When is your investment a failure?

When is your investment a failure?
Financial Planning

When is your investment a failure?

By Bree Hanslow, Wealth Creation, MB+M

Bree Hanslow discusses her personal experience with the decision over what investment to make, and the consequences her decision. In this process she came to question “when is your investment a failure”?.

Being a financial adviser, my inner nerd extracts great satisfaction out of over analysing decisions. Ranging from big life goals of purchasing a home to the small spending habits of planning the grocery shop.

Some financial decisions are straightforward like choosing to buy bulk toilet paper or pay insurance premiums annually. You should do both. But then there are the other decisions, the big ones, that aren’t nearly as straightforward.

Reflecting on some of these decisions I wanted to share my personal experience of investing in my 20s, because I believe the more we share and talk about money and investments the more we all learn and benefit. Four years ago I was renting, having finished Uni and being in a full-time job I’d been a hard core saver, well probably just normal saver, and had come up with some funds to invest.

Thanks to my nerdy brain I’d considered two options; the first one was to invest in shares with the use of an investment loan, and the second was to borrow from the bank to purchase a block of land and build a house.

The decision wasn’t easy; I knew there was a part of me that wanted to invest in shares and grow an investment portfolio, but there was also a part of me that thought I wanted to build a nice home and have a place of my own to live in.

The idea of a lovely home won, I think the shiny display homes won me over a bit, but there was definitely a voice in my head saying everyone else’s doing this, and you are not getting any younger Bree. I started the journey towards home ownership taking out a loan with the bank and feeling very grown up for sure.

Life Change Intervenes

Wind the clock forward 4 years and I was still in debt, no house, some weeds though and a ‘For Sale’ sign on my block. It just wasn’t meant to be, life changed and things such as replacing a car, study, tightened bank lending, relationships and work ambitions meant that my goal to build a house had fizzled out.

I purchased my block for $152,000 and it sold for $182,000 so from the face you would say that’s a decent profit. But from experience I knew there were a lot of hidden costs along the way and I wonder from a financial perspective was buying a block the right decision or would I have been better to invest in shares?

Having done the numbers, here is what I found;

My Block V’s Shares comparison over the last 4 years;

My block was a financial failure! Taking into consideration everything but the tax, shares were by far more profitable over the last 4 years, and I would have had approximately $50,000 extra in my pocket.

Now did I know at the time that property might not be the smartest financial choice? To be fair, I probably did, but it was a lifestyle choice that I thought I wanted. I didn’t try to find the best investment for capital growth. No. My block was in an appealing family area. It was purely a lifestyle choice I felt I wanted at that point in my life.

Did I know shares would return 6-7% plus per annum, and interest rates would drop historically low? No, I didn’t know that either. Furthermore, I also didn’t know where my life would head and that building my dream home wouldn’t eventuate.

I look back at my decision, and I’ve learnt a lot. If there is anything the last 4 years has taught me, it’s that money isn’t everything. And as a Financial Planner that’s something that I truly believe. From a financial perspective I might wish things had played out differently, but I went after something I thought was important and I wanted just because my life has taken a different direction doesn’t mean it was a mistake or total failure by any means. Chasing your goals is part of life and equally important if not more important than always making the wisest money decisions.

If you’d like to learn more about how to start investing read more here: Investor Toolkit. Help with the investing essentials

Bree Hanslow

Bree Hanslow – Financial Planner
Authorised Representative No: 1251805

Email: breeh@mbmgroup.com.au

Bree is an experienced, person focused financial planner whose focus is on ensuring that her clients enjoy a sound financial future.  Bree has been with MB+M/OzPlan since 2011 and been promoted during that time to be a financial planner and authorised representative of Oz Plan financial services, giving her firsthand insight into all requirements of financial planning.

Bree is committed to ensuring that everyone is doing what they can to protect and invest in their financial future, and is particularly passionate about ensuring those in the earlier years of work are starting early in building their financial futures.

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