The question most people with money are asking themselves at the moment; how can I protect and preserve my cash? Better still, how can I use my cash to my advantage?
Back in 2008 I was working as a financial news reporter and I witnessed first-hand the panic people had when their cash was at risk. Do you remember staff leaving Lehman Brothers with their stuff in boxes and the queues of people waiting outside Northern Rock Bank when the fear set in and people thought their savings were at risk?
I do. That memory has always stayed with me. It’s one of the reasons I am passionate about financial security and why I have written this article.
We are not seeing a run on the banks and most people with cash are sitting comfortably, or so they think. But in the background inflation is eroding your capital. As costs rise the value and power of your money is deteriorating. In this article I am going to talk about one of the ways you can protect and grow your wealth; property investment. I am not going to talk about why property investment is an ideal choice, although I have other articles that do. Instead in this article I am going to highlight some of the mistakes I see high net worth investors make and how you can avoid them. As Eleanor Roosevelt famously said; “Learn from the mistakes of others. You can’t live long enough to make them all.” With that said, let’s get cracking…
Trust
I am going to make the assumption you already have property investments or at least plan to. Let me ask you a question, and this applies to any of your investments. When you made your last investment did you trust the person or the product? When you were last advised on buying a buy to let property was it the numbers and the property itself that drove your decision or did you trust your advisor and they felt it was the ideal investment so you agreed? This may seem minor but it is actually major. I have met multiple investors over the years that have made their investment decisions heavily based on their advisors. I don’t blame them, I completely understand the behaviour. After all, don’t we put our trust and faith in the people around us for a reason? On a daily basis I advise clients on matters. There has to be some trust. So I am not saying don’t trust. Instead I am saying trust but verify. As a journalist by trade I always need a source. I cannot make a statement without having the data to back it up. And I expect nothing less from the people around me. Whenever I am looking at investing in a piece of property for myself or my clients I am always looking for the data and evidence to lead my decision making process. It may seem uncomfortable at first to question those around you. But ultimately when you are investing your cash you need to be comfortable you know why you are doing it. Having substance behind the decision-making process is essential and is often lacking due to the second mistake I come across often with high-net-worth investors …
Financial Literacy
We don’t know what we don’t know. And I often find the wealthier the client the less likely they are to ask about what they don’t know as they don’t want to appear uneducated and feel silly. I get it. It’s never nice when you ask a question and the person who has slightly more knowledge than you makes you feel small and stupid by replying in a certain tone; we’ve all been there. As I said earlier, I started my career as a financial journalist and I discovered finance is a world of jargon that a lot of the people in the finance world don’t actually understand. My job as a news reader was to get to the crux of the issue and make it simple. Real estate is no different. There are key elements in the process and metrics to understand. More importantly though, understanding why you need to know these things. You may be able to reel off a bunch of numbers but if you don’t understand what they mean in context then you are leaving yourself and your cash exposed. There is no silly question, you just need to find the right person to ask. With knowledge you have potential power. If you do nothing with it then you are just knowledgeable, but if you apply it then you will avoid the third mistake I see high net worth investors make ….
Leaving Money on The Table
In essence I am talking about underutilising your investments. One of the many things I like about property investing is you can do a lot to sweat the asset and maximise your return. However, I meet a lot of high-net-worth individuals that aren’t making the most of their investments. They have no idea just how powerful their cash is, particularly in this market. They are just looking at the monthly return instead of comparing the compounding element of real estate with other investments in their portfolio.
As Henry Ford said; “If you always do what you always did, you’ll always get what you always got.” And that’s often the problem. Because property over time is seen as a safe investment people don’t see that often their investment properties could be doing so much more. Buy to let investors are settling for good when great is available.
My aim with this article is to give you tangible action steps. If you have buy to let property, take a closer look. How are you measuring its performance and who is doing it for you? Is there a list of questions you would like to ask in confidence? Are you satisfied your returns are the best they can be in the area you are invested? If not, what can you do to further steady your investment?
When you really tap into real estate and if you have cash to invest then the next few years will be a real opportunity. Final quote, and I am sure you saw this one coming from Warren Buffett: “Be fearful when others are greedy, and greedy when others are fearful”.
I would add to that; before you expand make sure what you are doing is working and increase your knowledge where you can. Utilise the expertise of others but never go in blind, it will hinder your confidence and in essence your growth.
If you would like somebody to ask those questions to or you want to do a sense check on what you’re already doing then feel free to check out my website; www.kellylemon.com
Or if you would rather watch from a distance then drop me an email and I will add you to my newsletter list where I share nuggets of information on a regular basis.
Kelly Lemon
