6 Questions to Ask Yourself Before Investing in Property

by Aktive Learning on November 24, 2014

By Gerald Tay (guest contributor)

In a previous article we looked at the 8 Self-Defeating Mistakes Amateur Property Investors Make. The first thing any person should do before investing in property is to complete a personal inventory, by asking himself/herself the following questions:

1. What is my nature and how well am I suited for investing?

Know what you want. Know who you are, not who you think you should be. Self-awareness gives you the power to pursue what really feeds your soul, as well as the belief that you deserve it.

Know the cost of getting what you want. Realise the trade-offs of every choice. People often think that if they are smarter, they can make choices without experiencing any downside. However, the reality is that any road you choose means that there is a road you won’t experience.

Be willing to pay the cost. People often try to negotiate to win without incurring cost. However, every choice involves a price; we get to decide what cost we want to pay.

2. What’s my targeted Rate of Return?

What is the explanation given by people who spend time researching a new car or planning a vacation, but when it’s the time to invest, refuse to learn or engage in any form of research?

Have you sat down to analyse your personal financial statement? How much do you actually need to retire on? What’s your wealth creation plan? What’s your desired Rate of Return to achieve those financial goals?

Don’t just pluck any number from the sky. Sit down with a pen, paper and financial calculator to work out those numbers!

Tip: When people are in doubt, they tend to look to others to confirm their behaviour. Some people would rather adopt others’ opinions than form their own.

3. What level of effort am I willing to put in to reach my goals?

The challenge we face every day of our lives, when we try to accumulate wealth and create financial independence for ourselves, is impatience and our yearning for instant gratification.

Investing is hard work. Growing wealth is hard work. Both require delayed gratification for success.

“Having an education is one thing, being educated is another.” – Lee Kuan Yew, former Prime Minister of Singapore.

4. What, if any, is my investing experience?

How can I learn more? How can I improve? Who are the really successful people I can learn from?

There’s no correlation between good investing and intelligence. Some outstanding investors are quite intelligent, but many are not. Many intelligent people are horrible investors.  Average intelligence is enough.

5. What resources can I bring to bear?

Someone once asked, “How much money should I have before starting to invest?”

The answer is, “No amount too small or too big allows you to sit back and assume your starting capital alone is some secret key to success.”

The key is good financial management and personal discipline to manage those resources. There’s no magic starting capital needed to “win”. Anyone who tells you this is not being truthful. Even if you might have unlimited resources, you might lose to a lack of discipline and poor financial management.

I know millionaires who started investing with inherited money. In each case, they lost it all because they didn’t feel the pain when they were losing.

6. What are my strengths and weaknesses?

Optimism means expecting the best, but confidence means knowing how to handle the worst. There’re no guarantees in property or any investment. Use your strengths in areas you know best.Confidence comes from strength, and success comes from confidence.

By guest contributor Gerald Tay, who is the founder and coach at CREI Academy Group Pte Ltd, an organization dedicated to empowering retail property investors with smarter investing philosophy and strategies. He is a full-time investor with over 13 years of solid experience in building his wealth through Property Investment and is financially wealthy today. Posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property Beginner’s and Buyer’s Guide.

Related Articles

8 Self-Defeating Mistakes Amateur Property Investors Make (at Propwise.sg)

What Transaction Volumes Tell Us About Investing in the Property Market (at Propwise.sg)

Understanding, Measuring and Comparing Rates of Return in Property Investing (at Propwise.sg)

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