Managing your life through the rear-view mirror …

Not many people are rich, so following COMMON financial wisdom can’t be all that it’s cracked up to be, can it?

Case in point: paying down your mortgage is a subject that always gets a rise out of my readers.

I see it very simply:

If mortgage rates are currently 5%, what investments can give you 5% + whatever margin you feel you need to compensate you for risk?

How ‘risky’ is that risk? And, what do you stand to lose?

Some people, like Executioner, look at the 100% risk/loss scenario:

Although I’ll concede that it is unlikely that a broad index fund would ever drop to zero, it’s not outside the realm of possibility.

Sure, it’s not outside the realms of possibility, but has it EVER happened?

What’s the worst 30 year return that the stock market (as represented by, say, the entire S&P500), a basket of ‘blue chips’ (say, Coke + Berkshire Hathaway + GE + IBM etc.) have returned, or any solid piece of real-estate (be it residential or commercial)?

I’m betting that it’s not zero … not, by a long-shot!

But, maybe the rules have suddenly changed?

Neil thinks so, at least when it comes to house values:

House appreciation used to be a sure bet, but it isn’t any more.

But, I can’t help wondering … we used to say: “the market is going UP, blue sky everywhere … the rules have changed, it’s going to keep going UP”.

And, that thinking, of course, lead to ridiculously high valuations of both stocks and RE … and, a correction had to come.

And, it did. Big time!

Now, we seem to be saying: “no 8% returns for next 30 years [Executioner]” or “House appreciation used to be a sure bet, but it isn’t any more [Neil]” … “the risk/reward balance is different now [I made this one up]“.

So, I can’t help wondering:

If this is really the case … if things really weren’t different BEFORE (i.e. the market couldn’t keep climbing) are they really different NOW (or, can the market really keep falling?) …

… or, are we just guilty of doing more ‘rear mirror’ personal financial management?

I can’t give you the answer … only 30 years of ‘future history’ can do that!

But, if things haven’t suddenly changed PERMANENTLY – if the fundamental principles really haven’t changed – then, isn’t a ‘down market’ a GOOD time to buy?

Or, is that just the way that Warren Buffett thinks?

And, I know one which side of this coin I’ll be betting on

Financial rock’n'roll …

I don’t think that I ever mentioned it at the time, but I went to Warren Buffett’s Annual General Meeting in Omaha in 2008.

It was like going to a rock concert … without the music.

It was held at some football stadium, which was packed with 30,000 (maybe more?!) people and Warren Buffett and his long-time business partner, Charlie Munger sitting at a table with three large video screens behind them (just showing Warren and Charlie sitting at the table … only MUCH larger!).

They basically spent the day munching on Sees Candy (peanut brittle, I believe) and sipping on Coke …

Warren invites all the ‘international visitors’ [AJC: That's anybody who registers with a foreign passport as their ID ... I have a US driver's license, of course, but I heard that there were 'extra benefits" to registering using international ID] to a meet and greet.

This meant bringing anything that you bought from his trade show in the huge conference hall attached to the stadium (he has stands from a number of the 70+ businesses that he owns) and he and Charlie will shake your hand and sign it one item that you bought.

But, he stopped doing that – after 2008 – because there was a line of 1,000+ people waiting to shake his hand and get their signature. I know this, because when I got to him, the World’s Greatest Investor spoke to me!

He said (looking visibly paled): “Are there many more people in this line”. Sadly, I had to say there were …

Still, I got my $5 T-shirt signed, and had it framed with a couple of Warren Buffett and Charlie Munger playing cards (!), a couple of pictures that I printed from a web-site after googling “warren buffett”, and my round official entry badge.

Which has nothing to do with anything other than Bill McNabb – who replaced the famous founder of Vanguard (with their famous, low-cost Index Funds), John Bogle, who also seems to afford ‘rock star status’ with fans of his investing philosophy (which, naturally centers around buying and holding Index Funds) calling themselves Bogleheads and acting more like rockstar groupies than investing disciples – recently said that one “essential ingredient” in the investing and advice business, is:

Simplicity, which is exemplified by the “Five-Minute Rule” first coined by Richard Ennis of the pension consulting firm Ennis, Knupp: “If you don’t understand the thesis underlying an investment in five minutes or less, take a pass.”

