I thought I'd start this thread to discuss how individuals become
wealthy. How did these people create their wealth? What does one need
to make the BRW Richest 100 list?

Now for most, money is not the key to happiness - good health and
family are more than enough.

Some believe in the "slow and steady wins the race" - dilligent
savers, well educated investors, who have invested in their knowledge
to build wealth through their careers and use their salaries to build
wealth over the long-term.

However, what is needed to build sufficent wealth in the short to
medium term? Do we work our way up the corporate ladder or do we
create our own businesses? Do we buy other people's businesses? What
type of risks do we need to take? What personality traits do we need
to possess?

Does anyone have stories of people (or themselves) who have achieved
financial success?

Discuss... ;)

From:	Gregory Toomey
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 10:42:04 +1000

Darrin wrote:

> I thought I'd start this thread to discuss how individuals become
> wealthy. How did these people create their wealth? What does one need
> to make the BRW Richest 100 list?
>
> Now for most, money is not the key to happiness - good health and
> family are more than enough.
>
> Some believe in the "slow and steady wins the race" - dilligent
> savers, well educated investors, who have invested in their knowledge
> to build wealth through their careers and use their salaries to build
> wealth over the long-term.
>
> However, what is needed to build sufficent wealth in the short to
> medium term? Do we work our way up the corporate ladder or do we
> create our own businesses? Do we buy other people's businesses? What
> type of risks do we need to take? What personality traits do we need
> to possess?
>
> Does anyone have stories of people (or themselves) who have achieved
> financial success?
>
> Discuss... ;)

I had an acquaintance in Canberra who lived in a modest apartment in
Kingston . One day he casually mentioned he had saved $4 million over 20
years. By now I would expect it to be over $10 million. He had a good job
paying about $100K.

All he did was live modestly & put his money into 4 houses & a stock
portfolio. One stock he did buy was datacraft which increased 10 fold. His
superannuation fund had in excess of $1 million. He said a GST didn't
bother him as he didn't consume much.

He had training in economics, law & computer science. Computer science gave
him an income & economics taught him how to invest.

He had holidays at exotic locations eg exclusive French Alps ski resorts.
He also said he took time off work for thinking/planning?!

gtoomey

From:	MC
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 12:58:00 +1100

Gregory Toomey wrote:
> Darrin wrote:
>
>
>>I thought I'd start this thread to discuss how individuals become
>>wealthy. How did these people create their wealth? What does one need
>>to make the BRW Richest 100 list?
>>
>>Now for most, money is not the key to happiness - good health and
>>family are more than enough.
>>
>>Some believe in the "slow and steady wins the race" - dilligent
>>savers, well educated investors, who have invested in their knowledge
>>to build wealth through their careers and use their salaries to build
>>wealth over the long-term.
>>
>>However, what is needed to build sufficent wealth in the short to
>>medium term? Do we work our way up the corporate ladder or do we
>>create our own businesses? Do we buy other people's businesses? What
>>type of risks do we need to take? What personality traits do we need
>>to possess?
>>
>>Does anyone have stories of people (or themselves) who have achieved
>>financial success?
>>
>>Discuss... ;)
>
>
>
> I had an acquaintance in Canberra who lived in a modest apartment in
> Kingston . One day he casually mentioned he had saved $4 million over 20
> years. By now I would expect it to be over $10 million. He had a good job
> paying about $100K.

I like the 'living modestly' strategy to accumulate wealth, but I'm
at a loss to determine how your acquaintance managed to save an
average of $200k pa on an income of $100k.

From:	Gregory Toomey
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 19:02:23 +1000

MC wrote:

> Gregory Toomey wrote:
>> Darrin wrote:
>>
>>
>>>I thought I'd start this thread to discuss how individuals become
>>>wealthy. How did these people create their wealth? What does one need
>>>to make the BRW Richest 100 list?
>>>
>>>Now for most, money is not the key to happiness - good health and
>>>family are more than enough.
>>>
>>>Some believe in the "slow and steady wins the race" - dilligent
>>>savers, well educated investors, who have invested in their knowledge
>>>to build wealth through their careers and use their salaries to build
>>>wealth over the long-term.
>>>
>>>However, what is needed to build sufficent wealth in the short to
>>>medium term? Do we work our way up the corporate ladder or do we
>>>create our own businesses? Do we buy other people's businesses? What
>>>type of risks do we need to take? What personality traits do we need
>>>to possess?
>>>
>>>Does anyone have stories of people (or themselves) who have achieved
>>>financial success?
>>>
>>>Discuss... ;)
>>
>>
>>
>> I had an acquaintance in Canberra who lived in a modest apartment in
>> Kingston . One day he casually mentioned he had saved $4 million over 20
>> years. By now I would expect it to be over $10 million. He had a good job
>> paying about $100K.
>
> I like the 'living modestly' strategy to accumulate wealth, but I'm
> at a loss to determine how your acquaintance managed to save an
> average of $200k pa on an income of $100k.

I would presume compounding over 20 years, and dollar cost averaging.

eg Invest $30,000 pa each year for 20 years, 13 %pa return.
Total amount invested $600,000.
Total return #3,600,000

You need to read the faq at www.travismorien.com

gtoomey

From:	Travis Morien
Subject:	Re: How do you make lots (and lots) of money?
Date:	21 Jan 2005 22:19:40 -0800

Darrin wrote:
> I thought I'd start this thread to discuss how individuals become
> wealthy. How did these people create their wealth? What does one need
> to make the BRW Richest 100 list?

