big issues with buying off the plan is finance. Since loan approvals are only current for three months, obtaining a formal pre approval for an off the plan purchase is impossible. The problem is when the project is completed; some purchasers will be unable to obtain finance and have to sell. Others never planned to settle but intended to flip their property for a profit.
What this means is that when many projects are completed there will be a group of desperate vendors who lower their prices to sell at whatever the market offers.
And even if you are one of those who will be able to settle your purchase, the banks will only lend you against the prevailing market price of your property, which will be the lowest sale price achieved by one of the desperate vendors, rather than the price you paid.
Add to this the fact that banks often only lend on a 70% loan to value ratio in the postcodes where many of the big new developments are situated, and what looked like a good investment to start with starts to turn sour.
Of course there are a lot of other reasons I would avoid off-the-plan purchases, including the uncertainty about completion dates, the level of finishes and the market conditions when you eventually take possession. This means is you should buy your property at a significant discount to make up for these unknowns. But currently to get development finance, developers have to sell their products to you at a premium, not a discount.
And if that isn’t enough to turn you off buying off the plan, here’s one last point. Almost all off-the-plan developments are sold to investors. On the other hand, I like buying properties in buildings that have a good proportion of owner-occupiers in them. I just find owner-occupiers tend to look after the buildings better, and enhance their long-term capital growth.
2. House and land packages
I know some investors buy house and land packages because they’ve heard that land appreciates in value. But when you think about it, when buying this type of property usually the land accounts for less than half the purchase price, giving these properties a very low land to asset ratio.
While they may be great places to bring up a family, in general new or outer suburbs are not good places to invest. Residents in these areas tend to have less disposable income than people who live in more affluent suburbs which means that these areas suffer most in tough times or when interest rates rise.
Remember: one of the big factors that enhances capital growth is scarcity and that’s something missing in these suburbs. Many properties look the same, and there’s always another estate with more similar houses and more land just across the road.
Another reason I would avoid investing in these areas is their demographics, as they don’t attract the same demand from a diversity of tenants as the inner and middle ring suburbs do.
3. Buy renovate and sell a property 
I’m all for adding value through renovations; but you can’t buy a property, do minimal work and then sell it at a profit, because stamp duty, buying and selling costs and tax eat away at your profits. On the other hand, buy, renovate and hold in the long term is a great investment strategy.
4. Positive cashflow properties 
If you’ve been following my blogs you will realise I believe the best way to financial independence through property is to accumulate assets. In Australia, properties with higher capital growth usually have lower rental returns. Sure, owning this type of property requires more discipline, but you can’t save your way to wealth with a few dollars a week positive cashflow.
5. Options
Another way to lose money is to follow some of the creative schemes currently being promoted by property spruikers. People with little or no money are being tempted by the prospect of bypassing the step of developing the discipline of saving. They are happy to hear the promoter’s suggestion that you can control millions of dollars worth of property using none of your own money when you buy using an option.
There’s nothing new about these schemes. And if history repeats itself the promoters of today will become very rich while their students will learn a very expensive lesson.
6. Rent guarantees
This is where the seller or the developer guarantees a certain rental for a period of time. This panders to inexperienced investors concerned about vacancies, but these guarantees come at a cost. Don’t be misled - they are factored into the purchase price and you’re paying the developer upfront for the rent he’s going to repay you over the next few years.
7. Regional properties 
I admit that some regional towns have exhibited better growth than some underperforming suburban areas; but on the whole capital city properties have outperformed other types of properties in the long term. Since two important drivers of capital growth include strong population growth and having a diverse strong local economy, I only invest in capital cities.
8. Investing in mining towns.
Yes I know we’re going through the mother of all resources booms and mining towns will grow in the future. But if history repeats itself, and it usually does, the property market in these towns will be driven by speculative investors. While there are likely to be some short-term booms, property prices in these towns tend to be very volatile. Don’t believe me? Try selling your property in one of these towns today and see if you find any buyers.
Well if these methods don’t work, what does?
There is one proven, time-tested method that has made average Australians very wealthy…
If you want to grow your own significant property portfolio, you need to own properties that provide wealth-producing rates of returns. This means buying a well located property below its intrinsic value, in an area that outperforms the average over the long term and one to which you can add value so you can create some capital growth. This could be through renovations, refurbishment or redevelopment. Then over time borrow against your property’s capital appreciation and grow your portfolio one property at a time.
