For many of us, 2020 has been a year to forget, but I don’t think we’re going to do that easily.
I’m confident that we’re going to remember 2020 for a long time.
I don’t know when you’re going to listen to this podcast, but it’s almost certainly time for me to wish you a happy, healthy, and prosperous 2021 – a much better year ahead.
2020 brought a lot of its challenges to us, but it’s actually been a great year for me, my family, and my team, as well as for this podcast and blog.
I look forward to continuing this education in 2021, but for today, I want to say thank you for being part of my community, and to share with you 20 lessons I learned in 2020.
Michael Yardney’s 2020 lessons
Each year brings its own set of wins, challenges, and lessons to learn and 2020 was certainly no exception.
It’s been an extraordinary year.
Nobody could have foreseen all that’s happened, including the coronavirus, its economic fallout and the way our lives changed.
But as we head into 2021, I can’t help but reflect on what Australia as a country has accomplished and what I’ve achieved personally, what I’ve overcome, and the lessons I want to carry with me into the New Year.
Here are my top 20.
1. Expect the unexpected.
Every year an unexpected X factor comes out of the blue to undo the best laid plans – sometimes on the upside (like the miracle election result in mid-2019) and sometimes on the downside like Covid19 in 2020.
While an X factor seems to come every year, a major Black swan event as some call it, one that “breaks the world”, tends to come every decade.2.
2. Focus on the long term
Strategic investors have a long-term focus and don’t change their plans based on what’s happening “now”.
In fact, they don’t buy investments that are working now – they investment in the type of assets that have always worked.
Clearly this was the thinking behind Warren Buffets quote “Be fearful went others are greedy and be greedy with others are fearful.”
3. It’s the media’s job to entertain you – not educate you.
Remember… it’s media’s job to get eyeballs on the advertisers’ content, rather than to educate you.
Think about it… how many of those expert’s forecasts this year came true?
But look how many people worried and stressed about the potential outcomes that just didn’t occur.
Unfortunately, being overwhelmed with misinformation led many people to live in a state of fear and anxiety and caused some to make disastrous investment errors.
4. Take economic forecasts with a grain of salt.
If you’re reading something frightening in the business section, or hearing it on TV, or learning about it from your neighbour, it’s almost certainly too late to act—because the information is already reflected in market – in either the share price or property prices.
5. Don’t believe the Doomsayers
There will always be somebody wanting to stall the aspirations of their fellow Australians who are looking to take their financial futures in their own hands and do something about it.
Don’t let them stop you achieving your financial dreams – the doomsayers are always wrong, at least in the long term.
6. No one really knows what’s going to happen to the property markets.
As a real estate investor, while it’s important to have mentors make sure you’re listening to somebody who has not only built their own substantial property portfolio, but someone who has kept their wealth through a number of cycles.
There are just too many enthusiastic amateurs out their offering investment advice at present.
7. There is no such thing as the “Australian property market.”
There are multiple markets in Australia, and each state is at a particular stage of its own property cycle and within each state there are multiple submarkets depended upon price point, geography and type of property.
8. Don’t try and time the markets.
Even though they are armed with all the research available in today’s information age, economists never seem to agree where our property markets are heading and usually get their forecasts wrong.
That’s because market movements are far from an exact science.
And if you think about it, the top and the bottom of the market are really only one or two days or weeks or months in the cycle.
9. The crowd is usually wrong
Market sentiment is a key driver of property cycles and one of the reasons why our markets overreact, overshooting the mark during booms and getting too depressed during slumps.
Remember that each property boom sets us up for the next downturn, just as each downturn sets the scene for the next upswing.
10. Property Investment is a game of finance with some houses thrown in the middle
If you can only afford to own 2 or 3 properties, make sure they are all “investment grade” properties that are working hard for you.
11. Invest for Capital Growth
At Metropole, our 40-year analysis of investment returns shows that properties with higher rental yields generally deliver low overall returns for investors.
Our analysis proved that over the medium to long term, properties with lower rental returns (but stronger capital growth) delivered significantly higher overall returns (i.e. capital growth + rental return), while “cash flow properties” with high rental returns delivered lower ones overall.
12. There will always be reasons not to invest
Where investors get into trouble is that rather than focusing on their long-term goals, they see these crises as once in a generation events that will alter the course of history, when in reality they are just the normal path of history.
13. Property investment is risky in the short-term, but secure in the long term
I found it takes the average property investor around 30 years to become financially independent, but most don’t make it because they can’t stay the distance in part because they don’t have good cash flow management.
Many people get into property investment to improve their cash flow position, but if they don’t have good money habits to start with taking on more debt only compounds the problems.
14. Plan for the worst and look forward to the best.
As a property investor, I protected myself from the challenges that 2020 brought by:-
- Owning the right assets – investment-grade properties in desirable locations.
- Having multiple streams of income from a diversified portfolio of residential, commercial, and industrial properties as well as shares.
- Owning my assets in the correct structures that protected my interests and were tax efficient.
- Having set up financial cash flow buffers to see me through difficult times.
- Protecting myself and my assets with adequate insurance policies.
15. There are always risks associated with investing.
Don’t be afraid of failing, because the biggest risk is not doing anything to protect your financial future.
Sometimes negative experiences, mistakes, and failures can be even better than success because they teach you something new which another win could never teach you.
16. Cautious optimism is better for your investment health than perma pessimism.
Life is not fair – get used to it.
But having said that, optimists are more successful in all areas of life than pessimists, or so-called realists (who are just pessimists in disguise). And this includes the realm of investing.
17. Time is a limited resource – don’t waste it.
On some level, most of us know that life is short, but 2020 taught us and solidified the fact that we don’t get a second chance and the importance of truly appreciating what and who we have in our lives whilst living to the fullest.
18. The only certainty is change
Rather than worrying about all the changes occurring, I’ve learned the concept of having a useful belief about the changes that are happening to me and seeing what good will come from them.
The more I feel in control of my life, the more comfortable I feel and the better I perform in all areas of my life.
19. Worry Better
Forget the saying “don’t worry be happy.” Instead, worry the right way – it’s better than not worrying at all.
You see…worry can play important role in your life, and it doesn’t have to be destructive.
20. This too shall pass.
How often do we need to hear the world as we know it is coming to an end before we realize that the world as we know it has not come to an end.
Links and Resources:
Some of our favourite quotes from the show:
“If you saw it coming, you’d be prepared for it. But no one was prepared for these X factors.” – Michael Yardney
“Strategic investors have got a long-term focus and they don’t change their plans on what’s happening “now”.” – Michael Yardney
“There’s nothing new about these doomsayers – they’ve been peddling the same forecasts for a couple of decades.” – Michael Yardney
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