Have you ever wondered what your biggest asset is?
If you’re like most people you’re probably thinking it’s your family home.
The reality is far from that though. In fact, if you’ve found yourself going to work for the last 20 years, with a similar amount of time left before you retire, your biggest asset right now is YOU!
What many of us don’t realise is that we all go to work and trade our time for money, and we all aim to get a return on that.
If we stopped working tomorrow there’s a good chance that all that income would stop as well. Our financial assets may be jeopardised – even the family home.
Things really hit home when we look at the length of our working life – around 45 years in Australia – and then look at how much time we have in retirement. There may be another 20 years where we are not going to be working at all. That’s around half of our working life where we won’t be generating an income from working.
If you haven’t worked it out yet, your biggest asset (YOU), is suddenly not an asset anymore.
Here’s the video.
So what can you do to protect against this?
When I wrote my latest book Why Property, Why Now, this question was one of the central pieces of the book.
“You need to have assets underneath you to actually replace you when you’re gone, when you stop working.” (Not when you’re literally gone, but when you do stop working!)
The question is, what are you doing now to build that asset base? Because once you get to the end of your working life, you won’t have that opportunity anymore. You have to give it everything you have now to put a little bit aside to investments – to assets that can replace you when you’ve stopped working.
Your Super is going to be one of those assets, but it’s probably not going to keep you in the lifestyle that you’re accustomed to.
I’m a big fan of property because of the leverage you can get (controlling a lot with a little), the continued growth of the markets and the relative safety of property compared to shares that tend to jump up and down.
The property also has the ability to provide a healthy INCOME in retirement, as well as growing a substantial asset base over time that you can then use to fund your lifestyle.
If you do see the benefit of investing, make sure you get started as early as you can. The earlier you can do it, the better as you can really take advantage of the compounding effect.
Leave things too late and every year that you’re out of the market makes the long-term effects of any investment you make just that little bit weaker, meaning you’re going to have to work harder or longer for the same amount in retirement.