That’s what the small group of investors who have achieved financial independence through property have always done.
Michael Yardney is a best selling author and one of Australia’s leading experts in the psychology of success and wealth creation through property. He is Australia's most published property author and has probably educated more successful property investors than anyone else in Australia. Go to <a style="outline-style: none; outline-width: initial; outline-color: initial; text-decoration: underline; color: #005c7a; padding: 0px; margin: 0px; border: initial none initial;" target="_blank" href="https://www.metropole.com.au/">www.metropole.com.au</a>
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Eight sure-fire ways to lose money in property

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Warren Buffett is arguably the greatest investor of all time. He has a great track record of creating and maintaining his wealth through share investments, but many of his principles also apply to property investors. So let’s look at some of Buffett’s investment principles and see how we can apply them to our property investing.
 Adhere to a proven strategy.
Buffett’s success has often been put down to his extraordinary patience and discipline, never deviating from his proven investment strategy even when faced with short-term changes in the market.
 This is a great lesson for property investors, as most don’t have a plan or adhere to a proven strategy. In fact, many investors spend more time planning their next holidays than they do planning their financial futures.
 If you don't have an investment strategy to keep you focused, how can you hope to develop financial independence? It's too easy to get distracted by all the "opportunities" various interests keep spruiking. Unfortunately many of these supposed opportunities don't work out as expected. Look at many of the investors who bought off the plan or in the next "hot spot", only to see the value of their properties underperform.
 Invest counter-cyclically.
Buffett is a renowned counter-cyclical investor, advising: “We attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
This is also the investment strategy of many successful property investors and has proven to be a winning formula for many who invested in property last year, when many predicted that property prices would fall further. So be sceptical of conventional wisdom – not because the crowd is always wrong, but because the crowd is always late.
Sometimes it’s best to do nothing.
A great quote from Warren Buffett is “The trick is when there is nothing to do, do nothing.” Yet many investors get itchy feet and want to do more, put another deal together or buy another property. There are stages in the property cycle and times in your investment journey when it is best to sit back and wait for the right opportunities, because wealth is the transfer of money from the impatient to the patient.
Specialise, don’t diversify.
Buffett has adopted a focused investment philosophy, investing the bulk of his funds in a few companies. However, most advisers suggest diversifying. This is really just playing the game of investment not to lose, rather than playing the game to win, and leads to average results.
A successful investor specialises. He or she becomes an expert in one area or niche and reproduces the same thing over and over again, getting great results.
Invest for value.
Buffett is a value investor who says: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price," and it’s the same with property. Lock in your profits by buying the “right property” – one that will outperform the averages in the long term because of its scarcity or the potential to add value.
In today’s flat property market bargains abound, but they don’t necessarily represent good long-term investments. Rather than buying a cheap property, buy the best property you can afford. Remember, the price you pay for a property isn't the same as the value you get. Successful investors know the difference.
 
Invest for the long term.
Even Buffett can't predict which way the markets will move in the short term, and he is quite certain no one else can either. So instead, he takes a long-term view of the market, saying if you don't feel comfortable owning a stock for 10 years, you shouldn't own it for 10 minutes.
 Similarly, those investors who have created wealth out of property take a long-term view. This doesn’t mean buy and forget – you should regularly reviewing your property portfolio.
When was the last time you checked to make sure you were getting the best rents or that your mortgage was appropriate for the current times? Maybe it's time to refinance against your increased equity and use the funds to buy further properties?
And sometimes it is appropriate to consider selling an underperforming property to enable you to buy a better investment.
 
Don’t invest in anything you don’t understand.
During the boom years investors’ hunger for high returns took them into exotic terrain, whether they realised it or not. Promoters often promised large profits using opaque schemes, and the same has been happening in the last year or two from a new breed of property pretenders.
Warren Buffett never invests in anything he doesn’t understand – neither should you.
 Manage your risks
Many investors don't fully understand the risks associated with property investment and therefore don't manage them correctly.
 One common error is not having sufficient financial buffers to see them through from one property cycle to the next. Smart investors have financial buffers in their lines of credit or offset accounts to not only cover their negative gearing but also to see them through the down times like we’re currently experiencing and through times of increasing interest rates.
 Savvy investors don't only buy properties; they but themselves time.
 Another way smart investors minimise risk is to buy their properties in the correct ownership structures to legally minimise their tax obligations and protect their assets.
