Was this the very first question you spent serious time contemplating, before embarking on your investment journey? Hopefully it was and you did…and are well on your way to the success you dreamed of.
For many beginning investors though, the incentive for them to take a large chunk of savings that they probably worked hard to accrue over say, five to ten years is unclear. They never really took the time to consider and identify their reasoning.
Some people seemingly start buying bricks and mortar assets on a mere whim. Whether someone they know regales them with tales of impressive capital gains and rental returns, or a well versed property spruiker hooks them with a ‘too good to be true’ tagline, they jump in at the deep end with nary a concrete goal in sight.
Sure, on some abstract level they know they want to make money. But the how’s, whys and wherefores go unanswered. As such, they can easily be led down the wrong path, or simply start journeying down it without appropriate direction.
The good advice
Guidance can be another issue when you don’t have the confidence in your convictions, to stick with what you know will best work for you and your personal circumstances.
It becomes easy to fall prey to some of the less than scrupulous advisers and self-proclaimed ‘experts’, attracted to real estate like bees to the proverbial honey.
It may even be an accountant with the best intentions, who simply doesn’t understand what makes you tick and inadvertently leads you down the garden path.
The one big thing…
Is without a doubt the ‘why’? What motivates you to get up every morning and keep on keeping on? It’s a question every one of us should consider carefully, just so we have better insight into our own values and ideals, and purpose for being here.
I know…deep right?
But in this line of work, the people I see most often do well are those who can clearly recognise and maintain sight of concrete outcomes, with genuine forethought and self-awareness.
It’s not just about making X amount of dollars over a pre-determined timeframe…although this should of course be a part of the strategic planning process.
It’s more about what you intend to do with that money. What type of lifestyle will it be paying for? What do you intend to bequeath to your nearest and dearest to ensure their future is looked after? What is the non-monetary goal that drives your financial strategy?
Taking in the big picture vision will allow you to set tangible and achievable, incremental goals that can lead you, inch by inch, closer to that ideal outcome.
Ask yourself and respond in earnest…
1. What is your emotional reason for investing?
2. What type of ends do the means need to facilitate? What will you use the passive income stream from your portfolio to pay for?
3. How do you intend on transitioning from a life of work to a life of leisure?
4. How will property fit into your long-term financial plans?
If you don’t take the time to answer these important questions, chances are you’ll either fail to invest in the most beneficial way for your requirements and circumstances, or take advice from self-serving third parties and lose money in the process.
Why would you spend all the time, money and sacrifice that’s essential in the early days of an investment career to build retirement wealth, without having a clue why you’re doing it?
You want to know it will all be worth it. You want to know there’s that shining pot of gold, with your name on it, at the end of the real estate rainbow.