Buy-to-let property: have your cake and eat it
Given, for most people, it seems impossible to receive an inflation-linked income every month without spending time, money or effort to earn it, regardless of whether they are working or not.
Dr Koos du Toit, CEO of P3 Investment Group, who says for this reason, most people simply continue to work, day in and day out, for an income that is anything but passive, barely keeps pace with inflation and will abruptly come to an end if they are unable to work for any reason.
He says the truth is that a passive income stream is not only possible, it is also easier to create than most people realise. And, perhaps most importantly, passive income is the key to creating real wealth that will sustain you financially, not only in retirement, regardless of how long you may live, but also well before and well after.
So how can ordinary, salary-earning South Africans achieve an ongoing, never-ending passive income?
Dr du Toit says it is as simple as investing in income-generating assets. Among these assets, income-generating property remains the top choice.
This is because it is an asset that produces an ongoing, passive income for as long as the property is held, and that could be for generations.
A well-chosen property in a good area with solid rental demand, which is maintained properly over time, will keep generating a rental income for the owner, month after month, year after year, for as long as the property is owned, says Dr du Toit.
This passive monthly income keeps pace with inflation too, year after year, as the rental increases in line with inflation or the percentage stipulated in the lease agreement.
As a further added bonus to this ongoing, passive and inflation-linked income for life, he says the investor also enjoys ongoing and compounding capital growth as the value of the property increases year after year.
"A small portfolio of buy-to-let properties is the proverbial goose that lays a steady, never-ending stream of golden eggs," says Dr du Toit.
"In fact, if a property is acquired in the right structure, such as a trust, a rental property portfolio can continue to generate a never-ending income for an investor's family beyond the investor's retirement and even his or her lifetime.”
There are thousands of properties such as these held in trust in the UK, Europe and around the world, and these properties have been generating income for wealthy families for generations.
Many investors are surprised to discover just how simple and affordable it is to create a passive income with a buy-to-let property, says Dr du Toit.
He says you do not need prior knowledge or qualifications, you do not need a lump sum investment, or even substantial monthly contributions, nor do you need much time or effort to invest in buy-to-let property, if you follow a tried-and-tested system, with built-in risk management strategies.
"Don't let the fallacy that 'passive income is a pipe dream' prevent you from building real wealth," he says.