Most Investors Can’t Explain Their Strategy - How to Build One That Survives Any Market

Ryan Smith
2 days ago
8 min read

Introduction

Most investors believe they have a strategy. But when you ask them to explain it clearly, things usually fall apart. What many describe as a “strategy” is often just a mix of assumptions, opinions, and habits that haven’t been tested against reality.

You’ll hear familiar lines like:

“I buy in good areas.”
“I’m focused on growth.”
“I invest for the long term.”
“I prefer passive income.”

These statements aren’t wrong; they’re simply incomplete.

On their own, they don’t form a strategic framework. They’re preferences, not plans. And because of that, people often make decisions based on what feels familiar or what matches their existing beliefs, rather than what actually aligns with their goals.

Left vague, they’re little more than hopes or general attitudes. If we read into them further, we can see some deficiencies:

“I focus on growth” becomes strategic only when you specify what kind of growth, in what areas, under what risk settings, and why that aligns with your long-term goal.
“I invest for the long term” matters only if you can articulate what short-term volatility you’re prepared to accept and how your financial structure supports long-term holding.
“I prefer passive income” is an outcome, not a plan - unless you define how much, by when, and through what portfolio structure.

A real strategy is something you can articulate, repeat, and apply consistently - even when the market changes.

This article explores what an effective investment strategy actually looks like, why so few people define one properly, and how you can build a framework that fits your situation and stands up in any market.

Getting started - investor strategy

When people describe their “strategy” using the phrases we covered earlier, they’re usually not describing a strategy at all - they’re describing outcomes.

They don’t tell you what to buy, why to buy it, how to fund it, or what risks you’re accepting. They also don’t help you make decisions when the market changes, which is where most investors get caught out.

To build a real strategy, you need to go deeper. You need clarity on:

Your objective (wealth, income, portfolio size)
Your risk tolerance
Your time horizon
Your borrowing capacity
Your property preferences (new builds, existing, region, etc.)
Your financing settings (interest-only? P&I?)
Your exit options and assumptions

These ingredients are what turn vague intentions into something that can actually guide decisions.

Building the strategy: Joe and Emma

Let’s put this into practice using an imaginary couple, Joe and Emma.

They’re 45, own their own home, and want a retirement that feels comfortable rather than constrained. With busy lives and full-time jobs, they’re aiming for $100k in passive income, but at the moment, they’re relying heavily on KiwiSaver. Based on their current salaries and contributions, their KiwiSavers are only projected to deliver around $26k per year from age 65 to 90.

There’s a clear gap between where they are and where they want to be.

To close that gap, we need to actually understand who they are as investors, not just what they want, because that is how we build a tangible strategy. Let's break this down step by step.

Their objective

Joe and Emma want a retirement that’s funded by a predictable, reliable income. They don’t want to build a large portfolio for its own sake. There is a clear goal: to produce a passive income of $100k, and there is no suggestion that this couple is interested in speculative investments, nor building an ‘empire’ so to speak; they are interested in building a portfolio that will allow them to live comfortably.

Risk tolerance

Before they look at a single property, they need to understand how much risk they can emotionally and financially handle. A risk-tolerance assessment is a good starting point, but it’s not the whole story.

People often overestimate their tolerance in calm markets and underestimate it in volatile ones. Still, let’s use the result: Joe and Emma are “balanced” investors. That means:

They want a blend of growth and stability
They can handle some fluctuations
They prioritise avoiding major losses over chasing high returns
They have a long time horizon (20 years), which naturally reduces some short-term risk

But being “balanced” doesn’t solve the practical questions: - How will they react if rates spike? - Can their cashflow handle a vacancy period? - What happens if policy changes?

A balanced profile gives us direction, but not the full map. The strategy has to translate that profile into real-world decisions.

Time horizon

Your time horizon heavily shapes the level of risk, leverage, and portfolio scale that’s appropriate.

Short timeframe? You prioritise stability.
Long timeframe? You can afford to use leverage and ride out cycles.

A 60-year-old retiring in five years won’t invest heavily across four properties. They’d likely buy one solid asset and focus on paying the mortgage down quickly with principal-and-interest repayments, potentially using some of their KiwiSaver at retirement to clear the loan entirely and create a stable income stream.

A high-income 30-year-old is the opposite. With decades ahead of them, they can justify higher leverage and interest-only lending to scale a multi-property portfolio, often using their home equity to do it. Cash-flow neutrality becomes the key filter that keeps the strategy sustainable.

Joe and Emma fall in the middle. With 20 years until retirement, they have enough time to benefit from growth while still needing discipline. A strategy that combines long-term capital growth with interest-only lending gives them leverage now without sacrificing stability later.

Borrowing capacity

Joe and Emma need to understand their borrowing capacity before making any strategic decisions. It’s the anchor point that determines what types of properties they can consider, which regions are realistic, and how much leverage they can safely use.

Let’s assume they use our borrowing capacity calculator and discover they can purchase up to around $800,000. That immediately narrows the search to properties within a sensible range and prevents them from overextending, especially in a changing interest-rate environment.

It’s a simple concept, but an essential one. Without knowing your buying power, you can waste time looking at properties that were never financially viable. Think of borrowing capacity not as the target, but as the ceiling. The strategy is built underneath that number, not stretched beyond it.

