Welcome to another week at Blue Lake Invest! Today we’re going to talk about things that are relatively cool, calm, collected and composed. There are two main reasons for this, the first being that if you’re reading this from pretty much anywhere in our fair land of Australia you should know (if you haven’t already consulted the forecast) that today is going to be aggressively hot and sweaty. The second is that despite Ted Cruz narrowing his delegate deficit over the weekend he still lags well behind The Donald and does not appear to be capable of Stumping The Trump. To ensure that Blue Lake Invest does not contribute to the general state of discomfort caused by the weather and the (still shockingly valid) possibility of a Trump presidency we will today continue on with the same theme as past ASX:TRUMP articles and hopefully give you some great ideas about assets that have potential to survive whatever 2016 may bring as well as prevent unpleasant incidents of uncontrollable sweating etc.
The first chilled out investment idea is another Blue Lake Invest favourite asset, the Vanguard Australian Property Securities Index or ASX:VAP. What makes ASX:VAP such a refeshing option? Well, as an ETF (exchange traded fund) purchasing ASX:VAP exposes you to indirect ownership of thousands of Australian properties and property developers. Many of these are large commercial tenants such as Westfield, leaving ASX:VAP in prime position to benefit from the long term stability of the Australian consumer and retail market. Even if you believe the hype about the “bursting housing bubble” in Australia (we at Blue Lake Invest think it’s a long shot at best) you can feel good about the fact that ASX:VAP also has a large stake in many large property developers, i.e. the companies (such as Stocklands) that build and develop new suburbs with shit names like “Glending Waters”. The price of new home and land packages in these newly created suburbs is largely removed from the bubble-like dynamic that drives up valuations in most major cities so they naturally serve as a first choice for the buyers who can’t afford pricier locations. Please cast your eyes towards the chart below for the refreshing sight of a 5 year gross yield slightly above 51%.
If an ETF is too safe and boring for you I’d recommend a sea-change. Unfortunately, despite the sea-change being one of the most popular office cubicle day-dreams in Australia it remains largely unaffordable to common folk like us. That being said, you can totally buy cheap land near the coast in one of the aforementioned newly developed suburbs. Take for example this block in Drysdale, near Geelong. $124K for a vacant block might seem like a large outlay, but given that it will be located close to services and remain in a central location as the suburb evolves medium-to-long term capital appreciation is very likely. Even better, temperatures down by the coast are usually around 5 degrees cooler than the inland regions of Victoria! So you can have an imaginary, temporary sea-change every time you remember you own a coastal block. Better than nothing right?
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*These articles have absolutely not been proven to do either of these things. Sorry, you’ll just have to start wearing a white t-shirt underneath.