Questions to ask before building your investment portfolio

For many of us, building a property portfolio is a no-brainer. That’s what you do - own property, build value and then retire, right? Almost. We see so many investors spend their lives building property portfolios, without a long term strategy that gives their property journey a clear purpose and plan.

Thinking of the overall reason you are, or you want to invest in property is easy. Many of our clients invest to create a nest egg that will allow them to lead a comfortable retirement. This is a valid, normal reason to invest – but unless you’ve taken the time to quantify your goal and understand specifically what it looks like monetarily, you will never really know if you’re doing enough.

As the old saying goes, when you fail to plan, you plan to fail. The last thing you want is to get 10 years into retirement and run out of funds to live on. So it’s important you calculate how much you will realistically need, not just to survive, but to actually enjoy living.

At Du Val, we call this part of the investment process finding your number.

Instead of investing in property and hoping that it will be enough to retire on – here are the steps we help each of our clients take to figure out what their number is. It’s the first step in understanding what we’re actually investing towards, so we can plan accordingly!

How much longer do you want to work for?
The first step to calculating your number is to understand how many years of income you have to build your portfolio. There’s nothing like a deadline to get you on your way, and for many people this step alone can be a bit of a wake-up call.

In saying this, for younger folk, it’s important to remember that although 65 is the legal retirement age, it doesn’t necessarily need to be your target. If you want to build your own business or just gain back the time you currently sell to an employer, this could be an opportunity to set yourself a goal that takes place sooner than 65.

What are the things you want to have or do when you retire?
You’re not going to sit at home the entire time doing nothing, so think about the things you actually want to have or do. Whether that’s travelling, seeing the odd movie, to going out to dinner once a week, what type of life you want to live during retirement?

Let’s plan for that.

How much per week do you need to live on?
Now that you’ve imagined your post-retirement life of leisure, think about what kind of salary you would need to be able to do these things. Be aware that there are many financial advisors out there who say you should retire on 70% of your annual income each year. This mindset is silly for a couple of reasons.

Firstly, inflation: you’re planning for the FUTURE. So aim higher than what your current financial situation is. This will also allow you to be financially resilient, should anything unexpected take place.

Secondly, can you imagine arriving at retirement, finally having time to do all the things you never had time for, but then having to budget on 30% LESS than what you live on currently? Be realistic! Your number should cover all the activities you would like to do and the things you would like to have.

What’s your number?
So, what did you end up with? Was it somewhere between here?
$960 per week
($50,000 per year)

For a couple maybe
$1923 per week
($100,000 per year)

This tends to be the most common range for our clients, but we won’t be mad if you’re aiming higher – power to you.
Calculating your number is often the farthest many people have ventured into creating a sound property investment strategy for themselves. So the fact that you’ve done this much, sets you apart already.

The next step is to actually understand what your number looks like in terms of investment property. How many mortgage free investment properties do you need to own to provide this passive income? Is it one investment property, and you’re done? Is it 35 properties? Or is it just a couple?

If you are already on track to achieving your number, congratulations! If you’re looking at the amount of passive income you’ve calculated and you don’t think that you’re doing enough to achieve it, you’re probably right. It doesn’t have to stay that way, though. With a bit of guidance, a network of property advisors working for you and sound investment strategy – with the right drive and commitment you can absolutely achieve the life of leisure you imagined earlier.

This is where the team at Du Val come in. Our network of experienced property and financial advisors are able to walk you through the entire process. From understanding what your financial goals are and tailoring a strategy that to achieve this, to helping you structure and gain the lending you require.

Sound like something you need to do? You’re not alone. The thing is, there is a large number of people who are in the same position as you with the same worry about finances and retirement.

To help bring these people together, we’re holding FREE property education evenings, presented by our Director of Du Val Education Ken Hight.

Du Val Property Investment Education Evenings

During these property education evenings, Ken will walk you through personal goal setting, analyzing your finances, understanding legal structures, types of investment and more. By the end of the one-night-a-week, four-week course, you will have understood what your financial targets are and created a tailored strategy that maps out exactly how you will get there. Also present at these evenings will be an incredibly helpful Registered Financial Advisor, Mortgage Broker and Lending Specialist, who, alongside Ken, will be able to help guide you. The classes are small, and seats are strictly limited, so if this sounds like something you need to sort out to get ahead, make sure you reserve your seat today!

Du Val Property Investment Education Evenings

Presented by Ken Hight, Director of Du Val Education

Wednesday, 9 October, 6.30pm – Module 1
Wednesday, 16 October, 6.30pm – Module 2
Wednesday, 23 October, 6.30pm – Module 3
Wednesday, 30 October, 6.30pm – Module 4

FREE (for a limited time)

Du Val Group offices, Level 2 15 Osterley Way, Manukau 2241.

Note: Each module is detailed and we don’t want you to miss out on anything. To get the most out of the course, it is important you commit to each of the four sessions.