Empowering your plans & achieving your investment goals
If you fail to plan, you plan to fail…is a very common saying that you have no doubt heard in relation to the property investment game. Whilst this is true, the rest of that saying should go something like this…if you fail to follow through on your plans, you are doomed to fail indefinitely.
One of the most powerful things you can do to commit to your investment plans and work through to your end goals is to write everything down. This simple act can be the biggest differentiator between success and failure.
Too many people fail to write a personal financial plan for themselves, even though it has been proved that putting your intentions in writing gives you a psychological element of commitment.
As soon as you put something on paper, it’s there for the world to see. It is no longer just a fleeting thought or emotion – it is physical and enduring and you have to act on it.
When documenting your investment goals you should be as specific as possible because this will not only force you to visualise the outcomes of certain objectives, but also make your success more measurable.
Things that get measured get done
This leads me to my next tip to empower your plans: make sure everything is measurable. Ultimately, if you can’t measure it, you can’t manage it. You cannot be really vague concerning the targets you want to achieve; for instance, ‘In 20 years, I want to be happy.’
How are you going to measure that? You need to be specific. What does happiness mean to you? How will you measure your degree of happiness to know if you have achieved this goal?
Watch the change occur
This is a great way of obtaining gratification as you follow your plans and strive to realise your goals. One way you can do this is to keep a personal balance sheet that you update every three to six months, which will allow you to literally watch the change happen.
This can work equally as well with a profit and loss statement, where you have the ability to look at your income and expenses and see how the financial sacrifices you make today reflect on your balance sheet tomorrow, in terms of an increase in your net worth and those sorts of things.
For example, making an extra lump sum repayment into your home loan in year one might have saved you only a few hundred dollars in interest in that year. However, over a 30-year term, that lump sum repayment will save over $31,000 in interest.
Focus on the cumulative effect of your achievements in the earlier years, as the simple year-on-year changes might appear immaterial. However in reality, sacrifices and investments we make in the earlier years are absolutely critical.
Put your goals and plans somewhere you can see them every day
They must be in your line of sight at least once every 24 hours, so you might choose to stick them on the bathroom mirror, or the fridge, or maybe on the wall of your office.
If you can visually review your plans and goals and interact with them every day, they will always be in the front of your mind and, more often than not, if you focus on something you achieve it.
Certainly, visualising and focusing every day is one of the most powerful means to ensure you reach your goals. That is one thing I have learnt in business. Set goals and focus on them, talk about them and somehow they are always achieved.
Another good way to keep on track with your plans and goals is to stretch yourself to avoid becoming stale; don’t make it too easy. As much as we’d all like the heavens to open up and rain down riches on our heads, you have to remember that nothing worthwhile comes without some sort of sacrifice.
Be the Buffet
Honestly assess any areas in your life where you could cut back financially to have more money at your disposal to invest in property. You don’t have to go so far as to live in a cardboard box, but by scrapping some of the superfluous expenses today, that short term sacrifice will be worth many, many times that small amount in 20 years.
Warren Buffet is the doyen of this principle. Mr Buffet’s wife would suggest they spend $2,000 and buy a new coach. Buffet was always reluctant because he knew if he invested the $2,000 at 10% a year it would be worth nearly $35,000 in 30 years. Therefore, Buffet would consider the true cost of the new coach to be $35,000 rather than the ticket price of $2,000. While this behaviour is a bit extreme, I think we can learn something from this and resist the urge to spend money on superfluous stuff.
Importantly, you should always keep goals realistic; they have to be ‘do-able’. Achieving $200,000 worth of income in 24 days, for example, just isn’t possible. Setting such unrealistic expectations make you more likely to disbelieve and not feel attached to that sort of goal. So be realistic and firm in the pursuit of your goals. Stick to the plan, commit to it and make meeting your goals non-negotiable.
An excellent way to stay on track and empower yourself to reach your goals is to find a mentor or coach. Someone who has travelled the same road you intend to go down would be ideal, but is not absolutely necessary.
Share the journey and reward yourself
Once again, learning from each other’s experiences and motivating one another to stay on track is exceptionally beneficial. Get your spouse or partner on board with your goals and plans and make sure that the path you intend to take won’t create any friction along the way, by discussing the journey and keeping everyone committed.
Finally and most importantly, make sure you reward yourself as you go. Build specific, goal-related rewards into your overall plan to keep you motivated and give you something to strive for in the short term. It’s all well and good to know that in 10 or 20 years you have an ultimate financial and lifestyle gain to look forward to, but that can seem a long way off when you’re plugging away and making sacrifices today.
Now I’m not suggesting you squander every cent you make, and while this type of practice probably isn’t that productive in terms of wealth building, it is important to reward yourself for making the decisions and sacrifices to get you into a better financial position. It is along the lines of ‘live for today, not tomorrow’. We could all be dead tomorrow so you may as well enjoy some benefits from investing (in a sensible manner of course).
I think there are probably a lot of people who enjoyed great success trading stocks who are now looking back and thinking, ‘Wow, I made a heap of money in 2006. I really should have taken the opportunity to go to Europe.’
For more information on how you can profit from investing in Australia’s residential real estate sector by establishing clear investment goals and strategies, click here to contact us, or subscribe to receive regular post updates and industry insights.
Stuart Wemyss is a chartered accountant and founder of Property Tycoon Finance. Email: email@example.com
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