I am 21 and clueless …

Screenshot 2014-05-21 12.37.01This is quite typical of the types of questions that I receive from time to time:

I’m 21, and am clueless about finance. I want to start up a business at my mid 20s. Should I opt for endowment plans or unit trust?

The first thing you’ll notice is that there are no further details, as though there’s a ‘pat’ answer for every clueless 21 year old.

Still, let me suggest the following if you are 21 years old and also want to start a business ‘one day’:

1. If you consider yourself clueless about personal finance, start by reading everything you can.

Since you are young, start with I Will Teach You to Be Rich – I was weaned on a diet of Rich Dad Poor Dad, The Richest Man in Babylon, and so on …

Warning: The important thing to note is that these books are only to whet your appetite, they will  NOT make you rich … once you reach a certain point, much of the advice will have to be discarded.

2. If you want to start a business in your mid-20’s the best way to prepare is by starting one now:

It doesn’t matter if the business is successful or not, the idea is to learn by doing.

While you are studying, you can easily start an online business: become an eBay seller; start a drop-shipping business; write a blog about your passion (or, perhaps about your financial journey) and package up some of the posts into a series of information products that you can sell.

3. If you are worried about company structures, don’t!

Just get started … and with your first $1,000 in savings (from 1.) and/or earnings (from 2.) see an accountant and do what they suggest … this isn’t the place for such technical advice.

If you do these simple things, you will be financially better off than 99% of your peers within years, if not months, and should remain so for the rest of your life.

Why?

Because they will remain clueless, whilst you will not 😉

How lucky are you?

luckyMy son and I had a great time in Washington (where he was competing in a student entrepreneurship competition); the life of an entrepreneur can often be a lonely one, so it was good for my son to meet others following the same ‘student entrepreneur’ path.

The trip got me thinking about the interrelationship between ‘luck’ and ‘success’ …

It’s clear to me that the most successful – and, wealthy – people of all ages are indeed lucky … certain things had to go ‘just so’ in order for that big breakthrough to be made.

BUT, I think the luck factor is a rear view mirror effect

… that is, if you position yourself for success, the luck will come but you won’t know exactly when or how.

Richard Wiseman a researcher in the field of luck (he wrote a series of books on the subject) says that lucky people generate good fortune via four basic principles:

1. They are skilled at creating and noticing chance opportunities

2. They make lucky decisions by listening to their intuition

3. They create self-fulfilling prophesies via positive expectations

4. They adopt a resilient attitude that transforms bad luck into good

I’m not sure that this is the same as visualization techniques (a la The Secret), I just think it’s a difference in attitude.

In this context, Richard gives some advice on how to turn your luck for the better:

Unlucky people often fail to follow their intuition when making a choice, whereas lucky people tend to respect hunches. Lucky people are interested in how they both think and feel about the various options, rather than simply looking at the rational side of the situation. I think this helps them because gut feelings act as an alarm bell – a reason to consider a decision carefully.

Unlucky people tend to be creatures of routine. They tend to take the same route to and from work and talk to the same types of people at parties. In contrast, many lucky people try to introduce variety into their lives. For example, one person described how he thought of a colour before arriving at a party and then introduced himself to people wearing that colour. This kind of behaviour boosts the likelihood of chance opportunities by introducing variety.

Lucky people tend to see the positive side of their ill fortune. They imagine how things could have been worse. In one interview, a lucky volunteer arrived with his leg in a plaster cast and described how he had fallen down a flight of stairs. I asked him whether he still felt lucky and he cheerfully explained that he felt luckier than before. As he pointed out, he could have broken his neck.

Hopefully, reading this blog is one giant step along the path to making you a lucky person, too 🙂

Make more money with the watermelon plan …

20130522-123549.jpgIf you want to make money, you need a plan …

… a simple plan.

And, nothing could be simpler – or make more sense – than The Watermelon Plan.

Simple?

It has to be; you see, this ‘plan’ was created by an 8 year old!

Here’s the plan, as told by the boy’s uncle, Jack:

I will never forget my little 9 year old cousin who lives in the UK, who shared a pretty simple money making plan with me. He told me he is planning on:

1. Buying a watermelon for $5
2. Cutting it up into 10 pieces and selling each piece for a dollar.
3. Go back to the store and buy 2 watermelons.
4. Etc.

