Ways Our Minds Trick us into Not Investing

That monkey on your shoulder has been telling you for years that investing is a bad idea. It’s made excuses, dismissed your queries and generally turned you off even looking into investing in property. Honestly? It’s not as fraught with danger as you’ve been telling yourself.

Here are five ways our mind tricks us into not investing and why they’re rubbish.

  1. What if I Lose Money?

Investing in property is risky business. So is driving your car to work, crossing the street and eating too much sugar.

Yet we still do all those things every day right? Ensure you research thoroughly, develop a plan and enlist the help of professionals. Alternatively, be proactive about adding value to your home by taking control of your asset and considering renovations, no matter how small they may be.

  1. What if we can’t get tenants?

If you buy in an area that’s booming, getting tenants won’t be a problem. This is the why it’s a great idea to enlist the help of people who know which suburbs are set to boom and give you a return on your investment. The bottom line is, everyone needs somewhere to live and if you invest wisely, you’ll never be short of tenants.

  1. What if I choose the wrong property?

This is impossible if you do your research. Investing in property is a life changing decision and one that should be treated as such. Read everything you can find, attend seminars, get advice and ask for help. There is a wealth of information and professionals whose job it is to make sure you make the right choice for your financial future.

  1. What if I Can’t Meet the Mortgage Payments?

Planning is key when beginning the investment process. You need to be able to cover the payments while also having a buffer in case you come across unexpected circumstances. Don’t spend beyond your means when deciding on the property you want to invest in and buy in an area where you will be able to resell if the need arises.

  1. What if I Get Scammed?

If you’re going to pay for professional help to get you started on your investment journey again, make sure you do your research. There are plenty of big talking sales people out there who are more than happy to lead you down the garden path but it’s simple enough to avoid them if you’re thorough. Read forums and testimonials and ask around to see who comes with a high recommendation.

JDL Strategies is a wealth management company with a unique approach to creating financial freedom and a pathway to retirement planning. We use the JDL Strategies Chain Reaction™ built from three core components: Aggressive debt minimisation, proactive tax deduction and planning, and an intelligent investment management strategy. For professional advice with no obligation, why not attend one of our two hour seminars to learn how you could be financially free with the salary you earn now!


How you can reduce your mortgage faster

The biggest factor stopping most of us from growing our wealth through investment is our current level of debt. And the biggest debt for most people is the mortgage on their home. Is it important to reduce your level of debt?

Yes, it is. And if you have a mortgage on your home, the key thing to do is to reduce that mortgage. Paying off your home loan is not tax deductible – put simply, it costs you money and you don’t get anything in return. So how can you reduce the mortgage on your home faster?

The key strategies are based on maker larger payments, either regular payments or lump sum payments. This means that more of your money goes towards paying off the amount you owe (the principal). The lower the principal, the lower the amount of interest that is due. The most effective way to do this is to pay yourself first every week. Yes, you heard right. Pay yourself first. Every week pay yourself, say $100 – more if you can manage it – and use that money to steadily chip away at your mortgage. $100 a week will knock $5,200 from your mortgage every year. This, on top of your regular payments, will significantly reduce the term of your loan. Where will I find that extra $100 a week? I hear you say.

It’s a case of short-term pain for long-term gain. Put yourself on a budget – look at where your money is going and tighten your belt. Bring your lunch with you to work instead of buying it, make your own coffee – every little saving helps. When it comes to big items like TVs and computers, consider renting, which also might give you tax deductions.

Another strategy is to change your regular mortgage repayment from monthly to fortnightly. Let’s say your monthly repayment is $2,000. This means you make 12 payments a year and pay $24,000 off your loan each year. If you pay $1,000 each fortnight, you will make 26 payments (as there are 26 fortnights in a year) and pay $26,000 off your loan each year. In other words, you will pay off your loan faster!

In addition, make extra payments whenever you can. For example, if you receive a tax refund, don’t ‘blow it’ on a holiday – put it towards paying off your mortgage.