BRW's Rich List issue would be a good place to start.

They're an eclectic bunch but almost all got there through running some
sort of business. There are others who inherited wealth created by
some ancestral businessman.

> Now for most, money is not the key to happiness - good health and
> family are more than enough.

It is pretty hard to tell what does bring happiness; poverty and wealth
have both failed. - Kin Hubbard (1868 - 1930)

Money can't buy friends, but it can get you a better class of enemy. -
Spike Milligan

Money is better than poverty, if only for financial reasons. - Woody
Allen

It is a kind of spiritual snobbery that makes people think they can be
happy without money. - Albert Camus

Money won't buy happiness, but it will pay the salaries of a huge
research staff to study the problem. - Bill Vaughan

Money can't buy happiness, but it can make you awfully comfortable
while you're being miserable. - Clare Boothe Luce

Having more money does not insure happiness. People with ten million
dollars are no happier than people with nine million dollars. - Hobart
Brown

Money, it turned out, was exactly like , you thought of nothing else
if you didn't have it and thought of other things if you did. - James
Baldwin

The only thing money gives you is the freedom of not worrying about
money. - Johnny Carson

It is better to spend money like there's no tomorrow then to spend
tonight like there's no money. - PJ O'Rourke

Money isn't everything. but it ranks right up there with oxygen. - Rita
Davenport

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. -
Warren Buffett

I've never seen any rich people. Very often I have thought I had found
them. But it turned out that it was not so. They were not rich at all.
They were quite poor. They were hard up. They were pushed for money.
They didn't know where to turn for ten thousand dollars. - Stephen
Leacock (1869 - 1944), Further Foolishness (1917) Are the Rich Happy

Poverty is no disgrace to a man, but it is confoundedly inconvenient. -
Sydney Smith

It is no disgrace to be poor, but it might as well be. - Frank McKinney
Hubbard

There seems to be much more in the New Testament in praise of poverty
than we like to acknowledge. - Benjamin Jowett

Look at me. Worked myself up from nothing to a state of extreme
poverty. - S.J. Perelman et al in a 1931 film Monkey Business

> Some believe in the "slow and steady wins the race" - dilligent
> savers, well educated investors, who have invested in their knowledge
> to build wealth through their careers and use their salaries to build
> wealth over the long-term.

"It turns out that I should have just bought them (securities), and
thereafter I should have just sat on them like a fat, stupid peasant. A
peasant however, who is rich beyond his limited dreams of avarice."
(Fred Schwed Jr., Where are the Customers' Yachts?)

> However, what is needed to build sufficent wealth in the short to
> medium term?

The art of living easily as to money is to pitch your scale of living
one degree below your means. - Sir Henry Taylor

Do we work our way up the corporate ladder or do we
> create our own businesses? Do we buy other people's businesses?

All of that depends on your own skills. Robert Kiyosaki says everyone
should run out and quit their jobs so they can start a business.
Robert Kiyosaki is an idiot and his advice has led many people to do
really stupid things, like quit their steady good paying job and run
off to get involved in businesses they haven't got the skills to run.

> What type of risks do we need to take?

Most of the really wealthy have had to take significant risks at one
time or another. There is a big jump from being a millionnaire, which
isn't that rare nowadays and is achievable for any person with a
reasonable income and a thrifty nature willing to commit most of their
spare income to a savings plan, to being a billionnaire which requires
substantially greater leverage of your time and money.

> What personality traits do we need to possess?

Patience, thrift, common sense. All quite rare from what I've seen in
my time lurking in cyberspace...

:)

> Does anyone have stories of people (or themselves) who have achieved
> financial success?

The FAQ has profiles of a number of successful investors (Warren
Buffett et al) in the shares section and a summary of The Millionnaire
Next Door in the thrift section. www.travismorien.com/FAQ.htm

Just remember:

A billion here, a billion there, pretty soon it adds up to real money.
- Senator Everett Dirksen (1896 - 1969)

Travis
www.travismorien.com

From:	JimM
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 06:11:47 +1000

"Travis Morien" wrote in message
news:1106374780.632016.115500@z14g2000cwz.googlegroups.com...

> Do we work our way up the corporate ladder or do we
> > create our own businesses? Do we buy other people's businesses?
>
> All of that depends on your own skills. Robert Kiyosaki says everyone
> should run out and quit their jobs so they can start a business.
> Robert Kiyosaki is an idiot and his advice has led many people to do
> really stupid things, like quit their steady good paying job and run
> off to get involved in businesses they haven't got the skills to run.
>

Travis
Where you state "Robert Kiyosaki is an idiot" I must disagree.!!

Anybody that can start a multi million empire based on a few light weight
books
that rehash the same "wealth mantra" with variations of the same
copyrighted "wealth diagrams" and the frenzy of seminars, workshops and
product and merchandise;

Doesn't sound like an idiot to me !

