The Importance of having a goal and a plan

By Matt O'Malley on 18\03\2015

I would describe myself as a goal orientated person by nature. I love to set myself inspiring goals, and as soon as I have ticked them off I don’t lose any time in setting some new ones to replace the ones that have been achieved.

I have met with many successful investors over the years, and this seems to be a trait that I share with many of my peers. However there are a lot of investors who are less focused in their approach and do not appear to have a clear plan or goal. Their acquisitions are more ad hoc and any success is often more from luck than judgement. This type of investor might gradually improve their financial circumstances over time, but they could achieve so much more if they were a little more disciplined in their approach to property investing.

Setting the goal

Setting goals is great fun. The key is to set goals that inspire you. They don’t have to be realistic, based on your present circumstances. It’s all about having a vision of the future that would be your ideal world. Where would you live? What car would you drive? How would you fill your days? Once you have some goals and a specific time frame in which you want to achieve them, the goals need to be costed to find out how much passive income you would need to generate in order to achieve your dream lifestyle.

Setting the time frame

For most of us, the sooner we can achieve our financial goals the better. However the longer your time frame the more you can achieve. Time in the market is an important factor, and I would suggest a minimum of 10 years if you are starting from scratch. This allows for a few years of acquisition followed by a few years of consolidation before you activate your passive income stream. If your desired time frame is shorter it is even more important to have a clear acquisition strategy.

Coming up with a plan

Any future passive income stream from your properties will depend on the size of your asset base. So once we know how much passive income is required and the desired timeframe, we can estimate the total value of property that you would need to acquire in order to generate the desired income. I use some fairly simple software to model various scenarios, and this ultimately dictates my acquisition strategy. I always work off a conservative model, so that even if my properties do not perform quite as well as I hope I am still able to reach my financial goals. And if the properties do perform as expected it means that I actually end up with more money than I need to fund my desired lifestyle.

Staying on track

In order to keep moving forward to your ultimate goal it is necessary to have regular portfolio reviews and financial health checks. I am constantly monitoring my portfolio, but a major review every 6-12 months is necessary. If you are not undertaking a regular review it is impossible to know how close or far away you are from achieving your goals. When you are making projections you are making certain assumptions regarding capital growth etc. Once the time has passed you know how close your assumptions were to reality, and can go back over your spreadsheet and replace the estimated figures with the actual figures to see whether you are still on track to achieve your goals. You can also revise your future growth predictions as new information becomes available.


In the January issue of this magazine I shared my opinion that the Australian property market has become a little less predictable than it used to be. Unexpected periods of volatility can affect markets that previously had appeared fairly stable. If you haven’t got a plan or a goal it is easy to get spooked and to start reacting to short term market volatility rather than focusing on the long term plan and making the necessary strategic adjustments to ensure that you remain on course to achieve your long term goals. If you would like access to the financial modelling soft ware that I use to plan and keep myself on track, contact me or call me direct on 1300 850 038.

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