I just want to drive home this message because strategy does not mean where should you buy a property, and it does not mean what type of property should you buy. The important investment strategy questions must be asked for you to thrive in your investment journey.
What is the goal? And HOW will I get from where I am to that goal? Right now you’re possibly thinking….you don’t have much passive income or any at all for that matter. You might even have some negatively geared properties. And if you stopped working you may have to apply for financial support or to Centrelink to help keep the lights on. How do you get from the circumstances you are in right now, to having a comfortable passive income in 10 years, 15, 20 years from now? Simply put, this means (drum roll please) you don’t have to work any longer to pay for your lifestyle.
To reiterate: STRATEGY means is what is the goal?
And HOW will I get from where I am to that goal?
Consider these important investment strategy questions:
An active investor will develop property, do subdivision, do renovation, do refurbishment, etc. You get your hands dirty, as you are highly engaged in manufacturing equity through any one of these capital growth strategies. As a more passive investor, you would allow the market to lead the way in creating capital growth or equity in your portfolio for you? And as a passive investor, you may want to consider how you will effectively predict short-term and long-term capital growth for your portfolio (since this is your main lever for growth). And you may need to accept the fact that your passive income target is not going to be achieved as quickly as it could be achieved with a more active strategy.
There’s no right or wrong answer. There’s no binary decision here. Everyone’s different. We all have our sleep at night factor, our individual risk appetite, lifestyle choice, and level of engagement.
I’d love to hear from you!