This equally reminds me of a recent story of a company that a friend of mine was CEO of that existed solely to build, manage, and sell tax-advantaged agricultural ‘investments’:

Basically, this company did complex deals with rural land-owners, farmers, and so on to plant certain crops and sell shares to private investors; the advantage to the investors being (a) immediate and attractive tax-deductions, and (b) future (i.e. 10 to 30 year) capital returns … trees take a LONG time to grow!

Given that one friend was their CEO, another one of their key operations directors, and a third an enthusiastic ‘professional’ (counting, amongst others, my wife as his client) who positively represented the project to a number of my affluent friends who were also his clients, you may ask how much I invested in the company.

The answer is ZERO.

You see, I don’t invest in anything:

1. That eats or grows (because eventually it will stop eating, stop growing, and will die),

2. Uses tax-advantages as one of its key features (because I don’t mind paying my fair share of tax and governments have a sneaky habit of changing the tax rules),

3. Because of the 5-minute rule (if I don’t IMMEDIATELY understand it, I don’t buy it … and, truth be told, I don’t IMMEDIATELY understand much).

Postscript: because of the Australian drought, many of the trees did die, and the government did change the tax rules, and the company did go broke … and, many of my friends did lose 100% of their investment.

And, I still don’t understand the business 5,000,000 minutes later

None of my friends know that I blog ;)

It’s true, I am the ultimate Secret Blogger …

… only two of my closest friends even know that I do blog – about personal finance – but, I won’t even tell them the name of my blog or my ‘pen name’!

[AJC: By now, you probably know that Adrian John Cartwood isn't my real name - only the Adrian part is. For no reason that I can understand, my daughter started calling me 'Adrian John Cartwood" when she was 7 ... well, when the idea to write this blog sprang to mind in 2008, AJC was the natural choice!]

It’s not comfortable to talk about money: but, I resolved from Day 1 that this blog would need to be authentic and I would have to share the most gruesome details of my financial life.

So, when Bob asked:

From your “I’m a money hacker” post:

What is some financial advice you could give our readers?

Most people don’t really know how much house they can afford, so let me give your readers some very specific advice that will help them through every stage of their own financial journey: never have more than 20% of your Net Worth invested in your own house…

Do I understand from this post that $5M of your $7M net worth is in your own house?

… I can, from a position ‘protected’ by semi-anonymity, remind our readers that my $7 million journey represents a 7 year ‘slice’ of my financial life from when I started $30k in debt in 1998 and ended up with $7 million in the bank in 2004.

My recent ‘bad beat‘ post talks about what happened between 2008 and now

But, the years in-between (i.e. 2004 to 2008) were very kind to me: dominated by a series of sales of my Australian, New Zealand, and US businesses to a UK public company … it was almost literally raining money for those years.

But, this is a personal finance blog, not a business blog, so I concentrate on the $7m7y because I believe that is repeatable by almost any of my readers.

Even so, my $5 million (cash) house certainly breaks the 20% Rule (my net worth would need to be $25m+) but, it doesn’t matter!

You see, the 20% Rule only applies when you are still chasing your Number!

When you have reached your Number (Making Money 301), THE RULES CHANGE:

Remember when you calculated your Number?

You:

1. Took your required annual living expenses (of course, adjusted for future inflation until your chose ‘retirement’ Date) and multiplied that by 20, and

2. ADDED in the value of your house (plus any additional cash required to pay off the mortgage), initial cars, and any other one-time purchases.

Once you reach your Number, you no longer require 75% of your Net Worth to be in investments: you ‘only’ require the amount that you came up with in Step 1.

So, you can buy as much ‘stuff’ (houses, vacation homes, cars, etc.) as you like with any extra cash that you happen to have!

For me, it doesn’t really matter how much house I bought, as long as I still have >$5m in investments, generating my annual living requirements.

So, Bob, you don’t have to worry about me … yet … I just like to complain

Suffer any bad beats lately?

I have to admit that it’s very exciting seeing my two real-estate development projects coming to fruition [AJC: this is the architect's rendition of just one of my two condo projects ... click on the image to enlarge it ... go ahead ... do it ... I'll love you for it].

I’ll get back to that in a sec’ …

… first, let me tell you about a conversation that I just had with a friend, while we were playing poker today:

FRIEND: Do you find any parallels between business and poker?