I love this simple and basic business-building thought process.

There’s nothing difficult about making money if 8 year olds can do it.

And, they can. Here’s proof … a little closer to home … It’s my son’s story, as told on Quora:

At 10, my son wanted to start a cake shop outside his grandmother’s house (naturally, she would bake, he would sell).

But, at 12 y.o. he came to me and asked for $50 to start his new business on eBay. He offered me 49%. I accepted, just to see what would happen.

And, something did happen: a week later a package from China arrived at our front door, and over the next week a few smaller packages left the same way.

Two weeks later, my son came to me and said “here’s your $50 back” … he bought me back out!

[I didn’t have the heart to tell him that it doesn’t work like that. That’s probably the only non-commercial assistance that I’ve given his business in the last 6 years].

Since then, after growing his eBay store for 3 or 4 years, my son ‘graduated’ to an online service-based business that nets him in excess of $60k p.a. (turning over $100k++ p.a.) and has bought him a car whilst still in high school.

He contracts programmers in India and has 2 full-time customer service contractors in Manila. One of them just sent him a Christmas present and a card thanking him, saying that – because of my son – he can now fulfil his life ambition of opening up his own coffee shop.

Not only is my son setting up his own life, he’s changing other people’s lives already … and, he’s just finished high school.

With luck, you – or your children – may be able to embark on a similar journey.

Getting the keys to the golden treasure chest …

golden keyI love it when I receive an e-mail that begins:

As much as I know that I should read some of your posts to better understand some of the questions I’m about to ask, I thought it may be faster to drop you a line.

Yep, this really is part of an e-mail that I received today …

Now, I don’t mind – in fact, I love – receiving e-mails from my readers.

And, as many of you will attest, I really do try and answer them all (often backing up my answers with a post, such as this one)!

But, there are so many online sources that provide great, basic information …

… so, why waste your time asking a multimillionaire how to tie up your shoelaces, when he’s willing to almost-literally (well, as good as) give you the keys to the golden treasure chest?

Instead, I heartily suggest you first try doing your own basic research then, by all means, ask me to help you fill in the blanks

[AJC: Google is an amazing tool for finding the answers to standard personal finance questions. Another great tool is the comment section to my posts, where one of the other readers may be able to help; and, I often respond to comments, as well]

… believe me, I’ll be more than happy to do so.

And, if you’ve put in the work ahead of time, what you’ll end up with is some information that you will not be able to find anywhere else.

That, I can promise!

Happy googling 🙂

 

Why you’re not rich yet …

I’ve been writing this blog for 5 years …

… and, I made $7m in 7 years.

So, if you’re an early reader, that means that you should have added around $1m to your net worth since you started reading this blog.

Have you?

If you haven’t, I’m guessing that it’s for this reason:

Screen Shot 2013-04-09 at 8.42.30 AM

[Source: http://www.quora.com/Life-Lessons/What-is-the-most-important-life-lesson-that-you-have-learned-up-to-this-point]

The things that I discuss in this blog aren’t for reading or intellectualizing [AJC: is that even a word?] …

… they are for doing.

If you don’t get out of your comfort zone and actually change the way that you go about things – and, I’m speaking financially, here, but this is equally valid for any aspect of your life that you wish to improve – then how can you expect your results to change?

As Albert Einstein said:

insanity

If what you’ve been doing hasn’t brought about the life-changing financial situation that you’ve been hoping for, then think about what you should be doing …

… and, just starting doing it.

How do I make money?

That’s probably the most common question that I am asked: how do I make money?

Specifically, how do I make a LOT of money [AJC: not me – I have enough – but, you. How do you make money?].

The answer, of course, is to do what others do not …

… because, most others – the vast, vast majority – are not rich.

Clearly, what THEY do is the way to make only a small amount of money. And, what they do a little of is: invest.

It stands to reason, that you need to invest a lot. But, that’s difficult if you don’t have a high income.

That’s why I say, if you want to make money, you should increase your income – a lot – and invest most of the increase.

Simple.

But, that brings us right back to the original question, albeit altered slightly to now read:

How do I make a lot of income?