And remember that the earlier you make extra payments on your mortgage, the sooner you can start reducing the principal and lowering the interest that is due.

What else can you do?

Open an offset account. This is a savings account that is linked to your mortgage account. The interest you earn on your savings is applied to reduce the interest on your mortgage. In other words, the more money you place in your offset account, the less interest you pay on your mortgage. How neat is that?

There are also some things your financial advisor should be doing for you.

For example, there are a range of loan packages available. Your advisor should check all the features you need in a loan and then advise you which loan package will save you the most amount of money, whether it is best to lock in an interest rate, etc. If you have an existing mortgage, the best solution may be to change packages – note that exit fees have been abolished if you move a variable loan mortgage from one bank to another.

If you don’t have an advisor, talk to one of our client managers at JDL Strategies. We can source a loan package that meets your needs with the lowest possible interest rates.

And now for the part I like best. The moment you have equity in your home – that is, your property is worth considerably more than you owe – put your equity to work and make it earn a return for you. For example, use it to buy a rental property.

Why a rental property?

Because you receive so many tax benefits. Your tenant and the tax man will help you pay your mortgage. Over time the rent you receive will increase, the value of the house will increase, and your equity in the house will increase. And you can then use this equity to buy more investment properties as well as other assets.

It’s all about making your money work for you.


Daily Habits of Wealthy People

So you want to join the rich list. Free yourself from debt, travel the world, own a successful business, buy some investments properties, live the life that dreams are made of. Don’t we all?

Every day millions of people dream of being wealthy, what they would do with their days, how they would spend their money and where they would travel however very few people ever achieve the wealth they desire, it seems unattainable, too hard.

It isn’t. You can change your life too, just by adopting these simple habits every day. Think rich, grow rich. It’s as simple as that.

Here are seven daily habits of wealthy people you can incorporate into your everyday life.

Believe That to Get What you Want, You Must Work for it.

Wealthy people understand that to get where you want to be, you must put in the hard work. Of course it can be hard but it will also be worth it.

Keep Your Goals in Sight

Focus on what you want to achieve every day. Wealthy people know what needs to be done today, tomorrow, this month and this year to get them where they need to be. Plan exactly what you want to achieve. 67% of wealthy people surveyed indicated that they put their goals in writing.

Watch Less TV

Wealthy people understand that to take control of their financial situation, they must dedicate as much time as possible to creating positive change. Watching TV is wasting time that can be much better spent reading.

Read But Not for Fun.

If you want to become wealthy you must learn as much as possible about how to get there. Read self-improvement books, business magazines, the finance pages in the news. Arm yourself with as much information as possible. 88% of wealthy people surveyed in a recent study said they read for self-improvement for 30 minutes each day.

Seek Opportunities

Every day be on the lookout for ways you can grow your wealth. Go in search of new clients, connect with people who can teach you, change your home loan provider so you pay less interest. There are so many ways to increase your wealth. Keep your ear to the ground.

Put in Extra Effort at the Office

Go above and beyond at work. Do not only, what needs to be done but find extra ways you can contribute. This will not only give you a positive sense of self-worth, it will be noticed by the powers that be, in turn, giving you the opportunity to move up the ladder. It’s important to note that while 86% of wealthy people work an average of 50 or more hours a week, only 6% of those surveyed found themselves unhappy because of work.

 Keep Your Health in Check

To be on top of your game in any area of your life you must be in good physical health. Wealthy people understand the value in having sustainable energy throughout the day to work hard, chase leads and keep their minds focused.

Know Your Financial Status

Wealthy people are always aware of their financial situation, incomings and outgoings and ways they can be saving more money. Get to know your finances intimately.

If you’d like to know how much money you’re wasting each week that could be put toward increasing your wealth try our Burn Factor assessment. Answer a few simple questions and you’ll know how much you are out of pocket each week unnecessarily.


Key mistakes made by property purchasers

I was recently asked by clients what were the traps of purchasing an investment property by themselves. It was so helpful to them that I thought I would share my thoughts.

So here is my ‘hit’ list of key mistakes we have observed at JDL Strategies when people purchase investment property by themselves.

