What harms you may just help you

Are you (super) ignorant of how much money you could be making?

Don’t be (super) ignorant

In arguably the second-most controversial section of the award-winning investment book, “Who’s Taking Your Money? (and how to get some of it back!)”, Chapter 13 opens by stating that, “some people are just intellectually inferior… to hardwood…”

We could possibly change that last word to “driftwood”, as many hardwood timbers actually serve a defined and structured purpose, unlike the soppy pieces of wood that simply drift through life aimlessly without direction.

It may be cruel but it is a harsh fact of life: people who set themselves toward a certain goal or task will generally achieve it (or a semblance thereof), whilst people who bob along as victims of tides and circumstance will not achieve much (unless you count having a story about how much of a victim they are in life).

To continue the watery metaphor, we could discuss those who design their route after reading maps and charts left behind by wise sailors (guidebooks by mentors) or we could look at those who get caught up in merely watching or reacting to the uncontrollable currents (current events, current affairs); but you get the point. If you’re a column reader, you will be a classic succeeder.

As a guest on an international wealth creation teleconference two years ago, I asked the hypothetical question, “if you could continue to do your current job, and receive 10% wage increase and then, after 20 years, receive a bonus free car, would you switch companies?” With one exception, everyone on the call suggested that they would happily move.

The notable exception was a multi-multi-multi-millionaire who asked the pertinent question: “What kind of car do I get?” This question is further proof that millionaires are not just ‘lucky’ opportunists: they think differently (and this is a skill which can be learned).

One man asked the wise question, “Do I get a Ferrari or a Daewoo?”, whilst the rest of the callers were simply content with a 10% wage rise and a free anything. A free $10 000 car would be OK, but a free $40 Million car would be nicer… (just ask Ben Stiller’s character in the movie “Tower Heist”)

My reason for asking the question was an analogy about superannuation and it proved the point wonderfully. Most people are ignorant of the power of compounding and they are similarly ignorant of the control which they can exert over what is, and what shall be, their greatest investment. Someone who works without thinking and fails to choose their super will choose to fail with their super.

The employer will put you into the “default” fund if you fail to choose an option. It may be “safe as houses” (hang on, haven’t house prices dropped by 30%?) and your retirement money may be as solidly reliable as government bonds (yes, those big complex things that many investors are pulling out of, as major world governments accumulate debt which they cannot pay).

The default “balanced” fund for one of Queenslands’ major superannuation suppliers has had a barely positive result in the last five years: if you put $1000 in there in 2006 you would now have around $1020. If you think that you would have done better sitting in cash in the bank, you would be correct, and cash is the default option for many self-managed super funds (SMSF’s).

There are thousands of employer super funds to choose from and thousands of people who create their own SMSF’s to further direct their control of their monies.

Of the $430 Billion in Australian SMSF’s, it is interesting to note that only around 5% of this money is in “managed” investments such as managed funds or mutual funds. It would seem that the wealthier Aussies prefer to direct their own paths (around 88% of the $400+Bn is in direct shares, direct property and direct cash or trusts). [ABS 2011]

That “the rich get richer” is a cliché only because it is true; just not in the way that you may think. Those who are richest in education become richest in assets: it is all about knowing where to put the money and when (again, this skill can be learned: http://bitly.com/WealthClock).

With a plethora of investment books around, you may find it hard to read a handful of them and make an informed decision. We’d also suggest that if 90% of them agree on a point, it’s possible that the majority is wrong.

It would take a true contrarian to take cash OUT of the banks when everyone else is putting cash INTO the banks. It would take an incredible übermensch with nerves of steel to take money from cash IN the banks and put it into owning stock OF the bank itself.

Instead of leaving your cash in the super default fund and earning 4% per year for 5 years in a row, or putting the cash inside the bank and earning around 4%, you could have put your cash into bank stocks a few years ago.

In the last 3 years, stock in NAB has gone up 50%, as has Westpac. Commonwealth Bank is up 100% from January 2009 to January 2012, and ANZ is a smidge behind the 100% mark. We will not even mention mining stocks.

You can tell the people who do NOT own stock in their own bank; they are the ones who are constantly whinging about “the bastard banks” and lamenting the price of bank fees. If you owned part of the company and you just made 50% or 100% profit, you would not be whinging about it. So change.

How many times can we say “take control of your own destiny”, “stop being a victim and become an investor” or “buy a contrarian investment book”?

