It might appear that I’ve become slightly (more so) preoccupied with the theme of investment psychology these days. But all this ‘love and light’, ‘sharing is caring’ stuff is for good reason.
Everywhere you turn right now, you’re confronted with uncertainty surrounding our property and finance markets. Will interest rates rise? Is there a housing bubble? Will I still qualify for a loan when I wake up tomorrow morning? Yes? No? Definitely? Maybe?
In the history of Australian real estate cycles, this period will undeniably go down as the Great (Prolonged) Time of Conjecture.
Long time punters, who’ve been commentating the property and finance game since time immemorial, are even struggling in the current sludge of 24/7 mixed messages, conflicting data sets and ever more questions around the global economic playing field.
Just today I was reading an article about the manic cash interest rate analysis that occurs throughout the sector at the start of each month. Will the RBA raise rates? Will they lower them? Surely not! Or will they continue to just twiddle their thumbs…doop-de-doop-de-do…?
The analyst spent the entire article pointing out how pointless much of this incessant questioning was in our current market. And then concluded with more questions…what can we expect from interest rates? Who knows!
One thing is certain right about now. This is perhaps the most level playing field investors have ever had. This is a time where virtually anyone can be a property investment expert. All you need are the right tools, techniques and team!
It also pays to know how to recognise when one of these common 5 obstacles that prevent people’s success, in building a wealth creating property portfolio, might be getting in your way.
- Money mindset
Everything begins in your own head. This is a Universal principle based on quantum physics, which is as measurable as the law of gravity. It’s often referred to as the Law of Attraction.
The idea is…we all put out a certain ‘vibe’. And whatever we put out, we get back. Some might call it karma.
Hence, when it comes to accumulating wealth, via any means, including real estate, you will never get ahead of the game if you have what’s commonly referred to as a ‘scarcity mindset’.
How you think about money – and whether you believe you deserve to have a lot of it or not – stems from the messages you heard about money when you were growing up as a child.
If money had negative connotations in your household due to financial strains, causing arguments between your parents, or you always heard the words, “We can’t afford it!”…chances are you will start to have negative perceptions of money. Moreover, when you have self worth issues, you’ll often have trouble attracting and keeping money.
Think of those people who win the lotto and then blow it all in two weeks, ending up right back where they started, before they had all that money!
- Trusting others more than your own instincts
This is a habit we fall into as kids; because we’re constantly being told someone knows better than we do. Be it a parent, teacher, next door neighbour, uncle, grandmother, distant cousin or even Jo down the road, during that period when most of our thoughts about ourselves are being formulated and entrenched into our neural pathways, we often hear the message – “You don’t know what’s good for you!”
This can lead to trusting others far too much, meaning you end up as an easy target for one of the many manipulators in the property game.
You’re also more likely to fall into the trap of taking Uncle Fred’s investment ‘advice’ as gospel, even though he’s never made money from real estate, let alone the instant scratchies he buys religiously each week.
If you have an investment strategy to follow, based on clear, concise, personal goals that you want to achieve, it will be easier to recognise when your instincts are trying to tell you something.
And importantly, when seeking counsel from others, you can be confident that your intuition will guide you as to whose advice you should ultimately trust and act upon.
- Trusting your own instincts too much
Of course some people end up doing the opposite of the above. They get caught up in their ego and tell themselves they know it all!
This over-confidence, based on nothing more than an exaggerated sense of self importance, for whatever reason (maybe mummy and daddy told them how wonderful they were 24/7), is as detrimental to growing a successful portfolio as is not trusting your own intuition.
In this case, you don’t need to listen to anyone. You got this! You’ve bought a house, hung out in some investment forums, read a couple of books and attended a few glittery seminars…you know it all now!
This thinking often leads to speculative investment behaviour that can beget all sorts of financial strife.
Here’s a secret – even those of us who are highly experienced in creating our own successful investment portfolios, seek guidance from colleagues and mentors who have knowledge and expertise that complements our own.
Asking for help is a sign of courage, not a sign of weakness.
- Fear of failure/success
Fear is perhaps the biggest, unseen obstacle that gets in the way of investors realising their financial freedom. Fear will hold you back from what could be that one life altering decision. Fear will prevent you from acting, keeping you in paralysis by analysis and a constant state of procrastination.
Fear is intended to keep you safe. But it can also keep you small, because your biggest moments of success and accomplishment in life are generally on the other side of your fears.
- Lack of foresight and vision
People who set off on a property investment journey with nary a map or compass to guide them are on a fool’s mission I’m afraid.
In order to understand where you’re going, you first need to set your sights on the destination, and then map out a way to get there.
If the end objective requires a particularly long process, such as a lifetime of accumulating high growth housing assets and generating retirement income, it also pays to have contingencies in place, to allow for the unknowns that always pop up.
This is a time for investors to look sharp, stay savvy and be guided by their inner wisdom…alongside a team of highly experienced professionals who can keep up with the industry goings on, and tone down the “noise” surrounding real estate right now.