Choosing strategies

Our Experts Answer:

I think in most cases capital growth creates more actual wealth. However, the cash flow component can't be avoided as I have seen many capital growth investors put in forced sale situations due to not focusing on that part enough.

Ideally, using a combination of strategies can work well. Many investors focus on three to four regional investments which can achieve higher returns and then use this to offset some of the negative cash flow component of a capital growth property in an area like Auckland.

But note your personal position is very important here as well. If you have a high (and secure) income it might be okay to focus on some capital growth properties, whereas if your income is on the low side this could be dangerous.