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Economic Environments

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Transcript

Economic environments. When thinking of investing, there actually are so many different economic environments to consider, maybe down to a local level, the country itself, where that sits, where it was in previous times, the forecast of where it’s going ahead, all these different predictors and analysts, and then you might even consider what’s happening around the global side of things. There are many people in the shares environment, where so many little things can make huge impacts to certain companies so they’re almost reporting things on a global stance or always considering economic terms and what conditions that are happening, right?

Now, when thinking about property, I’ve noticed a trend amongst some of the first-time investors who are thinking about getting into property. The questions usually don’t resolve around or result around their goals, what they’re trying to achieve, why they’re trying to achieve it, the property, the location. It always is so high in terms of the economy, recessions, what happens in that case, what happening with overseas, China, USA, trade environments, so many macro level things.

Now, what’s important to understand is yes, macro level things are starting the journey for the micro, but there’s always going to be a different micro positioning, where it doesn’t actually impact or form an impact from that macro condition. And example might be lending, right? If there is lending that’s tightened, that impacts everyone on the macro. But on a micro level, there might be a suburb in a city which has well-placed income to house price ratios, and you might be able to purchase then go, “Well, why would lending affect them then if they’re able to afford it, can complete for it, can offer more and increase prices?” Right? Which is why we’ve seen some affordable areas and regions perform so well when lending is tightened.

So thinking of that, yes, there is a macro impact of almost everything. To be honest, not in one time in this world in the history has there not been one thing that’s bad occurring every day of the week. There is some country somewhere that could have some impact to Australia or some data or some statistic somewhere in Australia that’s impacting Australian property as well. So, considering that, you could be saying that almost every day, there could be something new you could find to tell you why not to invest. That’s the difference between those who have gone on to build portfolios that are helping them achieve their goals, helping them achieve things that are even beyond them and their family, good causes and helping them have that freedom in their life. It comes from taking action, but obviously not taking action blindly.

So when considering investing and understanding all the economic factors that are there, you’ve got to also look at all these recessions that have occurred over the past and what has happened to property in certain places during that moment. So property has performed during these previous decades, even the century in Australia when so many different things have occurred. Now, it doesn’t mean you can buy something and ensure that’s going to work out for you. But in means there should be a shift in the mindset that when you do take action to invest for your future, there is likely to be a positive outcome assuming you can get certain checkpoints and balances right. But at the same time, at some point, during any market, during all cycles, there will come a down. I haven’t seen a market that just has a line that just continues to go up. There might be ups and downs. There might be downs and ups.

These things do occur. So, when considering investing, consider all of these, but I would make it even simpler. Prepare for the worst, invest for the best. When doing that, you’re investing with your mindset focused on the goals that you want to achieve because at the end of the day, your goals should be set in stone. But your plan continues to navigate based on these economic environments, what’s happening, and your plan should be in the sand, right? Something you can move, shift, change to suit where you need to go, but your goal must be set in stone.

Then when you do invest for the best, you’re investing for the thought and trying to achieve the best that you can at that given point in time. But you’re preparing for the worst. So what does that mean? Buffers, money aside, not going and purchasing to the max of your range every time. Perhaps you’re working within a range, right? Understanding certain data points to protect yourself from certain rental vacancy, supply, unaffordability. You can prepare the best you can at the time of buy. But I assure you if you keep waiting for that perfect economic condition, well, that’s where you really miss out because every single time, even when the economy has been booming, some areas weren’t booming.

When there was Sydney flying off doing really well, there was parts of Perth doing not so good. When there are parts of Perth that have done well in the time, there’s been other markets not doing so good, right? So not everything is built the same. When investing, when considering these economic environments, understand them from the macro, see where they impact on a micro, but somewhere somehow, someone is buying something and property. How do you put yourself in that position to do more for your family, yourself, and the greater causes you want to impact?

So back to that point. Prepare for the worst. Invest for the best. Your goals are set in stone, but your plan needs to be set in sand. That’s it from us at InvestorKit, the experts in wealth creation, helping you take action.