Imagine this: You've just been seated at a restaurant that comes highly recommended by a good friend. The menu's in front of you and there are plenty of lip-smacking dishes on offer. Which answer most closely describes your next move?
a) Do you order the first dish that jumps off the menu?
b) Do you select a dish that sounds familiar?
c) Do you find yourself conducting a mini cost-benefit analysis on taste versus value, by which time, the restaurant's ready to close?
Believe it or not, your response is relevant to evaluating the kind of investor you might be.
What does a meal out have to do with investing?
Whether it's dining out, purchasing a handbag or buying a home, people have different attitudes about money. When investing in property, an understanding of your investment personality can be incredibly valuable.
So - what was your response to the above?
a) Act first-think later
At one end of the spectrum is the act-first-think-later buyer.
Pros: If you're this kind of buyer, you're unlikely to miss out on an opportunity, as you think on your feet. While people with fast-acting, goal-oriented investment personalities subject themselves to a higher level of risk, but are more likely to see higher returns over time, as losses and gains balance out over the years.
Cons: Act first-think later buyers often make rash decisions. If they've undertaken significant research and know what their investment goals are, this can be beneficial. However, without the right strategy, rash decisions could backfire!
Solution: Slow down and review your property portfolio regularly if you're this kind of investor. DPN offers portfolio reviews to ensure your strategy is on track, plus we'll work with you to find solutions where needed.
Sitting comfortably between act first-think later investors and conservative folk are the middle of the road investors.
Pros: If you're a middle of the road investor, you take a balanced approach. You're able to act quickly when the circumstances require this, but you're also cautious when required.
Cons: You could be missing out on strong returns on investment if you're too cautious. However, your balanced approach is generally beneficial, rather than detrimental.
Solution: Ensure you've got the right service providers working with you to make your investment decisions easier.
c) Conservative indicator
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Are you the kind of person to "um" and "ah" about every little decision?
Pros: Significant financial decisions should be backed by careful thought, which is a skill you've developed well. For instance, you'll work out your budget and ensure you can make repayments when taking out a home loan or increasing your credit card limit.
Cons: If you're too cautious, you risk inactivity - that is, you may find that you miss out on valuable investment opportunities. If a cash-flow positive property comes onto the market and it meets your requirements, you will need to be ready to make a decision. If the numbers work out but you refrain from acting, the opportunity may pass you by. By avoiding risk, you may not lose anything, but you may also gain nothing. Choosing not to invest may result in a retirement with accumulation-based savings alone, which are unlikely to sustain the standard of living you're accustomed to.
Solution: Formulate a strategy before you invest. Be aware of your investment capabilities and property requirements upfront so you will be ready to act when the opportunity arises. DPN offers free property investment plans that cover all you need to know before you invest.
Even if you are not entirely sure what type of property investor you are, DPN can assist you to make the right decisions whether you are a first time property buyer or a seasoned expert looking to modify your purchasing approach.
This information is provided by DPN Pty Ltd ABN: 94 630 700 186, Australian Credit Licence 514759. DPN Finance Pty Ltd is an authorised credit representative 504129 and a related entity of DPN Pty Ltd. Casa Capace Operations Pty Ltd ABN: 79 624 981 184, NDIS provider Number 4050038018 trading as Casa Capace.