(By accident I have met "The Great Man", the one thing that I remember about
him the most was the permanent smile he had on his face.....I wonder why!!
;-)

From:	Travis Morien
Subject:	Re: How do you make lots (and lots) of money?
Date:	23 Jan 2005 02:17:40 -0800

JimM wrote:
> "Travis Morien" wrote in message
> news:1106374780.632016.115500@z14g2000cwz.googlegroups.com...
>
> > Do we work our way up the corporate ladder or do we
> > > create our own businesses? Do we buy other people's businesses?
> >
> > All of that depends on your own skills. Robert Kiyosaki says
everyone
> > should run out and quit their jobs so they can start a business.
> > Robert Kiyosaki is an idiot and his advice has led many people to
do
> > really stupid things, like quit their steady good paying job and
run
> > off to get involved in businesses they haven't got the skills to
run.
> >
>
>
> Travis
> Where you state "Robert Kiyosaki is an idiot" I must disagree.!!
>
> Anybody that can start a multi million empire based on a few light
weight
> books
> that rehash the same "wealth mantra" with variations of the same
> copyrighted "wealth diagrams" and the frenzy of seminars, workshops
and
> product and merchandise;
>
> Doesn't sound like an idiot to me !
>
> (By accident I have met "The Great Man", the one thing that I
remember about
> him the most was the permanent smile he had on his face.....I wonder
why!!
> ;-)

Ok, you have a point.

He's a lousy author, contentwise and in his writing style.
He gives really bad financial advice.
He's a shyster who made up the whole "rich dad" story to give him an
"angle"

.... but there is no doubt that if his goal was to grow rich running a
shonky get rich quick seminar and book business, he's succeeded
brilliantly.

Travis
www.travismorien.com

From:	phil_herring at yahoo.com.au
Subject:	Re: How do you make lots (and lots) of money?
Date:	23 Jan 2005 16:03:34 -0800

Travis Morien wrote:

> All of that depends on your own skills. Robert Kiyosaki says
everyone
> should run out and quit their jobs so they can start a business.
> Robert Kiyosaki is an idiot and his advice has led many people to do
> really stupid things, like quit their steady good paying job and run
> off to get involved in businesses they haven't got the skills to run.

Robert Kiyosaki is an idiot?

Let's see... he worked out that in order to part people from their
money, all he has to do is peddle simplistic self-help books and
seminars, abandon the truth in favour of what people want to hear,
create and manage a brand, ignore the critics, and count the dollars as
they flow in.
So he may be a charlatan, but that doesn't make him an idiot.

-- Phil

From:	Darrin
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 16:46:16 +0800

>I thought I'd start this thread to discuss how individuals become
>wealthy. How did these people create their wealth? What does one need
>to make the BRW Richest 100 list?

Thanks for all the replies so far.

The common factor amongst the wealthy seems to be their involvement in
businesses - whether as a owner or an investor. Furthermore, they all
seem to posses the necessary motivation and drive to succeed.

The next question lies in what similarities their businesses have? Did
they identify niche markets or improve the profitability of existing
markets? Do these markets have high barriers to entry? How did they
monopolise or cash in on their chosen markets?

Also, how did these people start off? Did they meet the right people
or do it all on their own? Is it important to have a mentor or coach
to provide advice? Is it important to be surrounded by good (smart,
capable) people?

From:	Chris p
Subject:	Re: How do you make lots (and lots) of money?
Date:	23 Jan 2005 14:59:26 -0800

i think the opportunity to become exceedingly wealthy comes around in
cycles and it is the talented individuals with foresight, the ability
to handle a large risk, alot of luck and hard work that makes them
succesful. By this i mean if you look in the last say 5 years or so
some individuals made real wealth through the tech boom even though it
bust and by this i mean individuals like the gentlemen who invented
hotmail - a simple idea in hindsight. Guys like Aussie John who have
made a squillion through mortgage broking, in Adelaide we have a guy
called Bernie Lewis who runs his own mortgage broking house and has a
loan book worth 100's of millions that he has built up over 10 years
and his business gets 500 calls per month. Guys like these have taken a
simple idea and earned a killing out of it by positioning themselves at
the right time. There are plenty mortgage brokers around in adelaide
but none are receiving the inflows Bernie has as he has a brand name.
Anyway i know the question has nothing to do with happiness as welathy
people dont own the copyright on happiness but for a laugh Rene Rivkin
is on Australian Story tonight on the ABC so if you get a chance have a
look at that it may be worth a laugh.

"i am truly rich, as my income exceeds my expenses and my expenses
match my wishes"

From:	fruitbat
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sat, 22 Jan 2005 17:09:16 +1100

"Darrin" wrote in message
news:thn3v0lfu32tkdcbbcsunvb9fgucl33d9a@4ax.com...
>I thought I'd start this thread to discuss how individuals become
> wealthy. How did these people create their wealth?

There is a full discussion of exactly this in the BRW issue last year that
contained the BRW Richest 100 list.
In short, there is no one way to do it.

From:	David Segall
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sat, 22 Jan 2005 14:43:35 GMT

Darrin wrote:

>I thought I'd start this thread to discuss how individuals become
>wealthy. How did these people create their wealth? What does one need
>to make the BRW Richest 100 list?
>
>Now for most, money is not the key to happiness - good health and
>family are more than enough.
>
>Some believe in the "slow and steady wins the race" - dilligent
>savers, well educated investors, who have invested in their knowledge
>to build wealth through their careers and use their salaries to build
>wealth over the long-term.
>
>However, what is needed to build sufficent wealth in the short to
>medium term? Do we work our way up the corporate ladder or do we
>create our own businesses? Do we buy other people's businesses? What
>type of risks do we need to take? What personality traits do we need
>to possess?
>
>Does anyone have stories of people (or themselves) who have achieved
>financial success?
>
>Discuss... ;)
>
>
I am convinced that almost all rich people believe that money is a
measure of their worth in exactly the same way that some students
believe their worth is measured by the marks they achieve in the
subjects they are studying. It helps if they are convinced that others
are trying to rob them of their rewards because then they can justify
immoral business (or academic) practices.

