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Ben Kingsley Blog post by Ben Kingsley

Control & Influence a Key to My Wealth Building Strategy

Once again the first half of this year appears to be providing my wife and I with some exceptional value increases in our property portfolio and the market for well located inner city properties show strong double digit growth for the first 5 months of the year. What’s even more pleasing for me is the hundreds of clients we have helped find property will also be benefiting from these price increases, especially our Melbourne and Sydney property based clients.

In contrast, over the same period of time I have watched my shares slowly increase in value and then over the course of the past 4-6 weeks I’ve watch these ‘Blue Chip’ stocks lose as much as 10% – 20%. Seriously you need minds of steel if you are able to make calculated and rational decisions when a market is acting up as much as it has been of late.

Those of you who have read my articles in the past or heard me present would testify I have rarely entered the debate about Shares vs. Property as a preferred investment, as I consider investments in any investment class as potentially viable and profitable and over-time one hopes these investments deliver superior returns for me and my family.

But in this article I am going to re-affirm my bias towards direct residential property based on the two words have lead with in the title of this article.

Direct Property allows some investment advantages that I cannot get with Shares; Control and Influence. Let me defend this statement and position. When I invest in shares, I am buying a share of interest in that business. I am becoming a percentage owner of that company. The only problem is that ownerships is so minuscule that I have virtually no control over the way that business operates and the decisions it makes in regards to its strategy in growing profits and returning those profits to me (its shareholder).

Shares = No Control Direct property usually means you hold either the controlling interest or you hold a significant interest. This control allows you to make decisions that have upside on your investment, like deciding to make some cosmetic improvement to increase its appeal to renters and add further potential equity.

Influence can have the same outcome for property, yet very few shareholders ever have any influence on the shares they hold, succumbing to large institutional investors control and their ‘boys clubs’ where, board positions, huge pay rise increases or changes in business direction, just to name a few, could be decided with just a couple of big institutional investors, as your vote and influence carries no wait.

Furthermore on the property front, your influence can be significant. Here’s a couple of examples – stopping a development that you feel may affect the value of your asset or influencing the council to improve and beautify the street, which would have a huge positive financial impact on your properties value. The same influences could also be helpful with Owners Corporation decisions, by getting them to area to screen the land of for better security entry or to render the exterior of the building.

Direct investments provide for better control and influence and hence your ability to effect a better potential investment returns. That influence and control cannot be effects on buying a small amount of share in a large company. That’s why I am happier with my own investment strategy, as I have decided that the majority of the investments I make are made around my ability to have control and influence on the outcome of those investments

Remember, Knowledge is Empowering……….

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