No excuses: for those who do not have the capital or the means to commence a SMSF, there are many funds around which will allow you to choose your own investments or even purchase direct stocks and shares inside of your “off the shelf” super fund. Just because your own fund said that they cannot do it, that doesn’t mean it is impossible. You just need to ask someone else.

Not only have I assisted clients to purchase stock with just $1000 in their work super fund, I have also opened super accounts for my kids whilst they were under 12 years old (another thing most super funds will tell you that you cannot do).

Rather than be accused of labouring the point or preaching to the choir, we will let it rest for now with some pointed yet sagacious advice: read something wise and make a decision now for a better future. The choice of a Daewoo or the Ferrari at 65 is entirely up to YOU; but you must decide now!

Jeremy Britton is an independent wealth coach and business coach who advises clients on all aspects of wealth creation. Find out more or purchase his best-selling investment book at www.24HourWealthCoach.com

The luckiest country in the world

The luckiest country in the world

“DownUnder” bucks the global trend to come out on top as world’s richest

Whilst America and Europe are harbouring concerns about “GFC Part Two” or a double dip recession, one little country has plenty of reason to celebrate.

At around 3% of the world population, Australia’s population footprint is tiny, but this “blip” on the radar for people is actually a “blimp” on the radar for wealth.

Australia is now ranked as the world’s wealthiest nation by a Credit Suisse re

The average Aussie is now worth almost US$250 000 net, around 400% wealthier than the average US citizen. The proportion of Australian adults worth more than $US100,000 is now eight times the global average.port, citing Aussie wealth figures far in excess of Japan, Singapore, Switzerland, UK and the USA.

The high wealth rate in Australia is attributed to the strong Australian dollar, property ownership levels and a robust labour market. It could also be said that most Australians were not as caught up in soaring debt, sub-prime loans and massive expenditure such as had been observed in the US and some European countries pre-GFC.

Australians have become wealthier in actual dollar terms, increasing by 300%-400% in a decade, even after adjusting for the improved Australian dollar and the fall in the $US.

“It can be hard for people to tell who is truly rich when they are looking at perceived wealth rather than net wealth,” says Australian wealth coach Jeremy Britton. “We may see the image of the so-called ‘wealthy’ in Ferraris and Porches without realising that many of these people may be leasing the expensive car with a high income and may not actually have much money in savings or investment.”

Britton says that the rising popularity of being “green” has also helped Aussies to save and accumulate money. “Helping the environment by recycling things in business and in the home has cut spending, leading to more actual held profits, both in the corporate world and in our own homes.”

“Of course, Australia has benefited greatly from its mining boom and our relationship with China, but an increased income is no good unless you actually save it and invest it. It would have been very easy for cashed-up Aussies to spend their fortunes frivolously, but most seemed to have accumulated the money quite well, compared to other nations. ”

The Australian Bureau of Statistics (ABS) classifies someone as a millionaire only if they have more than $1 Million in “investable assets” such as cash, shares or property equity. Figures of those who are making higher-than average incomes do not necessarily show any correlation to net wealth.

The most recent ABS figures show that the average combined value of a true millionaire’s cars are only $36 000. This would seem to suggest that most Aussie millionaires do not drive cars worth more than a small house, and it may suggest that frugality, rather than flashiness, is one of the keys to true wealth.

Jeremy Britton is an independent wealth coach & business coach. He is often found on the beach, Facebook, or www.24HourWealthCoach.com.

Media contact +61410 468378

Flood waters drain financial fun but long-term profits ahead

Flood waters drain financial fun but long-term profits ahead

Recently the media has put much attention on the January Queensland floods, and yes it looks like the doomsayers will get loads of coverage from the February Floods as well. Much of the news media coverage is bad news and they almost never tell you what companies will make money next year (however we are happy to give you some general investment advice).

The Queensland floods are a blip on the radar as far as investment markets go. Some people may panic and sell their shares in insurance companies such as Westpac, QBE or Suncorp, but wise people will know that long-term profits are ahead.

Right now, millions of people are being reminded of the importance of insuring their houses and their possessions (yes, people in rental houses should insure their household contents for flood, theft and fire; it only costs around 50 cents a day to protect your beds, TV’s, washing machines, fridges and clothes).

Millions more people are also being reminded of the importance of having appropriate insurance! Although the media doomsayers have a field day beating up major insurance companies for not providing more comprehensive cover (covering stormwater damage but not flood damage), the policy-holders also need to take some responsibility. Note to self and others: have accountability for your own choices. Good insurance is not cheap and cheap insurance is not good.

