Saver To Investor Making The Transition

Making The Transition From Saver To Investor

Some people have no issue at all with investing and yet for others the thought of investing is terrifying. 

For those who have experienced fear related to the uncertainty of investing or their partners have experienced procrastination and worry on the topic of investing I hope that this article helps to turn that procrastination into decision. 

Most people understand that we all need to invest if we are going to retire without being under the control of the government’s old age pension. That is why schemes such as superannuation were created. However, there are still many people who, given the choice, would not invest in a managed fund like a standard super fund.

So why do some people find investing so daunting?
Before we look at a solution, it is important to understand where the fear is coming from.

When Uncertainty Becomes Worry And Procrastination

I feel it is important to first understand the major obstacle present for most of the people that do not invest, and it is uncertainty.

Some worry in our life is important, life is a dangerous place, and it behoves us to remain wary. But when worry and procrastination prevents us from experiencing all the joys in life, building security for our families and being all that we can be, something has to be done.

Worry has a habit of only telling us half of the truth and that is why knowledge is worries enemy. Be willing to seek council from people who know more than you do and your ability to outgrow your present comfort zone will be made that much easier.

Our Comfort Zone

We all have different comfort zones for everything in our life. Comfort zones have a huge impact on our careers, relationships, health, and finances.

Our comfort zones are created by our experiences,

Our experiences are created from our habits and actions,

Our habits and actions are governed by our self-image.

The reason it is so hard to break through our comfort zones is because it is hard wired to the person, we believe we are. If we are experiencing difficulty in breaking through a comfort zone, it is because the perceived risk that it will change who we are is too great.

The Saver

Saving money, particularly for real estate, can be a very long process for many Australians.

Many saving for a home loan prefer to keep the funds in a standard bank account as the perceived risk of losing it is very low.

I say, ‘perceived risk’, because many savers do not factor in inflation to their savings plan. However, it is telling of the importance a saver puts on the security of their savings. Most savers want to be as conservative as possible.

Saving involves a lot of discipline and sacrifice over an extended period of time. This builds into a habit and for many it gets harder and harder to let go of the savings they have worked and sacrificed so much for.

The Homeowner

The transition from saver to homeowner is not too hard for many savers. This is because it is usually socially acceptable to be a homeowner and there is usually a sense of deep pride of what they have achieved. More importantly there is a stronger belief that one is still in control of those savings once they are invested into the home.

Many Australians strive to pay extra on their home loans to pay it off as quickly as possible. This again is usually a very socially acceptable practice, and it aligns well with their long-term savings habits (or Comfort Zone) that have formed.

Again, the perceived risk is low because they feel in control of the asset.

Many homeowners also enjoy the luxury of being able to refinance their homes to make renovations or purchase a new car from time to time.

This is important to understand because a homeowner may feel they are putting that luxury of refinancing their home at risk.

The Investor

The transition from homeowner or saver to investor is another story for many people.

Many social circles and family units have a limited knowledge of investing and therefore the perceived risk in these circles can be very high. Finances are still widely a taboo topic within social gatherings so the opportunity to speak openly about one’s thoughts is limited and often when it is mentioned it is met with scepticism and warnings.

The thought of refinancing their home, the symbol of all that hard work and sacrifice to purchase a property that someone else will live in is a scary proposal for the homeowner.

Likewise, the thought of the saver giving up their hard-earned savings for a property they will never live in is also a daunting thought.

Image source: Pixabay

Making The Transition

The secret to making the transition from saver/homeowner to Investor is to create a vision for a future that is not only in harmony with one’s beliefs but is also in harmony with creating wealth.

It is all about perspective and focus.

Knowledge and Understanding

Build your knowledge in the area of property investment. If you are investing with someone else such as a partner or family member, make sure that they too are seeking the knowledge and the understanding to make wiser decisions.

A word of warning, be mindful of who you get your knowledge from. Do not fall for the get rich quick schemes, investing is a game of patience and time.

There is no quick solution.

Goals

Create long term goals that are in harmony with the life you would enjoy. This long-term perspective will quickly prove to you that it is not change that should be feared, but rather staying on the current course.

Zoom out your focus to see what future awaits you and your loved ones if you did invest. Likewise, zoom out your focus and see the future that awaits you if you do not.

Investing in property is not for everyone. It is important to make that decision based on the facts, your own financial position, your goals and most importantly, not to let fear stop you before you have begun.

Hopefully, knowing that people are not alone in feeling uncertainty about investing and the understanding of how comfort zones are created gives more people the motivation to build a vision of a better future for themselves and their loved ones.

Disclaimer: The views of the author, either expressed or implied, may not represent the views of Astute Property Network Pty Ltd. Every effort is made to ensure the accuracy of the information contained within this document. The information is not intended as financial advice and does not take into account your personal financial position or needs. You should always consult your financial specialist before making any changes to your finances.