Is home ownership the only way to get ahead?

Published on: February 12th, 2024

Owning your own home on a quarter-acre block used to be the ‘Great Australian Dream’. But we have seen several shifts since the post-war years, from denser housing reshaping the dream to today, where owning a home is a considerable financial commitment – and out of reach for many.

However, despite changing housing needs and lifestyles, it has remained a mainstay of many financial strategies.

Those of us with baby boomer parents likely witnessed them working hard for many years (probably in the same job) in service of this goal. That meant forgoing things like family holidays, with many baby boomers taking their first overseas trip in retirement.

It’s left many Australians wondering whether it really is the only way to get ahead.

While buying a home is one of the key mechanisms to achieve your financial goals, it certainly isn’t the only one. And for some, it may not be the best one.

Enter the ‘dream life’ instead of the ‘dream home’

The idea behind the ‘dream life’ is to use your money well, investing in other areas while renting to maintain flexibility and access to capital. Rather than tying up most of your funds in a single asset (your home), you invest them wisely and diversely to grow income streams that support a range of goals at different life stages.

This strategy can allow for more balance, to live for today while planning for tomorrow. It means that life doesn’t have to stop in service of rising interest rates, and you have flexibility when circumstances change – whether that’s your lifestyle or markets.

It can also make a little more room to enjoy life a little more, funding a few extras, such as family holidays and making memories.

Is it right for me?

It is one of many financial strategies, and whether it’s the right one for you depends on your specific circumstance and goals.

At Apt, we’ve seen it work well for those who are struggling to get on the property ladder but want to achieve more with the funds they have saved. It can also work well for those who bought an apartment or smaller property that no longer suits their needs as their family grows. It can provide an alternative to buying a large family home that can run into the multiple millions in many cities.

It’s important to note, however, that it’s not all upsides. You aren’t working towards owning a single significant asset that can contribute to your retirement savings. So, you need a clear plan to ensure you can live the life you want now and in the future.

If you don’t take care of your money with this strategy, the consequences can be harsh, particularly later in life. As it stands today, retirees who rent are twice as likely to experience financial stress than those who own their own home.

It can take far more discipline

To use this strategy effectively, you must have a clear roadmap for your funds and a little self-continuity. With more access to your funds will come more temptation, so you must keep your eye on the prize and stick to the plan.

Financial advice is key – keeping you on track for today and tomorrow

Whether or not home ownership is in your future, a financial plan is a must to ensure you stay on track for the long term. Otherwise, you are making decisions about how you will get to your destination without knowing where you are going.

If you would like to learn more on this topic, Michael Brandt will be hosting a webinar 29th February, 2024. Click here to register.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.