Share prices of some of the major insurers may have taken a short-term dip due to panic selling, but the insurance policy makers know that a major flood will come once every fifty years and they plan for it. They have huge stockpiles of money stored up to pay out claims, and this is what they do.

The insurance companies then sit back for the next fifty years and pull in millions of dollars in premiums and store them up again, waiting for the floods in 2065. Rest assured that the insurance companies will make massive profits going forward, just as they did in the 30 years after the Brisbane 1974 floods.

Two massively important tips for this month, so write them down and tell your friends; we cannot over-emphasise the importance of these two wealth creation tips.

1) Protect what you have before trying to get more. Insure your house contents, your car, your life, your income, your partner’s life and your partner’s income. If you cannot afford to insure it then you need to sell something you don’t need so that you can afford to protect what you really want.

2) Invest where you spend. If you insure your car with AAMI, your boat with Mariner, your bike with Shannons, your mum’s car with Australian Pensioner’s Insurance and have a mortgage with Suncorp then stay tuned. Suncorp owns all of the forementioned companies. You may do well to invest into a few shares in the company where you are sending so much money (parcels of shares start at just $500).

Remember that this is general advice for all readers and may not be appropriate for YOU in your unique circumstances. To receive tailored investment or insurance advice for your own situation, contact the author or contact your bank or your financial planner. Initial appointments are generally free. Investment fees and some insurance premiums may be tax deductible.

Jeremy Britton is an independent wealth coach, advising clients on shares, property and business. For more information refer to www.24HourWealthCoach.com

Making your New Year’s resolutions “sticky”

Making your New Year’s resolutions “sticky”

It’s that time of year again when everyone expects you to make some life-changing decisions and finally get your life in order. Your well-meaning friends and relatives may have even made some New Year’s resolutions for you on your behalf… Bless ‘em.

Be prepared: if you tell your friends that you are going to clean out your wardrobe or donate 10% of your income to charity, they may well counter with, “Have you thought about adopting a child from Nigeria?” or “Why don’t you join a gym; then you can wear all your old ‘thin’ clothes again?” Again, Bless ‘em.

It is far easier for your friends to plan your life for you, simply because they do not have to live your life or deal with the consequences of your actions every day. Here are some ongoing resolutions that you may like to use, remembering; it’s your life.

1) Resolve to take it easy on yourself: Don’t aim to run 5 kilometres a day if you are currently doing zero. Start with running to the corner and back, then running around the block. Build yourself up by increasing the distance by 5-10% per day. Aim for incremental improvement, not perfection. An increase of 3% per day will mean 1000% improvement in one year.

2) Pay yourself first. Resolve to set aside 5% of all incoming money and put it into a separate account. After one month, take out half the money and gift it to your favourite charity or spend it on a guilt-free gift for you. After the third month, see if you can increase the 5% to 10%. Surplus funds that are not used for monthly gifting will become the cornerstone of an investment that will bring further income.

3) Listen to the advice of others but then act with your own intuition. It’s your life and you have to live it. Sometimes that means that you have to make your own mistakes and find out for yourself that the stove was too hot to touch. Mistakes are how we learn and our intuition is built up over time. Resolve to listen to what others THINK and then act how you best FEEL.

4) Resolve to pay one random stranger a compliment every single day for 30 days. You can tell the postman you like his hair, tell a lady that she has a nice dress or compliment a motorist on their choice of car. People love to be noticed and if the compliment comes from someone they do not know it makes them feel fantastic. This feeling, in turn, then shines onto you. “As you sow, so shall you reap.” You may receive an increase in confidence from talking to strangers, better self-esteem, or make new friends.

Remember to make it easy, make it incremental and be gentle on yourself. Rome wasn’t built in a day, and your new gym body, your million-dollar savings and investment plan or your new habits will be built one small step at a time. Even a 0.3% daily increase in your health, wealth and relationships will mean that your 2011 will be 100% better in all areas than your 2010!

We wish you a Frugal Christmas

Former years have seen rises in personal wealth (or the illusion of it), with rises in share markets and property prices but 2010 saw mostly rises in unemployment and dramatic rises in interest rates. Two of the Big Four banks raised their interest rates higher than the Reserve Bank; time to vote with your feet, Australia!

