Some news
caught my eye this week involving a man suing Beteasy and Sportsbet for allowing
him to accrue $600,000 in betting debts over six years.
It’s an
extraordinary amount of debt – you could buy a house for $600,000!
I’m not
a gambler and if you’ve read my book Bulletproof Investing, you will
know why.
When I
was 5 years old, my Dad managed to rack up $160,000 in debts with bookies. For
some context, our family home at the time was worth $172,000!
It was a
huge setback for Mum and Dad. They kept their heads above water for a time, but
eventually had to sell the family home and enter a Part 10 insolvency agreement
a few years later.
Although
I was too young to grasp it at the time, it must have subconsciously left a
mark on me.
Gambling
is a huge problem in Australia and worldwide today. According to the Australian Institute of Family Studies,
6.8 million Australians gamble regularly, working
out to nearly 1 in 3 of all adult Australians.
I think
the number is higher if you include the number of Australians who gamble
masquerading as investing.
Depending
on your source, somewhere between 1 and 4 million Australians own cryptocurrency,
working out to be between 1 and 5 in 20 of all adult Australians.
I can’t even
count on one hand the number of people who can tell me what causes
cryptocurrency values to increase or decrease.
Many
property and share market investors would be in the same boat.
Land in
Australian cities is the safest and best performing asset I know. More
importantly, investing in it makes complete sense to me. It’s not a gamble.
Land is
a finite resource – they’re not making any more of it.
As our
population grows – and Australia is growing by the equivalent of one whole Adelaide
over the next 3 years – the value of that land will increase.
In Bulletproof
Investing, I dedicate a whole chapter to unpacking how and why the value of
land has increased by at least 5 per cent above inflation over the past 30
years.
Does that mean land in any Australian
city will increase in value?
In time, yes. As my Uncle John always
says, there’s no such thing as a bad investment if you invest in land in an
Australian capital city. But there is such a thing as bad timing…
I think any land in the affordable
capital cities today would be a good investment.
Why? There is only truth in numbers.
Today, the Brisbane median house price is
61 per cent of the median house price in Sydney. If you work in Brisbane, while
you earn less than someone doing the same job in Sydney, you don’t earn 40 per
cent less.
In 50 years, the median house price in
Brisbane has hovered between 40 and 80 per cent of the Sydney median house
price, reaching 78 per cent in recent times..
The same rationale applies in Adelaide
where the median price today is 54 per cent and has hovered between 40 and 70
per cent over time.
Investing in land in Brisbane and
Adelaide today is as risk free as investing gets.