Fortunately, that is much simpler than you might think …

… you simply need to find the intersection of things that: 1. you love doing; 2. other people want; and, 3. you’re good at:

I have a simple exercise that I teach, if you want to find the ‘sweet spot’ where your passion, talent, and opportunity align:

Think about each of these areas of your life:

EARN (i.e. how do you make money, or WANT to make money: past/present/future?)

SPEND (i.e. how do you spend money, or WANT to spend your money: past/present/future?)

ABILITY (i.e. what are you good at? what do you wish you were good at? what sparks your creative juices? what do you enjoy?)

DO (i.e. what are your hobbies? qualifications? jobs (unless already listed under ‘earn’)? what would you WANT to do, even for ‘free’?)

Somewhere in these four areas is your passion … and, these 3 simple steps will help you uncover it!

Step 1:

Take a blank sheet of paper, turn it sideways (landscape) and write down the following column headings:

EARN      SPEND      ABILITY      DO

Under each of the above headings, write 4 to 6 one/two/three word answers (e.g. teach; clothing; writing; wood-working; etc.); let the ideas flow and take as much/little time as you need

Step 2:

Once you’ve completed the above, take another sheet of paper and write the following numbers across the page (I recommend landscape, again):

4          3          2

Now, under each, transfer your answers from the first sheet of paper, as follows:

4: Write the items (if any) that appear (at least in some sort of similar/related form) across all four columns in the previous list; you may not have any.

3: Write the items (if any) that appear across exactly three columns in the previous list; you may have only one or two, if any.

2: Write the items (if any) that appear across exactly two columns in the previous list; you will likely have a few.

These, starting with the ’4′, then ’3′, then ’2′ columns, are where you will you will most likely find your passion!

Step 3:

Try combining your your answers (especially those that combine a future WANT with an ABILITY e.g. let’s say that you’re good at sewing and want to do some writing, then you have the possibility of starting a writing/publishing career, perhaps starting with a blog on sewing.

That’s it.

If you can find your passion, then find a way to make money from it, well, you’re almost home!

Let me know what this simple exercise shows you?

An interview with AJC …

I’ve created a new Facebook Group called 7million7yearshttp://www.facebook.com/groups/163746770428484/

Feel free to join! It’s where all of us can ask and answer questions about personal finance … ask anything you like, and see who responds; sometimes, I’ll weigh in, as well!

____________________________

Here’s an interview that I did a while back for the nice folks at Spectrem Group (a research company specializing in the ultra high net worth market). It was quite ironic that they asked me to do this interview, because I called their book the most dangerous idea in retirement planning that I have ever read!

Still, for new readers, this interview is a great overview of who I am and why I write this blog (as well as what you can expect, if you choose to stick with me):

 

What is your financial goal? Adrian J. Cartwood (a nom de plume) had one: $5 million in five years. He didn’t quite make it. But he did make $7 million in seven years and he writes about it in his blog of the same name. His is the sort of self-directed, out-of-debt story that makes for lively posts. Cartwood lives in Australia and he communicated via email with Millionaire Corner about his hard-earned success.

 

MillionaireCorner.com: What inspired you to start your blog?

Adrian J. Cartwood: I inherited a failing family business, and I was $30K in debt. During this time, in 1998, I found what I like to call my “Life’s Purpose,” or “Life after Work”. Others call this retirement, but who wants to wait until they’re 65 to start living their passion? So, I calculated my “number,” that is how much I would need in the bank to stop working in five years instead of 20 or 40. That number was a very scary $5 million.

 

Five million dollars in five years seems like an impossible target, especially when you’re starting $30k behind the 8-ball, so I started reading every single personal finance book that I could get my hands on. What I quickly realized is that they are mostly written by people who became rich because they wrote a book about how to get rich. Needless to say they were mostly full of rubbish. So, I found another one of my passions! It was, and remains, to be the first true multi-millionaire to write about personal finance, hence the blog.

 

MC: When did you launch your blog? How many visitors does it get?

AC: Three years ago. I don’t do any advertising, marketing, or promotion for my blog at all. I’m not even sure how you found me! Yet, in the time that I’ve been writing it, I’ve somehow built a dedicated audience in the thousands who seem to read it every day. I hope to never disappoint them.