Inadequate research and preparation

It is important that you do a wealth check so you understand your finances and needs before you start looking for a property.

And then you need to find the ‘right’ property for you. This includes factors like a desirable location with good growth prospects, infrastructure, and quality of construction.

Choosing the wrong mortgage

There are many types of mortgages and many lenders. This is a critical area, as you are locking yourself into regular payments for a number of years. So don’t play fast and loose with your money. Get professional help!

Waiting for the ‘right time’

Yes, the property market moves in cycles, and there are times when conditions are better suited to either buyers or sellers. But one of the biggest mistakes you can make is to wait for ideal conditions. You can be guaranteed not to get ahead financially if you never find the ‘right time’.

Here’s another thought. We have found that the most successful property buyers do the exact opposite of what everyone else is doing. In other words, when everyone else is zigging, you zag!

Stretching your budget

Make sure you have done your wealth check, know how much you can afford to pay for a house, and don’t fall for the trap of stretching beyond your budget for a more expensive property that looks more appealing.

Underestimating the full costs of purchase

The major cost of buying an investment property is the purchase price. But that’s not all! Other costs are involved, like stamp duty, rates, valuation costs, loan application fees and mortgage. Make sure you know all the costs you will be up for before making your decision.

Going solo

Who is protecting your interests? I’m okay, you say. I have a good real estate agent. But the real estate agent acts in the interests of the seller, not the buyer.

Buying an investment property is a big purchase, so it’s important to have knowledgeable advisors on your team. You wouldn’t go to court without a solicitor on your side, would you?

Attempting to self-manage an investment property

Do you know how best to present your property and what is a realistic asking rent? Are you able to source and check the references of potential tenants?

Unless you are an expert, don’t try to self-manage your property. Good property managers are worth their weight in gold and well worth the fee they charge.

At JDL Strategies we have an experienced team that does all the hard work of choosing an investment property for you. We do the research, and can arrange all aspects of your investment, including mortgage and property management. So feel free to talk to one of our client managers today if you would like more information.


Seven habits of successful investors

Do you want the key that unlocks successful investment – the key to becoming wealthy? It’s simple. It’s all about developing successful habits and repeating those actions again and again.

Do you remember Stephen Covey’s book, ‘The 7 Habits of Highly Effective People’, where he described the habits we need to cultivate to be effective as people. Here is how Covey defined a habit:

Habit is the intersection of knowledge (what to do), skill (how to do), and desire (want to do).

If we want to become wealthy, we have to break the deeply ingrained habit of chasing income to cover our expenses and consciously design our financial future. It doesn’t happen unless we make it happen.

So what are the habits that will help us to become successful investors?

 Investment habit 1: Develop your financial intelligence

Most people live their lives matching their income to their expenses, getting a bigger mortgage, and trying for pay rises. The end result? They have barely paid off their home by the time they retire, so what they are demonstrating is zero financial intelligence.

Our key objective at JDL Strategies is to raise the financial intelligence of our clients. We teach them how to invest, how to reduce their tax legally and how to use their new ‘tax benefits’ (after investments are in place) to drive their debt down and start accumulating assets that will deliver them income.

 Investment habit 2: Complete a financial wealth check

To develop a wealth creation strategy and receive appropriate advice from advisors, we need accurate, up-to-date information about our assets, income, debts, lifestyle, goals and constraints.

So make sure you complete a financial wealth check today, and review it on a regular basis. The sooner you get this critical aspect in order, the closer you are to creating financial freedom.

  Investment habit 3: Decide how rich you want to be

If we want to become wealthy, we need to consciously design our financial future. It doesn’t happen by accident! So you need to decide how rich you want to be. How much would you like to have, in addition to your home, when you retire? Come up with a figure. It doesn’t matter what the figure is – it might be $1 million, $5 million or $30 million. The important thing is to have a figure, as then you can measure whether you are on track. Or not!

 Investment habit 4: Develop a wealth creation strategy

Basically, we get wealthier by having a formulated plan to accumulate capital. And then, of course, carrying it out!

