Most people avoid advice on matters of money because of ignorance or because they’re simply scabs. I know it sounds like tough love for me to call most people reading this story here scabs but I fear it’s true.
Sure, I’ll concede that advisers — financial ones in particular — have not covered themselves in glory, becoming commission-takers and product floggers in the past. However, not all advisers lack morality and a concern for their clients.
The task of a smart wealth-builder is to find an honest adviser and, if you had your head screwed on, you’d be eternally looking for not the best restaurant, the best bar, the best holiday venue, the best hairdresser, etc. (which I grant can be important), you’d be always seeking out the best advisers.
In our stable of advice, we all should have experts on accounting and financial advice, as a minimum. You should be frequently testing them for the value of their guidance, which means you use them to get you money from tax savings and investment insights that save and/or make you money.
But you can have an even bigger stable of wealth-growers on board, with say, a mortgage broker to ensure you have the best mortgage rate. For example, I ask you, do you know precisely what interest rate your home loan is?
And do you know the comparison rate, which is the actual rate you pay? You might have got sucked into a nice headline rate but, with fees, the comparison rate could be a lot higher.
Use the Switzer Home Loan rate of 4.09% (which is the headline and comparison rate, as there are no hidden fees) as a benchmark test of your interest rate. This advice comes free but lots of advice is worth paying for.
Last night on my TV show, I interviewed Tyron Hyde from Washington Brown, a quantity surveyor who pointed out that lots of property investors fail to claim the right amount of tax deductions because they don’t use an expert, who goes on site and identifies a whole host of legal claims.
He pointed out that when you buy a renovated property for rental purposes, the buyer-cum-landlord often has years of depreciation expenses he or she could claim but they fail to do it. Why? Either no advice or bad advice!
One guy who built an industrial property missed out on $1.5 million worth of expenses over 10 years! Why? Bad advice. He probably used a cheap accountant.
Tyron Hyde pointed out that people who rent out apartments often don't know that they can claim for their share of common areas, such as swimming pools, barbecues, etc. I’ve never been in that situation of owning an apartment in a block situation but I’d never thought about that.
You know, some people can claim so much using a quantity surveyor that a negatively geared property actually becomes cash flow positive via a very big tax refund!
I say this to people who do their own tax returns: why not try one year with an expert to see if you’re missing something huge? The cost of the experiment is tax deductible and I bet you will learn something that would make it worthwhile.
Many quantity surveyors have offers that if they can’t save you what they charge you, the report is free. Others will even promise if they can’t give you deductions double what they charge you, then the report is free!
I accept a basic proposition put forward by Sophie Tucker (and later ripped off by Billy Connolly in an ad for a bank) that said: “I’ve been rich. I’ve been poor. Rich is better.”
Another comedian, Jerry Seinfeld, summed up the problem when it comes to wealth building. He said men were biologically programmed to do big things — build bridges, tall buildings, etc. But why don’t we do it? Because it’s very, very hard!
Making a commitment to self-improvement is very hard but I’ve found over the years that this is the standout characteristic of successful people — entrepreneurs, sports stars, politicians, professionals, great parents — they are committed to self-improvement.
Isn’t it funny that as a society we’re often cynical about self-improvement gurus and books but we accept crap everyday in our lives in the stuff we watch on TV!
I think a person’s state of wealth can be a function of bad choices. Sure, some advisers can let you down but just because you might have had some bad experiences with food doesn’t mean you give up on eating!
I’ve always loved the Jim Rohn advice, which runs like this: work out what you want, work out the price, pay the price!
If you want more wealth, you must pay the price of time by making yourself a great D.I.Y adviser, or you should pay someone who can give you the insights to make and save money.
My best free advice to you (and you should share this with the ones you love) is to be committed to self-improvement. Well-off people are in a minority. So are those who are into self-improvement. And that’s no coincidence!
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