Of course, in both business and academia there are some underlying
talents that are required for success. The rich will make the most of
their own talents and choose a corporate, entrepreneurial or even
political, role accordingly.

From:	B J Foster
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 08:42:28 +1100

David Segall wrote:
> Darrin wrote:
>
>
>>I thought I'd start this thread to discuss how individuals become
>>wealthy. How did these people create their wealth? What does one need
>>to make the BRW Richest 100 list?
>>
>>Now for most, money is not the key to happiness - good health and
>>family are more than enough.
>>
>>Some believe in the "slow and steady wins the race" - dilligent
>>savers, well educated investors, who have invested in their knowledge
>>to build wealth through their careers and use their salaries to build
>>wealth over the long-term.
>>
>>However, what is needed to build sufficent wealth in the short to
>>medium term? Do we work our way up the corporate ladder or do we
>>create our own businesses? Do we buy other people's businesses? What
>>type of risks do we need to take? What personality traits do we need
>>to possess?
>>
>>Does anyone have stories of people (or themselves) who have achieved
>>financial success?
>>
>>Discuss... ;)
>>
>>
>
> I am convinced that almost all rich people believe that money is a
> measure of their worth in exactly the same way that some students
> believe their worth is measured by the marks they achieve in the
> subjects they are studying. It helps if they are convinced that others
> are trying to rob them of their rewards because then they can justify
> immoral business (or academic) practices.
>
> Of course, in both business and academia there are some underlying
> talents that are required for success. The rich will make the most of
> their own talents and choose a corporate, entrepreneurial or even
> political, role accordingly.
>

See Covey's 7 Habits - it has a matrix showing financial, family & other
dimensions. You can't manage something without measuring it. How much is
enough? That depends on how you measure the other dimensions.

From:	Market Theory
Subject:	Re: How do you make lots (and lots) of money?
Date:	22 Jan 2005 13:52:04 -0800

B J Foster wrote:
> Darrin wrote:
> > I thought I'd start this thread to discuss how individuals become
> > wealthy. How did these people create their wealth? What does one
need
> > to make the BRW Richest 100 list?
>
> The "Millionaire Next Door" defines "wealthy" as the means to live
for
> 10 years without an income.
Does the dole count as income?

;-)

--mt.

From:	B J Foster
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 09:06:55 +1100

Market Theory wrote:
> B J Foster wrote:
>
>>Darrin wrote:
>>
>>>I thought I'd start this thread to discuss how individuals become
>>>wealthy. How did these people create their wealth? What does one
>>
> need
>
>>>to make the BRW Richest 100 list?
>>
>>The "Millionaire Next Door" defines "wealthy" as the means to live
>
> for
>
>>10 years without an income.
>
> Does the dole count as income?
>
> ;-)
>
> --mt.
>

Since the "means" is the Commonwealth & in theory the Commonwealth
cannot be bankrupted, YES - this is the ultimate wealth. ;-)

Dunno about the lifestyle tho'

From:	Public Image Ltd
Subject:	Re: How do you make lots (and lots) of money?
Date:	23 Jan 2005 20:06:16 -0800

phil_herring@yahoo.com.au wrote:

> Chance plays a very big part in putting people in the BRW rich list.

That's shifting the goal-posts a bit. The Kowalski definition is
essentially a paid-off home and a decent income stream. Anyone with
significant super is in that category. Military people can get there
after 20 years. Whether they can afford a _lavish_ lifestyle is another
matter, but they can probably afford the same middle-class lifestyle
they are used to, provided they don't try to upgrade houses, take on
kids' education, live overseas half the time, etc.

There are numerous routes to getting into BRW, but almost all of those
people will be very well connected, at least eventually. Your average
wage-slave doesn't really understand connections, except insofar as it
advances their career. In business, the magnitude of the impact is much
greater. Look at John Elliott. He reckons he can come-back, provided
they don't bankrupt him. He's probably right. Look at Holmes a Court.
I've heard Janet say that whenever the company was a bit short, Robert
simply got on the phone and did a deal. The vast majority of the
wage-slave population have no concept of that. The fact that both of
those guys eventually came unstuck does not change the essential point
about cultivating connections. Very few loners make it to that extent.

From:	B J Foster
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sat, 22 Jan 2005 18:19:36 +1100

Darrin wrote:
> I thought I'd start this thread to discuss how individuals become
> wealthy. How did these people create their wealth? What does one need
> to make the BRW Richest 100 list?

The "Millionaire Next Door" defines "wealthy" as the means to live for
10 years without an income. They key aspect here, usually forgotten is
control of spending.

>
> Now for most, money is not the key to happiness - good health and
> family are more than enough.
>
> Some believe in the "slow and steady wins the race" - dilligent
> savers, well educated investors, who have invested in their knowledge
> to build wealth through their careers and use their salaries to build
> wealth over the long-term.
>
> However, what is needed to build sufficent wealth in the short to
> medium term? Do we work our way up the corporate ladder or do we
> create our own businesses? Do we buy other people's businesses? What
> type of risks do we need to take? What personality traits do we need
> to possess?