So what do I mean by a wealth creation strategy? A serious wealth creation strategy should always link:

  •  debt reduction
  •  tax planning, and
  •  investing

At JDL Strategies our suggested investment strategy, based on extensive experience and research, is to acquire investment properties, and then to diversify into other assets, including shares, managed funds and superannuation.

Investment habit 5: Pay yourself first

So how do you acquire your first investment property? By developing the habit of paying yourself first every week. Yes, you read correctly – paying yourself first. So decide how much you can afford to pay yourself each week. It might be $100, it might be $200 – it is whatever you can afford to build up your capital base so you can start buying assets.

 Investment habit 6: Build and work with a team of advisors

You cannot do it all by yourself. It is important that you put together a team to give you expert advice and support your goals. This includes an accountant, lawyer, finance broker, real estate agent and financial consultant.

Investment habit 7: Stick with your strategy

As you can see, the habits you need to become a successful investor are simple to describe. What’s not so simple is instilling these habits and repeating them again and again and again. How do I know this? Because statistics tell us that only 3 % of people become seriously wealthy. The other 97% end their working lives with their homes barely paid off and around $80,000 in super!

So a critical investment habit is repeating the investment habits over and over again – so they become a lifetime habit.

Do you need a team to help you develop successful investment habits? A team of experts who can help you put together a wealth creation strategy that will make you a millionaire? Email or phone us today at JDL Strategies. You can reach us on 1300 723 580 or go to www.jdlstrategies.com.au


Tips for new and prospective landlords

So you have bought, or are considering buying, your first investment property. What are you expecting? An increase in the value of the property over time? Leverage through buying largely with borrowed funds? Tax advantages and perhaps cash flow if your property is positively geared? Tenants who pay on time and look after your property?

So far, so good. But what are the possible disadvantages? Here are a few – bad tenants (most landlords have a ‘bad tenant’ story), a long vacancy period, and unexpected large expenses (e.g. faulty wiring or roofing).

Okay, so you can’t completely eliminate the pitfalls, but you can minimise them. Here are some tips:

Keep your expectations realistic. Aim towards positive cash flow but also create an emergency fund for unexpected expenses and vacancy periods.

Engage professionals to advise and help you. At the minimum, you need a good accountant and finance broker. Also consider a property manager. While you can manage your investment property yourself, a good property manager can take most of the stress out of the process for a monthly fee.

Have the property inspected by a professional before you buy it. This is one of the best ways to avoid unexpected expenses.

Understand your rights and obligations as a landlord. Check the Landlord and Tenant Act in your State, and make sure you understand your rights and obligations as well as your tenants’.

Do all necessary repairs. The look and condition of your property will largely determine the rent that can be charged and the quality of the tenant you can attract.

Make sure you have the right kind of insurance. Check with an insurance professional to make sure you have the ‘right’ package for your rental property.

Choose your tenant carefully. Ideally, use a property manager or other professional to screen prospective tenants and look after a property condition report and lease. And remember, you have the last say on your prospective tenants.

Always remember – investing in a rental property is the best way in Australia to kick start your wealth creation process. Just make sure you are aware of your rights and obligations as a landlord and choose a professional team to advise and help you.


How to get good tenants for your property

What is a ‘good’ tenant?

For most of us, a good tenant is a long-term renter who pays the rent on time and treats our property with respect.

So what can we do to make sure we get a good tenant? Here are some key tips.

Choose your property manager carefully

Good property managers are worth their weight in gold and well worth the fee they charge. So see who other renters in the area recommend, check out the properties they manage, and talk to at least two property managers before you decide. Key factors are their experience and track record, and whether you feel comfortable entrusting your property to them.

Make sure your property is presented well

You need to ‘sell’ your property to potential tenants, so it’s important that it’s presented well. It also sets the standard that you want your tenants to maintain, so make sure it looks clean, tidy and low maintenance.

Your property manager will be able to give you tips on how best to present your property, and any necessary maintenance or updating.

