Aaron Christie-David says investment-based decisions need to be made with conviction and without too much hesitation.
Aaron is a mortgage broker, author and the owner of award-winning Atelier Wealth.
In his experience, many investors can falter in their decision-making because of fear, doubt and a lack of confidence.
On the Get Invested podcast with KnowHow’s Bushy Martin, he provided insight on how investors should tackle a range of decisions.
Investment decision: Should I invest?
Fear will often deter potential investors from purchasing a property and investing in their future.
“I’d say fear drives more decisions than confidence. So if you ask people, should you invest in your future? That’s what super is, it’s a no brainer. Clearly, because it’s even mandated that we have super to invest in our future. Now is buying an investment property an insurance policy for the future, so that you’ve got something to fall back on? Absolutely. So why don’t we all do it? It’s fear,” Aaron said.
“The tenants are going to trash the property, the property price is going to fall, the rates are going to go up, negligence, it’s going to cost me an arm and a leg in maintenance etc. And so I often say that buying a property holds up a mirror to your greatest fears, doesn’t it? You see that answer when you’re talking to someone, and it just spills out. And it’s like okay cool, let this out. You know there’s insurance for that, there’s protection against that, and you can rationally address these. But that fear is an irrational fear and it’s highly emotional.”
Investment decision: How much should I borrow?
Aaron said investors can often make the mistake of not borrowing to the maximum.
“It can sound irresponsible, but I’ll give you some perspective and put it into context. People will go, I don’t want to borrow too much, and I’m like, well, the bank already does a serviceability buffer on that. They buffer up your living expenses, they buffer up your credit card. So the bank has done a stress testing for you. That’s one part. But if you borrow just a little bit more and you’re able to buy a better home, that’s what I’m talking about,” he said.
“So I had a client, and I said to them, look, you can borrow this, but you’ve actually got the borrowing capacity to go here. Now that means you actually buy in a better street, in a better location and a property that’s already renovated, which means you don’t have to spend money on those renovation costs. And if that means you don’t have to move again, that means no selling agents fees and no stamp duty in the future again.
“And I tell this to young people – I’m like your income’s only going to go up. Young professionals, they’re white collar and educated, so I’m like, this is the lowest your income’s going to be. So don’t be afraid to take on a little bit more because your income’s already going up over tim, and you’re going to be able to service this loan.”
Investment decision: When do I enter the market?
Investors who delay their entry into the market will miss out on optimising their wealth generation.
“The other mistake is that people leave it too late. And then they now have children and they’re trying to buy, which is the worst scenario because one partner’s part time and they’ve got two dependents on the bank’s calculator. So double income with no kids is the sweet spot because you’ve got the best income and you grind through that phase. So get into the market, spend a little bit more than what you think you need, and it means that you don’t have another move in you, that’s not a bad outcome right now,” Aaron said.
Investment decision: Where should I get advice?
Aaron learned from experience that great opportunities can be missed when investors don’t ‘ignore the noise’ and take on the opinions of others.
“So when I got my redundancy from Wizard, I met with a lady called Jacinta. Now everyone will know her name, but at the time no-one knew her name. She got the franchise agreement for Anytime Fitness in Australia, and I was going to be amongst the first handful of people to get an Anytime Fitness business in Australia. She had one on George Street and she met me personally in a coffee shop, and I went back and told all my friends about this concept of the 24 hour gym. We’re talking around 2008. And they said, are you mad? No gym is going to be open 24 hours. So I think at that point, listening to other people was to my detriment and I missed a great opportunity,” he said.
“Naturally, if I had enough conviction in my own heart, I should have done it, so I can’t blame others and I need to take personal responsibility. But I missed the shot that I didn’t take. But I think at that point it really cemented in me the concept of ‘no pay, no say’. So if you’re not paying my mortgage, then you don’t have a right to say where I buy or what I buy. That’s my decision. Same for weddings – everyone’s got an opinion on someone else’s wedding, but I’m like, if you’re not paying for it, then don’t have an opinion on it and stay in your lane.
“And in our job, we see when we’ve got people that overstep their boundary lines, and it makes our jobs probably infinitely harder to convince our client because someone of trust, whether it’s a family member or another advisor, has mentioned something that goes against the grain of what we truly believe in and makes it difficult for us to float an idea. So I’m really big on ignoring everyone else’s noise. You do what you truly believe in, and that conviction will get you the success that you’re after.”
Listen to the full interview here.
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