Investing Strategies.

[Compleks]

This is something that I'm sure we have all heard mentioned many times.

Personally, I have spent alot of time avoiding the task of actually sitting down and creating my own investing strategy. (I'm excellent at procrastinating)

I was just curious to see if I could pick up some tips or ideas from different peoples strategies. Because at the moment I'm not really sure what options I need to consider.

Who here has a comprehensive wealth creation strategy in writing?
Better yet, who strictly follows their strategy?

At this stage I'm thinking that the best planning approach for me, would be creating a general wealth creation strategy to cover all major facets. This would include my income, business plans, property, shares etc... This would act as a rough guide.
Then I would go one step further and break down the individual segments into separate strategies (Property Investing Strategy - Share Strategy etc...)

How does that sound?


So, if you don't mind sharing some details of your personal wealth creation strategy (or any strategies you may know of), I'm sure we could all benefit from each other.

Of course, any general advice or comments would be appreciated.


Kind regards,

Compleks...

 

[alexlee]

I have a GOAL in writing (my signature, in fact), and a number in mind (how much income I'm aiming for). I also do various spreadsheets that show what would happen if I bought x properties a year for the next 20 years, etc.

Your plan can include, for example, setting aside an hour a day to read about shares and property, research the stats on a suburb, or spend one weekend every 2 weeks going out looking at inspections.

I think the more knowledge you have, the clearer your strategy becomes. If you don't own an IPs, for example, how do you know how many or what type you want? Your plan should definitely (and will) evolve as you gain more knowledge.

So at the start, I would suggest doing the basics. Put together a budget, set aside x hours a week to read about investments, and research those investments. With property, I'd say start off with a standard cheap (relative to your borrowing power) buy and hold, and then go from there. Having the best plan is useless if you don't actually go out and buy something!
Alex

 

[BDM]

Hi Compleks,

I think you are on the right track - set yourself a "main" goal, and break it up into smaller steps / goals so it is not so daunting.

For Example - Main goal = $100 K per year income within 10 years.
At roughly $200 per week rent ( ie approx $10 K ) per property means you need 10 properties to achieve the $100 K.
10 properties in 10 years - one possible option is buy 1 each year for ten years.
How do I buy 1 property a year ? As Alexlee has suggested, read, research, crunch numbers, allocate the time, etc.

Having the goal - preferably written - raises a whole heap of questions that need answers. These answers allow you to keep moving forward closer to your main goal. These answers, and the knowledge gained in finding the answers, may actually lead to a changing of the main goal, or the steps taken to get there.

"Starting with the end in mind" is probably the best way to go !!

Thanks,

BDM

 

[Compleks]

Thanks guys.

I have alot of written goals for other areas of my life, but struggle when it comes to the financial / investment side of things.

I actually have a written goal to start writing out my invesment strategy

haha, better get started then.

 

[alexlee]

I have alot of written goals for other areas of my life, but struggle when it comes to the financial / investment side of things.

I actually have a written goal to start writing out my invesment strategy

haha, better get started then.

The important thing is to always HAVE a goal at any point in your life, so that you can evaluate your actions against that goal. The goal can (and should) change as your circumstances and tastes change. For example, say at age 20 your goal is to eventually own a 2 bedder at Bondi, so you invest towards that. By age 30 you might want a 5 bed suburban house instead. That's fine. Just change the goal: the things you did to get you towards the Bondi apartment isn't wasted.

In other words, don't get too concerned about 'I need a goal for life'. Just have a simple goal (income $x in y years, etc). The goal is just to give you direction.
Alex

 

[The Y-man]

So, if you don't mind sharing some details of your personal wealth creation strategy (or any strategies you may know of), I'm sure we could all benefit from each other.

Our stratgey has evolved over time with the market and our knowledge, so here are the major version releases:

Strategy Version 1997-2000:
Invest in growth style managed funds
Target to build up enough managed funds to draw income in "retirement"
We figured income funds were getting about 10% at the time - so we figured we needed 10x pre tax living costs to live on. i.e. if yo needed $50k pa pre tax, you needed $500k in funds.

Strategy Version 2000-2004:
Invest in property, with the aim of investing capital gain in managed funds
Buy growth property, refinance, and invest drawn down captial in (a) more property or (b) managed funds to assist in repayments

Strategy Version 2004-2006 (minor update):
As per Version 2000-2004 but with addition of share/options trading to supplement income for serviceability and strategy acceleration.

Strategy Version 2006 - current
Develop trading business as core income production, investing in tax effective growth assets.
Culling of non-performing property assets.
Use of structured porducts to increase growth component of portfolio
Refinance property portfolio to expand core business.
Maintain/reduce exisiting income producing managed funds to expand core business
Build cash/precious metals buffer for market downturn

Cheers,

The Y-man