Thursday, 18 December 2014

What is the best way to grow your wealth?

What is the best way to grow your wealth, relatively risk free?

On one extreme end of the spectrum would be gambling. I'm not familiar with that and the other extreme end of the spectrum, saving. I hate that. 

Being financially savvy, one would need to understand cost of borrowing, leverage and the power of compounding. So given the following scenario, a relatively fresh graduate, earning $4000, trying to gain a foothold in the property ladder with no savings yet, what can he do?

If he save for a $500,000 property, he would need for a 20% downpayment of $100,000. This could mean a 5 - 8 years of diligent savings. At the end of 8th year, when he wants to buy the property, the property would have grown at least 50% and the down payment would have grown higher still. A case of forever not able to catch the ladder. 

What can he do?

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