KnowHow founder Bushy Martin says starting with the big picture and finding ‘Your Why’ is crucial to a successful property investment journey.
As part of the Property WEALTH series on the Bushy’s Property Hub podcast, Bushy explained how having a crystal clear vision of your ideal lifestyle in retirement will allow you to make the right investment decisions and grow your wealth.
Finding Your Why as a property investor
Finding Your Why will ensure you have the right guidance across your investment journey.
“If you don’t know where you’re heading and where you’ll end up, you’re not likely to last the distance, and you’re more likely to chop and change and be at the whim of every get-rich-quick scheme that comes along. Exponential growth that leads to sustainable success is a long term 15 year plus journey, and that’s built on developing your patience and persistence muscles, so you can enjoy the massive rewards of delayed gratification based on compounding growth,” Bushy said.
“Albert Einstein called it the 8th wonder of the world – he who understands it earns it, and he that ignores it ends up paying for it, because it’s a two edged sword. So you can either stay comfortable now and end up very uncomfortable later, or you can make some very small sacrifices and experience a little bit of discomfort now, to end up very comfortable later.
“So having a vivid vision of your ideal lifestyle that engages all of your senses will become both a magnet and a compass. A magnet that will be strong and attractive enough for you to overcome all of the inevitable speed bumps that you’ll incur along the way to ensure you make it happen, but also a compass, as every decision and choice you then make on a day-to-day basis will be guided by whether it will take you closer to, or further away, from your ideal lifestyle. And you need to work backwards to craft an investment strategy that will help you attain and maintain your ideal lifestyle, however you define this, because everyone’s is different.”
How to find Your Why
Bushy explained there are a myriad of ways to find Your Why, and you should choose a method that is best suited to you and your partner / family.
“The options are endless depending on how you best learn, but don’t overlook or shortcut the fundamental importance of getting clear on your why and your vision for your life. If you don’t know where you’re heading and you’re not excited about your future, your zest for life’s great adventure will die on the vine, as you keep doing the same old day in and day out. So get creative and get excited,” he said.
“You can record it and revisit it, so that you’re naturally attracted to bringing it into existence. You can create a vision board like me, write an affirmation, a poem, a letter or a song. You can record it on your phone and play it back to yourself at the start and end of each day, listen to it while you’re in the shower or look yourself squarely in the eye in the mirror and say it out loud to yourself, even if you don’t believe it. But make sure you talk about it in the present tense as though you are already living your ideal life.”
Revisiting Your Why
Bushy stressed that this isn’t a once-off exercise – you need to frequently review your vision and goals.
“Revisit your life vision every year, so that you encapsulate any evolving changes in your wants, goals and desires, as well as re-energising your excitement and enthusiasm to make your vision become a reality. This process is a lot of fun and very inspiring – you’ll get very excited about what your life is going to become, and without realising it, if you keep visualising it and it makes you feel good, you’ll bring it into existence,” he said.
“Now I’ve repeatedly done this throughout my life and it never fails, and every successful person in any sphere that I’ve ever met has done the same thing, by starting with a compelling vivid vision of the end in mind. So just give it a go, I mean, what’ve you got to lose? Yes it’s going to be uncomfortable at first but the secret to growth is to get comfortable with being uncomfortable.”
Finding your Freedom Numbers
The next step is to monetise your life vision and determine how much you need to fund and enjoy your ideal lifestyle. This can be achieved through finding your ‘Freedom Numbers’, which is determined through four key figures – Lifestyle Income, Breakfree Timeline, Nest Egg Number and The Gap.
“So let’s assume that you’re aiming to create an ongoing passive income of $120,000 a year when you stop work – this is your Lifestyle Income. And to produce this consistent level of ongoing income, you’ll need to invest to generate an income-producing nest egg of between $2.4M and $3M based on a 4-5% net return. This is based on the assumption that when you stop work, you don’t spend or eat into your principal savings, but instead you live off the income that your nest egg generates via interest, rent, dividends etc. In this way, you can effectively live comfortably forever without getting into the dangerous territory where spending and eating into your principal savings becomes a negative spiral where you end up with nothing,” Bushy said.
By preserving your investment nest egg principal, you also end up with a sizeable lasting legacy to pass onto your family and loved ones. And this perpetual financial freedom is important, at a time when our lifespans are increasing substantially as we live much longer, thanks to medical and health advances – so it is key to avoid selling yourself short.
“Now $2.4M – $3M in investments at first sounds like a big scary number, but it’s not if you have enough time on your hands. And lets assume that your Breakfree Timeline is 20 years, which is how long before you want to be in a position when you don’t have to work anymore. So now that we’ve set the goal posts, the next thing we need to do is to project where we’re likely to end up if we don’t do anything differently to what we’re already doing, because if continuing to do what we’re already doing is enough, then we don’t need to invest differently at all. However, if there’s a projected gap, then we’ve got the opportunity to do something about it. So to assess where we’re likely to end up, we need to look at our existing investments and project what value they’re likely to be at when we decide to reduce or stop work.”