We are writing this small guide on How to save money for buying real estate, becuase of the following: In many countries, the price of houses has sky rocketed for several years. For instance, in the coutry of the author, it has done so for over 15 years now. Mortgages are not taken into account in this article, because they are the opposite of saving; borrowing.
The underlying causes are many, but there is a universal one that has applied for centuries: Increasing population, without increases in available land. Demand has greatly increased and there is only one planet (at moment of writing there are no realistic/fully achieved plans for a exo colony). As such prices have increased and are going to keep on increasing. This can be offset by migration, but in the author`s case, people are actively migrating to his wider region (North-Western Europe), with the migrants even given preference over local population, so prices are possibly dropping in their home region.
The absolute easiest way to save is to simply put an alloted amount in a saving accout, perhaps 10% of net monthly salary, and not touch that money untill you have enough. This seems like a good idea, but with wealth tax eatingaway on a regular basis, and inflation either outpacing or diminishing interest; you really are just losing money. Investing is thus the only real option, for which you will need a high risk profile to get the required amount of money, possibly add diversification, inform of bonds and/or other funds to avoid losing all your savings.
Investing in precious metals could work, as they tend to keep pace with inflation and become more valuable in times of crises. Also, people just buy them plus there is demand from governments and jewellery. For metals you will have to decide if you want to pay approximately 1% a year for a company to store it for you or if you store it yourself, in which case you have to sell physical assets when the time comes. One thing to note: Crises will decrease home value, whilst increasing gold prices: This does create the perfect opportunity if you chose gold. Other metals can decrease in value, due to their value base being largely industrial.
All these investments have one thing in common: They are affected by market prices, which can cause loses outside of your control, profits can also occur without intervention on your behalf. As such it is best to diversify and focus on a mid term, as you will want to purchase as soon as possible. With a focus on low risk, the return requirement simply has to be above savings rate+inflation.
There also is something called a build deposit (name is likely to differ per country), in which you either deposit money or get a line of credit. These are sometimes restricted to renovating, but something similair or flexible is likely to be possible. They usually come with term and apply to only specific situation, so this might not be an actual option.
To summarise; you need to save a lot and do so with a bit of investing. Also investigate what options banks can offer, but be wary of the risks.
