What are the secrets to investing in property & investing in general?
Alright, so firstly I want to cover off some basics. What is investing? Investing is locking money away now to hopefully get more money back in the future. That's all it is.
You invest $1 to hopefully get $2 back in the future. In fact, your normal salary job or business is a compression of time and money. You are trading the amount of time you are spending in your job or business for the amount of money you get paid.
Investing is no different. The only difference is you're investing money to give you time in the future. Investing accelerates or compresses the time money calculation. It gives you more money in a set amount of time, hopefully to the point that you never have to worry about money again or worry less about money, which gives you time and freedom. I'm going to cover off the secrets to success and the biggest mistakes, in some quotes actually. I'm going to start with some quotes.
Warren Buffett, the greatest investor of all time. He started with $10,000 in 1950, I think it was, and he turned that into $100 billion US dollars. That's over 20% compounded in return through his entire investing career. He is very wise and he's a very nice guy too. I encourage you to look him up if you've never heard of him. He's in his 90s now, he's about 95. He's got a famous quote that goes like this:
“Investing is the transfer of money from the impatient to the patient.”
What I'd say on this is most people don't have the patience. They sell when the market isn't going their way or they're not in it for the long haul. The most successful investors I see, hold their investments long-term.
Second quote is Bill Gates, founder of Microsoft, for many years the richest man in the world. He's got a famous saying that says:
“Most people overestimate what they can achieve in a year and underestimate what they can achieve in 10 years.”
That comes back to that patience. When you don't get that sugar hit of immediately working, obviously you need to make sure that you're investing long-term. As you can see from these two quotes, they're all time-related, but your little seedling will grow into a tree, but most people cut it down because it has a slow year or sell it when it's a seedling.
You see, most people are thinking about, oh I bought a bad asset, or I bought it the wrong time. That’s actually, is all about patience. So again, carrying on, what are the secrets to success? And what are the biggest mistakes? Because a lot of people think that its luck or its timing or that person has some sort of advantage that they don't.
Their thinking is when they see people with haves or have done well, they think, yeah… but insert excuse of why they don't have it and why that other person is different or lucky. The reality is you need to have the commitment and the patience. It's all about temperament.
And I can tell you from being a Financial Adviser and investor for 18 years, the crux of it is, it's not luck, it's not timing, and it's not something you don't have that other’s do. It's how you think.
I'm going to give you another famous saying, another short story. It's by Charlie Munger, he's Warren Buffett's business partner. He was also a billionaire. His IQ is just off the scale, right? Really smart guy. But he was once asked how he became rich and I'm paraphrasing here. So, his famous little, short story is:
So, you're standing on a beach with a thousand other people. The water is investing and there is an island of financial freedom in the distance. And it's a beautiful day. There's no tide and I can tell you 90% of people give up before they even jump in. They are either scared, not committed, or rather go shopping or go and work in their job, trading time for money. The rest jump in and its fine at first, it's a warm day. Some start to turn back within the first 10 metres of shore, but then all of a sudden, the temperature drops and the tide turns and almost everyone turns back to shore. The person left swimming is not the best swimmer, but he or she decides to just keep swimming gently and slowly as they understand it's a marathon, not a sprint. After a while, the clouds part and a hot, still perfect day arrives with a big tide at your back and things get easier and you've got a smile on your face. You then stop to look back and not only is there no one around you, but there is no one at the beach and everyone is wondering how you got rich. I simply tell them I didn't stop swimming. Sometimes the tide is with you and conditions are perfect and sometimes they are not. The key is to keep swimming. So, it's not the timing, it's not having something that others don't.
So, I will just stop here briefly for any questions. It's like we've got a good turnout today. Some of you will be looking for some strategies which we're going to cover off soon, but yeah hopefully you all got some value out of that.
Matthew Dawe
Mortgage Broker | Financial Adviser
Phone: 027 321 4287
Email: mortgages@matthewdawe.com
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