One of my aspirational employees has continually asked me for the seven essential practices of highly wealthy people. As a 20-something working for the Switzers, he has worked out that building his bank balance and his assets won’t come by fluke.
Oz Lotto says you have a 1 in 45,379,620 chance of pulling off the big prize! I rest my case.
1. The desire to build wealth
First, you really have to have the desire to build your wealth. Deep down, you have to want it so badly that you can virtually will it happen. This desire will make you read websites such as this one daily. You’d flick The Project, ABC News and those cooking shows that will only make you fat and kill you! You read finance sections in really good newspapers and biographies of wealthy people — Richard Branson, Gerry Harvey, Warren Buffett, Imelda Roche, etc.
This very desire to build wealth would mean you’d write down your goals and produce the plan to make those things happen. Need an example? Well, try this. I’m 30 years of age and by age 35, I want to own an investment property. You then show where it will be and how you will make it happen. It’s the blueprint for building wealth. By the way, most rich people haven’t done this precisely but they have had a dream, they’ve created a plan and success and wealth followed.
2. Build a business (or your own personal brand)
Second, understand that the majority of very wealthy people have done it via starting a business and investing in property. I think a successful employee can do the same — CEO Nicholas Moore, who’s employed by Macquarie Bank, is a case in point. People like Nick have treated themselves like a business and, like a business owner, have built up their personal brand. He would have done it via his intelligence, his academic hard work, his hard work at Macquarie and so on. I always tell business owners that their businesses have to stand out from the crowd. Employees who stand out get promotions, pay rises, progress, success and income that is the basis for wealth building.
The bottom line is: Be odd! Hell, I’m writing this at 7:30 on a Sunday night so I can go for a two-hour walk at 6am tomorrow and that’s odd!
3. Become an expert on property and shares (hint: requires reading)
Become an expert on property and shares. Read books on both of these assets. Anything my colleague at Sky News Business, Margaret Lomas, writes on property I’d read. I would sign up to newsletters such as my Switzer Super Report, which has the investment education and tips on stocks from people like yours truly, Charlie Aitken, Paul Rickard and some of the best fund managers in the country.
It would be remiss of me not to say the Switzer program on the Sky News Business channel is designed to help Australians invest more wisely, so anyone who prefers to be rich over poor should rationally watch it. If they don’t have Foxtel, then they should go to Switzer Daily each day, as we show the interviews there the day after.
There are no excuses for not helping yourself get richer. You can do it with others, but I’d prefer you do it with me. And you can even join me on 2UE Monday to Thursday between 4pm and 5pm. If you don't live in Sydney, visit this link.
4. Find a great accountant
Find a great accountant, even if it takes you a few attempts. Get someone to look at your income, the tax you’re paying and let them ponder some alternative ways that you can use your income to build wealth and reduce your tax bill at the same time. Ask them to step inside your shoes — actually use that language, as it will shock a lot of accountants — and share with them your goals and let them rip. They could be blunt and negative but use it as an opportunity to learn.
5. Find a financial adviser you can trust
Find a trustworthy and smart financial adviser. I’ve always remembered the story of a really savvy, pretty wealthy business owning couple who were introduced to a financial adviser, who was also a pretty smart accountant. He looked at what these people were paying in tax and how they were investing. When they came back for the second meeting, he simply passed them a note that said “I can save you $20,000 a year in tax, legally, and with that extra income I can invest better and more rewardingly than your current adviser.” That was a lucky day for that couple. When it comes to wealth building, seek and you will find.
6. Master your money
Become unbelievably professional about your money. I suggest you start by doing a budget and then trying to GST your life by trying to save 10% on your spending. Imagine you were an outsider paid to be objective about your wasting of money and your goals. He or she might say: “You’ve got to be kidding! You are doing everything in your power to fail.”
Next get serious about your super, as it’s a great asset for retirement but because it’s in the future, it shouldn’t be treated as unimportant. This is the real test of how fair dinkum you are about getting richer. Go to SuperRatings or Chant West and find out the best super funds over the past 3-, 5- and 10-years. Compare the returns of these top super funds to your super fund and then compare the costs. Some of the best super funds are some of the cheapest!
If you can’t do this because it’s too boring or too hard, then you’ll be hoping to get rich by luck and hope is not a plan! Ignoring your super could cost you hundreds of thousands of dollars by the time you retire, so this is your super test. If you can’t fix up your super, you might have to get used to a non-wealthy life.
Many entrepreneurs know little about their super but they’re doing exceptional things elsewhere. If you’re an employee, getting your super right should be a self-test on whether you have the steel to get wealthy.
7. Think it - be it!
Think wealthy. Visualise yourself wealthy. Dress and act like wealthy people but you still can be a great, kind, caring human being, just adopt the new stance of someone determined to succeed. Hang out with winners, when you can and with people you who can teach you stuff to give you a competitive advantage. Gerry Harvey says this was an important decision he made as a young man.
And by the way, everything you learn you can share with your loved ones, so they too can become wealthier. Be certain about this: I’m not saying richer people are better people. However being richer doesn’t mean there’s anything wrong with you and if you’re a generous, caring person, you can do more material good if you have more money.
The bottom line: Be odd!
The point is simple — if you want to be a success at anything, you have to go from being normal to abnormal. You know I’ve met highly successful, rich people who have done it all to help a mother or a family who has lived in poverty but had always backed them. They wanted to succeed and become wealthy to help others!
When someone commits to success and the alternative paths that take you there, they learn stuff such as this chart, my favourite chart, which shows what happens to $10,000 between 1970 and 2009, just after the GFC hit stock markets. It became more than $450,000 and that’s despite five significant market collapses and many other corrections!
After seeing that, everyone should be saying: How do I get my $10,000 into such share portfolios? Hang out with the right people and they will tell you.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
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