Scrooge McDuck

Sir Scott,

I see your dread and fear of low interest rates, and will slay this with my positive outcome. My investment property in Queensland, which I bought cheaply, is positively geared and is reaping the rewards. I bought it in 2018 and interest rates have continued to decline each year. I feel this is a much better approach then just letting money sit in the bank earning next to nothing. I am quite shocked as to why you never encourage investment property purchasing when there is affordable housing across Australia. I feel you coach people to be Scrooge McDucks.

Pete

Hi Pete,

As they say in the classics, where do I start?

Whenever I talk about cash, I’m talking about short-term savings: money you’ll need in a pinch.

You suggesting that an investment property is an ‘alternative’ to saving money in the bank is weird.

They are not the same.

There are three things your 18-month journey into property investing hasn’t taught you yet:

First, interest rates may be the lowest in history now, but remember you are taking on a 25-year mortgage.

Second, properties are expensive to maintain. Something costly almost always goes wrong when you least expect it, and that will eat into your return.

Third, when speculators without Mojo go bust, it’s not pretty. And it happens quite a bit, especially in the go-go Queensland apartment market. Wait a few more years and you’ll probably see it.

Look, it’s not about being Scrooge McDuck, having money for money’s sake. That’s the opposite of my message. Rather, it’s about having a financial cushion so you can say “I’ve got this” no matter what happens to you.

And that gives you the ultimate return: sleeping well at night.