You must be debt-free before you begin an investment portfolio

Our parents hated debt because their parents taught them to. Today, waiting until you own your own home debt free may mean you miss the boat completely. The way to deal with this myth is to know that personal debt is bad debt, but debt which secures income producing growth assets is good debt. As the asset grows, you only even need to repay what you borrowed, and you can keep the rest to fund your own retirement.

Myth 2

You need cash lump-sums to invest

In the past eras, only those with a lot of available cash invested. Banks were not as amenable to property investors, and so few people thought about borrowing to invest. The beauty of property as an investment today is its acceptability by banks as a security for borrowing. That being the case, once you have entered the market with your first cash deposit (usually via a purchase of an owner-occupied property), even low growth on property will mean that you can leverage again and again over time, even if you never have any actual cash to do so.

Myth 3

Capital growth is the single most important feature of an investment property

Capital growth is important over time. However, your sole reason for investing in property should be to hold on to it as long as you can so you can gain the maximum amount of growth. To do this, cash flow aspects of the investment today should be more important to you than its potential growth rates, since the ability of a property to support its own costs is what will keep you in the market.

Myth 4

Your family home is a financial asset

Our parents reached retirement with only their family home, which had always been the cornerstone of the ‘great American dream’. These days, choosing to view your family home as an asset allows you to ignore the important task in preparing financially for your retirement. If you do not want to end up having to sell the family home and move outside your neighbourhood to liquidate cash to live on, then you must accept your home will remain a liability until you choose to use it to leverage into other income-producing assets. For many, this will mean dealing with fear of debt now, and understanding that another day you wait may be another you waste.