The finale of Channel 9's The Block on Sunday was a prime-time example of how investors can get into trouble trying to make short term gains from their investments.

The worst result in the 4 season's of the Block shows that no matter how good you are, it is not always possible to make short term gains from speculating and a longer term approach should be taken to investing. Even with the celebrity appeal and millions of dollars of prime time advertising Channel 9 had 3 out of 4 properties passed in at Auction and likely lost $300,000 - $500,000 per property according to property valuer Louis Christopher in a recent Scott Pape article.

"What a bloody waste of time", said one of the disappointed contestants. But luckily for the deflated contestants it was only their time they wasted and not their life savings.

For an average investor they would have needed to borrow over $1 million to achieve this renovation and most wouldnt have been able to complete it as full time job for 3 months, so the cost of holding the investment would have increased and made the loss even bigger.

For most this result could have sent them into bankruptcy.

This issue is not limited to reality TV, with many local "investors" getting caught trying to "buy and flip" properties off the plan during the boom and even speculative share investors chasing recent bubbles. You may get away with it sometimes, but dont bet your life savings on the result.

The lessons that can be taken from this very public display of the weakness in property markets, are that "speculating" on short term gains is a risky strategy and should never be your only option when deciding on an investment strategy especially when the stakes (debt levels) are so high.

The other is that even though Investment property's are tangible assets and Australians love the idea of being able to drive past their investment, they do fluctuate in value like shares and problem of being unable to sell when you want and the high costs of purchasing and holding the investment can make the risks quite high if your strategy is not a sound one.

Mark Rattigan
Principal - Merideon Wealth Strategies