 A final lesson from the master is that bad times will come and go with surprising frequency over our investing lifetimes, but if we have a plan and stay focused on sound financial strategies, we can gain financial independence through prudent investing.
Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia's leading experts in wealth creation through property. For more information about Michael visit <a href="https://www.metropole.com.au/">www.metropole.com.au</a>  or <a href="https://www.propertyupdate.com.au/">www.propertyupdate.com.au</a>.
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Invest like Warren Buffett

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In the current buyer’s market we all want to buy our new home or property investment at the lowest possible price. On the other hand, the vendor wants the highest price they can get.
You know that the asking price quoted by the selling agent will usually be more than the owner is happy to accept for their home. It's just part of the real state negotiation game.
If you’ve been reading that there are more properties for sale than ever, that properties are on the market longer and that vendors are needing to discount their asking prices to get a sale, you’re probably wondering how much should you offer when negotiating for your next property?
If you ask the selling agent what price you should offer, you're asking the wrong person. Remember, the agent is paid by the seller to represent them and to get the best price possible. Despite this, I would still ask them what they would consider a fair offer, and then ask them to justify it with a list of comparable sales.
But unless you use a buyer's agent to help you negotiate, you are going to have to rely on your own research to work out what the property is worth – not just what the selling agent tells you.
By the time you end up at the negotiation table, you should have looked at many properties and have a pretty good idea of what similar homes in the area have sold for. Remember, it's the final sale price – not the asking price – that you need to focus on when you're doing your pre-negotiation homework.
In the current market most properties sell for less than their asking price. There is no standard discount, but as everyone knows there will be some 'argy-bargy' about the price as agents tend to list the property for sale at an asking price usually about 5-10% more than the vendor will accept to sell their home.
This means the asking price is just a starting point for the negotiations.
If you pay what the seller is asking, you could be wasting money. The trick is to know how much less the seller will accept. Sometimes it's only a few thousand dollars. In a buyer's market like we’re experiencing, many vendors are prepared to drop their asking price, especially if their property has been for sale for some time.
Before deciding what price to offer, here are five questions you should consider asking:
1. How did the vendor come to the asking price for their home? Was it from the agent's suggestion or because that's how much they need to buy their next dream home? Some sellers are unrealistic and unlikely to come down from their asking price if they have to get a certain amount for a particular reason. Others are still hoping to get the price their neighbour achieved last year.
2. Have there been any other offers made? This lets you know if you have any competition and how serious the vendor is about selling their home for a reasonable price.
3. How long has the home been on the market? If it's just been put up for sale, the seller may not be anxious to accept the first offer. If the home has been on the market for several months it's more likely the seller would be ready to accept your offer.
4. Why is the vendor selling? Are they going through a divorce? Do they have to move interstate urgently? Have they already bought another home that would put them under pressure to sell their current home? This will let you know how motivated the seller is.
5. Has the asking price been reduced during the time the property has been on the market? This will tell you whether the seller is really keen to offload their home and also let you know that you might have a motivated seller on your hands, and perhaps greater bargaining power.
Good luck with your negotiations!
Michael Yardney is the director of Metropole Property Investment Strategists <a href="https://www.metropole.com.au/">https://www.metropole.com.au/</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the Property Investment Update <a href="https://www.propertyupdate.com.au/">https://www.propertyupdate.com.au/</a> blog.
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Five questions to ask before making an offer on property

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In general property investors are all after the same thing. They buy property because they want to develop a degree of financial freedom. While some are looking to quit their jobs, others just want to have the choice of whether they work or not. Some are trying to save for their retirement while others want to leave something for their children.
Yet most property investors never achieve the financial independence they strive for, with close to 90% never owning more than one or two properties. On the other hand, a small group of investors manage to build substantial property portfolios.
Over the years I found that investors tend to fall into three main categories, which led me to investigate if one style of investing was more successful than others.
So let’s look at the 3 main types of property investor.
Firstly there is the passive investor, who tends to spend little time looking for a property. They are not interested in understanding all the ins and outs that go along with creating a property portfolio and are more likely to buy the first thing they come across, rather than conducting any due diligence or consulting others for advice.
The more active investor puts in some degree of work in order to find a good investment prospect. They gain a basic understanding of the principles involved in property, finance and taxation. They seek professional advice regarding structuring their portfolio and conduct some due diligence in the hope of increasing the likelihood of making a viable investment purchase.
