All Topics / Help Needed! / Planning your investment strategy? Start with your goal and work backwards.

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  • Profile photo of Corey BattCorey Batt
    Join Date: 2012
    Post Count: 1,010

    One of the most common questions early investors ask is: “What sort of property should I buy/What should my strategy be?” In many cases it can be the first question they ask – but cannot be accurately answered without first knowing something far more important.

    It’s hard to plan a journey unless you know the destination; the same rules apply when trying to form an investment strategy. Only once you have a goal can you begin mapping a path for moving forward.

    Use your goal as an acid test for your choices – this will help you make better investment decisions. For example, if your goal was to retire on a portfolio of investment properties which generated rent, would you buy a property which was only earning you a 2% yield? Likewise if you were looking to build a portfolio with exceptional capital growth so you can then diversify into growing a share portfolio, would you buy a property in a regional area with strong cash flow but long term has shown poor capital growth?’

    Keys to Setting a Goal

    Set it early

    When you’re expending significant time, effort and money into investing, it’s fairly important that you know you’re heading in the right direction. Set yourself a goal early so that you can work towards it – it doesn’t have to be the ‘perfect’ goal, and it might very well change. Once you have something to aim for on the horizon, you can start mapping your future plans with a bit more ease and efficiency.

    Review it often

    A goal doesn’t have to be a static aim which never falters, or changes. Your circumstances can change, expectations grow or any other number of variables that life can throw at you. Don’t feel bad about revising a goal – each time you adjust and alter your end goal you’re actually fine tuning your plan to fit the future needs more accurately.

    Stick to it – a goal is only so useful if you stick to it

    It’s there for a reason, aim for it! Not all decisions you make will be 100% directed to your goal which is OK – but you do need to question what value you are gaining by doing something which is directly against your long term goal.

    Have micro goals

    Use incremental goals to keep you on your course by providing ‘mini successes’ along the way. Outside of your financial abilities, you need to keep yourself psychologically geared towards your goals. Mini goals will help you feel progress in what is a long term plan. An example of a mini goal could be by achieving a certain number of investment purchases, paying off unnecessary personal debt (credit cards, car loans) etc.

    Don’t be afraid to change your goal

    Much the same as reviewing your goal – you may find that you can do a complete change in course and start working towards a different goal, this is OK. We can’t always make the right choices, but there is no value in sticking to a course out of stubbornness. As your life develops the goal can change as a point of necessity – changes in your employment, family, relationships.

    I’ve established my goal, how does this help me work out my strategy?

    Having a goal won’t make your strategy crystallise into existence without any thought, but it certainly will help you narrow down your options. By comparing what a strategy can achieve and how this relates to your goal, you can eliminate strategies which don’t fit your goal. Couple this with comparing your risk profile; it’s easy to quickly come up with a short list of options which you can work out the probability of success.

    You may not narrow the list to one core strategy, but that’s OK. As you develop your skillset and experiences investing a definitive path will become apparent.

    So armed with this information, you can go out and form a long term goal to start working towards. Ask yourself why you’re investing, what you want to achieve and what your long term expectations of life are today and in the future.

    Corey Batt | Precision Funding
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of BennyBenny
    Join Date: 2002
    Post Count: 1,416

    Hi Corey,
    Awesome subject !! As I read your thoughts, an old favourite saying came to mind :-

    “If you don’t know where you are going, any road will get you there!”

    Puts a smile on the face thinking about something so silly e.g. how often do we back the car out of the garage to go “somewhere, but I don’t really know where…”? Not too often, I hope.

    It is very common for us to get into the car, knowing exactly where we are going to go. But when it comes to investing, it is almost like the goal (or destination) is SO far out of reach that we can’t visualise ever getting there? So instead, we liken it to getting into the car and driving to the first set of lights – at THAT point we will decide which way to turn (still not sure though….).

    It is far from unusual to read of those just wanting to start, without really knowing where to go, or why. Anyway, your post (above) looks like being a great help for newer investors who are “looking for the path”. Here’s hoping we can direct them here !!

    Well done – and THANKS !!


    Profile photo of Shane WShane W
    Join Date: 2016
    Post Count: 17

    I really enjoyed this post. As someone who is just beginning the property investment journey – setting a goal has given me confidence that my actions are going to the right direction.

    I have recently read Rich Habits by Tom Corley. In his book he identifies one of the major habits of the affluent is to set long term, medium and short term goals. Every week, time is set aside for action towards achieving these goals.