AJC: It’s uncanny, but yes I do … and, it’s caused me to totally rethink the way that I think about money

Well, not so much ‘totally rethink’ as remind me about some important Making Money 301 lessons that I seem to have forgotten …

…. but, I keep getting side-tracked; back to the poker:

Case in point: I had quickly tripled my starting stack in a cash game but, just as quickly lost it on a series of bad beats; bad calls (by them, not me); and bad luck.

When you’re running hot, you feel invincible.

When you’re running cold, nothing that you do turns out right.

… and, your poker bankroll quickly slips away.

Well, it’s pretty much the same thing in business and personal finance:

Your investments and/or businesses are ‘on fire’ … the market’s running hot, and – if you’re smart – you cash out at the peak, building up quite a bankroll.

Maybe you even reach your Number.

What should you do then? STOP and smell the roses!

But, the trouble is, greed and the adrenalin kicks in … you believe that you’ve got the Midas Touch. And, you push for the next project.

… and, that’s the one that gets you.

You know, market downturn, bad luck, bad advisers, etc., etc. sob, sob, sob.

Which is, perhaps, why Ill Liquidity asked me:

I don’t get it. You make a tidy sum and retire from the rat race, paying yourself a salary… why go forth and try new money making ventures?

Given my own ‘stop and smell the roses’ advice in that regard, I agree, it’s hard to understand. Sometimes, it’s even hard for me to understand

So, let me take a stab at explaining it; the story so far:

I made my $7 million in 7 years (mainly through reinvesting the profits of my businesses into buy/hold real-estate), and then made a heap more (by selling those businesses just before the 2008 crash), but ….

… then the crash hit, and here’s where my money went:

1. $1.5 million cash into my house in the US (you know I can’t sell that, right?)

2. $5 million cash into my house in Australia

3. 25% of what I sold the businesses for in taxes [AJC: sheesh!]

4. Lost 100% of my $3 million bonus on company stock price crash + taxes paid on the full $3 million [AJC: double sheesh! ... but, it's nice to know that I have a heap of capital gains tax credits to use for the rest of my life]

5. Gave my accountant $1 million to invest in the Aussie stock market for me … he promptly lost 75% in about 6 weeks. My fault for trying to time the market, not his

Don’t feel too sorry for me: when others try to get to sleep by counting sheep, I count millions!

My problem is this:

All of this bad luck and bad management has left me with assets – not including my $5 million primary residence – that I consider just enough to live my Life’s Purpose.

But, I am an über-pessimist and I really want a large margin for error.

Now, in my rational moments, I realize that my house provides me that i.e. as soon as the kids move out, in approx. 10 to 15 years, we will sell down into a, say, $2 million apartment, which would free up another $3 million (all in today’s dollars, but the price differential should still hold true).

But, even that’s not good enough for me.

So the question that I am wresting with – and, have decided to put off answering until I have building permits for both projects in my hands:

Will I take my own advice and sell both development sites (with permits) for a tidy profit (if all goes well), or will I pull the trigger and dump most of my net worth into these developments to get the Really Big Bucks?

Only time will tell … but, you will be amongst the first to know

In the meantime, have you suffered any ‘bad beats’ lately?

Riding the profitability curve …

Take a look at the chart on the left … yes, the one that I’m busy drawing for you

… because, if you’re in business – or aspire to be – whether online or offline, this is a lesson that you simply have to ‘get’ … and, early:

For those of you who have been to business school, there is a space between the sales [blue] and expense [red] lines called PROFIT.

Profit is for growing the business and returning value to the shareholders.

But, in a small business it’s mostly known as OWNERS’ SALARY, because the owners live off this instead of taking a wage … and, it’s usually (barely) enough to fund their ever-growing (assuming the business is becoming more and more successful) lifestyle.

Instead, it should be known as CAPITAL.

You see, large businesses (particularly publicly listed ones) find it easy to raise capital: they simply issue stock.

They trade bits of paper (stock) for more bits of paper (cash) to go ahead and do all the things they need to do in order to expand their businesses (e.g. buy new machinery, open new branches, fund acquisitions).

But, small business owners can’t do that … it’s very hard to raise money as a small business owner, for anything … including expansion.

So, my advice is to fund your own expansion, by retaining profits (instead of spending them on yourself) and using those retained profits to grow the business.

There’s your capital!