Set a realistic asking rent

If you set the rent too high, you will deter savvy tenants. If you set it too low, you are doing yourself a disservice.

This is where good property managers come into their own. They know the local market and the rent that is achievable for your property. Just to satisfy yourself about their recommendation, do an internet search of the rents being asked by comparable properties in your area.

Be patient

The first applicant is not always the best tenant. It generally pays to wait a bit longer to find the right tenant.

Reference checking is critical

This is another area where good property managers are invaluable. It is just as important to them as it is to you that the prospective tenant’s work and real estate references check out, and they are not on a tenant default database.

 Get landlord protection insurance

There is no guarantee that even a well-screened tenant will be a perfect tenant. So always make sure you are covered by taking out landlord protection insurance – a small price for peace of mind!


Tips for Refinancing Your Home

There comes a point when most home owners are looking at refinancing, whether that be to assist with the purchase of an investment property or due to the lure of a lower interest rate. If you are thinking of refinancing your home sometime soon, here are a few tips and things to look out for;

  1.  Always do your sums on exit fees

Don’t fall into the trap of thinking a lower interest rate is always going to save you a lot of money. Early exit fees on mortgages can be hugely prohibitive and outstrip any savings that going for the lower rate would have given you. While the Australian government stepped in and banned lenders from charging early exit fees as of July 1st 2011, anyone with a loan from an earlier date (which many still do) may be charged the fees. Even if you will be exempt from early exit fees, bear in mind that your current lender may charge you discharge fees while your new one may charge application fees or other upfront costs. Sometimes that lower interest rate is not as shiny as it appears!

  1.  Check the comparison rate

Advertised headline rates may seem appealing but remember these do not take costs into account. A comparison rate is a much better tool to use than headline rates as it incorporates known ongoing costs so is a better way to compare rates. You also need to know that comparison rates are based on a $150,000 loan taken out over 25 years, so if your loan amount or term is different, this will affect the comparison rate.

  1. How’s your credit score?

It pays to always know what is going on with your credit score and whether you have had any defaults listed recently. It is much easier and cheaper to secure lending with a clear record so keep a track of your score and know what lenders will be seeing when they check it. If there is something on there and you know about it, it is much easier to take care of early and come to the lender with transparency rather than find out at the last minute.

  1.  Check out your current property value

Since the GFC many Australians have found themselves in the lesser-known position of owning a property which has decreased in market value. This can be problematic for refinancing as you may find that you do not have as much equity in your property as expected or you may be pushed into the low-equity zone (less than 20% equity, or often more for those who are self-employed or rural owners). If you are in this position you may find that you are required to pay extra costs such as Lenders’ Mortgage Insurance (LMI). Again, this is a cost that may make it not worth your while to go ahead with refinancing.

Overall, if you are looking at refinancing your home, make sure you do some research into exactly what different lenders are offering and what costs may be included that are not as immediately apparent as a headline interest rate. The better your equity and credit score, the more negotiating power you will have with lenders, so see what they can offer in terms of reducing or eliminating fees too.


Property Investment Australia – 5 Ways to Success

Have you ever wondered how to be a successful property investor? How is it that people on relatively average incomes, with no clear advantage over others get ahead?

Property investment in Australia tells an interesting story; figures from the Australian Taxation Office show that more than 1.2million people own investment property, while data from Run Property, Australia’s largest metropolitan real estate agency show that on average, investors own 1.2 properties each. Very few investors own 5 properties or more (and no, the chances are they are not on huge salaries or gifted large amounts of money!). So what are the key factors that will separate you from merely average to being a successful property investor with a growing portfolio? The main difference tends to be in your mindset…

  •  Unshakeable Desire

One of the first things separating the most successful people from the unsuccessful or average is the burning desire to improve their circumstances. Many success stories seem to have been born from some type of urgency; for example the need to quickly raise enough for a comfortable retirement, single parents desperately wanting to improve their financial situation, or the desire to get away from the regular 9-5 job.

The fact is, if you are quite comfortable with your situation at the moment, you are less likely to create the momentum needed for extraordinary success. Discomfort is a great motivator!