Considering that the festive holiday season (regardless of your religious beliefs) was originally said to be all about Jesus, we can always claim to be following biblical precedent when we are frugal at Christmas.

Consider that 2000 years ago, according to tradition, God gave the world a small baby who was destined to be the saviour of the world. God did not send Rambo or Chuck Norris to save the Palestinians from Roman slavery, nor did he give a billion buckets of gold. The baby in a manger was a seedling gift of hope.

In honour of this tradition, we suggest that you give a small gift that means big things will come. Spread some frugality this year and also help to spread HOPE for the New Year. 2011 just has to be better than 2010, right?

1. Blooming great gift: Consider a few packets of seeds instead of a bouquet of flowers. They are cheaper to send through the post & will grow in value over the next few months, unlike flowers which will wilt & die within a few days. Those in small apartments or units can be given something small for a window box or movable planter pots. Also consider edible treats such as fruits or vegetables. There are also many species of flowers which are safe to eat, such as chrysanthemums, roses, daisies and more; check with the nursery and deliver something beautiful, tasty and practical!

2. Handmade Gifts: homemade jams and other homemade baked goods from the talented ladies and something creative from the talented blokes. Recycle some old household goods or get carving, whittling, gluing or wiring. Nothing says Christmas love like investing your precious time (not just your money) into a gift. We once received a model aeroplane made from empty beer cans and one created from old wooden clothes pegs. Novel, fun and a good talking point.

3. Newspaper Gift Wrapping: Wrap children's birthday gifts in old comics for a fun twist. A fancy red ribbon would go nicely with black and white newsprint for adults, or even "brown paper packages tied up with string" for a “Mary (Poppins) Christmas”.

4. Christmas Presence: Giving someone your time is a very valuable thing and memories last a long time. You could give a couple the gift of a night off by babysitting their kids, or you could pack a picnic basket for a single friend to have an afternoon together chatting and drinking wine in an unusual location. Most mums would love an hour of housework done while they relax in the bath and dad would love for his car to be cleaned or shed tidied.

Whatever you decide, keep it simple, practical and keep the love central to your theme. Holiday seasons are all about spending time with family, friends and loved ones, not spending money for the profits of big banks, toy companies and retail stores.


Jeremy Britton is an independent wealth adviser. For more tips, tricks & advice go to www.24hourwealthcoach.com. Article also featured in Strike publications, Ipswich City News

Interest rates are INTERESTING, part 1: both sides to the coin

Rising interest rates may seem like a burden for Australians, particularly those who are paying off a large mortgage. The thing to remember is that whilst the family picnic may be ruined by wet weather, the farmers love the rain! More rain will eventually mean more food and more picnics later on.

Examples of people who may be affected positively by interest rate rises are investors, particularly self-funded retirees or those who are about to retire (such as the "Baby Boomers"). These people will now be receiving a higher income which means that they can spend more money on new goods and services; possibly in your workplace.

Yes, the average home-owner with a mortgage will have to spend more money on their bank loan, but this will have a flow-on effect in the greater economy. Consider that without an interest rate rise, the economy may overheat, which causes further job losses. A higher interest rate can be a good thing if your homeloan costs more but you do get to keep your job!

At present, interest rates are at record lows in the UK and the USA (below 1%). We will look more at why this is in “Interest Rates Part Two: how to make $50 000 for nothing”. These economies are suffering badly and job losses are at record highs. The economies in Australia and China are weathering the economic storms more strongly, and both countries have just raised their interest rates.

International investors are strongly attracted to Australia with its stronger dollar, more secure economy and higher rates of return on investment. Investors are attracted to China for similar reasons. Investors’ money is rapidly leaving the USA & UK (earning 1% interest) and flooding to Australia and China to be invested at 5% or greater. This international investment means more jobs, even if the mortgages are going up.

Whilst mortgage rates may be high for the foreseeable future, homeowners are advised to cut back on unnecessary expenditure, such as cable TV, cigarettes, alcohol, work lunches or anything that is not essential or anything does not MAKE you money or SAVE you money. Ensure you do essential maintenance on the car but hold off on the new in-dash DVD player.

Consider doing an imaginary cashflow projection based on a 10% mortgage; you will soon see areas where you can cut back. You can pay 10% payments off the mortgage anyway; this will put you in front on the loan, impress the banks and be good insulation if anything unexpected should occur.

Next article: How to make $50 000 for nothing & Higher interest rates just like 1992: where to invest for the best returns beyond 2015.