Many hard-working Australians are holding themselves back from becoming successful property investors due to one or more fears of investing.
Like a deer in the headlights, fear causes us to freeze. We become easily frazzled, dazed and uncertain of which direction to run in.
In this article, we are going to talk about the Top 5 fears of investing which hold newbie investors back from achieving their goals.
We will then highlight 4 tips that can help you to overcome them.
Control Your Fears of Investing. Don’t Let Them Control You.
When it comes to investing, fear is not always a bad thing. In some cases, feeling a sense of anxiety before investing can even be helpful.
It can keep you focused and on your toes, preventing you from making bad decisions and acting too quickly before you have all the facts.
To be a successful investor, you mustn’t let fear control your behaviour or decisions. Instead, use that energy to dig deeper and push through the uncertainty. Otherwise, you could miss out on some great opportunities.
Here are the Top 5 Fears that hold people back from taking action and becoming successful investors:
- I Don’t Know What to Do
- I Don’t Know Who to Trust
- I Don’t Have the Time to Invest
- I Don’t Have the Money to Invest
- Naivety – I don’t need to do anything. I’m fine.
Which one resonates most with you?
Regardless of which fear is overwhelming you, you will need to learn how to face and overcome it. You can start by first defining and understanding what you’re really afraid of.
Is the danger real or is it only perceived? Is the fear justified and factual or not?
As an investor, your biggest challenge is to understand what triggers your fear response. You can then use this knowledge to regain control.
Let’s now explore some tips that can help you to overcome your fears of investing – whether it be lacking the right knowledge or concerns about time and money constraints.
1. Do Your Homework
If you want to be a successful investor but worry about not knowing the ins and outs of the market, it’s time to hit the books. Educating yourself about the industry is a critical step to building your confidence. Especially before taking any action and plunging into the market.
If you’d like to get some tips about what makes a successful investor, start by reading our article on “10 Important Tips To Be A Successful Investor.”
Like you, many of our clients have shared similar fears including:
- Buying a dud property that has no capital growth, low rents or high vacancy rates
- Paying too much for a property (by making the decision based on emotion, not facts or data)
- Entering the market at the wrong time of the cycle
- Not having the experience to manage a property portfolio
But despite these common fears of investing, we have been able to help many people to build their knowledge and confidence over time.
Our Client Managers can help you to develop a Strategic Wealth Plan. Each client’s Strategic Wealth Plan is tailored to suit their individual circumstances. This enables them to differentiate between good and bad investment decisions.
If you would like to build your confidence, but are not quite ready to consult the services of a Client Manager just yet, we encourage you to start by:
- Reading property and investment books
- Listening to investment podcasts
- Researching the industry
- Finding respected experts in the field that you can follow
- Finding a motivating and trustworthy mentor (who has actually achieved what you want to achieve)
2. Surround Yourself with a Team of Experts
Worried about the amount of time it takes to invest? Don’t worry. You’re not alone.
Many newbie investors share concerns about the time burden of investing in property. This includes the time it takes to:
- Research the market
- Follow market trends
- Inspect properties
- Be a landlord (collect rent and maintain the property)
- Attend auctions and
- Find good deals
It’s no wonder that many perceive investing as too hard or consider themselves too busy to make the commitment. But they’re forgetting one very important thing…
With property investing, you don’t have to do it all yourself!
Those who succeed typically have a team of experts to guide and support them throughout their investment journey. Very rarely do they operate solo as one-person-shows.
As an example, your team could consist of financial advisors, property acquisition specialists, tax professionals and portfolio managers who:
- Research the market and investment opportunities on your behalf
- Provide professional advice on what to buy and the best strategy for you
- Eliminate unnecessary risk by creating financial firewalls and safety nets to build and preserve your wealth and provide peace of mind
- Can save you money and time
- Reduce your tax bill
- Support your strategy
They will also help you to buy investments based on logic and numbers, not emotion (a common trap for investors).
If you’re looking for a team to help guide and support you, check out what we do at Infinite Wealth. Our group of companies provide the range of services that people need to become successful investors. Many of our clients love that we provide all the services they need under one roof.
So, what are you afraid of?
With a good team behind you, you’ll save yourself hours of research, procrastination, stress and worry, enabling you to focus your attention on more important things.
3. Develop a Concise Plan and Stick to It
Another common fear is whether you have enough money and whether you can afford to hold the property over time. But this can be overcome by having a strategic plan and budget.
A clear and concise plan can help you to:
- Gain a clear understanding of your current situation
- Know how much money to set aside into your savings each week for future investments
- Determine what you’re trying to achieve
- Determine what you need to start doing now to get there
Planning is also a good way to ensure that you’re not stretched financially. Particularly, when it comes to managing ongoing costs – such as property maintenance, corporation fees, insurances, repairs and periods of vacancy. Unexpected costs can turn your property from being your best friend into your worst enemy.
Having a budget helps you to set your limits and establishing a financial buffer can help to protect you throughout all stages of the economic cycle.
It is clear to us that investment in Australia is either feared by many or simply out of reach. This is backed up by a statistic from the ATO (Australian Tax Office) that tells us that 78% of all hard-working Australians have no plan for retirement. That’s crazy. Four out of every five people have no plan… This is very concerning given the existing pressures on both superannuation and the pension.
For more information, please refer to an article we wrote last month – 78% of Australians Have NO Financial Plan. Here’s How to Ensure That’s Not You.
4. Debt is Not Always Bad
Taking on debt is another concern of many newbie investors. For many Australians, the idea of owing someone else money and having outstanding debt makes them cringe. “Cash good. Debt bad.” Am I right?
While it is true that some types of debt can be bad, not all debt is equal. For example, personal debt related to items such as a car or your credit card is typically bad debt. Personal debt should be avoided at all costs.
However, investment debt can lead to some positive outcomes and opportunities. It can help you to accumulate more properties using existing equity rather than your own funds and reduce your income taxes.
Another great advantage of investment debt rather than personal debt is that your tenants and the tax man will actually help you to pay down your mortgage. We explain this concept further in our workshops. If you’d like to attend one of our upcoming “Plan Your Way To Wealth” evening workshops, click here.
With a concise plan and budget, we can help you to ensure that you only take on debt that you can afford to service. This way it is unlikely to become a financial burden for you in the future.
If you are still unsure about what to do next, who to trust or whether you have the time or money to invest, reach out to our team at Infinite Wealth. We’re always happy to answer any of your burning questions and tackle the common fears of investing. If you’d like to get in touch, click here.