Fellow Aussie and business/success coach, Jon Giaan (knowledgesource.com.au) similarly advises aspiring business owners:

When starting a business, most people focus on generating income and lose sight of their long-term goal of having a successful and ‘sustainable’ business that will provide freedom, independence, wealth and support many years into the future. Keep focused on building a long-term asset.

No doubt this is true; Maslow’s Hierarchy puts food/shelter/clothing right at the top …

But, once your business has grown to supporting those needs, your mind starts to look at wants, and before you know it, you NEED your business just to survive mortgage payments, expensive car leases, private school/coach/country club fees, and the list goes on.

Right from the beginning, we had a different view, one that saw the owners of an [eventually] profitable business jointly deciding that the partner not working in the business – my wife – still needed to work her $60k – $90k per year ‘day job’ (as an IT Project Manager with a major telco).

The reason was exactly as Jon says: we wanted to keep “focused on building a long-term asset”.

We knew that it was only by reinvesting the cashflow produced by the business – both within (reinvesting in the business) and without (buying good quality buy/hold real-estate and other investments) that we would eventually reach our Number.

[AJC: Right there, in a nutshell is how we reached $7m7y: use the cashflow from the business to invest instead of spend. A side benefit being that we didn't need to rely on the ongoing success and/or sale of the business to reach our Number. Too easy, huh?]

In fact, we eventually blew our first $7m7y out of the water … but, that’s a whole, other story

From Warren to Phil to Me to You …

Phil’s a great speaker and this is a great story; it tells you where Rule # 1 comes from.

BTW: if you’ve read / got / intend to buy the book, this spreadsheet will help you apply the ‘rules’:

Rule 1 Investing – Worksheets – 90518

The Zero Dollar Emergency Fund!

Last week I asked How many months do you have in your emergency fund?

Earlier, my blogging friend JD Roth at get Rich Slowly (GRS) asked the same question of his readers, and this is what he found:

This shows that more 7m7y readers have 3+ months living expenses in their ‘emergency funds’ than GRS readers, which means …

… I’ve done a terrible job

On the other hand, if you answered “what’s an emergency fund?” good for you, you’re already a step ahead of the pack … you see, not everybody – including me – thinks that you need to have an emergency fund at all!

[AJC: At least not until after you reach Your Number]

For instance, Liz Pulliam Weston writes at MSN Money that you should have a $0 emergency fund, replacing it with a concept that she calls ‘financial flexibility’:

The whole idea that everyone needs a big pile of cash, and needs it right now, should be rethought. In reality, the failure to have a fat emergency fund isn’t inevitably a crisis. At the same time, those who feel safe because they have three or even six months’ expenses saved up might be kidding themselves.

Let’s say your take-home pay is about $4,000 a month. Although you have been spending every dime, you make a concerted effort to trim your expenses by 10%. This not only frees up money for your emergency savings but lowers the total amount you need to save from $12,000 to $10,800.

Still, it will take you 27 months — more than two years — to scrape together your emergency fund. And that assumes nothing comes up that forces you to raid your cache.

Let’s explore this a litter further: JD Roth has $10,000 in his emergency fund, but that doesn’t just represent $10,000 today …

…. it represents the future value of $10,000:

Let’s say that you intend to retire in 20 years, if you earn 9% on your money (say, invested in Index Funds) then you are giving up, say, 2% bank interest (by having your emergency fund sit in an ordinary savings account for quick ‘emergency’ access) to earn 9% – or, a net of 7%.

That extra 7% earned represents about $8k in extra interest/profit that you are giving up for the benefit of ‘peace of mind’ in an emergency. But, we aren’t investing our money in Index Funds, because we are on a mission: we want to reach $7 Million in just 7 Years!

To us – that is, those of us on a steep financial trajectory - this $10k pile of cash represents seed capital for your new business venture or next real-estate acquisition [AJC: and, don't tell me that an extra $10k wouldn't be a big help for either of these endeavors] …

… now, $10k ‘invested’ at:

• 15% (stocks) grows to $35,000 after just 10 years
• 30% (real-estate) grows to $106,000 after just 10 years
• 50% (business) grows to $384,000 after just 10 years

… a slightly larger price to pay for peace of mind

… but, Will Smith isn’t (completely) happy

So, the jury is IN: money does buy (at least some) happiness …

… then, why isn’t Will Smith (who has PLENTY of money) completely happy?!

