As you might remember, my main business is short term insurance, but I am also part of a group that teaches and helps people to invest in residential property (seminars are free – so you are welcome to contact me). As part of the presentation we normally compare projected future values and incomes derived from property and conventional investments in terms of Present Value. In other words, we take the projected future value and discount it back to what we can buy with that money today.
Regular readers will also remember that I have written about the need to do that very often. There is one very big difference between R1 000 000 today and R1 000 000 forty years from today. Insurance and investment companies give us projected future payouts that seem astounding!
Anyway, quite often when we show this to people at the presentation, they question the figures, sometimes aggressively. After all, the insurance companies have been advertising for ages and here comes I, a nobody, and tells something totally different and, to add to that, something that threatens their financial certainties. Because the difference is dramatic.
I don’t have to defend myself – I experience the power of property (and fortunately was bitten by endowments and the like before I was 27) . I normally just ask this:
When you rely on a retirement annuity and shares for retirement, where does the money come from? And the answer is simple: “I pay it from my own pocket.” And I can guarantee 1. you are not paying enough and 2. you can probably not afford more and 3. even if you could afford more, you don’t want to spend more and 4. what you are doing is not enough. That is why the figure on that side of the equation is so shocking.
If we look at property and we ask: “where does the money come from?” The answer is not so simple any more. I borrow from the bank. Hm, other people’s money! And I have a tenant who pays substantially more on my bond than I do. Hm, other people’s money and other people’s time. Think about it, your tenant is selling his time for a salary to pay your asset! No wonder property outperforms other investment classes! You don’t have to be an Einstein to realise that 2 people can save more money over 40 years than 1.
Interesting enough, those who question the above, never get involved in property. Those who grasp it immediately, see the light, so to speak, cannot wait to start buying properties.
Just remember, I don’t work with “either or”, I prefer “and and”!
And you are more than welcome to contact me for that presentation, as long as you are serious about learning! There is no strings attached. If it is not for you, it is not for you, I understand that. But you can only say that once you have seen how we do it. But please don’t tell me “it does not work”. Then you say I am a liar, because it really does work for me!