“Investors need to keep an eye out on international markets” says some commentary.  Sure.  But realistically who does that 🙂

What you DO NEED to know is where funds come from to support our banking system.  And a lot of it is NOT from our domestic market.  But rather from overseas.

It’s always important to see how the overall market is performing in Australia, but according to the Housing Industry Association (HIA), investors and even home owners, who intend to go for another loan need to keep an eye out on something bigger than the Reserve Bank of Australia. Here’s why.

To purchase an investment property, your own home, upgrade or downsize or even request a loan extension for some home improvement – you need a loan.  Well 95% of us choose to use leverage rather than expose large chunks of equity at one time.

Without loans, we would have a much harder time investing, and even though we would be investing from Australian banks, HIA’s principal economist, Tim Reardon, believes not only should the state of the Australian economy be considered when securing a loan but also the global economy at large.

According to Mr Reardon, this is because Australian banks are only as strong as the conditions that allow them to give out loans, which is influenced by the global market as well as conditions at home.

“The costs of finance to Australian banks is as a consequence of cost of borrowing globally, and what’s likely to play out in the next couple of years is that there is a timing of that money supply,” Mr Reardon said at an industry briefing.

“Post GFC, there was a flush of both loose behind monetary policy and loose fiscal policy which gave us a money supply volume that was largely unprecedented post Second World War, so that would give us the only point in time where we would have a reference to look at, to see what happens when you start to restrict that supply of money.

“As those US, UK [and the] rest of the world pick up and they start to tighten their fiscal policies and they

start to tighten their monetary policies, that supply of money tightens, the cost of borrowing for Australian banks increases,

so regardless of what happens with the Reserve Bank, the cost of borrowing domestically is likely to rise.”

For example, when the Nasdaq Stock Exchange experienced a fall in February, Mr Reardon said that this was felt globally with a curbing of the supply of money.

Other influencers, the principal economist said, include how major international trading partners are keeping Australia up and not down; the growth of India overtaking China; and how the pressure for interest rates to go up rather than down is being felt globally, not just in Australia.

So what does this all mean?  Interest rate rises are coming.  Rates will go up over next 12 months and longer – not down.

We have bottomed out and the global economy fiscal tightening is a simple supply versus demand effect.  As accessing a limited supply globally becomes harder – the costs to do so increase which in turn results in higher costs to the banks and this in turn is passed on in the form of higher interest rates.

Higher rates are coming.  In fact increased rates have already started happening in the Australian lending market.  You need to understand your investment and finance strategy and ensure you have a plan in place to deal with these changes.

I know it’s a bit late – but HAPPY LAST FQ.  Now is the time peeps to review the last 9 months.  And prepare carefully for the remaining 3 months of the FY.

Not only will this determine how you conclude financially – but it also can determine where you may be in 12 or even 24 months time.

Here are the Top 10 Questions I’d suggest you answer for yourself in order to be in the best position for financial success in the next 12-15 months:

1.  Has my financial position improved over the last 12 months (since April last year)?

Why since April last year?  This allows you to determine patterns and benchmarks.  If you only review the last 9 months (current FY) then you miss any important data based on your similar position this time last year.

I review in Quarterly blocks (so read and analyse quarterly reports) focusing mainly on P&L (or income / cashflow) and then asset allocation.

Review firstly by overall ownership or entity structure.  And then break down to analysing individual asset and income lines.

2.  If it’s not improved then why not?  If it has, why has it?

If nothing has improved write down why not.  Be honest – because hiding the truth from YOURSELF is just plain dumb!  If it has improved, what happened to improve it.

3.  What financial result do you want to achieve in 2 years from now?

Why 2 years from now?  If you are considering borrowing funds for asset  or capital expansion, or even to enhance cashflow, then lending parameters are often based on a historical 2 year review.  So you need to have a good idea (always open to change of course) of what you want to be experiencing in the short term.

10 years is often too far – and only really applies if as part of your planning (as I do) include retirement and superannuation planning.

4.  And 12 months from now?

1 year is an excellent short term target which I’d strongly encourage you to break down into quarterly (3 month) reviews.