Finally, there is the analytical investor, who tends to run around for months, sometimes even years, examining every nook and cranny of our property markets, endlessly comparing values and sales, reading reams of material regarding property do’s and don’ts and seeking advice from as many experts as possible before committing to anything. They like to conduct as much due diligence as possible and look for the ‘perfect' investment property.
If property investment is like many other things in life, the more effort and energy you sink into property investing, the greater your rewards are likely to be. In other words, the passive investor would enjoy smaller gains than the active investor, while the analytical investor would come out on top as they were willing to do the hard yards.
In reality this is only partially true!
Many passive investors purchase their investment properties the way they would buy their home – emotionally. They tend to buy their investments near where they live, or close to where they want to retire or holiday – all emotional reasons. Some live to regret their investment decisions and have difficulty holding on to their investments and end up selling their properties after only a year or two. Those who can hold on usually do well, but more of that later.
The more active investor puts in some degree of work in order to find a good investment prospect. They gain a basic understanding of the principles involved in property, finance and taxation. They also tend to seek professional advice with regard to the structuring of their portfolio and tend to conduct some due diligence in the hope that they can increase the likelihood of making a viable investment purchase.
What about the analytical investor? Let me share a story with you.
A while ago I bumped into Leonard, a successful IT engineer. When I first met him years earlier he said he was going to invest in property, so I asked him how his investments were going.
He explained that he was still researching the markets. Now Leonard is very intelligent but has a tendency to over-analyse things, hence he was still waiting for the perfect property, the perfect time and the perfect set of circumstances in which to buy.
What he doesn’t realise is that this will never happen.
If he had invested in a well-located property in his home town of Melbourne (or in almost any major city) three or four years earlier, when I first met him, despite that time frame including some of the worst years in property market in more than a decade, his property would have increased in value significantly.
While the value of many properties has gone by 20 or 30% in that time, Leonard had $500,000 sitting in the bank waiting for the ‘right opportunity’ to come along.
On the other hand, let’s look at Mark – a passive investor who was so naïve that he bought the first property that he could get their hands on 20 years ago for $50,000. At the time, everyone told him he was “crazy” – it was a bad time to buy; it was a foolish thing to do and he paid way too much.
Although he may not have done all of his homework, Mark bought in a popular inner suburb and the value of that property is now in the order of $500,000. And if he was half smart, Mark has borrowed against its increasing equity to allow him to buy more properties.
The lesson from all this is that it really doesn’t matter if you’re a passive, active or analytical investor, as long as you are taking action and are in the market.
Of course, you can’t just buy any property and hope it will increase in value – particularly in the current market. Educate yourself and make informed investment decisions, as long as you don’t get so absorbed in the process of learning that you forget to use that knowledge to buy something!
If you have been thinking about investing in property, maybe now is the right time to act. After all, we are in a buyer’s market – a time of great opportunity.
Buy a property that suits your current circumstances and investment strategy. If you are in it for long term, as you should be, doing something some might consider foolish right now could be much better than waiting to do something “smart” later.
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a>, a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
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What type of property investor are you? 

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According to the latest survey of the world’s wealthy by Merrill Lynch and Capgemini, there are now 192,900 high-net-worth individuals in Australia, up 11.1% from last year. To get onto this rich list you need to have more than $1 million of investable assets – not including your family home, collectible items and super.
The most startling statistic was our standing in the global wealth rankings of numbers of high-net-worth individuals. Australia rose one spot in 2010 to be ninth out of the 71 countries covered by the report. We’re now in front of many countries with vastly larger populations than Australia.
Another interesting statistic from the <a href="https://www.capgemini.com/services-and-solutions/by-industry/financial-services/solutions/wealth/worldwealthreport/" title="More about the report.">World Wealth Report</a> was that in 2010, a mere 103,000 people of the nearly 7 billion people on the planet controlled 36.1% of the world’s wealth. (This was up from 35.5% in 2009.)
North America had the largest number of so-called ultra-high-net-worth individuals, with 40,000 people worth more than $30 million. By the way, that’s one of the reasons I think the US will eventually work its way through its economic woes. It has more of the world’s high-net-worth individuals than any other country, and there is some smart collective wisdom among these people. They can’t all get it wrong – can they?
But last year was not just a good year for the really wealthy. It was also a good year for the merely rich.