  • Planning

Having a solid plan in place and following it is a key ingredient to success in any venture. A surprising number of Australian property investors really have no plan in place, but have ‘fallen in’ to owning an investment property.

Like any business or investment venture, property investment should be entered with a clear strategy; you should determine your goals and what actions you need to take to get from your present to your desired state.

  • Support

As with any goal-setting, you are many times more likely to put the work in and achieve that goal if you have a mentor or support person holding you accountable to that goal. In the case of property investment this could be a professional property advisor or someone who you trust to hold you to your word and get tough with you if necessary.

  •  Be a continuous learner

Find your property investment style and stick tightly to your investment strategy. The most successful property investors have found a strategy that works for them and waiver little from that strategy. That being said, be prepared that you may make mistakes and ensure that you learn from those. Determine that you will make up for any mistakes with future investments that will more than compensate for any losses made. Perhaps a good way to view any mistakes is as an investment in your future learning.

  •  Take Action!

Finally, one of the biggest separators between the successful and the unsuccessful is the willingness to actually get up and make a move. You will hear many comments such as ‘I’m not buying in this market’, but the fact is that those who follow a strategy, get out there and do something this can be successful in any market.


3 Reasons to Stay with Investment management

The investment management scene has recovered well over the past few years, with professional Investment Managers generating some incredible returns for their clients. However, it is vital that you have a well-structured portfolio which is appropriate for both your personal and financial objectives, as well as appropriate to your level of risk tolerance. This is where a professional Adviser can be worth their weight in gold…

Investment Knowledge

While it is possible for individual investors to do well on their own, the average investor doesn’t have the time or possibly the inclination to learn all of the complexities of the investment scene.

Studies have demonstrated that the track record for individual investors is not encouraging. DALBAR, a leading financial services marketing research firm, released another study this past year revealing that from 1990 to 2010, the unmanaged S&P 500 Index earned an average of 7.81% annually. Over that same period, the average equity investor earned a paltry 3.49% annually!

The difference in wealth accumulation between these two return numbers is staggering. Over 20 years, a $100,000 investment would grow to nearly $450,000 if compounded at 7.81%, while a $100,000 investment would grow to only $198,600 if compounded at 3.49%! It’s important to note, however, that the performance differential had little to do with the returns of the average equity mutual fund, which performed just shy of the index itself, but was most affected by the fact that investors were unable to manage their own emotions, and moved into funds near market tops while bailing out at market lows… Click here to read more

Key reasons for failure include lack of knowledge and over-confidence in their own abilities. A good investment advisor will stay abreast of market developments and know the ins and outs of each investment type so that the client doesn’t have to. They will also tailor your investment package to suit your goals and life stage.

Access to a wider investment range

The average investor is not Donald Trump, stacked with funds and able to enter into virtually any investment arena he desires. Investments usually require a minimum sum to invest. Sometimes these minimum sums are larger than what most investors have, or want to put into a single investment. Investment management with a professional provides access to these investments by way of managed or mutual funds, where funds from multiple investors are pooled to be able to meet the minimum investment requirements.

Traditional bank savings are not always a good plan

Most of us would like to be able to make a maximum return on our money, preferably with as little effort as possible. However, putting your money away in an interest-bearing bank account is a conservative approach and will not usually allow you to make particularly good returns. Sure, performance on the share market and in managed funds has been mixed lately, but if you look at longer term trends in these types of investments, they tend to give a better reward in return for the risk outlaid. Again, ask a professional for your investment management advice, they are trained to offer you solutions based upon your risk appetite.

Australian All Ordinaries Index; 1988 – 2012 (source: Shareswatch Australia)

For the average investor, these are just a few reasons to stick with a fund manager for your investment management needs. Remember that if you don’t want to have to learn such terms as ‘Efficient Market Hypothesis’, ‘Capital Asset Pricing Model’ or ‘Modern Portfolio Theory’, then investment management as an individual can be fraught with hazards and professional advice may be the key to your investment success.