5.  If nothing changes – will you achieve the 12 and 24 month targets?

Make sure you are clear and honest with yourself.  And even more powerful, be honest with your partner (personal or business).  If you do nothing and continue as is, will you achieve your 1 and 2 year targets?

6.  If nothing changes, what do you NEED to change?

In your analysis, if you’ve determined that by doing nothing, making no changes and leaving everything as is (effectively sticking your head in the sand) that you will NOT meet your 12 or even 24 months targets.  Then what do you need to change.

And this point, don’t get concerned or scared about HOW you will achieve it.  Just identify what needs to change.  The HOW and WHO answers come later.

7.  Can you do it yourself?

Are you a DIY person or do you get the best results having someone guide you and also hold you accountable?  I know PLENTY of people who choose to struggle.  Because in their mind it’s important to find the answers themselves and ‘bumble along’ hoping (praying) that they’ve got it right.

And if that’s you – fine.  As long as you are sincere and work through these questions you are giving yourself a great chance to improve.

However, if like most of us, we are more concerned with security, peace of mind and having choices – then identify that’s the case and acknowledge that maybe you ‘could’ do it yourself – kind of, sort of.  But you know better, faster and safer results will come from being guided be someone who is already getting the results you want.

8.  What or Who do you need to help you achieve these targets?

Do you need a DIY framework?  A set of guidelines and structures to achieve what you want.  You feel if you had the templates and an explanation, then you are enough of a ‘self-starter’ that you will be fine.

If not, it’s not a question of ‘What’. It’s a question of ‘WHO’.  Who do you need to get the results you want and to help you impact your business, your family and improve your lifestyle.

9.  Are you prepared to commit to your targets or are you really just kidding yourself?

This is a great question.  Is all the answers you’ve written down so far, fair-dinkum.  Or are you just blowing smoke up your butt?  Are you committed to change?  If you are – then things are gonna change.  Or are you too scared (or to egotistical) to make a change.

Either way – again be honest with yourself and if you are serious about helping your loved ones, then commit and take action.

10.  What date will you finalise your finance & investment plan mapping out the action steps to your goals.

Write down the date in which you will FINALISE your finance and investment planning.  Not the date in which you are going to start.  You already have started.  But the date in which you want to have completed your Finance, Investment & Lifestyle Plan.

From here you will know the weekly, monthly and quarterly action steps you need to take to get the results.  Commit to completing your plan.  And work backwards from there.

The LIFETIME FINANCE & INVESTMENT SUCCESS Online Course is ideal for those DIY’ers who want the templates, the instructions to do it themselves.  This program is FULL of Bonuses, videos, tutorial, etc etc.  You enjoy LIFETIME access and can re-watch, re-do anything anytime.  And get all updates forever more.

Or the PERSONALISED 1:1 CONSULTING Program is tailored to your personal, business & financial position.  By Application ONLY, work with me for 3 or 12 months.  With minimum monthly personal finance & investment strategy sessions, ongoing weekly contact PLUS you get access to the Lifetime Investment Success Course COMPLIMENTARY as a private client.

CLICK HERE TO LEARN MORE ABOUT THE LIFETIME FINANCE & INVESTMENT SUCCESS ONLINE COURSE

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Before you can even consider the benefits of successful investing.  There is something else you need to understand.  And that is the SECOND point I’ll cover.

Whilst I have covered the importance of a Disciplined Investment Strategy in the past – this is an outline of what this actually means.

However, the First Point is you need to understand is that you need to actually have an Investment Strategy first.  So what is that?

I have spoken with thousands around the world over the last 15 years and have personally coached hundreds of investors and business owners.  And what is missing in SO MANY finance & investing concepts – is a Strategy.

I believe that a Strategy is different from a Plan.  A plan is generally a set of step to achieve a specific outcome.  Whilst a Strategy is bigger picture. 

A good Investment Strategy considers other internal and external factors – so is more holistic.

So consider this – you want to go out to dinner with your significant other.  So you put together a plan.  I’m not talking about some written lengthy document.

