Investopoly

When working out a retirement strategy, often people try to work out the value of investments they will need by multiplying the amount of annual retirement income they will need by a nominal interest rate. For example, if you want $100,000 p.a. in retirement and you think you can earn an income rate of say 3% p.a., you’ll need $3.4 million of net investment assets. The more aggressive you are with your interest rate assumption, the fewer assets you need to meet your goal. The reverse is also true.Beware, there are a couple of pitfalls with this approach.It results in a lazy asset allocationIf all of your investment assets are invested in cash or fixed interest investments (such as government and corporate bonds) in order to generate a stable income, you have little protection from inflation. This is because these investments do not provide any capital growth. All their return is provided in the form of income and your capital stays the same – think term deposit.This means that over time, your assets will be worth less and less in real terms – because of inflation, your purchasing power is reduced. For example, $1 million today will be equivalent to $477,000 in 30 years’ time assuming the inflation rate averages 2.5% p.a. over that period.People are living longer. Medical technology is improving at an increasing rate. Therefore, we must consider the likelihood of living to age 100 and beyond. To ensure you don’t run out of money, you must ensure you invest in assets that provide some capital growth so that your money at least keeps up with inflation and hopefully increases over time.You must account for taxesOf course, you must account for any taxation liabilities. If all your money is inside super (and your balance is less than $1.6 million), then no tax will apply if you draw a pension. However, if you have assets outside of super, you will need to account for any income tax consequences. The good news however is that an individual can earn approximately $20,500 per year before they need to pay any tax. Therefore, hopefully you can share any personal income between you and your spouse to minimise any taxation liabilities. My point here is you must think carefully about ownership structures i.e. where your investments are held. Super is excellent, but you don’t want to put all your eggs in one basket. Putting all investment assets in one person’s name also typically isn’t very wise in the long run.Markets will go uMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Question one: What didn’t work well in 2018?When planning, a good place to start is to ask yourself what were the one or two things that didn’t work well in 2018. Maybe you planned to sort out your super and didn’t get around to it? Or maybe you didn’t have a good enough handle on expenses (spending)? The idea is to identify one or two big things that didn’t turn out how you had hoped and develop a plan for rectifying them this year. Here’s two tips:1. Often, it’s not a what, but who question. The best way to find a solution to a problem is not by asking “what steps do I need to take” but “who has solved this problem previously that can help me”. Seeking advice or experience from someone that has been in the same situation you will save a lot of time and help you avoid repeating common mistakes. People such as family, friends, colleagues or an independent advisor could help.2. Who’s going to hold you accountable? Creating some sort of accountability has a massive impact on the likelihood of someone achieving a goal. When you set a goal, you must set a deadline and then have someone hold you accountable for achieving that deadline. That could be your spouse, friend, accountant or an independent advisor.Question Two: What are the one or two things you need to achieve in 2019?All of my financial advisory clients have a very clear understanding of the one or two priorities that they need to focus on/achieve this year in order to achieve their longer-term goals. This could include reducing/offsetting debt by a predetermined amount (through good cash flow management assisted with software), investing a certain amount in super, making regular share investments, investing in property or similar.The key question to ask yourself now is “what can I do this year that will have the largest impact on my financial position by 2030?” This will force you to take a long-term view and not be distracted by short-term worries or noise. Don’t try and take on too many goals in 2019 – you really only what one to three goals. And if you are struggling to develop a long-term plan then grab a copy of Investopoly and follow the 8 rules outlined therein.Question Three: Are you safe and secure?It is very important that you periodically consider the things that are in place to protect your wealth and family and the start of a year is a perfect time to do that:· Are your wills up-to-date? Are your executors still wMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Last weekend, The Australian newspaper published the blog I sent you last week where I predicted that the property market is close to the bottom and that prices next year would either be unchanged or improve slightly. Well, that article received over 60 comments and none of them were complimentary or supportive of my prediction. Upon reflection, I wanted to share some very important comments and observations.Be aware of the story you are telling yourselfI am almost certain that 95% of the people that commented on my article have never invested in property and probably never will. They desperately want to prove that their decision to not invest was correct; “See, the market is about to crash. That’s why I didn’t invest!”