Before you start investing read this.

Investment Goals

The goal of investing is to achieve passive income. Passive income is income which you do not need to work for.

Before you start investing there are some basic concepts that you need to understand if not you will fail. Just reading this will put you ahead of the average person.

Fund facts: for an average working person.

  1. A million dollars will allow you to retire at the same standard of your working life.
  2. Three million dollars will provide you a better lifestyle than what you had during your working life. It will also allow you to leave money for the kids giving them a chance at financial freedom.
  3. Thirteen million dollars will generate around a million dollars of income each year. This is a tough goal but achievable.

Like everything in life there are universal rules that you need to understand and work with if you want to be a successful investor:

  1. There is a finite amount of money in the world.  For you to accumulate more money it must come from someone else. Rich is a relative term; it means you have more money than the average person. How rich you are is determined by comparing your wealth to the average person.
  2. You need to educate yourself and understand how investments work. There are three main investments; cash, property, and shares. Understanding what you are invested in is the key to success. Spend the time to educate yourself and make sure you continue to increase your level of knowledge over time. Spend some time every day doing this and you will amass knowledge over time.
  3. Have a professional to assist you. Take the time to find the right professional adviser who understands what you are trying to achieve and has the skills relevant to the investments you what. Make sure that they are highly qualified and have experience in the sector.  A good adviser will not be cheap as but the will they add more value. Listen to them but make your own decision and own it.
  4. You will have losses, learn from them. Too many people use investment losses as a reason to stop investing and start spending again. Spending will make you happy, not rich.
  5. Growing wealth take a long time.  The first 10 years is slow, and you feel you are getting nowhere. The next 10 years you start to see the benefits of compounding and you starts feeling the benefits of your hard work. Yes, it takes most people that long.
  6. Continue to save money and add to your investment, this will super charge the growth of your portfolio. You need to reduce your current lifestyle if you want a better lifestyle in the future for you or your family.  If you just put in the initial capital and nothing else you will be disappointed with the results.

Investment Return, Tax and Fees – The holy trinity of wealth accumulation

One of the big mistakes is to be focused on only one part of the holy trinity. This mainly happens as new investors tend to skip through rule 2 above.

The main traps new investors fall into:

  1. Tax – the process of losing money to save tax is a flawed strategy and puts you behind from the start. There are better ways to reduce tax. First up is super contribution.
    1. Fees – a good adviser will make you more money than what they charge you. They have more knowledge than you, which is why you need them. It is the engineer and hammer story.
    1. Investment Returns – markets are volatile, focus on the average return overtime not the daily change. Chasing last week’s return is a flawed process.

The trick to good returns is to make sure that your investments strategy is structured to make the most of investment returns, keeping tax as low as possible and making sure you are getting value for money from your adviser.


The big complaint I hear regarding Superannuation is that you can not access it when you want. Superannuation has many benefits and not having access to it is one of the best ones. You need time to create wealth and superannuation gives you that.

Superannuation also complements the holy trinity as discussed above.  It has the lowest tax rates, fees are generally on the low side, and you have a large choice of investments allowing you to find one which matches your risk profile.

Investing for kids – teach them to how to fish.

Before you start putting money away for your kids when they turn 18,  decide if you are going to give them a lump sum or the skills to create their own wealth.

Parents want the best for their children.  The best gift for any child is knowledge. Give them the ability and know how to fend for themselves. Giving them the money to get started on their wealth journey is great but it must come with the knowledge to be successful.

Teach them the above basic concepts and get them involved in any investment you make for them otherwise they will be back with hand out for more once the initial payment is spent.

 Please contact us if you would like more information.

Articles | Newsletter

March 8, 2023

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