Assuming you have been following my articles for any time, you would know that I am all FOR investing directly into property (albeit a narrow selection of property). As much as I am pro property investing, I am anti investing in companies that develop & construct property.
I want my name on multiple property titles; but I am not interested in participating in the risk associated with bringing new property to market. Many people do not understood the difference and think that investing in a developer’s company is akin to investing in property… but it is not!
Investing in any company; public or private… ensures that the performance of your investment is tied to the performance of that sector, that company and it’s management team. It is a legitimate, yet high risk, investment strategy.
Following is a list of recent high profile property company collapses. Each have left a trail of devastation and destruction in their wake. Many families and individuals alike have lost their entire life savings.
- Westpoint | Collapsed in January ’06 | Debts = $320m
- FinCorp | Collapsed in April ’07 | Debts = $200m
- Australian Capital Reserve | Collapsed in May ’07 | Debts = $330m
- BridgeCorp | Collapsed in January ’08 | Debts = $450m
- MFS/Octaviar | Collapsed in January ’08 | Debts = $1.07b
Storm Financial, a Townsville based financial planning company, was not a property company… nevertheless, when people placed their money with them they immediately entered the arena of high risk. The consequences of this collapse have been nothing short of tragic.
Back in 2000 I invested tens of thousands of dollars with a Melbourne based company known as LGH. The return of my capital and profit was 24 months away (or so I was told)… yet 9 years later I am still waiting. This, along with other positive and negative investment experiences have helped me shape the mrd set ‘n’ forget for busy people strategy that has kept me (and many mrd clients) insulated from the potential impact that the global economic downturn may have otherwise had on my bottom line.
My very strong suggestion is that you please exercise great caution when investing, especially in the current economic climate. My personal opinion is that you should only invest where:
- Doing so will result in your name going onto the title of the asset being bought
- Where you you remain in control of the asset
Anything else is high risk!
Happy Investing,
Nick Lockhart
mrd Customer Care Program… because investing is personal