. So, when there’s an opportunity for support the idea that investing in property is destined for failure, they jump at it.Successful property investors tell themselves a story too. Most investors will say that the market will be fine in the long run so there’s nothing to worry about – it’s all just media hyperbole.With this in mind, I would like to make two points:Be careful that you don’t fool yourselfOnce you understand that humans are susceptible to only seeing things (data, media, ideas, etc.) that validate the story we are telling ourselves, you must be careful to not be too one-eyed. One of my favourite sayings is “hold strong opinions, loosely”. Always leave room for the idea that your story could be wrong.Be careful who you listen toIt is interesting to note that the economists that don’t invest in property themselves (personally) tend to always hold negative views about the property market. The ones that do invest in property tend to be more balanced. Also, negative property views make perfect clickbait and some commentators have built a career out of holding perpetual negative views – because it garnishes media attention. So, be careful who you listen to.In short, people that voice very strong views tend to do so to defend (validate) past decisions.The chorus is getting stronger for a loosening in credit policyEveMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

I think we are very close to the bottom of the property market – if not already there. In fact, I believe that price growth next year will be positive. I appreciate that this prediction is contrary to most, if not all the predictions in the marketplace – most notably AMP Capital’s chief economist, Shayne Oliver predicted last week that property will fall by a further 15%. I explain my view below.Predictions are worthlessThe largest and longest study of expert predictions was undertaken by Professor Philip Tetlock in 2003. He studied 82,000 predictions over 25 years by 300 selected experts. Tetlock concludes that expert predictions were only slightly more accurate than random guesses e.g. coin tosses. Interestingly, experts with a greater media profile tended to do worse than their relatively unknown peers – which maybe suggests you should give more weight to my prediction than Shayne Oliver’s above. My new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Paul Nugent, the co-owner of Melbourne-based buyer’s agency, Wakelin Property Advisory, sadly passed away recently. I first met Paul back in 2004. Over the past 14+ years, Paul and I have given many presentations, shared a large number of mutual clients and have had numerous conversations and debates about property investment.Not only was Paul a true gentleman with an encyclopaedic knowledge of the Melbourne property market, he had a fantastic sense of humour (although I never dared to say that to his face). I really enjoyed working with Paul and he'll be sadly missed. As you can imagine, over the past couple of weeks, I've been reflecting on the information and knowledge that Paul passed on to me through conversations and interactions. And this has inspired me to write this blog. I'd like to share with you the three things that Paul Nugent taught me about investing in property.Paul’s lesson 1: Some properties just take timeAs Warren Buffet says, "The stock market is an efficient device that transfers the money from the impatient to the patient." And that's the key ingredient for any robust, long-term investment strategy. That is, time and patience.However, patience should not be confused with apathy. Of course, it is important to review investment performance and make sure that your assets possess the requisite fundamentals to deliver performance. This will give you the confidence that you have the right assets to help you achieve your financial and lifestyle goals. But, as Kenny Rogers says, you must “know when to hold them and know when to fold them". So, if you do have an impaired property, no amount of patience will make up for a poor-quality asset.Paul would also often would remind me that some assets just take more time. And it’s patience and having faith that the fundamentals of an asset that will ultimately deliver long-term returns.This concept is most applicable to entry-level investment grade assets. A lower quality asset (yet still investment grade) tend to take more time to deliver adequate investment returns. Therefore, if you own an entry-level investment grade asset, you will just have to have more patience and let time do its thing. Sometimes, this might mean that you need to hold onto a property for a couple of decades before you're satisfied with its overall return – so consider this when mapping out your plans.I recall conversing with a very experienced and wealthy property investor and he was telling me about a pMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Nice family homes in blue-chip suburbs are becoming increasingly difficult to acquire from an affordability perspective. This also puts