I read somewhere that criminals and entrepeneurs have similar
personalities. The difference lies in personal values and intelligence.
Of course, there are wealthy individuals with neither as well.

>
> Does anyone have stories of people (or themselves) who have achieved
> financial success?
>
> Discuss... ;)
>
>

By the MND definition, many middle-class Australians would qualify -
including myself. The next generation will struggle though, because
goverments (all levels) are engaged in wholesale robbery and we are
spending more than we are saving and we will be trapped by simultaneous
inflation, salary caps and outrageous property prices. All those who
voted for Johnny start squirming now.

From:	sarge
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sat, 22 Jan 2005 10:26:03 GMT

B J Foster wrote:
>
>
> Darrin wrote:
>
>> I thought I'd start this thread to discuss how individuals become
>> wealthy. How did these people create their wealth? What does one need
>> to make the BRW Richest 100 list?
>
>
> The "Millionaire Next Door" defines "wealthy" as the means to live for
> 10 years without an income. They key aspect here, usually forgotten is
> control of spending.
>
I thought it defined "wealthy" or more accurately "affluent" as being in
a position whereby your assets produced recurring income able to cover
your recurring costs for the REST of your life.

I believe the formula was something along the lines of "A/10*I" where

A = Your Age
I = Your lasts years gross income.

If the figure you came up with was less then the value of your
investable assets (ie. don't count lifestyle assets such as your house
or car only things that produce an income for you) then you were
affluent, if it was less then you were not.

The main thing here was that it was your passive income in relation to
your expenses that was the important issue not the ability to draw down
on your assets to fund your lifestyle. It was also highly important to
recognise that anything that results in more money leaving your pocket
then what it puts in to it is not an asset, but rather a liability -
this could include things such as negatively geared property or shares
that don't produce an income.

Then again maybe a I read a different edition to you. The second book
"The Millionaire Next Doors Mind" (?) sucked in my opinion. This was
quite a disappointment especially since the original, in my opinion, is
a must read for anyone who is even contemplating investing any money in
any asset.

>>
>> Now for most, money is not the key to happiness - good health and
>> family are more than enough.
>>
>> Some believe in the "slow and steady wins the race" - dilligent
>> savers, well educated investors, who have invested in their knowledge
>> to build wealth through their careers and use their salaries to build
>> wealth over the long-term.
>>
>> However, what is needed to build sufficent wealth in the short to
>> medium term? Do we work our way up the corporate ladder or do we
>> create our own businesses? Do we buy other people's businesses? What
>> type of risks do we need to take? What personality traits do we need
>> to possess?
>
>
> I read somewhere that criminals and entrepeneurs have similar
> personalities. The difference lies in personal values and intelligence.
> Of course, there are wealthy individuals with neither as well.
>
I like the analogy.

>>
>> Does anyone have stories of people (or themselves) who have achieved
>> financial success?
>>
>> Discuss... ;)
>>
>>
>
> By the MND definition, many middle-class Australians would qualify -
> including myself.

The bulk of middle class Australians would fail miserably on the basis
that the bulk of their assets are tied up in the "value" of their family
home. Very few have a passive income that would cover their living costs
and most don't even have enough assets outside the family home to live
for 1 year let alone 10. To all those that do - congratulations, but you
may still have a long way to go to be able to live for ever from your
passive income and be truly affluent.

> The next generation will struggle though, because
> goverments (all levels) are engaged in wholesale robbery and we are
> spending more than we are saving and we will be trapped by simultaneous
> inflation, salary caps and outrageous property prices. All those who
> voted for Johnny start squirming now.
>
The problem does not sit with the government, inflation, salaries or
property prices. The problem is a lack of savings commitment by the
current generation (of which I am one, ie. under 35). People spend more
then they earn - it is that simple. The old adage of pay yourself before
you pay anyone else still applies and those that do not adhere to this
will always struggle no matter what else changes. In a world where house
prices were 50% below where they are today, salaries 50% higher,
inflation 0% and tax halved there would still be plenty of people who
would never save enough to make them fit the criteria of affluent.
People often winge and look for others to blame for their situation (its
the governments fault or property prices are too high) but the real
person to blame is often looking at them in the mirror everyday.

Very few people in the world today, of any generation, do not/did not
have the capacity to be affluent it is just that they were too stupid to
know what to do, to proud to ask for help getting there or lazy to do
what was required. Unfortunately for most it is the later of these things.

sarge

From:	B J Foster
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sat, 22 Jan 2005 22:52:16 +1100

sarge wrote:
> B J Foster wrote:
>
>>
>>
>> Darrin wrote:
>>
>>> I thought I'd start this thread to discuss how individuals become
>>> wealthy. How did these people create their wealth? What does one need
>>> to make the BRW Richest 100 list?
>>
>>
>>
>> The "Millionaire Next Door" defines "wealthy" as the means to live for
>> 10 years without an income. They key aspect here, usually forgotten is
>> control of spending.
>>
> I thought it defined "wealthy" or more accurately "affluent" as being in
> a position whereby your assets produced recurring income able to cover
> your recurring costs for the REST of your life.
>
> I believe the formula was something along the lines of "A/10*I" where
>
> A = Your Age
> I = Your lasts years gross income.
>
> If the figure you came up with was less then the value of your
> investable assets (ie. don't count lifestyle assets such as your house
> or car only things that produce an income for you) then you were
> affluent, if it was less then you were not.

