The reason so many people love a great action film; such as “The Bourne Identity” (I loved all three in the Bourne series) is largely because the story revolves around a hero who looks fear in the face and overcomes great adversity. Fortunately building wealth doesn’t require car chases while being shot at… or putting on a parachute after having jumped from an aeroplane and taken it off the back of the bad guy etc.
Nevertheless, to safely and successfully navigate a path to financial prosperity… that will deliver a life of choices we must confront fear.
I can deal with an interest rate climate that is low or high. Neither is a climate of full employment or rising unemployment my concern. A climate of prosperity or a climate of recession… these are not the issue either! As with any journey we start where we are now and we navigate the best route forward; always with the destination in mind. It is possible to build wealth in just about any climate; except a climate of fear!
Fear is more often than not simply: False Evidence Appearing Real! But with right knowledge and understanding we defuse it’s power over us.
Those prepared to toughen up and take appropriate action become those who others refer to as “lucky”. Few people ever manage to have control of their time; most people spend the majority of their time doing what the lack of money demands of them.
Before setting out on a journey it’s wise to ensure your vehicle is properly equipped and safe. There’s no point heading off only to crash along the way.
I believe investors too should ensure their chosen investment vehicle will safely deliver them to their financial destination. So how do I insulate myself from the potential negative impact of external forces beyond my control?
mrd “set ‘n’ forget… for busy people” ™
When I speak of the mrd “set ‘n’ forget… for busy people” ™ system of wealth creation I refer to a strategy that leaves most asset classes and most investment strategies out of the mix. Sure, I may miss out on the opportunity to benefit from some quick healthy profits that an experienced trader or speculator may enjoy, but equally I can sleep at night knowing that I will not be contending with sudden big drops.
For the benefit of those who are newer to my writings I will reiterate what I look for in an investment:
- Property only (property never goes to zero and will eventually double in value)
- Buy and hold (no trading, speculating or ‘profit taking’)
- New or near new (no renovating)
- Well researched (risk minimisation)
- Residential only (people have to have a roof over their heard)
- Permanently let (Avoid market peaks and troughs)
- Median priced (where most people live and the market shows greatest demand)
- In those areas of limited supply where demand is growing (as affordability permits)
- As close as possible to infrastructure, employment and services and/or lifestyle opportunities (again, subject to individual affordability)
My Scars From The Global Financial Crisis
The “scars” that I have worn as a result of the global financial crisis (GFC) is that my rental incomes have dropped across the board and vacancy levels have been higher where a tenancy has changed. Until the GFC vacancies were never an issue but has been a small issue in recent months. Given the strength of my asset base and where I know my properties (or “passive little workers”) are taking me, the rental pain I have experienced is really quite insignificant. Huge interest rate savings have delivered more than I have lost in rents and even factoring in a few inevitable rate rises; will continue to.
Assuming a person commits to responsible debt management only and assuming the total cost of purchase can be met by equity and other people’s money, why would anyone not want to have their name on the title of a new $500,000 investment property? If the property ticks all the boxes and is well located the investor will have passively created $500,000 and own a 50% share in a property that they leveraged to secure without using their own money; perhaps in just seven years!
After one more property doubling cycle that one property will be worth $2m and carry a debt of $500,000 leaving the investor with $1.5m and a 75% share of the asset.
An Analogy
My investment journey, like that of most investors on planet earth, has over the past two years involved “driving through a storm”. Where I have been particularly advantaged is that because of the mrd “set ‘n’ forget… for busy people” ™ strategy I have restricted myself to; there was no thunder, no lightening, no falling branches and no hail… just a bit of rain!
We are now coming out the back of the greatest financial crisis and time of global fear and uncertainty in living memory and all I have suffered is a bit of lost rent… yet my asset base was protected and remains strong! Seriously as I look around the world and hear the tragic stories of so many I feel like I have won the lottery by comparison. Getting up in the morning and going to work each day costs most people more time, more energy and more money than it does me looking after my property portfolio.
Let me reiterate again the need for all investors to practise responsible debt management and only make fully informed investment decisions. This ensures it remains “set ‘n’ forget… for busy people.™
Back to the topic of FEAR!
I believe that the biggest roadblock to a person creating wealth is their fear; especially fear of timing. Some want assurance that every traffic light will be green (all at the same time) before starting their journey; but that will never happen!
Next Week’s Newsletter
In next week’s newsletter I am going to look back over the past 41 years of political history and turmoil and demonstrate why it could be argued that there was never a good time to invest in property. Nevertheless, the facts are that in 1970, the median house price in Brisbane was $9,910. By 1980, it had risen to $35,450 and by 1990, $118,000. In 2000, it was $173,000. Last year, it was $450,500.
Be sure to read next week’s article and how ABC Radio in Brisbane reported last month that Brisbane’s median house price will be over $36 million by the year 2050.
“From 2030 buying a home [will no longer be] counted in years, but in generations”… more next week.
Personalised Retirement Options Plan
Numerous clients have already taken us up on our complimentary no obligation offer to conduct a Personalised Retirement Options Plan (PROP) with them. We’ve been pretty slack at asking for testimonies to share with others, but today we decided to call William C whom Doug conducted a PROP with last night. This is what William said:
My wife and I decided to take up Doug’s offer of an mrd personalised retirement options plan. I was open minded and didn’t know if we would be pleasantly surprised or disappointed by the exercise; I guess I had no real expectation. I rate the benefit of the 90 minutes spent with Doug in this private web meeting as an 8 or 9 out of 10. It was great that we didn’t have to leave home and everything was there on the screen before us. We now have a clear understanding of the many options available to us and are focussed on retiring in 7 years. Thanks for taking the time to explain things for us Doug it was certainly time well spent. I recommend anyone unsure of how or when they will be able to retire to do what we did and speak with mrd. Their services are complimentary and not pushy in any way at all so people have everything to gain and nothing to lose. I look forward to receiving and going over the reports that you kindly offered to send us. Thanks again Doug. William C
YES PLEASE; I would like an mrd Property Mentor assist me to tailor a Personalised Retirement Options Plan >>>click here
Happy Investing,
Nick Lockhart
mrd Customer Care Program… because investing is personal
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