Property preferences

It’s common for investors to default to what they already know - usually the suburb they live in or the type of property they grew up around. But familiarity isn’t a strategy.

Investment decisions should be grounded in financial logic, not gut feel or comfort with a certain neighbourhood.

The same goes for property type. Many Kiwi investors still view older, larger-section homes from the 1900s as the “safe” or “traditional” path to wealth. They’ve performed well historically, so the assumption is that they must always be the superior option.

But markets evolve. New builds now offer lower maintenance, lower deposit requirements, better tax treatment, and comparable long-term growth - advantages that many investors simply don’t recognise because their preferences haven’t kept up with the data.

Your preferences are allowed to exist, but they should be shaped by real market understanding, not nostalgia or habit.

In Joe and Emma’s case, working with a professional adviser helps them gain a clear picture of the full range of property types available, so their decisions are informed rather than inherited.

Financing settings

How you structure your lending often determines whether you can invest at all. Many investors jump in without a finance strategy and end up stuck with one bank, locked into inflexible terms, or carrying a repayment structure that works against their goals rather than supporting them.

Your time horizon heavily influences the right approach. Joe and Emma have a 20-year timeframe, which gives them space to focus on growth rather than rapid debt reduction.

Their priority is building long-term wealth without putting pressure on their current lifestyle.

In this context, interest-only lending can be an effective tool. Lower repayments free up cash flow, which allows them to hold the asset comfortably while the capital growth does the heavy lifting.

Principal-and-interest may feel “safer,” but for a long-term growth strategy, it can restrict leverage and slow portfolio development.

The key point: financing settings aren’t an afterthought - they’re part of the strategy itself.

Exit options and assumptions

A comprehensive investment strategy isn’t just about buying property; it also considers how and when you might exit.

Thinking about exit options from the start helps shape the type of property you purchase, the financing structure you use, and the assumptions that underpin your expected returns.

For Joe and Emma, the primary plan is to hold properties long term until retirement, aligning with their goal of generating $100k in passive income. But part of a strong strategy includes flexibility: if a property performs particularly well or market conditions change, they may choose to sell or restructure their portfolio to maintain cashflow and manage risk.

Setting realistic assumptions is critical. Historically, New Zealand residential property has grown on average around 7% per year over the past 30 years.

For a conservative planning approach, Joe and Emma could assume a 5% annual growth rate. For example, if they purchase a property today for $500,000, after 20 years at 5% growth, it would have increased in value by approximately $826,649. That growth in equity would be a substantial contribution to their retirement goal and future passive income.

The key is that every exit decision should support the overall strategy rather than being ad hoc. Planning exit options and assumptions upfront gives Joe and Emma the confidence to make long-term decisions, knowing they have contingency plans in place if the market or their circumstances change.

Putting it all together: A property recommendation aligned with strategy

By now, it should be clear that a strong investment strategy is about far more than picking a property that “feels right” or chasing general market trends.

Joe and Emma have walked through each component: defining their objectives, understanding their risk tolerance, setting a realistic time horizon, knowing their borrowing capacity, considering property types, structuring their financing, and making assumptions about growth and exit options.

All of these elements combine to create a framework that guides their decisions consistently and rationally, rather than leaving them to guess or follow popular opinion.

With this strategy in place, Joe and Emma can make a targeted property decision that aligns with their goals.

For example, a new-build property in Hamilton priced at $619,000 fits neatly within their borrowing capacity. Hamilton has a history of strong, steady growth, and this particular property offers a decent yield, low maintenance requirements, and modern amenities, all of which complement their long-term wealth-building strategy.

This isn’t a property recommendation “for the sake of recommending something.” It’s the outcome of a comprehensive strategy: one that balances growth and stability, considers cashflow and leverage, and is designed to help Joe and Emma achieve their goal of generating $100k in passive income at retirement.

A strategy like this doesn’t just help investors make one good purchase; it provides a roadmap for every decision moving forward, ensuring that each property they acquire contributes meaningfully to their long-term financial objectives.

How Can We Help You?

We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.

What Does This Look Like?

We use a 3-step process:

We start with a Discovery Meeting where we learn about you, your goals, etc., and you learn more about us.
This is followed by a Strategy Meeting where we model your retirement plan, understand key investment concepts, and briefly touch on some investment choices.
Finally, an Asset Selection Meeting where we discuss investment options in more detail and make any recommended adjustments based on what we now know about you.

Who Are We Right For?

We help people make smart investment choices and set up their futures. From first-time investors to experienced investors, we can cater to a wide range of people and help set up their futures through research-based property investment.

How Much Does It Cost?

Our advice is free to you! If you choose to invest, we’re paid by the property developer. This developer-paid model allows us to provide no-obligation property investment advice in New Zealand, without charging clients directly.

What Do We Do, And What Don't We Do?

What We Do

We offer end-to-end New Zealand property investment advice, helping Kiwi investors grow wealth through smart, data-led decisions. Our focus is on quality new builds in strong locations, tailored to your goals, guided by a team that knows the NZ market inside out. What We Don’t Do

We don’t do KiwiSaver, shares, cryptocurrency, or broad financial planning. Thrive is not a generalist firm. We specialise in property investment in New Zealand because that’s where we deliver the most value. By staying focused, we cut through the noise and help our clients make confident, well-informed property investment decisions.

How Do I Start?

Start the process now by booking a time to talk with our advisor here.