You're probably right about the exact formula.

I think you can assume that if you *can* live for 10 years without an
income (drawing down the capital only), then adding 5% or so on that
*and* a salary, then you would be quite comfortable.

>
> The main thing here was that it was your passive income in relation to
> your expenses that was the important issue not the ability to draw down
> on your assets to fund your lifestyle. It was also highly important to
> recognise that anything that results in more money leaving your pocket
> then what it puts in to it is not an asset, but rather a liability -
> this could include things such as negatively geared property or shares
> that don't produce an income.

Yes, I agree. In particular, the high-flying stockbroker type paying off
his Ferrari may not be wealthy because if he lost his job he wouldn't be
able to maintain his lifestyle. Wealth was defined as relative to
lifestyle - i.e. crank up your lifestyle and you're less wealthy because
you're increasing your liabilities.

>
> Then again maybe a I read a different edition to you. The second book
> "The Millionaire Next Doors Mind" (?) sucked in my opinion. This was
> quite a disappointment especially since the original, in my opinion, is
> a must read for anyone who is even contemplating investing any money in
> any asset.
>
>>>
>>> Now for most, money is not the key to happiness - good health and
>>> family are more than enough.
>>>
>>> Some believe in the "slow and steady wins the race" - dilligent
>>> savers, well educated investors, who have invested in their knowledge
>>> to build wealth through their careers and use their salaries to build
>>> wealth over the long-term.
>>>
>>> However, what is needed to build sufficent wealth in the short to
>>> medium term? Do we work our way up the corporate ladder or do we
>>> create our own businesses? Do we buy other people's businesses? What
>>> type of risks do we need to take? What personality traits do we need
>>> to possess?
>>
>>
>>
>> I read somewhere that criminals and entrepeneurs have similar
>> personalities. The difference lies in personal values and
>> intelligence. Of course, there are wealthy individuals with neither as
>> well.
>>
> I like the analogy.
>
>>>
>>> Does anyone have stories of people (or themselves) who have achieved
>>> financial success?
>>>
>>> Discuss... ;)
>>>
>>>
>>
>> By the MND definition, many middle-class Australians would qualify -
>> including myself.
>
>
>
> The bulk of middle class Australians would fail miserably on the basis
> that the bulk of their assets are tied up in the "value" of their family
> home. Very few have a passive income that would cover their living costs
> and most don't even have enough assets outside the family home to live
> for 1 year let alone 10. To all those that do - congratulations, but you
> may still have a long way to go to be able to live for ever from your
> passive income and be truly affluent.

Yup. I said "many", not "most". I forget the exact figures, but I heard
of a survey done in WA that found that over 90% of people would retire
with insufficient capital to maintain half their income for their life
expectancy.

>
>> The next generation will struggle though, because goverments (all
>> levels) are engaged in wholesale robbery and we are spending more than
>> we are saving and we will be trapped by simultaneous inflation, salary
>> caps and outrageous property prices. All those who voted for Johnny
>> start squirming now.
>>
> The problem does not sit with the government, inflation, salaries or
> property prices. The problem is a lack of savings commitment by the
> current generation (of which I am one, ie. under 35). People spend more
> then they earn - it is that simple. The old adage of pay yourself before
> you pay anyone else still applies and those that do not adhere to this
> will always struggle no matter what else changes. In a world where house
> prices were 50% below where they are today, salaries 50% higher,
> inflation 0% and tax halved there would still be plenty of people who
> would never save enough to make them fit the criteria of affluent.
> People often winge and look for others to blame for their situation (its
> the governments fault or property prices are too high) but the real
> person to blame is often looking at them in the mirror everyday.
>
> Very few people in the world today, of any generation, do not/did not
> have the capacity to be affluent it is just that they were too stupid to
> know what to do, to proud to ask for help getting there or lazy to do
> what was required. Unfortunately for most it is the later of these things.
>
> sarge

The government, and by extension, we are responsible for the money
supply. The government prints money because we want them to. Absolutely
everything is going up, except Chinese-made DVD players and plasma TVs.
Why save when your money is worth less tomorrow? The problem is that a
whole new generation has grown up without the ravaging effects of overt
inflation - so they're blind to the current inflation-by-stealth.

From:	John Wright
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 13:39:51 +1100

"B J Foster" wrote in message
>> I thought it defined "wealthy" or more accurately "affluent" as being in
>> a position whereby your assets produced recurring income able to cover
>> your recurring costs for the REST of your life.
>>
>> I believe the formula was something along the lines of "A/10*I" where
>>
>> A = Your Age
>> I = Your lasts years gross income.
>>
>> If the figure you came up with was less then the value of your investable
>> assets (ie. don't count lifestyle assets such as your house or car only
>> things that produce an income for you) then you were affluent, if it was
>> less then you were not.
>
> You're probably right about the exact formula.
>
Somehow I have difficulty with this formula, a key factor is missing.

