All too often, investors are swept up on the growing tide of general market sentiment, whose ebb and flow is largely determined at any given time by the going level of media induced fear.
Having the ability to not only create, but also implement and follow a sound investment plan based on your own personal circumstances, objectives and risk profile as an investor, means you are less likely to react to market noise and more likely to act on your own goals and strategies, staying true to your investment course.
Unfortunately, life, future and financial planning is not a part of Australia’s mainstream school syllabus, so most of us finish our stint as students, transitioning into a world of money and responsibility without any real forethought as to where we want to be in five, ten or twenty years time.
What happens as a result? Well, most of us fumble through life without a lot of direction or idea as to where we’re headed and in turn, become victims of circumstance, rather than taking control of the proverbial wheel.
So for now anyway, it’s up to us as parents and mentors of the younger generations to impart these lessons, including the following six planning techniques that are critical to investment success…
- Establish your goals. If you embark on your investment journey without an end destination in mind, you risk never really getting anywhere meaningful. Make your goals tangible, realistic and well defined. In other words, make them attainable and ensure they are relevant to your life and where you see yourself in the next five, ten, twenty and thirty years.
- Get real – Defining your investment objectives is one thing, but keeping your eye on the prize and avoiding any distractions as you work towards them takes a different kind of discipline. Stay on track by writing your goals down in detail and then keep them somewhere as a daily reminder of your journey. Maybe you could stick them on your bathroom mirror? Read and review your goals consistently and make any necessary amendments as major life changes occur.
- Who are you? This involves working out who you are as an investor. Determining whether you are the type who is prepared to take greater risks for returns, or you prefer to keep things simple and safe is crucial, because if you don’t feel comfortable with your investment strategy you will never make it to those end rewards. A good financial advisor can assist you in creating your own personal investor profile and I highly recommend you take the time to do so.
- Work out your strategy. Depending on your goals and investor profile, you might choose to focus on cashflow or capital gains as your priority. The bottom line is, your investment strategy will determine pretty much every other decision you make as you build your property portfolio, including where and what type of assets you acquire and how you structure your purchases and associated investment debt.
- Map it out. You wouldn’t decide to take a road trip to a particular destination without first consulting a map, or at least plugging the address in to your GPS before setting out, right? For some reason though, people fail to plot a detailed course to follow for their investment journey, and it’s these folk who get lost in the woods when the property wolves start baying about bubbles and booms. Without putting a concrete plan around your strategy, you risk veering off track.
- Review & revise. Having set tangible goals, take some time out on a regular basis to assess how well you are travelling in respect to meeting those goals. Measure and celebrate your successes, but be prepared to tweak your strategy or investment roadmap as required.
Remember, planning for a lifetime is not an exact science, because things happen that we may not have anticipated. At the end of the day though, if you follow this simple 6-step guide, the natural ebbs and flows you encounter over your lifetime won’t seem like insurmountable obstacles. No matter what life throws at you, you will be able to stay true to your course and your life’s journey.
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).