Know your ‘why’ before investing in property
Remember when you were a kid and wanted that latest toy and used all your pocket money to buy it? The same desire can also apply to investing, with many examples of people financially rushing into something they were not prepared for.
As you become older your habits might become more expensive, and impulse buys could extend to clothes, jewelry, tools, cars, or even that property that you just have to have. For example, have you ever been guilty of booking a spur of the moment flight to some exotic destination, after seeing an online ad with images of pools and white sandy beaches?
There is no shortage of investment ‘opportunities’ being advertised in magazines, newspapers, on the radio and online. However, to achieve long-term sustainable results, knowing why you are doing something is as important as knowing what to do or how to do it. We are sure you can agree that there is a big difference between simply buying an investment property, and the skills and experience required to become a professional property investor.
Unfortunately, many investors choose to approach their investing more like playing darts, with a blindfold on.
After working with thousands of investors over the years, we have found the one common mistake people make is to jump in to investing without getting clarity on why they are investing in the first place. “Hang on, that is easy to answer I’m investing to make money”, I hear you say? Yes, that may be true, however that is only part of the equation.
Making a profit on any investment is the outcome you might achieve if you invest successfully, but when push comes to shove, everyone out there investing has a deeper and more personal reason for investing. And it is understanding what these reasons are that are often a far better predictor as to whether or not you will ultimately become successful as an investor, and achieve all of your financial and life goals.
Maybe you want to provide a better lifestyle for the kids as they grow up, maybe you want to send them to private school, or help them into their first property one day. Perhaps you want to travel to every continent and visit 100-plus countries. Maybe you want to start a charity to help the homeless, or maybe you just want enough money coming in every month to pay your bills without having to worry about where to source money.
Regardless of your motivation, if you look at any investor who has achieved long-term success, often the one thing that sets them apart from the pack is that they have a clear understanding of their reason(s).
Now, it is probably common sense to know why you are doing anything in life. Why are you waking up every day, going to work, having kids, and all the other things you do on a regular basis? Please don’t confuse common sense with common practice. You might think that EVERYONE would know exactly why they are investing. But it has been our experience that while some people may have a general idea about which direction they are headed, there is usually very little planning or strategy involved.
Wanting a better retirement or travelling more are vague goals, and while they are worthy targets, you are unlikely to make an emotional connection to that end goal without being more specific.
By specific, we mean that you have also quantified that goal by writing down the ‘Three D’s” - the Dream, the Date and the Dollars. These are three measurable components that stem firstly from your ‘why’. That is, we can quantify exactly what the goal or dream is, exactly when you are aiming to achieve it by, and how much money you are going to need to achieve it.
Once you have written down each of these points for each goal you want to achieve in life, then you will have a great starting point to start working backwards from. The average investor goes out into the market and puts their money into an investment, hoping for great results but are often jumping from one thing to the next. This is often because they have no clarity on their end goals and therefore they cannot assess whether any investment will truly get them closer to, or further away, from what they are trying to achieve.
The investors with the very best chance of success, always start with the end in mind. They are clear with their end goal (Point B), and fully understand how they have arrived at their current financial position (Point A). They then work backwards from their Point B position to work out the fastest, safest and most efficient road map to help them get there.
They know that without a clear strategy, plan, and a team of experts around them to help them achieve their goals, they are unlikely to get there. Not only that, they know that without making that deep emotional connection to their why, they will never be motivated enough to get out of their comfort zones to do what it takes to achieve great things in life.
