Article By Fiona Morris
Wednesday, November 27, 2019

Start at the end

Playing the long game; it’s a phrase many people have heard and probably used when talking about education, career, business and especially wealth. The idea behind it may be no sexier or more exciting than saying you have a long term strategy that you follow consistently. But it’s certainly a buzz term that is still a winner.

Building a long term strategy

The idea of formulating a 10, 20 or even 30+ year plan may seem daunting. Especially when you’re sitting there with a blank spreadsheet in front of you wondering how to transform your current savings, investments and assets into a plan that will deliver you a life of financial freedom.

And it may seem counter intuitive but long term planning needs to start at the end, not the beginning.

Ask yourself these questions:

  • What are your long term goals?
  • What do you want your life to look like?
  • What do you want to achieve?
  • What makes you happy?

Imagining your life in 10, 20 or 30+ years, this will give you clarity on what you are aiming to achieve. Write down those goals – be clear, specific and detailed.

Now you have a clear picture of where you are today and where you want to be at the end game.  Your plan is what gets you from A to B.

What does your financial freedom look like?

Getting from A to B

Working within the parameters of where you are today and where you see your end game, it’s time to start building the path between – this is your long term strategy.

Consider your time frames, your financial situation, your risk appetite and what you’re willing to sacrifice to make it happen.

Look at yearly and five-yearly plans, because although this is a long term plan you need to make sure you are meeting your objectives along the way to those goals. It is vital you build in shorter-term objectives to keep you on track for the long term.

Long term strategy with short term tactics

Although you’re here to play the long game, that doesn’t mean your plan is set and forget. In fact, it could be beneficial to your plan to work with short term tactics to maximise the profit from each investment.

Why use short term tactics?

Looking at short term tactics in property investing, the evidence shows the majority of price growth happens within the first 2-3 years.

If you are nimble with the tactics you use it will ensure you are buying and selling at the right time to maximise your investing potential. This will allow you to exit a property investment as the price flattens out and invest your newly acquired capital into another property investment that is set to grow.

Newcomb, Vic shows the most price growth occurring in a 17 month period.

These short term tactics can benefit the smart property investor by ensuring once the investment property has gained good capital growth over the short term, you can sell. This avoids being stuck with a property through periods of low or no capital growth.

Short term tactics for long term success.

Strategy is always about the long game and to build real wealth it is important property investors have thought about and documented their long term goals and the plan to get there.  Rather than the buy-and-hold fable that is prevalent in Australia, smart property investors use short term tactics, getting and out of the market at the right time to maximise their profit.

If you want to best understand when to use short term tactics, subscribe to TUDI’s Investor Plan for property market insights.