How do I invest on a low income?


Question: I earn roughly $50,000 a year and want to get into property investing. I’m single and don’t have any kids or major expenses. I’m debt free and have an excellent credit rating. Even so, I have some misgivings about getting into property.

Foremost, is that I worry that I don’t earn enough money. I know it is possible (though difficult) to buy property on a much lower salary than mine, but still – after doing a lot of research it is clear to me that all I’d be able to afford is mediocre properties in areas that are not doing badly, not doing well, but simply doing ok.

The other problem is that I am hopeless at saving money. I hear stories of people who earn minimum wage who save enough for a deposit on a house and I wonder where these people come from. With all these negative ideas spinning in my head, I’d like to know: is there something I’m missing? Is there something that other people are aware of that I’m not?


Answer: You have raised some very important questions. If you were sitting across from me, I guess the way that I’d answer this question for you would be by asking you what your misgivings are about property. What are you so afraid of?

You are in a great position at the moment.  No debt, very few expenses – I’d say the time of your life. If I knew what I know now when I was single and had no debts, kids and commitments, I would have done a few things differently when it came to investing. One of the main things is that I’d definitely start earlier than I did.

There are many investment strategies available to investors, from renting shares, CFDs, managed funds, high interest online savings and the like through to property. Even in the realm of property investing there are different strategies, from growth properties with negative gearing through to positive cash flow properties, renovations and so on. There is no right or wrong strategy and it all comes down to what fits you. Your strategy will evolve from your individual risk profiling, current financial situation and what your future goals are.  Income obviously comes into what you can do, but your mindset is the most influencing factor. 

From what you say, it is clear that you are concerned about your ability to save and the fact that you don’t think you earn enough money. My first suggestion would be to do a budget. After working through your numbers ask yourself: what do you have left? If there is nothing then you have to rethink what you are doing. Can you cut back on certain things in your budget? Do you make a plan to earn more to achieve your goals? Or, do you continue as you are? 

What’s important here is to understand your numbers and your long term goals.  Often this will help depict what investment strategy will be best for you to follow. What I can say is that the only mistake that anyone can do is not to do anything at all. Yes, some people can only afford mediocre properties, but they will probably still reach their financial goals faster than someone that is waiting around for only the prime properties.

Some people get so frozen in the details, wanting to make sure that the property is 100% perfect, that they miss out on some decent opportunities. The irony is that many investors have made more from their so-called mediocre properties than from what some would call a blue chip or prime property.

Good property investing is long term and while you can make good short term gains, you want to always do your numbers and forecasting on the long term average. This gives you a better perspective and expectation. This is probably the same in other areas of investing also.

I have clients that are earning $40,000 a year and have saved a deposit of $40k to purchase a property. That’s their goal and they have stuck to it. I have other clients earning over $100k that can’t save a thing and have credit cards and personal loans. It all comes down to each person and how they individually see the value of their money and what their goals are.

Earning $50k shouldn’t be your benchmark for what you can do. It’s what you think you can do and what your goals are that matter. I think you’d probably be best doing some more research and investing in an education. The only person putting limitations on what you can achieve is you.

  • Answer provided by Michelle Coleman, W Financial Group

Can you afford to buy in this suburb? Find out how much you can borrow

Top Suburbs : st kilda west , spearwood , alderley , dulwich hill , st marys

go back

Get help financing your investment

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here