To invest or not to invest
Investment can be a lucrative business. It is also a risky one. Major global investment players
have recently collapsed. Many investors have sustained significant loss. And it’s not over.
Now more than ever, if you want to invest it’s essential to set some fundamental protections in
place. It can be the difference between a major gain or a major loss. First, ensure you
understand the investment game. Then follow some simple rules to invest wisely.
How investment works
Investment schemes for property development are where the owner or developer needs to
raise money to buy, develop and ultimately make money. Your investment is usually part of
three groups that make up the required finance needed.
investment scheme directors invest about 10%, banks will lend about 60%, and the rest is
where you, the investor, come in. Your investment is required to complete the funds needed.
Your money is the ‘fill in’ finance gap and is generally unsecured, which means if it fails,
you’re last on the list to get your money back.
Why? Because the bank has security on the mortgage of the property so it can sell the
property and regain funds. The directors will have provided real estate of their own to the
bank as security. That leaves you as an unsecured investor where you have nothing to fall
back on. When investing in these types of schemes always make sure you get the full facts
and have some form of legal interest or ownership.
So why would anyone invest?
The higher the risk the higher the returns. Such is the nature of investment.
If you win, the dividends can be great. As can the losses if you don’t. You can never
guarantee your investment. But you can take steps to protect it.
Apply the same information seeking and safeguard essentials that you would in any business
venture. When performed from a well-informed, strategic standpoint, property investment is
an excellent generator of wealth. To learn more, South East Queensland Investment Property
invites you to download a free copy of a fantastic e-book entitled Basic Principles of Property Investing For Wealth Creation
In the meantime, use these Golden Investment Rules as a guide to smart investment.
Golden Investment Rules
Make Australian Investment Securities Commission (ASIC) your first stop. ASIC is your
investment bible. It’s also the national regulator of most investment schemes. ASIC has a set
criteria that investment schemes must meet to be recognised by ASIC. The criteria is based
on ensuring that investment schemes and their directors are honest and diligent in protecting
investors’ interests.
Investment schemes that don’t fall under ASIC are not subject to this criteria. If your potential
investment scheme is not ASIC recognised – investigate further and reconsider the integrity
of the scheme in which you are placing your money. To check if your potential investment
scheme is recognised by ASIC you can:
• Visit www.asic.gov.au
• Call ASIC on 1300 300 630
Avoid any scheme that overpromises. High return promises mean high underlying risk. Don’t
invest on the strength of marketing ‘spin’. Read the fine print and do your research. Never
take an investment scheme on face value.
Know the risks. Learn the risks associated with various investment opportunities. For
example, you’d get more return and less risk by buying a rental property as opposed to
investment in a property development scheme. Knowledge is your key to unlocking the wealth
potential of property development investment.
Make your perfect investment match.You’ve worked hard for your money. Invest it in ways
that fit your goals and personality. If you’re not one of life’s risk takers, don’t suddenly become
one when playing the investment game.
Secure your investment. Banks have security via the mortgage on the investment property.
The directors’ other investments give them security. If you have no form of ownership or
security in an investment scheme – walk away.
Read the fine print. If your investment scheme gives you a product disclosure statement
(PDS) – read it! If anything is unclear – ask. Being fully informed is crucial to wise investment.
The PDS is the investment scheme minus the marketing gloss.
Into whose hands are you placing your money? You wouldn’t let an inexperienced mechanic
fix your car. So be equally thorough in your choice of investment scheme. Word yourself up
on the directors and entities involved in a potential investment scheme. Have they done this
before? What qualifications do they have? Do they have relevant and up-to-date market
knowledge? Remember, these are the hands that will be holding your hard-earnt money.
Have a ‘get out of jail free’ card. Make sure you have an exit strategy available at any point.
Don’t enter into a scheme that has no provision for you to withdraw your cash before the
scheme is complete.
Remember, investment scheme directors need your money to fund their property development enterprise. So they will market the possibilities in an immensely positive light.
But you need to know the flip side. Always have a thorough understanding of what would
happen if the scheme collapsed – before you invest your hard-earnt money.
Investment is a dynamic game. It can bear great fruits or bring great losses. Today, investors
are placing their money in schemes against a backdrop of widespread global financial
collapse. More than ever, investors must exercise caution. Consider your investments with
care – protect your hard-earnt money.
• For more free information about how to get started, please contact me using the details
below and download a free e-book full of valuable information on the Basic Principles of Property Investing For Wealth Creation
Thank you,
Peter Morris
"Making Property Investing Easy!"
S.E.QLD. Investment Property
- Mobile: 0403 089 730
- Phone: 1300 798 011
- Facsimile: 1300 797 036
- Email: peter@seqldproperty.com.au
- Web: www.seqldproperty.com.au
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