But even unconsciously you are working with a plan.

Choose a night, pick a time.  Select a venue.  What to wear?  Going out afterwards?  Transport.  What’s on the following morning, etc etc.

Whereas the Strategy entails “If I complete the plan [going out to dinner]…Then what”  What is the BIGGER picture of this plan.

This plan being a set of action steps.

Your plan can be adjusted can’t it?  If the venue is booked – go somewhere else.  If you’ve both had a bit too much to drink – no driving.  Get at taxi.

So your plan can be adjusted to meet the strategy.  

I have gone into more detail on Strategy.  And feel free to ask me any questions on this.  But for now – Point 2.

Point 2 is the Discipline.  This is second step where most investors fail.  The MOST common failure is, as above, lacking any plan or strategy to start with.  Then when they get something like a plan – fail to follow or measure it.

Discipline is a great word.  It means “controls that is gained by using or following rules.”

Some people have great self-discipline.  Some below average.  But often this self-discipline is about the WHY?  Is it important enough?  If something is important enough to you – has enough meaning and horrible consequences you will stay disciplined.

But if it’s kinda “meh!” then it’s likely self-discipline will be a challenge.

Some, in fact most people, magnify their performance when working with others.  This is simply because the human spirit is not designed to be alone or operate by itself.  Who says that ‘Discipline’ has to be done alone.

How many ‘Fitness’ and ‘Weight Control’ groups are out there?

Having someone as a sounding board.  A mentor or coach.  Or just someone you trust.  To help keep you focused, following the plan and keeping you on track.

That’s why people pay Personal Trainers, Coaches, Consultants, Play in Sports Teams, etc.

Disciplined Investing is about working to a strategy.  Following rules & guidelines.  Even if you don’t feel like it.  But you MUST UNDERSTAND and take RESPONSIBILITY for what is happening.

A Disciplined Investment Strategy is achieved through regular, frequent ‘check-ins’.  Helping you stay the course.

So a recap – First – actually develop or have someone help you, develop your own personalised Investment Strategy.

Second – get support around ‘staying on track’.  Do it yourself if you have the self-control & focus.  Or accelerate your results and minimise the mistakes by getting someone (or others) to help you out.

There is always the balance of ‘do I buy my own home first or an investment property’.  Well what if you could save yourself between $10-30,000 for your investment property.

And it doesn’t even have to be your first IP.  Could be your second or tenth.

It all comes back to your personal values and lifestyle goals.  But there is a way in which you can get a financial ‘leg-up’ in purchasing an investment property.

And here it is:

You purchase this investment property firstly as your owner occupier or principle place of residence. 

If you buy a place to live in – with a view of turning it into an investment property in the short term, then there are some great advantages that ‘may’ suit you.

Here are 6 reasons you might just find this will work for you:

1. When you purchase property you are subject to Government Stamp Duty.  This is significantly less if the property is to be used by the purchase to live in, rather than rent out.

For example in Qld – Total fees for the purchase of a $450,000 property as an Investment is $15,370.80.

The same property when purchase to Live In attracts much less Fees of only $8,195.80.

That’s $7,175 in difference.

Now how ling would it take you to save that extra $7,175.

2. Now the news gets even better is you are a First Home Buyers.  In most States, First Home Buyers are EXEMPT from paying Stamp Duty at all.

In Qld – you are only required to pay transfer fees totalling just $1,195.

In NSW you are only up for $328 bucks.

So compared to buying as an investment there are potential savings of at least $15,000

3. Next one.  First Home Buyers Grant.  Again in most States there is the FURTHER BONUS of receiving the First Home Buyers Grant (if indeed you are a first home buyer).  This can be up to $15,000 or even $20,000.

If you used $15k as a yardstick – there is potential savings so far of $30,000.

That’s $30,000 that you DO NOT need to have to purchase your investment property, simply using the interim step of purchasing it to Live In first.