At the top the stated requirement is the ability "to cover your recurring
costs for the REST of your life". So the formula must use the required
annual living cost; but I don't see it. It uses only Age, Income, and
investable asset. For a given value of these three factors, person A can be
wealthy and B not so, if A's living cost is low enough - that is the thrust
of the book as I understand it.

Say age is 50, and gross income is $50K/year; so having 50/10*50 = $250K
investable assets is enough? Doubt it very much.

Could someone please produce the exact formula after consulting the book?
Thanks.

Regards - JW

From:	sarge
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 03:30:11 GMT

John Wright wrote:
> "B J Foster" wrote in message
>
>>>I thought it defined "wealthy" or more accurately "affluent" as being in
>>>a position whereby your assets produced recurring income able to cover
>>>your recurring costs for the REST of your life.
>>>
>>>I believe the formula was something along the lines of "A/10*I" where
>>>
>>>A = Your Age
>>>I = Your lasts years gross income.
>>>
>>>If the figure you came up with was less then the value of your investable
>>>assets (ie. don't count lifestyle assets such as your house or car only
>>>things that produce an income for you) then you were affluent, if it was
>>>less then you were not.
>>
>>You're probably right about the exact formula.
>>
>
> Somehow I have difficulty with this formula, a key factor is missing.
>
> At the top the stated requirement is the ability "to cover your recurring
> costs for the REST of your life". So the formula must use the required
> annual living cost; but I don't see it. It uses only Age, Income, and
> investable asset. For a given value of these three factors, person A can be
> wealthy and B not so, if A's living cost is low enough - that is the thrust
> of the book as I understand it.
>
> Say age is 50, and gross income is $50K/year; so having 50/10*50 = $250K
> investable assets is enough? Doubt it very much.
>
> Could someone please produce the exact formula after consulting the book?
> Thanks.
>
> Regards - JW
>
>
>
JW,

I have gone and pulled the book out of the bookshelves and had a quick
read (highly recommend anyone who hasn't read this book buy a copy of it
and Peter Thornhill's "Motivated Money").

I had the right formula, but out on the definition. A person whose net
worth (investable assets) is between 0.5x and 2x the answer calculated
has the average amount of assets expected. A person whose net worth is
2x or more is wealthy or affluent. So if they have $250,000 in net
assets they are doing OK, if they have $500,000+ they would be
considered affluent.

This is from "The Millionaire Next Door" printed by Harper Collins in
2001 (originally printed in 1996). On page 13 under the heading "How to
Determine if you are Wealthy"

"Multiply your age times your realised pretax annual household income
from all sources except inheritances. Dived by 10. This, less any
inherited wealth, is what your net worth should be."

This is essentially the same formula I gave before.

The example they use is some one aged 41 earning $143,000 per annum
(with investments making another $12,000 per annum). This persons net
worth should be $635,500.

It then goes on to describe people as being either PAWs (prodigious
accumulators of wealth), AAWs (Average accumulators of wealth) or UAWs
(under accumulators of wealth).

PAWs have 2x or more the figure using the above calculation. AAWs
between 0.5x and 2x the figure derived and UAWs less then 0.5x the
figure calculated.

Again we are only talking investable assets, not lifestyle assets (ie
not the family home or cars or boats etc.)

Hope this clears things up.

sarge

From:	phil_herring at yahoo.com.au
Subject:	Re: How do you make lots (and lots) of money?
Date:	23 Jan 2005 16:20:13 -0800

Darrin wrote:

> The common factor amongst the wealthy seems to be their involvement
in
> businesses - whether as a owner or an investor. Furthermore, they all
> seem to posses the necessary motivation and drive to succeed.

The factor you're missing: luck.

There is a very strong selection factor in the data you're looking at;
you're only seeing the ones that succeeded. Along the way, many times
that number have failed.

You can be as motivated, talented and educated as all get-out, you can
have the best advice, great aopportunities, adequate capital and plenty
of time... and you can still fail. The world is not a meritocracy.
Playing fields are never level, and circumstances change unpredictably.
Chance plays a very big part in putting people in the BRW rich list.
-- Phil

From:	sarge
Subject:	Re: How do you make lots (and lots) of money?
Date:	Mon, 24 Jan 2005 06:00:22 GMT

phil_herring@yahoo.com.au wrote:
> Darrin wrote:
>
>
>>The common factor amongst the wealthy seems to be their involvement
>
> in
>
>>businesses - whether as a owner or an investor. Furthermore, they all
>>seem to posses the necessary motivation and drive to succeed.
>
>
> The factor you're missing: luck.
>
> There is a very strong selection factor in the data you're looking at;
> you're only seeing the ones that succeeded. Along the way, many times
> that number have failed.
>
> You can be as motivated, talented and educated as all get-out, you can
> have the best advice, great aopportunities, adequate capital and plenty
> of time... and you can still fail. The world is not a meritocracy.
> Playing fields are never level, and circumstances change unpredictably.
> Chance plays a very big part in putting people in the BRW rich list.
> -- Phil
>
There's no such thing as luck when it comes to the business of making
money. People make their own luck, usually by being willing to put in
the hard yards necessary to be a success.

sarge

From:	Greg Martin
Subject:	Re: How do you make lots (and lots) of money?
Date:	Mon, 24 Jan 2005 21:15:27 +1100

