#UnlockingWealth: The Power of Property Investment

3 Oct 2024

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Presenter argues that property is a cornerstone for building wealth because bank leverage magnifies returns and accelerates compounding. An illustrative example: assuming 5% annual property appreciation and a 10% deposit (100,000 AUD), purchasing a 1,000,000 AUD property yields a 50,000 AUD gain — equivalent to a 50% cash-on-cash return on the 100,000 deposit. The chunk emphasizes leverage as the key multiplier versus shares.

Questions this video answers

5% per year.

10% deposit.

100,000 ("100 grand").

1,000,000 (one million).

50% cash-on-cash return (50,000 gain on 100,000 deposit).

We believe property is the cornerstone for everyone building wealth. And the reason for it is, although it's performed about the same as shares, the difference is the leverage that we can use the bank's money to substantially increase our asset base and allow compounding to work on bigger numbers. Now, let me just simplify my maths for a second. For everyone, let's assume the property only went up by 5% a year. And let's say that you had a 10% deposit. Okay, so you had 100 grand. And let's say, for example, you went and used that to buy a million dollar property. If that million dollar property goes up by 5%, that's 50 grand. But because you've only put in 100 grand, that's a 50% cash on cash return. So it magnifies our money a lot faster.