24 Aug A good investor is a balanced investor

​If I were to describe the types of investors I have seen over the years, it would be something like describing a scale with two extremes.  There are some investors staying within their comfort zone and not taking any chances, on the other hand some constantly on the hunt and jumping into any opportunity without thinking too much about the consequences.  Being either too risky or too conservative.
Both these behaviors are based  on fear, one has the fear of the unknown whilst the other, the fear of missing out.  None of these types of investors are allowing their portfolio to growth to its full potential.

The most successful investor however is the person who can balance themselves between these two extremes.  They are then able to maintain a measured and a much more balanced approach to investing and give themselves the best opportunity to grow their portfolio.
The only way you can achieve that is by having a wealth of knowledge and experience behind you.  You can gain knowledge by reading book, attending seminars, listening to podcast etc but how do you gain the experience.  This is something you get by networking and using experts.
These are some of the habits of a successful investor.  

They start with the right foundation
They have a clear defined goal. They ensure their financial foundation is sound. They diversify their portfolio using a mixture of strategies in a wide range of locations. Successful investors allow for a buffer of emergency funds during the investing journey knowing that the buffer will still be there when they purchase the next property.  Successful investors define long-term goals and ensure their path will allow plenty of buffers so that their first and second investments set them up for the future

They understand the importance of experts.
They create a safe baseline portfolio before getting into the more dynamic stuff. Before getting into a new location, they spend the time in doing the groundwork and they do dry runs to see if it will be a sound investment. They learn from others who’ve blazed the path before them. Often, that means relying on talented professionals in their field of expertise.

They understand the importance of being liquid.
Being liquid allows you to manage risk better. Being liquid allows you to take advantage of any new opportunities without risking everything. It means you can transition smoothly into new markets because you have the security of buffers. 

They understand the importance of diversification
Diversification is a risk minimisation tool.  Diversify the types of properties, the financial institutions, the strategies.  Know the fundamentals so you know when to move in and out of a market.  

Staying abreast with industry/market knowledge.
Tracking the number of construction approvals, keeping an eye on yields, looking out for auction clearance rates and staying abreast of finance movements.
Watching these fundamental metrics on markets of interest will tell you when it’s time to switch your attention from one to the other.  Avoid leap-frogging too quickly into the unknown.

It’s important to gain knowledge gradually – becoming an increasingly sophisticated investor in a measured and organic way rather than rushing ahead just like I did.  Buying the wrong types of properties in my early years of investing set me back quite a few years.
For example, I would not recommend taking on a small development project or a subdivision as your first purchase – regardless of how good it looks. Instead, start with a home or unit and perhaps move into a small renovation or extension after that. Build some experience first.
When you do make it to the small development stage, try an easy project such as a land split before you take on a construction deal.
Successful investor stays between the flags of good sense.

If you’re looking for help to become more successful while being flexible, we’re here to