"sarge" wrote in message
news:W90Jd.131744$K7.14800@news-server.bigpond.net.au...
> phil_herring@yahoo.com.au wrote:
>> Darrin wrote:
>>
>>
>>>The common factor amongst the wealthy seems to be their involvement
>>
>> in
>>
>>>businesses - whether as a owner or an investor. Furthermore, they all
>>>seem to posses the necessary motivation and drive to succeed.
>>
>>
>> The factor you're missing: luck.
>>
>> There is a very strong selection factor in the data you're looking at;
>> you're only seeing the ones that succeeded. Along the way, many times
>> that number have failed.
>>
>> You can be as motivated, talented and educated as all get-out, you can
>> have the best advice, great aopportunities, adequate capital and plenty
>> of time... and you can still fail. The world is not a meritocracy.
>> Playing fields are never level, and circumstances change unpredictably.
>> Chance plays a very big part in putting people in the BRW rich list.
>> -- Phil
>>
> There's no such thing as luck when it comes to the business of making
> money. People make their own luck, usually by being willing to put in the
> hard yards necessary to be a success.
>
> sarge

Not sure I agree.

My Dad worked seriously hard and it didn't get him rich.

I think that there is a fair few rich people who won't acknowledge that part
of their good fortune was being in the right place at the right time.

I think there would be a pride thing where you don't admit to luck when it
looks far better to have succeeded due your own efforts completely.

But I would say that luck, in any event, would go only part of the way, and
hard work (and smart work) the rest.

From:	John Wright
Subject:	Re: How do you make lots (and lots) of money?
Date:	Mon, 24 Jan 2005 20:31:53 +1100

"sarge" wrote
> There's no such thing as luck when it comes to the business of making
> money. People make their own luck, usually by being willing to put in the
> hard yards necessary to be a success.
>
> sarge

Any number of books and stories are out there showing successful people who
have put in hard yards. "People make their own luck" is the message
generally and universally accepted.

Pointing to someone - or even many of them - who have toiled and achieved
greatness/wealth is not enough to reach any conclusion about cause and
effect, any statistician will tell you. For reaching at sound conclusion,
one has to also study several others who DIDN'T achieve greatness/wealth -
and show that they consistently didn't do whatever these successful ones
did - somewhat like they study patients with genuine and placebo medication
to confirm cause and effect relationship.

It is entirely possible that other factors play a part, even a major or
overwhelming part, in achieving wealth and success. It is possible that that
factor is luck. Who knows? Very difficult to prove or disprove conclusively.

Some might consider even thinking this way a defeatist attitude, certain to
lead to failure in life. But that is not something based on reasoning or
evidence.

Regards - JW

....... "All I know is, I don't know!" - JW

From:	Bill M
Subject:	Re: How do you make lots (and lots) of money?
Date:	Sun, 23 Jan 2005 06:49:04 +1100

First thing for sure it won't happen overnight unless you win lotto or you
get an inheritance. It's got to start off with hard work and saving those
$$. The hardest thing for most Aussies is getting that first 5K together. I
still have 50 year old mates borrowing $20 from me just to buy their lunch
until pay day every week.

That's not answering your question though. You got to make the start by
saving your first 5k. Nothing will happen before that. If you can not get to
that point you have no hope. Once you have achieved that then invest it
wisely then save your next 5K. Wow, you might say it might take a year to do
that but it is so important this first step that if you don't do it you
probably never will.

Once you have saved up enough and you have your first mortgage and you are
paying that off comfortably then you get the investment property (this is
after you have saved those 5K chunks over and over). If you can get the
second investment property even better. At one stage I was working long
hours in a simple job doing as much O/T as possible to cover my 2 investment
property mortgages. As long as you can work your normal job, rent your
properties and cover the payments with your salary you won't go broke. Keep
this up for as long as it takes to see your properties jump in price, lets
say about 50%. You could then sell out and make that profit or just keep
them and keep going until you have reached your desirable appreciation
level. Sometimes this can take so long but sometimes it can happen in 5
years, it's a bit of market timing and luck.

When you get to a level when you think you can generate a reasonable income
if you liquidate your property (for me that's about $25K a year without a
mortgage to pay) you can liquidate. Then you can put your cash into more
manageable investments such as fully franked shares, property trusts and
cash investments. Property is not easy and not a sure way but it is a way.

I am still not answering your question, "lots and lots of money", if I knew
that I wouldn't be happy with 25K a year. I think seriously to make lots and
lots of money you need to have your own business that is thriving and has
little competition and which ever business you choose there will be no short
cuts, you will work long hours and very very hard. Good luck.

"Darrin" wrote in message
news:thn3v0lfu32tkdcbbcsunvb9fgucl33d9a@4ax.com...
>I thought I'd start this thread to discuss how individuals become
> wealthy. How did these people create their wealth? What does one need
> to make the BRW Richest 100 list?
>
> Now for most, money is not the key to happiness - good health and
> family are more than enough.
>
> Some believe in the "slow and steady wins the race" - dilligent
> savers, well educated investors, who have invested in their knowledge
> to build wealth through their careers and use their salaries to build
> wealth over the long-term.
>
> However, what is needed to build sufficent wealth in the short to
> medium term? Do we work our way up the corporate ladder or do we
> create our own businesses? Do we buy other people's businesses? What
> type of risks do we need to take? What personality traits do we need
> to possess?
>
> Does anyone have stories of people (or themselves) who have achieved
> financial success?
>
> Discuss... ;)
>
>
>