The key difference between leasehold and freehold pertains to the ownership duration and control over the property:

• Freehold: Owning a property on a freehold basis means you have outright ownership of the property and the land on which it stands, indefinitely. This type of ownership allows you to have full control over the property, including the right to occupy, sell, or bequeath it without time constraints.
• Leasehold: Leasehold ownership means you possess the property for a specified period as outlined in the lease agreement, typically ranging from several decades up to 99 years. During the lease term, you can use the property as if it were your own, but the land it stands on remains the property of the freeholder. When the lease expires, ownership of the property reverts to the freeholder unless an extension is negotiated.

In essence, freehold offers permanent and unrestricted ownership, while leasehold is essentially a long-term rental agreement, with the duration and terms specified by the lease.

Each property we offer is under leasehold, which presents several advantages, especially in the context of Indonesia where freehold ownership by foreigners is extremely complex and practically unfeasible. Here’s why choosing a leasehold property with us is beneficial:

• Cost-Effectiveness: Leasehold properties are significantly cheaper compared to freehold lands, enabling quicker returns on your investment.
• Extended Lease Terms: Our leasehold properties typically come with long lease periods of 25 years with an option for an additional 25 years, or 30 years with a guaranteed extension of another 30 years, depending on the specific project. This long duration enhances investment security and potential for appreciation.
• Regulatory Ease: The legal complexities and restrictions surrounding foreign ownership of freehold land in Indonesia are considerable. By offering leasehold properties, we navigate these challenges, making property investment more accessible and less cumbersome for international investors.

What is Compounding?

Compounding refers to the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes. In simpler terms, it's earning returns on both your original investment and the returns that investment has already generated.

How Compounding Works

1. Initial Investment: You start with an initial amount of money, known as the principal.
2. Earnings: Your investment generates earnings, which can come from interest, dividends, or capital gains.
3. Reinvestment: Instead of withdrawing these earnings, you reinvest them into the original investment.
4. Growth: The reinvested earnings generate their own earnings. This process repeats over time, causing the investment to grow at an accelerated rate.

Example of Compounding

Suppose you invest $1,000 at an annual return rate of 10%.

• Year 1: You earn $100 in returns ($1,000 x 10%). Now, your total investment is $1,100.
• Year 2: You earn $110 in returns ($1,100 x 10%). Now, your total investment is $1,210.
• Year 3: You earn $121 in returns ($1,210 x 10%). Now, your total investment is $1,331.

Each year, the amount of earnings increases because you are earning returns on a larger amount of money due to the reinvestment of previous earnings.

Benefits of Compounding

• Accelerated Growth: Compounding accelerates the growth of your investment over time, especially if you start investing early.
• Wealth Accumulation: It allows for significant wealth accumulation with relatively small, consistent investments.
• Financial Freedom: Over the long term, compounding can help you achieve financial goals and independence.

Compounding in Real Estate Investment

In the context of real estate, such as with InvestBali:

• Short Cycles: By reinvesting the returns from short investment cycles (e.g., 8-14 months), you can rapidly grow your initial investment.
• High Returns: Achieving 30-40% returns per cycle allows for substantial compounding, doubling your investment every 2 to 3 years.
• Portfolio Growth: Continual reinvestment leads to a larger and more valuable real estate portfolio over time.

Conclusion

Compounding is a key strategy for building wealth, leveraging the power of reinvesting earnings to generate more earnings. Whether through interest, dividends, or capital gains, compounding helps your investment grow exponentially over time, making it a fundamental principle in both traditional investing and real estate.