How to be a Heroic Investor

How to be a heroic investor

Unless you are a soldier, policeman, fireman or even possibly a public school teacher, you are probably thinking, “I don’t risk my life on a daily basis. I am not a hero. What does this have to do with me?”

The answer is that anyone can be an inspiration to others. It is your humanity that makes you a hero. Mahatma Gandhi and Mother Theresa could have just sat on the sidelines, completing crosswords in the rest home and no-one would have blamed them. Instead, both risked their lives to bring change. You may not battle against leprosy, poverty or the British Empire, but you may choose to take on something that is bigger than you and try like crazy to overcome it. You may make it your life’s work to eradicate third-world debt, save the numbat or invent a better-tasting lamington.

You may choose to skip the huge awesome goals and consider simply doing one thing each day to make the world a better place. You may never risk your life in the course of your goal, you may only risk poverty, failure or humiliation. Those are still big risks, and big risks are often placed smack bang in front of big rewards and big achievements. Know that you may fail. Feel the fear and do it anyway.

Your local library will be filled with autobiographies from real-life heroes who bounced back from overwhelming odds: Nelson Mandela, Richard Branson, Motzart, Rembrandt, Abraham Lincoln and others. (Lincoln’s story of three failed elections, failed businesses, the death of his wife, his son, and quitting politics is particularly inspiring; because nothing seemed to go right for him until after he turned fifty. 50!)

Locals like “Aussie John” John Symond , Dick Smith , Jamie McIntyre , Li Cunxin and Peter J. Daniels had to overcome fabulous odds to succeed. “Rich Dad, Poor Dad” author Robert Kiyosaki was almost 50 before retiring and writing his best-seller.

Walt Disney and Henry Ford were both bankrupt before they finally risked everything, yet again, to make their fortunes in later life.

My desktop on my computer has a picture of a surfer that inspires me: I learned to surf on my 33rd birthday, despite the fact that I cannot swim! The words next to the picture say “It is never too late to be what you might have been”.

Be a hero: never give up. Invest into yourself.


Jeremy Britton is an active financial planner and a lazy investor. His kids think that he’s a hero but they also know the truth: true heroes regularly show their humility.
Inspiring words and investment tips available from www.24hourwealthcoach.com

Jeremy Britton is an Authorised Representative #298825 of Financial Planning Services Australia, ABN 11 010521810, AFSL 225982.

Billionaires agree on investment horizon

Economic guru says that the clock is still ticking

July 30th 2007

These could be scary days for investors, unless they look back for the future.

As the Reserve Bank debates about putting up interest rates yet again, the property market looks perilously high, housing affordability is at all-time lows, and the sharemarket is making plunges into negative territory. What to do?

Recent sharemarket dips in the USA and China may drive panic into Australian investors. Many investors fear that October 2007 may hold a major sharemarket correction, as has happened in 1997 (Japan) and also 1987 (USA & Australia).

Right now, housing price growth appears unsustainable, sharemarkets look choppy, the US dollar is dropping and the Australian dollar is higher than in the 1980’s. Where should investors be placing their money now?

“This is all normal”, says Jeremy Britton, Australian financial planner and author. His latest book, “Who’s Taking Your Money?”, deals with the money movement from USA to China and Australia and the centuries-old Economic Clock. “Although many of these occurrences look alarming, similar things have occurred before, and they will occur again. The trick is to recognise what comes next in the pattern and then be bold enough to take a calculated action.”

Calculated actions have been taken in the past by other wealth creators, such as US investor and world’s third richest man, Warren Buffett. Buffett refused to invest into the booming “tech-stock” economy in the USA in 1999 and 2000. In a rare speech [published FORTUNE magazine (Nov. 22, 1999)], Buffett stated his belief that “returns from stocks would fall dramatically”. When tech stocks tumbled in 2000 and the broad US markets crashed in September 2001, the quiet oracle kept his profits and maintained his reputation as the world’s best investor.

Asian millionaire investor Lin Yuan has been called the “Warren Buffett of China”, after turning 8000 yuan into 1 Billion yuan over the last 20 years of investing. Like Buffett, Lin invests for the long term into good strong companies and stays away when things get too heated. He bought into the stock market after the 1987 crash and Lin invested in real estate only during the massive growth years between 2001 and 2005.

