4 Steps to Creating Your Own Portfolio Growth Plan
The Property Portfolio Growth Plan is a unique tool that’s changing the game for property investors all across Australia. Learn how to create your own portfolio growth plan.
Katie sought Dashdot’s help in achieving a pretty standard goal:
$100,000 in passive income…
And a portfolio value of $2 million in 15 years.
So, we got to work.
First, we looked at how much money and credit line Katie had. She had $75,000 of cash available, and a borrowing capacity of a million dollars.
Second, we looked at her savings rate. She’s been saving $2,000 per month regularly – a very common savings rate we see across our clients.
And third, using all this information about Katie’s starting point, we built a portfolio growth plan that would help her achieve — exceed, even — her passive income and portfolio value goals.
We discovered that in order to achieve $100K in passive income and $2M in portfolio value, Katie needed to purchase six properties over the course of seven years. Her purchasing window will be from August 2023 to June 2030. And then… she’ll do nothing for eight years after that.
That’s a pretty accurate plan, don’t you think?
Well, that’s exactly what makes the Property Portfolio Growth Plan extra special. It maps out a super specific path forward to where you want to be five, ten, 15, 20, or even 30 years into the future.
How Does a Portfolio Growth Plan Work?
As you might have observed from Katie’s story, a Portfolio Growth Plan is a strategic investing plan that’s built on a person’s goals. It takes into account how much money you want to be earning… and how big your portfolio needs to be in order to achieve that profit target.
Notably, it takes the guesswork out of property investing.
With a portfolio growth plan, you won’t just be purchasing property after property, crossing your fingers that they will all end up in your favour.
Instead, you’d know exactly how many properties you need to buy, how much equity you’d have to pull from them, and over how many years so you could hit your income and portfolio value targets.
And the best part?
This article will teach you exactly what you need to know in order to create your own portfolio growth plan.
The 4 Steps
Step #1: Identify your big goal
Just like we did with Katie, you first need to get clear about your goals and hopes. If it’s $100,000 in passive income and a $2M portfolio in 15 years, for example, then you already have an idea of what your portfolio growth plan would look like.
Your big goal could also start as something intangible.
Perhaps you’d say you want to retire comfortably within the next 10 years. If so, the next thing you need to do is translate that goal into tangible figures. Ask yourself how much money you actually need if you want to retire in 10 years.
It’s important for you to know the numbers and figures that would make your big goals a reality. After all, preparing a portfolio growth plan is a highly scientific process. So, if you want an accurate plan, your big goal must also be precise.
Step #2: Get as much clarity as possible on your financial situation
Apart from gaining clarity on your hopes and goals, you also need to be clear about your current financial situation.
So, how much are you earning at present? What is your borrowing capacity? And additionally, what is your risk appetite? These are factors that would determine how you’d be moving forward with your investing plan.
Looking at your financial situation would also help you determine whether you’ve set a realistic goal for yourself.
For instance, you could say you want to retire with $4 million in the bank after 10 years. But you don’t really have a lot of savings… and you’ve used up all your borrowing capacity.
This tells us that you might have to reassess your goals. Perhaps you need to extend that retirement timeline… or set a lower retirement fund target.
Step #3: Create a plan on how much value your portfolio should have
After considering your risk appetite and financial capacity, the next step is to figure out how much portfolio value you need to target in order to achieve your goals and hopes.
Starting with the end goal in mind will allow you to determine how many properties you need to invest in and how much you should earn from each property. It will also tell you when you need to start investing and at what pace for you to hit your goals by a specific timeline.
Step #4: Build an automatic model as your growth plan
Now, here’s the crucial part:
You need a growth plan that will automatically adjust its results if you adjust your inputs like profit goal or borrowing capacity. Otherwise, you’d be forced to manually calculate those results every time to need to tweak something, like perhaps a higher savings rate.
This last step is a challenging one. As such, you might need professional help doing it.
After all, developing an entire software just for your personal growth plan won’t be worth it at all. It makes more sense to partner up with a company that already has software that will help you create your portfolio growth plan.
Let’s Start Planning Your Journey Towards Success
Finding success as a property investor is not a walk in the park. The reality is, you’re going to need all the help you can get.
And a property portfolio growth plan can help you start things off on the right foot.
Doing trial and error, as many rookie investors out there tend to do, can delay the realisation of your dreams and derail your timeline. So, set yourself up for success by having an accurate plan of how your investing journey should go.