Hello and welcome along to the property Academy podcast. I'm your host it but night and I'm a general and today on the show. We're going to be talking about goal setting and this is particularly important with it because it's the new year was still in January. And I know that a lot of people are still setting goals thinking about their goals and starting to implement them. So we're going to be talking about first of all what goes into a golden eye. I know we've talked about this a little bit before the new year as well, but it's worth repeating and going back over and go more in-depth into it. And then we're going to be talking about the sort of goals that property investment is a good a good tool to achieve and the sort of goals that aren't we're probably investment isn't it a good tool to achieve that goal. So Andrew we've been talking about well what actually goes into a goal. I've got three things. You've got three things. Why don't you take us through your three things actually know my ones coming next I think. Yeah, sorry lessons and I'm toe and ha ha ha ha. Well, I always say the three things you need are there is simple you want to figure out what do you actually are trying to achieve so property investment is just a tool it's a it's a means to an end. So what I want you to do is start thinking about your end first. Now the in that we're going to talk about today is sending your children to private school. I wanted to choose something that was a bit different from the usual retirement. So, what are you trying to achieve? Achieve then what you want to figure out is when you want to do it by so in this example and this actually comes from a an article that Andrew and I wrote for Juno investment magazine. So we see that you've got say two toddlers now, so they're both three years old you want to send them to a private high school? Well, if they're going to start in 10 years as far as when that's to attend you've got ten years to achieve that to build up the amount of money you need in order to do that. And then third you need to know how much so we'll map that out. Minute, but those are the three things I always say our goal needs what you're actually trying to achieve when you want to do it by and if it's a financial goal how much you're going to need to make that happen now enter what are your two? So my points I think that are really really key when you're sitting a goal is the accountability side of things and so there are two main points to this firstly as visibility and that and that's kind of your own accountability. So so making sure that you have your goal stuck on a Post-It note on your computer screen at work that you've got it on the fridge or Home that you always seeing this goal make it the background of your of your screen on your on your phone or something like that or all of these things just make sure that that's always at the Forefront of your mind so that so that you're jogging your memory that this is my goal and my am I doing something today to kind of get me towards that the other thing is actually having accountability to someone else. So making sure that you tell your spouse or your tell a friend and you make sure That you actually then what you more likely to do it if someone else is going to be seeing you on and saying hey, you know, how is it has that gym membership going whatever it is. And I know some people get a bit worried or scared about wanting to tell people think that they might you might think well, I don't want to tell people what my goal is because what happens if I don't achieve it, that's the point Jinx we didn't even plan that but that's the point because you're going to be able to use that that motivation to not look stupid in front of your friend. To make sure you actually go and do it. Now. What I want to do is walk through especially the what when and how much with it within this the studio investment article that we've got and what I'm really getting at. First of all when talking about goal setting and property investment is that property investment is a very good way to achieve long-term wealth and as we just talked about in the previous episode property investment is not necessarily a good way to get a lot of cash now, so if you want to go out and buy a boat now. Like today probably investment is not very likely a good tool to help you go and do that if you want to go and buy a big boat in 10 years and you want to buy a much bigger boat Rob investment. Great way to do that. So we often talk about retirement. Let's talk about sending your kids to private school because I know a lot of the reason why people want to grow their wealth is for the kids and we actually get a lot of people coming to us when they've just had a header and a newborn baby saying hey Riley, I'd let's let's do something and we probably think that's because because they want to do something for their kids. So let's map this out. We've said the what we want to send to kids to private school that both three years old now, they're going to start when they're 13. We know the wind now is going to take us 10 years to be able to do this. Well, let's map out how much it's actually going to cost to be able to do this. So right now your average private school probably cost just for the school fees about $25,000 a year. I went on to some private school. It's kind of got a bit of an average. That's we've got it from now. Of course, we're not going to aim for 250,000 dollars which is you know, 25k Times by 10. We're going to aim for more because of inflation. So if you are trying to calculate what your how much your 10-year goal is going to cost you now, here's a really Pro tip just multiply it by 1 Point 2 2. So if we assume that inflation is 2% each year and that compounds then it's going to be 22% more expensive in 10 years. So that means that we're estimating that a Year's worth of private school tuition. It's going to cost about thirty thousand five hundred dollars each year, which means we're aiming for about three hundred and five k as how much we're