Expert Advice with Ian Hosking Richards. 30/04/2012.
In the past three or so years that I have been writing this column I have on several occasions written about the importance of mindset to an investor. My more recent articles have perhaps not dwelt on the subject to the extent that earlier ones might have, and I feel that it is now time to redress that balance.
As I revealed in my column last month, it is perfectly possible to become a successful investor without much knowledge. In fact for some people, the less they know the better! It is much less common to come across a successful investor who does not have a positive attitude.
I believe that one perceptible difference between successful investors and the masses of ‘underachievers’ out there is their focus. Less successful investors seem to focus more on the perceived negatives. They are more concerned with all the things that can go wrong rather than the opportunities that exist and how they can improve their financial circumstances. They also focus more on their present circumstances than what they actually want to achieve. They look at their income and assets, they may talk with a mortgage broker. They make decisions based on what is achievable given their particular circumstances at the time. Whilst this approach might seem logical, unfortunately it does not always allow them to achieve the kind of financial independence that they would like.
Most successful investors in my experience are much more focussed on their future goals. For example, an investor might have sat down and given a great deal of thought about how they imagine themselves living in, say, 10 years time. They know what car they want to be driving, how often they will change it, the type and length of holidays they intend to take etc etc They build up a comprehensive list of anticipated expenses. Once they have a really good idea of how they see their future lifestyle, it is quite easy to put an approximate price on the intended lifestyle.
Only when you know where you are headed is it necessary to revisit the start point and formulate a strategy to help you bridge the gap between where you are now and where you would like to be at a particular time in the future.
Having exciting goals that you look forward to achieving will keep you motivated as well as allowing you to periodically check your progress to make sure that you are on track. It is also invaluable in decision-making. Every time you have a major financial decision to make you can ask yourself – will this help me to achieve my goals, or will it actually make them harder to achieve? One decision that almost always affects the capacity to achieve long term goals is if the investor is considering taking on a large a non-deductible debt in order to buy a property for owner occupation. If you are really committed to building an asset base that will provide a passive income stream in the future in the shortest amount of time, buying somewhere to live in is, on paper, utter madness!
If you are one of the aforementioned ‘underachievers’ and want to get better results, a change of focus may be all that is needed. Focus on your future goals and do not dwell on all the perceived negatives, as this will sour your attitude. Remember, being successful is more about your resourcefulness than your present resources. If you doubt me then just go back and look at previous ‘Your Investment Property’ magazine ‘Investor of the Year’ winners and runners up. Investors like the most recent Winners of the Award, John & Renae. High school drop-outs who went to work part time in MacDonalds to earn some cash. They now have a property portfolio worth over $2m, all this achieved before Renae’s 22nd birthday and with two small children in tow. So your future success is not about whether or not you qualify for a loan at the moment, it is about how committed you are to achieving the long term goals that you have set for yourself. It is about changing your circumstances to suit your future goals, rather than changing your goals to suit your present circumstances. Even a small change in attitude can result in a big change in results. Happy investing.
Ian Hosking Richards is a successful property investor with a portfolio of over 30 properties. He is the CEO and founder of Rocket Property Group, a leading independent real estate agency that helps hundreds of people each year enter the property market or grow their existing portfolios.
For further information or assistance, please visit www.rocketpropertygroup.com.au or call 1300 850 038.
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.