pressure on one’s capacity to fund an investment strategy whilst repaying a large loan. So, a few years ago, a strategy called ‘rentvesting’ was popularised. But this has some limitations. I have formulated an alternative strategy which I’ll call livevesting.What is rentvesting?Rentvesting involves renting a house in a location where you would like to live. One that has all the lifestyle benefits and amenities that you desire, thereby freeing up as much cash and equity as possible to allow you to invest in pure investment locations. Investments that you can make without needing to consider lifestyle considerations.In reality, there's a couple of challenges associated with rentvesting.Firstly, there's an emotional consideration. That is, some people feel more comfortable living in a home of which they own rather than renting. To some people, rent money feels like dead money.Secondly, schooling can be a concern. There's not a lot of certainty with respect to the longevity of the renting relationship. That is, the landlord can decide to sell or occupy the property and not renew your lease. If that happens, you've got to find a new home. And if your children are attending a school in that location, then you’re forced to find another house close to their schooling. That can be difficult at times, depending on what sort of rental stock is on the market.And lastly, the other complication with rentvesting is a possible change of mind. If you implement a strategy that requires you to rent for the next twenty years, what happens if you change your mind in five years’ time? You might find that because you have exhausted your borrowing capacity, you’reSpreading yourself too thinOne of the challenges that people are finding today, especially in light of the tighter credit market, is that they could be spreading themselves too thin. That is, their borrowing capacity might restrict them from being able to afford the size of home or location that they truly desire. Plus, their borrowing capacity might restrict how much they're able to invest once they have purchased their desired home. In this situation, sometimes people are seduced into compromising on the quality/location of both home and investments. In this situation, it's possible for people to end up owning two or three very average quality property assets.A new strategy: LivevestingIn short, an alternative strategy is LivevesMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

With the tightening in credit and the reduction in borrowing power, many investors capacity to invest has been adversely impacted. For example, an investor who planned to invest in two properties worth say $750k each might find that when it comes time to purchasing the second investment property, they can only afford to spend say $400k due to a contraction in borrowing capacity.This begs the question, what do they do?As I see it, they have four possible options:Reduce the budget for the next investmentInvest in a regional or outer-suburb - so you can still get a house for exampleConsider other investments such as a regular gearing strategy into a portfolio of low-cost index funds.Wait to see if things change - will credit loosen up? Will your financial position strengthen? Will expenses (school fees) disappear?I discuss these options in the below video and explain what approach I think is best.The theme of my message is twofold:You must NEVER compromise on the quality of your investments. Only quality assets will produce quality returns.Typically, there’s more than one strategy to build wealth. A quality share portfolio is better than a sub-quality investment property.An astute investment strategy should be robust and flexibly enough to navigate inevitable market challenges such as a tight credit market.My new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

No one wants to buy at the peak of the property market! Imagine if you buy a property and then a month later property values fall and it takes more than 2 years to recover to the amount you paid for it. That two years of holding costs (interest) for no gain. Would you kick yourself if that happened? This begs the question, how important is property market timing?How important is good timing?I used the graph below to pick two points in time to measure the importance of “good timing”.See chart here. You will notice above that the median property price in Sydney fell between December 1988 and Dec 1990. Similarly, in Melbourne, the market fell between December 2007 and March 2009.I considered the question; what if you had a crystal ball and instead of buying in 1988 in Sydney or 2007 in Melbourne, you held out and purchased a property at the bottom of the market in 1990 in Sydney or 2009 in Melbourne? How much better off would you be?The table below illustrates the difference in equity and overall percentage returns over the total holding period.See table here.The percentage returns look significantly better. However, in fact, the dollar value difference isn’t that significant at all. The investor with poor timing in Sydney still has over $860k of equity in his property (versus $915k for the perfect investor). In Melbourne, the less successful investor has $255k (versus $325k).This suggests that timing really doesn’t have a huge impact – even if you get it terribly wrong. In fact, the longer you hold onto your investment, the less timing really matters. I propose that if you plan to hold your investment property for 20 years or longer, timing is irrelevant.Equity could have easily been zeroImportantly, these investors that had “poor timing” could have been a lot worse off. Imagine if they hadn’t invested in property at all? In this case their equity would have been zero!No one knowsThe fact of the matter is that no one really knows where the market is now (peak or otherwise) and what it will do over the next 2 to 3 years. No one. Zero. Nil. Zilch!The largest study of forecasts thMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