going to do. So, how can you make 305 K in cash over 10 years so you can see and little Jimmy and Jane off to to die o or Kings or wherever you're trying to trying to send them to so what I actually do is it Just compete property investment versus savings right now. If you wanted to make that much money just by savings you'd have to save five hundred and forty eight dollars every week starting right now to achieve that goal and that includes both interest and tax on any interest that you've earned. So we've worked that out. So you could say five hundred and forty eight dollars every week in order to do that the alternative that we've mapped out is to say so you invested in a property. And a property with five hundred and twenty-five thousand dollars and let's say that property goes up at five percent in value Capital Growth every single year compounding over that ten years and bear in mind that the media New Zealand property actually grow over the last over the last 10 years at five point nine percent. So we've been a bit conservative there there. Now. Let's say you did it completely with a hundred percent lending of Leverage your own owner occupier home and put no kashin up front in order to be able to do. Based on what we've talked about over 10 years that property would then be worth eight hundred and fifty five thousand dollars pretty reasonable. So what that actually means is if you didn't pay down any of the principal you were on an interest only loan over those ten years you've now got three hundred and thirty thousand dollars of equity within that property. So what do you do you go you sell that property pay you real estate agent. You've got about three hundred five thousand dollars of cash to put it in a savings account ready to pay your kids. School fees each and every year and then what you do for that is if that's got a little bit of Interest happening on it that's going to pay pay for inflation and you've got that money ring-fence for your kids education. Now, what did that actually cost because you've gone out and bought this property with a hundred percent lending. It's probably going to be negatively geared especially in the first year. So say you're topping it up by fifty dollars a week say well over 10 years and say say that continued for ten years and that's not actually realistic because we know that Properties tend to become positively geared over time because rents increase faster than your cost. Oh, you'd actually have only bought an $28,000 28,600 dollars over that 10 years which in 10 years time is actually going to be less than one year's worth of private school tuition. So essentially you've 10x your Equity or your money. It's about actually 11 times. You will the money you've actually put in through property investment and I think what this comes down to Two is that property investment is a very efficient way of increasing your wealth. That's because enabled in order to get the deposit you're able to leverage your own home. You're then able to leverage that deposit again to buy a much more expensive asset and then you leverage your tenants rent to be able to pay the majority of the expenses on that property when you've set it up in this way. And so there we go in 10 years you seen little Jane and Jimmy off to some cuffs and die. Well, not Jimmy. He will go somewhere else, maybe some kids or something like that or Christ College out down in Christchurch. And that's one way in order to be able to do that. But really what are we saying? It all comes back to when you're you know, we're not saying that you should send your kit necessarily send your kids off to private school or that you you might want to be able to do this. But if you've got a long-term goal three things will five things you need to do figure out what you want to do when you want to buy and then run some rough calculations. Turns to figure out what do you need to make it happen and then consider is property investment the right tool to make that goal happen and if it's a long-term goal that cost a lot of money chances are property investment is probably a good strategy to be able to build that wealth. A great if it let's wrap up the show show there. Now look, please don't forget to write a review And subscribe to the podcast really helps us get the message out to more and more people and hey, if you want to learn more about property with Andrew, and I then why not check out if it guide to mortgages, this is a nine and a half thousand word article that we've lovingly written over the Christmas break to teach you both how to get a mortgage and then pay it off quicker. So we're going to link to that in the show notes and it's definitely worth a read. Thanks for listening to the property Academy podcast. I'm your host Edward night Andrew niccol property Market until this time.
In this episode, we discuss how to set financial goals in 2020. We outline a 5-step process:   What – figure out what you want to achieve  When – decide when you want to achieve it by   How Much – calculate how much that goal is going to cost   Remind – set up reminders of your goals that you'll see frequently   Get Accountable – tell a friend about your goal to make sure you're accountable to it  An example of this would be:    What – Send my two toddlers to private high schools   When – In 10 years once they both turn 13   How Much – $305,000 for 10 years of education, accounting for inflation   Remind – Put a cut out of the high school's newspaper ad on the fridge at home   Get Accountable – Tell your partner or siblings that that's what you want to do. We walk through this exact example within this episode and show how property investment can be the right tool to achieve your financial goals. We also go over that property investment is not the only tool you can use and property is not the right tool for every financial goal. Finally, we also discuss mortgages and our new Epic Guide to Mortgages. This is a 9-500-word guide that you can read to learn both how to get a mortgage and then pay it off faster. 