Time to let go – healthy investment
Investment in a property can be a big deal. Even a small loan is a relatively large, long-term commitment and there can be plenty of emotional attachments – especially if it’s your first home loan.
“ People tend to purchase property based on emotional triggers, and not a smart business strategy.”
And it can be very similar with investment properties; you want to make sure your investment is the best choice for your needs, short-term, and long-term, and again it can be easy to become too emotionally involved with your investment(s), and that can lead to poor decision making and potentially missing out on maximising your wealth.
One of the first things we ask our Clients when they approach us for investment lending is
Why. Why are you purchasing this property?
A lot of the times, people choose to invest because they were given, well-intentioned, investment advice from a friend or trusted source. Or they have seen someone else do it “successfully” and think that they can also (or they don’t want to miss out).
People tend to purchase property based on emotional triggers, and not a smart business strategy.
That’s exactly how investing should be addressed. Like a business. When you start a business, you sit down and plan a structure of how you intend to grow.
The same should apply to your investment.
To do that successfully you need to be able to let go of any emotional attachments you have with the property, and treat it like a vehicle for wealth creation, have a sound grasp on projected growth, how it will affect your personal tax situation, and be prepared to sell when the time is right.
In our experience, we see a lot of people who started their investment strategy a while ago and haven’t really analysed it since, or they wait until tax time to worry about it. The dangers there, lie in that just letting it tick over and becoming complacent can cause problems; “set it and forget it” doesn’t always work in the ever-changing landscape of investing.
By managing your investment like a business, you are staying engaged with regular reviews of your strategy with your trusted team (your broker, accountant, planner etc) and constantly refining your game plan to ensure your investment portfolio is always performing.
An annual review of your investment lending structure is a very good idea – a lot can change in that time and you want to be certain that you have the best possible loan set-up to match your investment goals.
Investing can sound scary for some people, but it doesn’t have to be.
If you approach it the right way it can be a very beneficial experience. It really should be pretty black and white; a business decision, not a sentimental one. Investing can sound scary for some people, but it doesn’t have to be.
So before you make that next (or your first) investment purchase decision, ask yourself what the driver is for that purchase, and does it truly suit your goals.