If you want to reach financial freedom and stability than you must find a way to make money and grow rich while you sleep. There are many ways to do that including investments in stock markets, mutual funds and real estate. As we grow in our careers or primary businesses we start searching for a proper investment for our profits and savings. Some of us try to build new or expand businesses . Some just put the money in the banks, we may buy insurances and the list goes on.
So ask yourself a question today , what do you wish to do with your savings and profits. Do you want to just put all your money in a savings account or mutual funds or do you want to buy stocks or an insurance. You can also use this money to start a new or expand your existing business. Finally one Last option is to invest in real estate.
This is a difficult choice and many of us get it wrong. The first thing you need to do and it is extremely important after your initial success is to secure and consolidate what you have. Some of the risk takers will move on and invest it in a business or stocks. However as an investment consultant i do not suggest that. I strongly recommend that the first thing you need to do after scoring your initial success is to find a safe , secure and sure way to earn more money on your savings while you sleep. This is an important part of your wealth gaining strategy as you need to consolidate your gains, grow rich and secure some thing to fall back on if things go wrong in future.
This leaves you with just 3 options , savings account , insurances and real estate. Some of us do not invest in savings account and insurance because of religious restrictions. As for others they need to compare these three and find out what works best for them.
Savings accounts offer 8 to 10% annual growth and are a safe and wise bet to secure what you have earned. On the other hand insurances in my opinion are a scam. The basic principle of insurance is not about building your wealth but protection. Harnessing the fear of safety we are being manipulated to keep on paying a lot of money for some thing we may not ever use. The last option you have is to invest in real estate , not only it is safe , but it is the most reliable and surest way of multiplying your money. Real estate grows at the rate of 20 to 30 % annually , even the mature markets offer at least 10 to 15 % growth.
Lets take a look at the history
Real estate has proved to be the the only true constant across the history of investing and wealth building. In Pakistan real estate has grown phenomenally in the past 3 decades and continues to do so. Let us just take into account the growth of real estate sector in Pakistan. As i deal in real estate in DHA Lahore i happened to come across some one who purchased a 1 kanal plot in Phase 5 of DHA Lahore in 1996 at a price of 300000 Only and in 2015 he sold it for 26 Million. A plot file of DHA Phase 6 was being sold between 7 to 8 lacs in 1999 to 2000 and presently an average plot is worth 19 to 22 Million.
I can quote you so many examples from history and probably many are also known to you. This is phenomenal growth compared to savings accounts which offer to double or triple your money in 7 and 10 years respectively. To draw a comparison if you had put 300000 in 1996 in your bank account in 2015 it would be worth roughly 5 Million in 2015. Not bad but almost negligible to what real estate investment delivered in the same time period. Same applies to insurance as well.
The real estate sector growth will not be phenomenal any more
20 years back some of you thought the same and 20 years before that your elders thought the same and if you do not invest right now 20 years from now you will regret. Real estate will never stop growing , it may give low yields during certain years but it will continue its growth . The demand for housing is increasing every year, 20 years back i used to live in one house with my 6 siblings and now we all live in 6 different houses. 20 years from now all my nephews and nieces and my children will have there own houses . The demand keeps on growing and so will the prices , it is no rocket science, however the under developed sectors will give you much more returns and as an investor those should be your target.