One of the most common questions early investors ask is: “What sort of property should I buy/What should my strategy be?” In many cases it can be the first question they ask – but cannot be accurately answered without first knowing something far more important. It’s hard to plan a journey unless you know the destination; the same rules apply when trying to form an investment strategy. Only once you have a goal can you begin mapping a path for moving forward. Use your goal as an acid test for your choices – this will help you make better investment decisions. For example, if your goal was to retire on a portfolio of investment properties which generated rent, would you buy a property which was only earning you a 2% yield? Likewise if you were looking to build a portfolio with exceptional capital growth so you can then diversify into growing a share portfolio, would you buy a property in a regional area with strong cash flow but long term has shown poor capital growth?’ Keys to Setting a Goal Set it early When you’re expending significant time, effort and money into investing, it’s fairly important that you know you’re heading in the right direction. Set yourself a goal early so that you can work towards it – it doesn’t have to be the ‘perfect’ goal, and it might very well change. Once you have something to aim for on the horizon, you can start mapping your future plans with a bit more ease and efficiency. Review it often A goal doesn’t have to be a static aim which never falters, or changes. Your circumstances can change, expectations grow or any other number of variables that life can throw at you. Don’t feel bad about revising a goal – each time you adjust and alter your end goal you’re actually fine tuning your plan to fit the future needs more accurately. Stick to it – a goal is only so useful if you stick to it It’s there for a reason, aim for it! Not all decisions you make will be 100% directed to your goal which is OK – but you do need to question what value you are gaining by doing something which is directly against your long term goal. Have micro goals Use incremental goals to keep you on your course by providing ‘mini successes’ along the way. Outside of your financial abilities, you need to keep yourself psychologically geared towards your goals. Mini goals will help you feel progress in what is a long term plan. An example of a mini goal could be by achieving a certain number of investment purchases, paying off unnecessary personal debt (credit cards, car loans) etc. Don’t be afraid to change your goal Much the same as reviewing your goal – you may find that you can do a complete change in course and start working towards a different goal, this is OK. We can’t always make the right choices, but there is no value in sticking to a course out of stubbornness. As your life develops the goal can change as a point of necessity – changes in your employment, family, relationships. I’ve established my goal, how does this help me work out my strategy? Having a goal won’t make your strategy crystallise into existence without any thought, but it certainly will help you narrow down your options. By comparing what a strategy can achieve and how this relates to your goal, you can eliminate strategies which don’t fit your goal. Couple this with comparing your risk profile; it’s easy to quickly come up with a short list of options which you can work out the probability of success. You may not narrow the list to one core strategy, but that’s OK. As you develop your skillset and experiences investing a definitive path will become apparent. So armed with this information, you can go out and form a long term goal to start working towards. Ask yourself why you’re investing, what you want to achieve and what your long term expectations of life are today and in the future.