Welcome to 2022
It’s been an interesting first few weeks of the year that’s for sure!
Novak Djokovic dominated the headlines, the Aussies dominated the Poms in the cricket, and many businesses have been stretched by staff shortages as we adjust to the new ‘normal’.
Personally, I am excited and grateful for the progress we are making.
I hope all of you got the opportunity to see loved ones. My wife and I were fortunate enough to spend our holidays catching up with friends who had travelled from Canada to Australia; something that’s been practically impossible for two years.
I also got to spend the past weekend in Melbourne visiting my little nephew for the first time. He was born in December and, for most of 2021, trips interstate were next to impossible.
I’m also excited because I took the opportunity over the break to reassess my goals, giving me fresh motivation for a new year.
I devoted a big chunk of my book Bulletproof Investing to explaining the importance of goals.
To me, successful and happy people move through life with purpose and direction, as a result of the bold and emotive goals they set for themselves. The majority of people don’t do that; they live day to day, week to week, meandering their way through life.
Effective goals are emotive; you can see and feel them, they create a positive feeling within you, even inspire you.
Effective goals also have a deadline to them. It doesn’t feel real until there’s a deadline. That’s what triggers the emotion and, most importantly, the motivation to get moving toward the goal.
Over the Christmas break my wife Hannah and I put aside some time to review the goals we had set for ourselves the year prior, review our progress and reflect on what we wanted our goals to be going into 2022.
We were fortunate enough to achieve a lot of the goals we had set, and we celebrated those achievements.
Then there were goals that were ongoing, for which we had made progress, but weren’t there yet.
Finally, there were some goals that we didn’t achieve (e.g. still waiting for our pool to be built!). And that’s okay, too. While goals need a deadline, you can’t get wedded to the deadline—it’s going to happen when the universe thinks you’re ready for it to happen. You can only do your best and, while it’s certainly important to reflect on whether you could have done anything differently, it’s more important to make sure the outcome of the goal is something you still really want.
We ended up setting new goals, tweaking some of the goals we were still aspiring to, and even scrapping some goals that were no longer important to us.
For the last few years, Hannah and I have done some goal planning together. I found that daunting at the start, but I think it’s important to try and include your loved ones in your goal setting. There’s often some overlap, there’s normally an opportunity to be held accountable, and there’s almost always goals that benefit the people you care for.
The first time we talked about goals together as a couple, I was a little surprised that Hannah didn’t share the same emotions as me when it came to some of the goals I was working on. We needed to figure out what was important to both of us, as well as our separate ambitions. We can now cheer each other on in the pursuit of our joint or individual goals.
Finally, once I have set goals, I break them down into small milestones and achievements. The bigger the goal, the more daunting it can seem. Therefore, it’s important to break it down into smaller, achievable, shorter-term milestones that you can aim toward. I try and set weekly, monthly and quarterly deadlines for the smaller milestones, and celebrate them as I knock them off throughout the year.
If you’re interested in setting some goals, trying to set goals and looking for some help, or even have set goals and want to make sure you achieve them, you can download my FREE goals workbook HERE. I’ve used this workbook for more than a decade to help me set, work toward and achieve my goals.
One last thing. I mentioned at the start of this blog that I am excited and grateful for the progress we are making as a country. That said, I think it’s going to be a bumpy ride for the first part of 2022. But I am extremely optimistic of what lies on the other side. We’ve just got to get through this next little stage.
I think it’s going to be important to look for the positives in every situation (however small) and not get too bogged down in the things you can’t control, and instead focus on taking one step at a time.
Offset or invest?
Q – We own our home (with a mortgage) and have put together quite a bit of savings which sits in an offset account against our mortgage. We are thinking it’s only making/saving us 2 per cent sitting there, so wonder if we should be investing it into property. What do you think? If we did that, how much cash would we need?
A – First of all, you’re clearly good savers which is the best money habit you can have!
I don’t know what your home is worth and how much debt you have, but I would recommend looking at whether you’re eligible for an ‘equity loan’ in the first instance.
An equity loan is a loan you can take against your property, which can be used for investment (in your case a deposit and costs on an investment property) in place of using your savings.
That way you can do both; invest and have your savings to continue offsetting your non-deductible home loan debt.
Your bank should lend you up to 80 per cent of your property value.
That would mean, if your property was worth $1 million the bank would lend you up to $800,000.
If you only owed $600,000 then there is up to $200,000 you can access as an equity loan to go and invest (you’ll just have to be able to demonstrate to the bank that you can ‘service’ the debt).
In terms of how much you need as deposit and costs for a property, general rule of thumb is that you’re going to need a 10 per cent to 20 per cent deposit, and 3 per cent (if you use a 20 per cent deposit) to 5 per cent (if you use a 10 per cent deposit) of the property price for your costs.
On a $500,000 property you’re going to need between $75,000 and $115,000 for your deposit and costs.
First port of call should be to sit down with a broker/banker and find out your borrowing capacity. All the best for your journey.
James Fitzgerald
Author, BULLETPROOF INVESTING
