Gen Y vs Gen X

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While they may be younger, is the way that Gen Y are investing in property a smarter way to go than how Gen X have traditionally done it? I think it is and I tell you why in this weeks video.

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Transcription

Hi, I'm Phil Anderson from LifeCorp, the home of street smart property investors. Today, we're gonna have a little look at the difference between the way that Gen Y are approaching investing in property as opposed to Gen X-ers. I think you'll find this very interesting.

So, all those Gen X-ers out there are probably thinking right now, "Wow, what's going on here? What are the Gen Ys doing differently?" Let me show you what's going on. When we assess all of the income that we earn- and let's just take, in this example, the fact that you're a wage earner, you pay a certain amount of tax each week, you take a certain amount of net wages home each week. The old way of investing in property, and unfortunately still the most popular way to invest in property here in Australia, is demonstrated by the Gen X-ers. The Gen X-ers will buy a property and have to service that property out of their take-home income. This is, of course, their family home. And unfortunately, most Gen X-ers love property so much, and want to, I guess, live the life so soon, that they buy as much family home as they can possibly afford- in some cases, more home than they can afford. But that must be paid for out of their take-home income. Now, of course, that's gonna push down what wage you've got left over, what net wage you've got left over, so your lifestyle money could be squeezed down quite considerably dependent on what decision you make here.

It's interesting, though, because when you think about Gen Y, Gen Y does it quite differently. What Gen Y does is they delay this process. They delay this process of buying the family home. And instead, they use, maybe, a small amount of their take-home income, and most of their taxable income, to buy one or two investment properties, choosing instead to rent- pay rent for a property that may be closer to where they work, and where their lifestyle is and their social circle is, and decide to invest in property first, having a much smaller amount of impact on their take-home wages- in many cases, like most property investors are doing around Australia at the moment, no more than a budget of about $20 a week to hold these two investment properties. And when they compare the rental amount, as opposed to servicing a family home, that will also eat smaller into their take-home wage, giving them a greater amount of net wage to live on today. And they're still in the property market. They've still got a couple of great wealth seeds planted inside of the property market.

In recent years, I've seen this trend grow. I've even seen some Generation Ys make this decision and accelerate their ability to buy family homes. But more recently, what I've done- and when I say buy, instead of having to rent, use the momentum, use the equity that grows here to give them the ability to buy a family home sooner- but Gen Xs are getting this as well. One lady I've been working with over the last 5 years, 5 or 6 years, has bought 5- actually, make that 6- investment properties before she bought her first family home. Her family home was actually her 7th property that she added into her portfolio, choosing to build this component up first, using her tax effectively, minimizing the effect on her pocket, and as the equity grew and the cashflow grew very, very positively, it could actually help service the family home as well, putting a minimal amount of impact on the net wage before she added her family home.

I think this is a breakthrough. I think Gen Y really get this. They know that they wanna be invested in the property market, they want to get the best of investing in property, but they want to protect their take-home income at the same time. This is, for me, a new trend that I'm seeing emerge, and it's Gen Y that really does get it.

Now, at the end of the day, when you're buying an investment property, if you're gonna buy one or two, to offset some of this tax, to give back that tax money in your pay each week, you don't even have to wait to get to the end of the year, please protect it. Regardless of how many that you buy here, keep that budget in place. Like I always say, if you can't buy a property with your lunch money, don't buy it.

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