Infinite Returns

Last week , in my blog "Financial Freedom" we spoke about how you can create an income producing asset which pays you whilst you sleep. A much better use of money and a way of getting your money working for you instead of you working for your money. The financially savvy know this and look for ways of leveraging their money to produce a repeat income.

Today's blog is about "infinite returns" and how property , as an asset, can produce infinite returns.

To introduce you to the concept - I am going to compare a property investment with a standard investment like a stock or a bond or a mutual fund for instance.

I am going to show you that over time, a property will produce an infinite return! Now what do I mean by an infinite return?

I mean the asset continues to grow with or without your initial investment.

Let's take a closer look at this idea.

Take a £50,000 investment in a mutual fund which produces 8% per annum over 20 years.

See how the curve of the graph increases and produces a nice return of 466% or £233,048

Take a £50,000 investment in property where the money forms the deposit required for a property worth £150,000 and this property value increases by 8%

See how the curve of the graph increases but , because our asset is 3 times the value of the deposit we are considerably wealthier than the mutual fund.

We produce 1098% or £549,144 return.

This is called "leverage" which means we have used the financial product and lending rules to allow us to acquire an asset worth 3 times our investment.

Now let me show you something that excited me so much the first time I saw it and made me realise the secret of the property investment

Spending your investment in property is totally different to any other investment - why? Let's take another look in more detail.

With our £50,000 investment in mutual funds , look what happens when we choose to spend some of the money - in the example below I have shown what happens when we spend £20,000 in year 9. A full 27% or £63,500 has gone forever because the fund no longer has the cash in it. We took it out.

However with a property investment, when we spend some of our investment ,by remortgaging, look what happens to our investment in the graph below. The bricks and mortar asset cares not for our withdrawal because it continues to rise in price over time and give us all but £20,000 of the previous graph with £549,144. Which is just a 3% drop in equity and still returns an impressive 1058%. Why is this so much better then? Its because the property price will rise with or without our money.

So taking this one step further, you can use some of your equity in an investment property , lets say £50,000, and effectively take back out all of your initial investment; which means your initial property is now , to all intents and purposes, FREE! 

Did that make sense to you? It might be hard to believe at first that you can own an asset worth hundreds of thousands of pounds and it has cost you nothing, but if you have got your deposit out then you have to accept that your investment is now free and producing a return. This means your property is producing an infinite return because your money is not locked up it is out and your asset is still producing.

Imagine using this knowledge to your advantage and building an entire property portfolio to achieve this idea of infinite return.

If you have the time - then I would really recommend watching our online Property School Presentation (Click Here) which is designed to walk you through the concepts and show you exactly how we do it for our clients - 10 properties over 10-15 years and financial freedom for those that are willing to use the knowledge, leverage our team and achieve their financial goals.

Thank you for reading this blog - I hope you have found it useful.

Please come back next week when I will be discussing "Creating a positive reason why to achieve our goals"

Have a great week

Robin

www.midasestates.com