    Another quote you might like Benny “The issue isn’t that people set goals too high and don’t achieve them, it is that people set them too low and achieve them” -Michael Yardney. This resonated with me quite strongly. I know my lovely parents aimed too low in terms of wealth and got it. Whilst they are happy, if they aimed higher, they would not still be working wondering how they will eventually retire.

    My goal is to have a $100,000pa income from a real estate portfolio in 9 years time. I will do this by investing in a property portfolio focusing on high capital growth.

    I have broken this down to yearly, monthly and weekly goals. I have tried to be as specific as possible. I have included everything from appointments with financial brokers to books I will read to inform my actions. As Corey stated, breaking down these goals into smaller steps.

    Thank you for this post – It is the best post on goal setting I have read.


    Profile photo of Blue BehaviourBlue Behaviour
    Join Date: 2016
    Post Count: 1

    Awesome piece of advice, Corey. I just started my investing journey as well and on my way to 2nd property. Reading through Steve’s book actually helps a lot to align my goal since my goal was a bit scattered before. My goal is to buy a couple of houses with rental yield of 6% and development potential.

    Profile photo of BennyBenny
    Join Date: 2002
    Post Count: 1,416

    Hi all,
    An old memory hit me the other day – I recalled it from my schooldays… A Maths teacher described a situation where a lake started to grow a weed – the weed was doubling its size daily, and had been growing in this lake for one year. The question posed to us asked “once the weed covers one quarter of the lake, how many days will pass before it covers the lake completely?”

    The answer is quite simple, but perhaps almost unbelievable. i.e. it takes just two more days. It has taken more than a year (365 days) starting from almost nothing, then, in just two more days, “Wham!” it has covered the entire lake.

    And then, there is the grain of wheat on a chessboard – how awesome was that one (put a grain of wheat on the first square of a chessboard, then two grains on the second, doubling as you go). How much wheat would be on the last square (there are 64 of them)? The answer was something like “The total wheat output of the USA for one year!”

    The lesson from this:-
    Well, to me it is something like that with investing. In our earliest days, setting ourselves a goal of amassing $2million can seem WAY too unlikely and hard to reach (a bit like when that weed was starting out). Setting aside tiny amounts might seem like watching grass grow in those early days, but keep it up and the rewards will come. We are not likely to be able to double our money daily, but what if it were possible to double it yearly?

    Working backward, how could that $2million have been amassed? Let’s see:-
    Now +10 years = $2million
    Now + 9 years = $1million
    Now + 8 years = $500k
    Now + 7 years = $250k
    Now + 6 years = $125k
    Now + 5 years = $62k
    Now + 4 years = $31k
    Now + 3 years = $15k
    Now + 2 years = $7k
    Now + 1 year = $3.5k
    Now – do you have just $2,000 to start out with this? And a spare ten years? :)

    Isn’t that amazing? Starting with just $2000, and doubling that each year for 10 years, you would have over $2million.

    OK, maybe doubling it each year is a stretch too – or is it?

    What if you were to use the leverage that property provides? i.e. you put down just 10% of your cash to control 100% of an asset. You buy well, do a small reno, lift the rental income, and force an Equity jump in value. That Equity jump then allows you to “do it again” with another 10% deposit to buy another IP….

    Your cash input might be as little as $50k, yet be returning a further $50k in Equity. If so, isn’t that doubling your money? You still have the initial $50k in the value of the place, but it has now gone up in value by ANOTHER $50k. But, what if it takes 18 months to do that instead of 1 year. If so, then damn, it will take 15 years to get your $2million instead of 10 years.

    As your experience and your assets grow, you will likely find that you can double your money quicker, and the amount being doubled can be growing a lot larger too (like that weed in the lake was, just two or three days before fully covering the surface).

    Like the lake weed, the “working backward” figures show just how miniscule the start-out amount can be. If you are getting into property investing, surely you will be starting out with $50k, not $2k. So, how many years have you just saved? Or, maybe now it means that 10 years is still very possible, but you don’t have to double your money each year to “make the goal”?

    THAT is an example of what others mean when they say “Set your goal, then work backward to see what you need to do today”, or this week, or this year.

    Don’t be over-awed by the final goal – it might be WAY more achievable than you first thought !!



    And, if you want to check out someone who actually did this recently, go and reread Westnblue‘s story (from the “Big Picture for new Investors” thread):-

    He started with about $20k – bought a cheapie in Broken Hill, did a quick reno, doubled the value of the property (he had put in just 20%, so he had more than tripled his initial money within a few months). He then kept that one, doubled the rent too, and went out to buy another one. That original $20k mushroomed.

    Within just 3 years (from 2011 to 2013) he had created $600k+ in Equity, and was pulling in $200k in rents from around 20 properties. It is a great story.

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