The biggest investment planning folly

If you thought, ‘I want to have 10 properties in ten years with $100,000 passive income’, both investors agree that it must go deeper than that.

Mr Harris explained: “Most investors haven't actually identified why they're investing in the first place.”

“Everybody wants to make money—that's the standard default response. What we worked out is that most investors haven't actually identified specifically what they're trying to achieve for their own circumstances,” he added.

While most budding investors study fundamentals, finances and property management, they tend to forego understanding their personal goals.

Every investment journey is different, and the only way to work out which strategy will work best for you is to identify your endgame, according to Mr Harris.

He highlighted: “Work backwards from the end right back to where you're at today—I guess that’s the strategy for getting the best results.”

‘From Point A to Point B’

To put it simply, budding investors are encouraged to take time determining their Point A or where they are, and their Point B or where they want to go, Mr Harris said. Moreover, you also have to understand how you got to Point A in order to identify the best possible way to reach Point B.

Mr Harris reminded investors that having enough savings for a property purchase does not mean you have to jumpstart your journey right away.

According to him: “How did you end up with $30,000 in credit card debt? How did you end up paying, fixing your interest rates when they were eight per cent? How did you get to this position where you're at right now?”

Having a good understanding of how you handle your personal finances will make it easier to plan your wealth-creation journey since you know what could your capabilities and limitations are as an investor.

Once you have a clear understanding of your Point A, work out your Point B by identifying what you’re investing for. Is it for your retirement? Do you want to be able to pass on a generational asset to your kids? Or do you simply want a new car or a house?

“Whatever it might be, once you've got a clear understanding of your point B position, then you can bridge the gap between your point A and your point B position,” Mr Harris said.

The ‘why’ as motivation

Aside from helping you develop the right investment plan, having a clear goal set in mind can also motivate you to work harder.

According to Mr Harris, if you put your energy towards achieving one goal, then you’re more likely to get better results. If the ‘why’ is crystal clear, then the rest of it can easily fall into place.

He said: “It's really about focusing on why you're doing all of this in the first place, because if we can maintain a focus on the why, then all the stuff that comes later—the property selection, the due diligence and the research and all the work that you have to do—is going to be much easier to go through because you've got a clear target.”

Take time to rediscover the ‘big picture’ and ask yourself what you want out of your investment journey once you reach the finish line.

Tune in to Matthew Bateman and Luke Harris’ episode on The Smart Property Investment Show to know more about how to get better results throughout your wealth-creation journey.