Developing investment plans – 4 elements that need to be in place for the plan to succeed – Ben Kingsley

In today’s show Ben Kingsley,  founder and CEO of Empower Wealth, shares with us the process he takes potential investors through when he is designing their portfolio. He says there are 4 elements that need to be in place for the plan to succeed.


Kevin:  As a property investment advisor, Ben Kingsley, founder and CEO of Empower Wealth, spends a lot of time developing property investment plans. That’s everything from single properties to very large portfolios. Now as part of that process, Ben believes that there are four essential elements of a personal nature that must be included in the mix to create a successful plan. He joins us to share what they are.
Ben, thank you very much for your time.
Ben:  Thanks, Kevin. Thanks for having me on.
Kevin:  That’s a pleasure, mate. Where does it all start?
Ben:  It all starts with the numbers, and it all ends with the numbers when you’re trying to build out a property investment plan and portfolio for clients. The four personal elements that we’re looking at are income, expenditure, the time we have available, and the target.
If we want to break them down into a little bit more detail, when we’re trying to build out an investment portfolio for a client, we need to understand some essential things:

  • What is the current income coming into the household?
  • Is that income going to fluctuate in terms of maybe mom or dad going off on maternity or paternity leave?
  • Are we going to take some time out for study?

It’s not just about looking at the revision and seeing what’s gone in the past; it’s actually about forward projecting that income.
Kevin:  It could be things like family schooling or buying a car, as well, Ben, could it?
Ben:  Yes, it could, and that’s the expenditure side, Kevin. What happens with the expenditure side is you’re trying to unpack all of those big one-off expenditures, but you’re also trying to unpack the changes that may occur that happen over a period of time. The classic ones are child-care fees turning on and off, buying a car – as you mentioned – and the big one is obviously the private school fees versus the public school fees.
Now, once you understand that, you have an element of surplus cash, and it’s that surplus cash that you’re able to invest because most of us who are investing are obviously borrowing money. We need to make sure that when we’re borrowing money that we can service that loan, not just in the near term, but also over that extended period of time.
Kevin:  I suppose as well as that, too, Ben, there are two areas in expenditure, aren’t there? There are the essential areas and those discretionary areas, as well?
Ben:  Correct. That’s a classic comment there. We need essential needs like shelter, food, clothing, heating, and those types of things. But when we get down into the personal living and the discretionary stuff, that’s the determination that we as individuals need to make about whether we’re going to enjoy that surplus money now, or are we going to put that money into investment?
That’s where the time element target comes into it in terms of how much time have we got to build out a portfolio. With the plans that we build here at Empower Wealth, we actually do a 40-year cash-flow projection.
Now in the accumulation phase, that’s when we can work out how many properties we can actually buy over that term. That’s all to do with once we’ve worked out the income and we’ve worked out expenditures, we know how long we have that income tap on, because when we get to retirement, of course, that income tap turns off, and then we have to live on what is left over in terms of the passive wealth that we’ve been able to build.
That’s the target question. That target question is about how much is enough? If I have more time in terms of the income coming in, then potentially, we have a greater possibility of getting the target higher.
Kevin:  I guess the other message, too, Ben, is that it’s never too early to start and never too late to start.
Brad:  Yes, it is. We’ve done plans for people in their early 20s and we’ve also done plans for people in their early 60s. The reality is that once people realize that they’re going to need to do more around building out general investment wealth and to build out a capital base or passive income, they’re going to have to do something.
Property is obviously an excellent vehicle for that. But it does require really good cash-flow management, and that’s why there are those four essential personal elements that people need to consider when they’re planning out there property portfolio.
Kevin:  Very good advice there, Ben. I appreciate you squeezing us into your very busy day, too.
If you want to contact Ben or any of his team, Ben is also the chair of the Property Investment Professionals of Australia, the peak industry association for property investment professionals.
Ben, thank you so much for your time.
Ben:  Absolute pleasure, Kevin. Thanks for having me on.

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