When Your Wealth is in Your House.

By Jason Fittler

Australians could be looking at another interest rate rise, after the Treasury released data showing that Australian’s average wealth has doubled in the last five years.

If this is true, why then are borrowings at their highest levels ever?  Why is housing no longer affordable?  Is it just the rich getting richer or is everyone getting richer?

For most Australians it is the growth in the value of their house that accounts for this increase in wealth. The problem here is that your house is a lifestyle asset not an investment. Yes, it is a great feeling when the real estate agents tells you your house is now worth double what you paid for it. We all feel very smart.

But it does not pay you any income, in fact it’s a drain on your cash flow. You can not spend the growth in your house unless you borrow money against it, then you have an increase in debt and more of your surplus cash is lost paying interest and bank fees.

So yes we are all getting wealthier but not richer.  To get richer you need investments which improve your cash flow, cash which will allow you to put the kids through a better school, go on holidays or retire early then you expected. It is this real cash injection into your family budget which will allow you improve your standard of living.

Do not take this the wrong way, yes you need a place to live, a place to call home and raise a family in, a place where you and the kids feel safe. The trick is not to put all of your money into it as it will not improve your quality of life.

To improve your standard of living, you need investments which provide you with cold hard cash. For this you need us, to get you on the right track and more importantly keep you there.