4. The 6-year rule.  One of the other benefits of owning your own home is the Tax Office rule of Capital Gains Exemption.  Meaning that if your home goes up in values and is worth more when you sell than when you bought – you are not required to pay any tax on the Capital Gain.

If you turn your home into an investment property well – it’s no longer your own and if you sold you would need to pay the tax on the Capital Gain.

HOWEVER, if you rented for this period and you intend to at some point move back in – you may be able to still benefit from the Capital Gain Exemption rule as long as you sell with 6 years (the current ruling) of when you bought it.  BONUS eh!!

5. The last benefit is – that the huge savings you’ve made when buying your home can be further enhanced once it becomes an investment property.  Because any short term losses or deductions should now be tax deductible – including the Interest you are paying on your loan.

What started out as a non tax deductible, personal loan can now be transitioned into an Investment loan where the Interest should now be 100% tax deductible.

6. Oh – and a BONUS reason.

Using rent to reduce the mortgage.  And I guess one of the last opportunities could be, depending on how your loan is structures, you may be able to using surplus income or rent to reduce the investment property loan.

** And if you DO move back into this property to live in – your non tax deductible mortgage is now less.  Double BONUS!!

Now the above is a scenario.  Which may or may not be suitable for you. 

I wanted to give you some ideas as to things you can achieve when thinking outside the box.

All good ideas like this firstly come from having an Investment plan linked to your own Goals & Dreams.  If you want to get some Clarity around YOUR goals and DREAMS – book in for your FREE Finance & Investment Clarity call.

Using the link below.

FREE Investment Clarity Call – Book A Date & Time That Suits You

Good luck.

We had only strapped our cross-country skis about 2 hours before hand.  And for some of us (me included) it was our first time cross-country skiing.  For me it was basically like hiking.  I still had a pack on my back, carrying food, water, tent, sleeping bag, etc – but instead of walking I was in snow and skiing across the top.

After just  few hours one of our guides pulled us up and started some instruction in what to do if you got caught in an avalanche.  What to look out for, how to survive and what was required when searching for someone.

Rather than share the whole story, we had stopped in this small valley rift where avalanches had happened within the last few days.  So it was a good place to practise and learn.  HOWEVER we all got a big shock when there was an almighty “CRACK”.  We looked up the slope to see a snow slide gathering momentum.

As it gained speed it impacted so many other things.

Rock was caught up, as were trees.  It kicked up snow drift and vision was impaired.  It seemed to both suck the oxygen out of the air and yet fill the air with snow gusts all at the same time.

It got bigger and seemed to get out of control very quickly.  We all managed to get out of the way before it reached us and we had front row seats as it slowed down and deposited a massive volume of snow at out feet.

So how, Duncan is this anything like investing, I hear you ask?

Well understand this.  Just like in physics – for every action there is an equal and opposite reaction.  If you have not developed, and then actively manage a finance and investing plan – just like an avalanche – one single, seeming harmless decision can have a rolling impact to so many other things.

And before you know it, opportunities are missed, profit is destroyed and sometimes the wind is just knocked right out of you.

When you invest you need to consider:

• What Result Do You Want From Your Investment – Growth or Cashflow?
• What Timeframe Do You Want The Result To Happen In?
• What Is Your Available Equity or Borrowed Funds You Can Use?
• What Is the Ownership or Entity Structure You Wish To Use?
• What Are the Short and Long Term Tax Implications?
• What Are ALL The Investment Options Available That Could Meet The Above Criteria?
• FINALLY – Be Prepared to Adjust As You Need To So You Can Achieve The Best Result Possible.

I don’t believe there is ever one perfect investment.

You need to understand your Personal Lifestyle Goals FIRST, the Investment RESULT second and then be prepared to adjust as you go.

Because one poorly informed or rush decision WILL HAVE a flow on impact to all the other areas of your finances, investments and personal life.

And I’m sure you don’t want to be under a pile of snow – wondering why you didn’t both planning ahead.

An adjustable and well-informed investment strategy CAN SAVE your life – it can support the people you LOVE and it can help provide experiences that are most IMPORTANT to you.

Invest Intelligently.  Live Authentically.