The number of people around the globe with more than $1 million to invest was 10.9 million, up 8.3%, while the amount of money they had, $42.7 trillion, had risen by 9.7%. This was driven largely by the Asian region, including China and, to a lesser extent, Australia.
The report noted that the number of high-net-worth people in Asia, 3.3 million, surpassed the number in Europe, 3.1 million, for the first time. China ranks fourth behind the United States, Japan and Germany for the number of high-net-worth citizens.
Advice for everyone else:
This report also offers some practical insight for those of us who are not super-rich.
For one thing, the wealthiest people around the world put more money into the equities last year and plan to continue to do so. The percentage of assets allocated to equities increased from 29% to 33%, while allocations to fixed interest dropped from 31% to 29% and cash dropped from 17% to 14%.
Not surprisingly, they also invested in real estate. Dorus van den Biezenbos from Capgemini Australia explains: "We see the real estate market as a big contributor to the positive growth number of millionaires in Australia." 
Regardless of what they were investing in, the wealthy were spreading their investments round the world to reduce the risk from political, economic and financial uncertainty. But identifying that safe place is more difficult. The rich generally agreed that they were concerned about the American economy and the potential for political and economic unrest elsewhere.
Not surprisingly the World Wealth Report found that wealthy Asians were the only ones confident in investing in their own region. The report estimated that Asians would maintain the current percentage of their money invested in the region in 2012, while the wealthy in Europe, North America and Latin America indicated that they planned to reduce their allocations to their own regions.
With the rich getting richer yet many of us feeling poorer, knowing how the very rich think about their investments and diversification in an uncertain world can be useful to everyone else. Or it could provide some interesting gossip to share with friends. 
Michael Yardney is the director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
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The ranks of Australia's super-rich are growing, and they are investing in property

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Since one of the primary drivers of property prices is where people choose to live, I like to know where future population growth is likely to occur to ensure the value of my properties keeps rising.
It should come as no surprise that the vast majority of people in Australia live within the capital cities. According to RP Data, 64% of Australia’s residents lived in one of our eight capital cities of June 2010, with 55.5% living in Sydney, Melbourne, Brisbane or Perth.
Although we have vast open spaces in this lucky country, much of it is empty expanse, and two-thirds of our population lives in only 0.5% of the overall land mass.
More Australians lived on the land a century ago, but with the industrial revolution the jobs and therefore the population moved to the big cities, and this trend has continued. Even 50 years ago only 60% of our population lived in capital cities, but people keep moving to where the jobs are.
Sure, we have a resources boom and a small percentage of our population is being drawn to the mining towns, but the vast majority of Australian business is housed within the major capital cities, and that's where the jobs are.
I've always chosen to invest in capital cities rather than regional Australia because a larger population base means more owner-occupiers looking for homes, which pushes up prices, as well as more tenants driving rental demand and therefore rents upward.
With good employment prospects and major infrastructure like schools, hospitals and public transport, as well as desirable lifestyle amenities such as shopping, recreation, restaurants and entertainment venues, capital cities will continue to be home to a large portion of the population.
I admit that there are some regional towns that have exhibited great capital growth, and in some cases better growth than some underperforming suburban areas, but on the whole capital city properties have outperformed other types of properties in the long term.
This is particularly true for our four major metropolises – Melbourne, Sydney, Brisbane and Perth – where more than half our population reside.
Another important consideration is that our large capital cities boast diverse economies with a wide array of industries supporting them, compared with regional towns, where the local economy is often driven by one or two industries. Having a more stable economy ensures that the property markets in our big cities are less subject to sudden changes. This is different to the more speculative holiday hotspots and mining towns, where fortunes can be made and lost in the blink of an eye.
Just look at the once booming Gold or Sunshine coasts, where properties are languishing on the market and prices have fallen due to a significant drop in the tourism sector – the main industry that largely drives that local economy.
Of course all property markets are cyclical and will have their highs and lows, but over the long term it is evident that above-average capital growth will be found in the suburban property markets of our major metropolises. While this may lead to affordability issues, particularly for first-home buyers trying to get into these markets, it also means there will be a good supply of tenants for those investors who own the right properties.
For me capital cities are the place to be.
Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia's leading experts in wealth creation through property. For more information about Michael visit <a href="https://www.metropole.com.au/">www.metropole.com.au</a> <a href="https://www.propertyupdate.com.au/">www.propertyupdate.com.au</a>.
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Michael Yardney

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