Do you play to win or not to lose?
In life, there are generally two types of people – those who play to win and those who play not to lose. In property investing, you might play cautiously and invest to hedge your bets, or you might play aggressively to beat the odds.
Your motivational focus is the way you approach life’s challenges and can be described as one of either two types: a promotion-based focus or a prevention-based focus (Halvorson & Higgins, 2013). Individuals with a dominant promotion focus play to win. They are comfortable taking chances, like to work quickly, dream big, and think creatively. In contrast, individuals with a dominant prevention focus play to not lose. They are vigilant, risk-averse, worry about losing, and tend to be methodical, thorough, and accurate.
So, what about you? Are you overly optimistic and self-promoting or retentive and cautious? How does the way you invest reflect this part of your natural tendency?
Identify Your Motivational Focus
What do you think is your dominant motivational force? To try to figure this out, take a second to think about the following questions:
Promotion Focus: Do you prefer to work quickly and generate many different ideas (quickly)? Are you open to new ideas and generally optimistic? Do you seek out positive feedback and feel unmotivated if you don’t get it? Your chosen strategy might be to utilise a number of investing strategies in one chosen location. You are probably the type of person to enjoy finding motivated sellers and discounted property before deciding which of the many property investing tools to use to maximise your returns.
Prevention Focus: Or, do you prefer to work slowly, carefully, and with attention to your accuracy? Do you think about what happens if you fail and do you feel anxious if things go wrong? Do you try to figure out all the ways to avoid failure? And are you more relieved than happy when you finish a challenging task and succeed? For you investing in about the long term – employing one of two carefully chosen strategies such as HMO or buy to let – and magnifying the value of these properties. Rather than jumping around, you love the idea of economies of scale. You are cautious when it comes to re-finance, preferring to leave some money in the deal if it means higher cashflow.
Although it is likely that you are able to adopt either, what you adopt depends a lot on the task and the situation; it is also likely that you tend to operate more in one motivational focus than the other (although there are true hybrids). Most people have a dominant motivational focus that “affects what they pay attention to, what they value, and how they feel when we succeed or fail” and, thus, is an essential part of their every day.
Having met hundreds of property investors, my conclusion about which ones of these approaches you might naturally adopt, is also based on a number of other factors such as your confidence, your education, and your knowledge.
Property education is vital – not just to learn about how to invest wisely and well, but also how to know yourself!
What do you think? Have I made you consider more about your own style? What can you learn from the opposite approach?