What Second Income Can You Create and Still Keep Your Day Job?
You are working hard at a good job and still can't make ends meet?
Flattened wage growth and increasing costs are driving significant interest in creating another source of income. However most of us in Sydney, and increasingly Melbourne, aren't managing much more than the big day job with its long commute.
To consider adding part time employment, in the hours after dark, is a gritty choice. On top of this if we choose traditional jobs like IT, there is considerable pressure on profits from the myriad of virtual services such as Fiverr.com.
Seeking to address this some consider a new tech opportunity such as marketing a YouTube channel, creating an app or writing a book.
However, all of these still require our time - which we just worked out we don't have.
They also require expertise and timing.
Demand peaked in many countries simultaneously creating huge supply issues. Picking trends like this, creating the perfect product and delivering on to the demand becomes the next big day job with significant more risk than the one you have trained for and had ten years experience delivering.
Consider the fidget craze for children, teens and young adults has now swept the globe.
So most of us can't leverage our time because it is already fully committed during the week. On the weekend in the commuter suburbs we have 48hrs of weekend to clean the house; shop for food and all the kids activities for the week; take the kids to sport; get organised for the next week; and relax and enjoy ourselves. No wonder we see round-about, shopping trolley and sporting parent rage increasing.
They have run out of time but not ambition! So what can we do instead to create the income we need?
We need to think differently. What other assets do we have? How can we leverage them? Traditionally we have leveraged our money.
We have had it work for us while we do our day job, commute, play with the kids, manage our households, have a social life and sleep? Most of us don't know the framework for considered investment – lower risk and returns over time. It wasn't taught in school. We need advice.
However, before we go for advice we need to work out which asset class we are going to use because they are offered by two separate professionals in Australia –financial planners for shares, and property investment advisors for property.
We need to think differently. What other assets do we have? Can we leverage them? Traditionally, we have leveraged our money.
Fortune 500 companies have fierce needs to drive results. They focus on spending to increase their clients experiences; and on enhancing their cyber security so we trust them to transact electronically. If we invest in these companies, and they are catapulting themselves into the future, then we too can ride that wave.
However, some of us we want greater returns through leveraging our money. Share price volatility makes many of us are uncomfortable to leverage our money through borrowing. Instead we look to property.
Australian housing has performed strongly with Melbourne and Sydney ranking in the top ten cities for capital growth in recent times. On top of this the banks have been comfortable to lend their funds or up to 80% of the value of the investment property.Leveraging increases our returns. When the price of the property increases it is all recorded as the return on investment against your seed money.
A 5% increase in the property value with a 20% deposit of your money, has returned a 25% increase on your funds. If it is as good as that why arent more people doing this? So how do we choose something that is going to perform for us in our time frame and be confident about the decision?
A 5% increase in capital growth with a 20% deposit can provide a good return.
A recently published PhD study, using private data from a major mortgage provider, showed property investment between 2003 and 2009 by post code. The key areas were all regional starting with Cairns QLD, Manduarah WA, Mackay QLD, Launceston TAS, Gold Coast QLD, Ballarat VIC, Darling Heights QLD (Toowoomba near University of Southern QLD) and finishing with Pine Creek QLD (15+km south west of Bundaberg). What a strange group of postcodes for investment returns. Is it any wonder the media is highly critical of investors prowess to identify and deliver on future capital growth?
How would you approach property investment advice to de risk your opportunity and manage your returns? Do you really think it is about selecting someone you like to help you? Does real estate training teach this and can they really identify what is next?
Property economics is the key. Identifying the relative strength of different drivers and finding areas where they overlap. Then if they are backed by consistent Government Policy you have a great area. However, this is not something you can do in the spare time you don't have.
It is not about looking at property on your iPhone on the commute home. This can be formulated to create greater confidence in your results. No more time to leverage? Leverage your money, from fractional ownership to stand alone property, to create the future you want.