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4 SAVE, SAVE, SAVE
Gen-Y investors need to forget about
saving 10 per cent of their wage,
according to Somers. Instead, they should
be saving as much as possible, not just
limiting their savings to a small portion.
“I had a total, non-spending philosophy,”
Somers says. “It’s the things you don’t
buy that’ll make the difference.”
Solano adds it might also be
inconvenient for gen-Y investors to have
to live in a property they purchase for the
first 12 months, which is part of stamp
duty saving rules provided by some
state governments. But you can use this
opportunity to do a small renovation.
“You’re better off claiming the
concession and then renting the property
out for a higher yield (after a renovation),”
Solano says. “Use it as a stepping stone.”
He adds you can also save money by
using social technology. Ask your tradie
mates on Facebook if they can help with
electricals, for example.
“Gen-Y is a social generation, use your
social links to your benefit,” he says.
5 THINK LONG-TERM
It’s often said property doubles every
seven to 10 years. But Somers says young
investors need to focus on the next 30 or
40 years, not just five or 10. She adopts a
policy of ‘never sell’ and advises gen-Y
investors to hold for the long-term. There’s
no get rich quick scheme – it’s simply
about being patient and waiting for time
to do its thing.
6 DON’T MAKE THE SAME
MISTAKES YOUR PARENTS DID
How many gen-Y investors have parents
facing retirement with little to no savings?
After decades in the workforce, it’s a
very sad situation so many thousands of
hardworking Australians are facing.
If this sounds familiar to you, don’t make
the same mistakes.
Somers advises gen-Y investors to look
at what their parents did and how they
got there. If they were successful, repeat
their formula. If not, do the exact opposite
and start planning your future now.
“If they finished up renting with nothing
to show for it after 20 years of hard work,
don’t do what they did,” Somers warns.
7 CONSIDER MORTGAGE
If you’re just out of university but on a
relatively high income, consider mortgage
insurance to get into the market faster.
“It’s not good for those who have had
every opportunity to save and haven’t, but
mortgage insurance is good for those on a
reasonably high income,” Somers says.
McLellan adds it can take years for a
gen-Y investor to save a $50,000 deposit,
but paying mortgage insurance means
you don’t miss out on capital growth.
8 BE BORING
Wemyss says the best strategy never
has the glitz and glamour and is always
the most boring. It involves buying good
quality assets and repeating the process.
In essence, it’s not a get rich quick
scheme. It’s a safe strategy but it works.
“Don’t waste money or time on fancy
strategies like share trading, auction
trading or investing in risky areas,”
Wemyss says. “For gen-Y, it’s pretty basic,
but people tend to overcomplicate it. They
try and cut corners, they want money fast
and it almost always doesn’t work.”
What’s a gen-X investor?
Gen-X had it tough – they had to call the
dreaded house phone when they wanted
to chat to a boy or girl in high school,
often being answerable to mum or dad.
Only a gen-X person would know the true
torment of picking up a phone, plugged
into the wall, and dialing a number, then
hiding in the closest room – with the cord
stretched under the door frame – for
some semblance of telephone privacy.
This is the generation born between 1965
and 1976. They were exposed to more
daycare, more divorce and of course, more
fluro pants and hypercolour tops while
growing up in the 1980s.
MC Hammer could often be heard
blasting out of gen-Xers’ cassette
recorders. It was always a mad rush to
press ‘record’ at exactly the right time
when their favourite songs came onto
the radio – you had to time it so the radio
announcer wouldn’t be talking for too long
at the start or the end of the song. This is
also the generation that knows the true
pain of using pencils to try and fix tapes
after they were chewed up in a recorder.
Typically, a gen-X person has started
to climb the ladder in their career. They
might have already married or started a
young family and hopefully, there’s now a
bit of equity in their property portfolio.
A typical gen-Xer usually has their own
property. Kingsley says they’re normally
starting to see their employment levels
get to middle management and they
might be cracking through some career
ceilings. They might have also paid down
some debt and already have substantial
equity. So the biggest considerations are
their career prospects, securing a long-
term property and the equity they’ve built.
Wemyss adds gen-X is usually in a
comfortable phase of their career and they
can still experience two or three property
cycles, which gives them plenty of time to
see solid growth in their property portfolio.
“People in gen-X are probably getting
towards the peak of their earning
capacity,” Wemyss says.
“Cash flow is quite strong but living
expenses are high as well, with a young
family and school fees.”
1 KNOW WHAT YOUR
Kingsley says a gen-X investor’s
principal home usually plays a big part in
determining their strategy.
It’s also likely they’re at a stage of their
lives where they’re trying to ‘keep up with
“They want the picket-fence home in the
nice street, the good secondary education
for their children. They’re conscious of the
impact of private school fees and bigger
costs, so they’re really keen to know their
numbers and possibly own the $1 million
house in the suburb they want to live in,”
“We’re finding that when the family
comes along, there’s a lot more emotional
pressure to have the right home. My
advice is to work out what that dream
home looks like, put that as your number
one priority and then work around the
sides of that. If there’s still an opportunity
to do something earlier, to sneak a cash
cow in, then do it if it won’t impact when
you buy the significant home. It’s before
the accumulation phase finishes and
you’re retiring the debt.”
2 GET AN OFFSET ACCOUNT
Kingsley advises gen-X investors to
secure an offset account. This works as a
positive double-edged sword. On the one
hand, it helps you pay down your own
principal place of residence (PPOR) faster,
as you can put any spare money you have
into the offset account. On the other hand,
it also helps you build a deposit for an
investment property much faster.
COVER STORY // GENERATION WEALTH
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