Jonathan Cattana: Now I’ll show you some growth assets.

From his book at: Jonathan Cattana’s New Book

Property

Property as an investment provides both income and growth. When holding direct property as an investment, it may provide reasonable capital returns over the long term through rent. Income is received when you rent the property out. Meanwhile, the property itself increases in value.

However, for income from this investment to be consistent month after month, you need to ensure that the investment property is always tenanted and maintained. And, if you stop pouring money into maintaining property, it literally falls down around you and hence loses value.

There are other forms of property you can buy. For example, a non-residential property asset within a vehicle called a listed property trust. Here, a fund manager will purchase a mixture of property assets in various sectors and place them into one portfolio such as commercial, industrial or even leisure properties. When you invest in a listed property fund you buy what is called a unit—a small portion of ownership in that property portfolio, you do not own the whole property. Australian fund mangers have been successful with industrial property in the past and are now looking to invest abroad – internationally. However, the same requirement applies to industrial and commercial property as residential property, the property needs to be securely tenanted and regularly maintained to be a good investment.

What about your own home you ask. Well, your home means shelter, but not income. However there is strategy in the next chapter that can turn around your home loan (a bad debt) into good debt.

There are certain limitations with property:
1. Bad tenants who damage the property, non-paying tenants and property un-tenanted for more than a few weeks.
2. Buying and selling property is expensive. You may need to outlay costs such as valuation fees, stamp duty, agents commission, costs of advertising and loan costs to name a few.
3. You need to do your research to know the value of what you are buying or selling.
4. Other potential land taxes.
5. Property is not liquid meaning that you may not be able to sell it quickly if you require money urgently. Settlement of a sale often takes six weeks (at least in New South Wales).

What is the real return on property?
Not many people actually go to the trouble of working out the true yield on their property investment. To do this they need to add in all the extra costs of maintenance, fees, rates and possibly months where there are no tenants paying you an income.

When you sell any asset, the net gain is:
Original investment + purchase cost + additional cost of maintenance (in this case, rates, taxes etc.) – income received + final sales cost (stamp duty, legals etc.).

Despite all this, property definitely has more growth than cash and fixed interest, but not as much as shares.

Shares are my preferred asset class for growth and a growing income return. My strategy to help you fund your private school fees is based on this asset class.

Jonathan Cattana Book

Read Jonathan Cattana’s book here

Contents
CHAPTER 1 – Schooling in Australia 5
Stages of schooling
Trends in schooling 6
The cost of private school education
Why a private school? 8
Summary
CHAPTER 2 – Making the big decision 11
Choosing to send your child to a private school 12
When is the right time?
Which school is the right school?
CHAPTER 3 – The cost of private schooling 16
The important extras 19
CHAPTER 4 – How do I pay for private school fees? 23
What are asset classes? 24
Which asset class should I invest in and why? 27
Cash
Fixed interest
Property
Shares
Perceptions of an investor—your questions answered
Summary
CHAPTER 5 – The game plan: strategies for financing private school fees 42
Essential steps for all wealth creation strategies
The game plan 44
Strategy 1 – A simple savings plan 45
Strategy 2 – A geared investment portfolio 49
Strategy 3 – Debt recycling—good debt, not bad debt 54
How does debt recycling work?
When should I start with this strategy?
Regular saving
Strategy 4 – A discretionary trust 60
Income from trusts
Other ideas 65
Other points
Summary
CHAPTER 6 – Protecting your greatest assets—you and your spouse 70
Personal insurance
It can never happen to me!
What is personal risk insurance?
Other insurances you may need
What choices do I have for paying for my insurance premiums?
Insurance tips
Estate planning
Good advice
Financial planning
Things you should look for in a financial planner
Conclusion 87
A final word
Resources 89
Acknowledgements 91
Notes 92