“Mr Lin sounds like a clock-work investor,” says Britton, who advised clients to purchase property in 1999, seven years after the famous 19% mortgage interest rates stalled the 80’s property market climb and a year before the big property boom of the noughties. “Lin was in the right place at the right time and then moved to the next position when things changed.”

Investors who held property from 1992-1999 could have made returns in line with the CPI, whereas investors who held property from 1999-2005 could have doubled their money. Investors who held Australian shares from 2005 to now may be looking at returns of several hundred percent and despite market fluctuations, many believe that the sharemarket ride still has a way to go.

Buffett is still buying stocks, Lin is investing into a Chinese market that has already risen 300% and Britton is still looking at Australian shares. “It’s funny -- when my advice made investors 300%, people accused me of having a crystal ball to see the future. In reality, all I had was an old tool to look at the past.”

www.24hourwealthcoach.com

The importance of being FRANK...

The importance of being FRANK

Sometimes he is called "Frank" and sometimes he is not... who is he? Our old friend ensures that we pay far less tax than we used to... ya gotta love him for that!

Like many terms in the investing world, "franking" is confusing, old-fashioned and has many aliases...

In years gone by, a franking machine was used to stamp outgoing mail or to stamp invoices that were paid. For those who remember tax stamps, it is a small jump to connect "franking" to having the tax paid on an investment. For the younger crowd, we apologise for the jargon: just believe us when we say that "franked" means "tax paid".

From there, you may hear of "fully franked", "partly franked" (100% tax paid or only partially tax paid), or "FF" (fully franked).

The confusing jargon reminiscent of something to do with hotdogs hides a lovely truth: when you receive a cheque from a company that pays fully franked income, you know that THEY have paid the tax and often you do not have to pay any tax on the investment income.

Many Australian companies pay a company tax rate of 30% on their profits before they pay the shareholders, so you would normally only have to pay extra tax if you are on a tax bracket over 30%.

So, how much money could you have, or how much money could you make, and not have to pay any tax?

Let's look at two scenarios:

(assuming that dividends are the average 3.6% and 100% franked)

Scenario One:

RITC is another name for "rich"

A retired Australian couple could own a share portfolio worth $863 600 and earn almost $45 000pa with no tax to pay.

A portfolio such as this would bring in around $31 090 in dividend income & $13 320 in franking credits (they would have to pay $666 in Medicare-- for more on why the franking credits are paid as cash, refer to "Think RITCH" Chapter 9 of Who's Taking Your Money (and how to get some of it back!).

Scenario Two:

no RITC is still good rich

A second Australian retired couple have a share portfolio worth $4.7 Million ($4 700 000) and could receive an income of $170 064 in dividends without paying any additional tax (they would pay $1822 for Medicare)

Scenario Three:

Super Frank is not a hotdog with a cape on

A third couple could have a share portfolio worth $4.7 Million, as above, but inside of superannuation.

They would receive the same $170 064 in dividends and could also receive $36 444 paid back to their super fund pension account, and would NOT have to pay Medicare...

That is an income of over $200 000 pa with zero tax and zero Medicare levy... Super, huh?

Now you know more about franking and how it can help you to make a LOT of money with LITTLE or NO tax... Excited?

If you have any questions about tax, franking credits and RITC, talk to your accountant or taxation specialist. If you would like to know how to invest or where to invest, talk to a good financial planner or call 1300 762 624 to find one. Once you know how to do it, then (let's be frank) just do it: Invest.

Jeremy Britton DipFA SA(Fin)

[Information provided is of a general nature only and is not to be taken as financial advice. Before making any investment decisions, you should consult an expert to receive advice based on your own unique personal circumstances. Data sourced from technical team at ING Australia.

Investment Management Professionals Pty Ltd, ABN 37 115 359 316, is a Corporate Authorised Representative #306558 of Financial Planning Services Australia Pty Ltd, ABN 55 010 521 810, AFSL 225982. Jeremy Britton can be contacted through www.24hourwealthcoach.com ]

Yes, we know that we said we would look at two scenarios and then you found three. That was just a surprise bonus, not an error. For more surprise bonuses, refer to the website www.24hourwealthcoach.com or www.invest.org.au