First, let me backtrack a little:

One of the advantages of being rich – well, 7m7y kind of ‘rich’ – is that acquiring technology isn’t an issue.

That’s why we have a Slingbox, which sends live streaming video from our friend’s satellite TV in Atlanta right to my wife’s PC (or, our home theater) in Australia.

This means that she doesn’t need to miss out on the most current episode of Oprah, and neither do I … on the odd occasion that I happen to be in the same room when she’s watching.

As it happened, on this occasion my wife was catching up on some more recent episodes that she missed while we were busy moving house, and it was how I happened to catch a bit of Will Smith’s Oprah interview.

Will said a couple of things that intrigued me:

First, he said that no matter how much money he accumulates, he never stops worrying about money!

Well, that’s actually good news, because I can see that through every stage of my financial journey, I have never stopped worrying about money.

Good news, because if Will Smith – who must be an order of magnitude or two ahead of me, financially speaking – worries about money, then I can stop worrying about worrying about money.

And, so should you!

It appears that worrying about money is a normal part of the human condition

The second thing that Will said interested me even more: he’s not satisfied with his achievements to date … he can’t believe that he was put on earth merely to entertain people.

It seems that Will hasn’t found his Life’s Purpose!

Confirmation, to me, that fulfilment comes in three parts:

1. Discovering your Life’s Purpose, then

2. Working towards it, using whatever tools/talents you have been given, then

3. Finally, living your Life’s Purpose.

Step 2 is a means to an end (and, there’s no reason why you can’t bypass it if your Life’s Purpose doesn’t require the passing of time, or the accumulation of supporting assets).

But, don’t confuse Step 2. with Step 3. …

… Will Smith might be famous and known for his singing/acting talents, but (for him) it appears they are merely a means to an end.

Discover your ‘end’, and the ‘means’ – even if not as exciting, profitable, and/or high-profile as Will Smith’s - becomes much more palatable.

What do you think?

5 Secrets Of Self-Made Millionaires

I’m a voracious reader of anything that purports to teach you how to be rich … when I needed to learn, I read everything hoping to find ‘the answer’ … and, after I made it, I continued reading (but, I must admit that I am more discerning now) mostly out of curiosity (to see what others are saying).

In both cases, I was almost invariably disappointed … hence this blog.

But, I was pleasantly surprised to read an article with a [groan] headline: 5 Secrets of Self-Made Millionaires …

… it’s actually not that bad. Not rocket-science, but not anywhere near as bad as most similar articles and books are.

Here are the 5 ‘secrets’ and my take on each:

1. Set your sights on where you’re going

T. Harv Eker, author of Secrets of the Millionaire Mind [another groan] says:

The biggest obstacle to wealth is fear. People are afraid to think big, but if you think small, you’ll only achieve small things.

Wanting to be wealthy is a crucial first step.

I obviously agree; if you don’t understand why, you must be a new reader [Hint: It's to do with discovering your Life's Purpose and Your Number / Date]

2. Educate yourself

You’re reading this blog post … and, I wrote it, didn’t I? ‘Nuff said

3. Passion pays off

See 1. above … ZZZZZzzzzzzzzzz

4. Grow your money

Well, d’uh!

But, Loral Langemeier, author of The Millionaire Maker, adds something sensible:

The fastest way to get out of that pattern [the never-ending cycle of living paycheck to paycheck] is to make extra money for the specific purpose of reinvesting in yourself.

[AJC: I would delete the last two words, which are hokum; it doesn't cost much to "reinvest in yourself" except time ... for example, this blog is FREE].

I like this part [AJC: I bolded the part that I like the best ... I like it, because I did it, too; that's how I raised the capital to expand to the USA i.e. from profits left in the business]:

A little moonlighting cash really can grow into a million. Twenty-five years ago, Rick Sikorski dreamed of owning a personal training business. “I rented a tiny studio where I charged $15 an hour,” he says. When money started trickling in, he squirreled it away instead of spending it, putting it all back into the business. Rick’s 400-square-foot studio is now Fitness Together, a franchise based in Highlands Ranch, Colorado, with more than 360 locations worldwide. And he’s worth over $40 million.

I also like:

If you want to get rich, you need to pay yourself first, by putting money where it will work hard for you—whether that’s in your retirement fund, a side business or investments like real estate.

5. No guts, no glory

If there’s any one secret in all of this, it’s this one:

Iif you are a timid mouse (like me), you either have to learn to roar (like I had to) or learn to live with a Small Number / Never Date.