You must have a robust methodology for selecting the right share, property or bond to invest in. If you select the right asset, your investment returns are likely to be very healthy in the long run.However, if you make a mistake, it is likely to cost you money – in terms of opportunity cost and/or in real terms.The best way to prevent making a mistake is to use a methodology for selecting the right asset that is proven to work. In this blog I outline the four different methodologies and the two that I think are best to use in combination, where possible.There are four different asset selection methodologiesThere are many different asset selection approaches which can have their own subtleties and idiosyncrasies. However, every methodology can be broadly allocated into four different categories:1. Value investingThis involves identifying assets or sectors that are intrinsically undervalued. Markets are not always perfectly efficient and sometimes assets transact for amounts less than fair market value. This could be due to factors such as a motivated seller, misinformation, market sentiment (fear) and so on.2. Growth investingThis involves identifying assets or sectors that have high growth prospects. This approach is less concerned with the price paid for the asset compared to its appraised value - it’s all about the idea that you can buy this asset today for $x and that price will look cheap in the future after the expected growth has materialised. This methodology requires you to form a view as to what the future growth opportunities could be which is often highly subjective.3. Fundamental investingThis approach involves identifying the assets or sectors that have the strongest underlying fundamentals such that the asset quality is extremely high. This approach is less concerned about the price paid and usually the assets growth prospects might be already reflected in the current price. The thesis underlying this strategy is that investment returns are directly linked to asset quality i.e. you can only expect above average returns from above average quality assets.4. Technical analysisThis approach involves looking for trends in data and statistics (such as price movements and volume) to identify assets and sectors that are expected to deliver above average returns in the shorMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

There has been a lot of commentary in the media about the “credit crunch” that we are in at the moment. Why is the credit crunch going to impact you and your plans? And what can you do about it?Why has credit tightened?Over the past year I have written (here and here) about how the government has tightened up lending standards in an effort to cool the property market and reduce the volume of interest only loans. The reason for this is that they didn’t want Australians over-borrowing whilst interest rates were very low, and they didn’t want investors speculating in the property market. They have certainly achieved their aims. The property market has cooled and investor and interest only loans have fallen dramatically.The RBA is out of touchThe RBA seems to be comfortable with the credit tightening as noted in its most recent minutes:“They noted that most borrowers took out a loan that was substantially smaller than the maximum loan that lenders were prepared to offer; three-quarters of borrowers had taken out loans that were less than 80 per cent of their maximum borrowing capacity based on serviceability considerations. This suggested that relatively few borrowers would have been constrained by the tightening in lending standards that had reduced maximum loan sizes to date.”The RBA’s comment is ridiculous because this statistic doesn’t include the fact that many borrowers would have had loans declined. And, of far greater importance, many prospective borrowers would have been told that they would no longer qualify for the borrowings they desire by their mortgage broker or banker and in these cases would never proceeded to a formal application. So, to say that relatively few borrowers have been constrained by the credit tightening shows how out of touch the RBA is and that is a worry!Anecdotally, I estimate that a least 30% of our clients have been impacted by the credit crunch i.e. they are willing and able to borrow more but cannot do so. Given that our clients almost always have higher than average earnings, the broader market has definitely been significantly impacted.Applying for a mortgage can be like a crMy new book out in mid-2026: To join the pre-order waitlist and get a bonus. More info go to: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at questions@investopoly.com.au. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.