When speaking with prospects, I often meet many Australians who are fantastic savers.
But that’s where it stops.
They’re often too scared to put that money to work – money that could generate far more wealth over the long term.
Putting your savings to work helps protect it from losing value due to inflation.
Otherwise, the cash sitting in your bank account is quietly devaluing every day.
Savings in the bank won’t dramatically change your retirement.
Savings in the bank won’t make you rich.
In fact, savings in the bank will likely cost you hundreds of thousands in missed wealth creation opportunities.
If your property’s holding costs are significantly less than your monthly surplus cash flow, and you have the borrowing capacity, building long-term net wealth becomes a no-brainer.
You might be wondering: What exactly do I mean by that?
Let me break it down with a simple example of what this could look like over just one year.
Over time, the gap only gets wider.
Example:
Let’s say Jimmy has been saving diligently for years. He’s accumulated $100,000 and continues to save $3,000 per month.
Based on the most recent CPI for the March Quarter 2025, in just 12 months that $100,000 would be worth only $97,600 in today’s money.
That’s a $2,400 loss due to inflation. Ouch.
That means Jimmy’s money now has less purchasing power.
He can buy less with the same $100,000 than he could just a year ago.
Now imagine what happens after 10 years.
Over time, savings in the bank simply don’t keep up.
Now, let’s flip the script.
What if Jimmy decided to put that $100,000 to work?
Let’s assume he uses it as a 20% deposit on a $500,000 investment property, taking out a $400,000 loan.
Let’s also say the holding cost for this property is about $250 per week, or $13,000 per year.
With the RBA cash rate currently at 3.85% (and expected to drop in 2025), this could improve further.
Since Jimmy saves $3,000 per month, even after accounting for the property’s holding costs, he still has a monthly surplus of around $1,900.
It might feel like he’s going backwards – his cash surplus has dropped.
But here’s the difference: his net wealth base is now growing significantly.
He works with a high-quality, investment-focused buyer’s agent and purchases below market value in an area primed for growth.
Let’s say the property experiences 10% capital growth in the first year.
That $500,000 property increases to $550,000 – a $50,000 gain.
After subtracting the $13,000 in holding costs, Jimmy is up $37,000.
Compare that to losing $2,400 to inflation by leaving the cash in the bank.
That’s a $39,400 difference in just one year.
This is the power of investing in property – putting your money to work.
Yes, you might take on more (good) debt and higher holding costs, but your net wealth base continues to grow.
This is why focusing on long-term outcomes is so important, rather than getting caught up in short-term costs.
This mindset is what separates those who dramatically change their financial future from those who remain stuck in the rat race – trading time for money until retirement at 65.