Getting the Life’s Purpose ‘religion’ is one way to put the fire in your belly … it worked for me.

Oh, and they leave the best secret to last (at least the author feels it’s the best), which is funny because this would then be Secret # 6:

The Biggest Secret? Stop spending.

I agree with everything AFTER the ‘?’ above

If you don’t have the money to invest, don’t spend … it’s simple!

But, I don’t agree with this:

Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”

Don’t believe that Millionaire Next Door cr*p; some multi-millionaires are frugal – even some Billionaires (most notably Warren Buffett) – but, don’t be fooled into believing that’s the majority of multi-millionaires:

I have a friend who works for a 35 year old Russian immigrant who is now a hugely successful hedge fund manager (yes, he’s survived the GFC as far as I know. I’ll check when I’m on Safari in South Africa with my friend later on this year); my friend overheard him explaining to his daughter that he was going to take the family jet to a business meeting, so she would need to fly on a commercial airliner with her mother to get home from their vacation.

This is what he said to his daughter: “You know that there will be people you don’t know on that plane” … at 8 years old, she had never flown other than by private jet!

Another friend works in MLM and had breakfast with that company’s # 1 distributor – a nice, young lady. She receives a $600,000 check every month. She just bought a mountain in Colorado and a special tractor, so that she could grade her own private ski run.

I hope she puts a lot aside for a rainy day; gives overly generously (money and time) to charity and those in need; and, joyfully spends the rest!

I have a simple rule: spend freely, when it doesn’t make sense not to.

Think about that, and let me know what you think it means …

Would you donate your last penny?

They say that the will to give – to donate – generously is governed by a gene. 

For those readers in – or approaching – MM301 (i.e. you’ve made your millions, now you are struggling with what to do with it), I want to test that gene to its fullest, by asking you a question:

Would you donate your last penny?

I can honestly say that I would not …

Which brings me to a related topic: it seems that many people who come into money take a chunk of it to donate. Perhaps to have the wing of a school named after them, or to do some other ‘good works’.

Whether the sum is $1,000,000 or $100,000 or $10,000, when donating what you consider to be a large sum, think about what you are really donating; you are not merely donating $1,000,000 (or $100,000 or $10,000), you are donating the future value of $1,000,000:

Let’s say that you plan on living for another 40 years, and you can invest your money at 5% above inflation, then the real value of your donation is not $1,000,000 but more than $6.7 million!

[AJC: if inflation runs at 4%, and you can get an average return of 9% over 40 years your $1 million will grow to almost $29 million, but inflation takes away a huge chunk of it!]

When thinking about donating that $1 million [AJC: The Cartwood Family Wing does sound tempting], I’m not really thinking too much about that $6.7 million [AJC: or, $28.8 million ... ounch!], I’m actually asking myself:

Would I donate my last $1 million?

You already know the answer to that

But, why?

If all goes belly-up in my financial life, I really may have just given away my last $1 million … in other words: if I lose $6 million, I am now broke (since I already gave away the 7th million of my 7m7y).

That’s why I would never donate a lump sum … instead, I would invest that $1 million for the benefit of charity. Further, I would not even pledge the capital or the income stream in advance, I would simply make the requisite donations annually and anonymously.

It may not get my name ‘in lights’ [boo hoo]; it may not help the charity with capital acquisitions; and, it may not be the most tax-effective method of donation (compared to, say, charitable trusts and the like), but it will help both the charity and me, long-term:

1. The chances are that I can invest $1 million far better than the people running the charity can [AJC: after all, I've made 7m7y]

2. It’s likely that the charity – or, some other equally worthy casue - can use $6.7 million more than they can use $1 million, albeit spread over 40 years; but, I admit that I’m just making a wild guess that the world will need philanthropy for at least the next 40 years.

3. If all goes belly up, and I end up becoming the one in urgent need of ‘charity’, I can ‘donate’ my last million (at least the income thereof) to myself and my family.

4. When I die, if I feel so inclined, I can finally donate either the asset or the income stream (or both) to the charity as I will no longer require it as insurance for myself. On the other hand, I may choose to pass it on to my family and let them decide.

I guess nobody will be talking about “AJ Cartwood, the great AustraloAmerican investor, raconteur, and philanthropist” … at least, not during my lifetime