 

MC: For whom is your blog intended?

AC: This is an excellent question because I often get comments from new readers who say “Well, my 401k is company matched, so it’s a great investment.” Sure it is, but it won’t make them rich. So my blog is specifically targeted to people like me who want to stop full-time work to pursue their passion, be it writing a novel, traveling, researching great wines, volunteering, whatever. The kicker is, when they calculate their own “number”- how much they will need in passive investments to support them, it’s inevitably something like $2 million in 6 years. If you run their starting position (say $100,000) through any simple online compound growth rate calculator, as I encourage my readers to do, they quickly see that they need to achieve a 65% compound growth on their investments. Given that their 401k can’t achieve more than 8% over 40 years, it’s clear that they need somebody to teach them how to become rich. That narrows down my readership to those who have done the same kind of self-reflection that I did seven years ago and realize that they actually need to become rich.

 

MC: What do most hope your readers get out of it?

AC: I hope that my new readers realize that they should evaluate their lives and see if what they are currently doing is going to truly satisfy them. If so, don’t change anything. But, for those who need more out of life, I hope that they walk away with the tools to evaluate what they truly want to do with their lives, how much money they will need (and by when), and the real personal financial steps that they need to take to bridge the gap … quickly. It’s not about getting rich quick. But it is about getting richer, quicker.

 

MC: For those unfamiliar with your blog, what are some representative posts?

AC:  http://7million7years.com/2011/05/24/my-circle-my-prison/

I like this one, because it encourages you to start thinking externally rather than internally, which is the first step to financial freedom:

 

http://7million7years.com/2011/05/26/the-pay-yourself-twice-wealth-strategy/

This one shows that where you invest your money is more important than how much you put aside each week or month:

 

MC:  Did you grow up in a financially literate household? Did your parents discuss money matters with you?

AC: I grew up in a poor household. The rest of my family grew up in a rich one. The trouble was it was the same house! You see, my father lived beyond his means, but I was the only other male in the family, so he only confided his true financial situation in me. Therefore I grew up paying for all of my own clothes, cars, and so on. The rest of my family still lives on handouts from richer relatives.

 

That knowledge taught me financial responsibility, but it didn’t teach me how to make money. That came from my $7 million/7 year journey. Naturally, I taught my own children about money. My son is a natural entrepreneur, my daughter is more social, but both know how to save and how to spend responsibly.

 

MC: What books or financial pundits, if any, influenced you/

AC: Rich Dad, Poor Dad by Robert Kiyosaki and The E-Myth Revisited by Michael Gerber. The first is about money and the second about business.

 

MC: How did you get started in investing?

AC: My very first investment was an apartment that I bought soon after college because a friend of mine was buying one in the same block. I knew nothing other than to copy him. I sold it a couple of years later to pay for a trip overseas. It’s safe to say that was not the start of my financial journey. When my financial wake-up call arrived seven years ago, I made my first real real-estate investment. Like most people, I knew that I wanted to invest in real-estate but I had no idea how.

 

One day I was driving around my neighborhood and saw a ‘For Sale’ sign on a condo in an older block of 12. There was an auction just about to start.  I figured that not many people would know about it because the sign was by an out-of-town agent, so I stopped to check it out.

 

My next problem was that I had literally no idea of how much to pay. But, I saw a young guy in a tradesman’s outfit measuring doors and windows and so on. I guessed that he was planning to buy it for himself, fix it up and flip it. I decided to bid against him and pay $1 more. I figured that if he was looking to take a quick profit that he would be operating on a tight budget, and that I could then afford to pay just that little bit more to buy and hold.

 

And, that’s what happened. I found myself as the winning bidder for a property that I had never been in before. I had to call my wife (who was not pleased) to rush over with my checkbook. We still own that condo today and it has been a star performer.
MC: What are some of the defining lessons you learned when you first started out?

AC: You can’t save your way to wealth. Running some simple numbers through that online calculator quickly showed me that my 401(k) would never be able to fund my retirement even if I waited until 65. Investment returns from mutual funds are simply too low and fees are too high, not to mention inflation eats up half of everything every 20 years. I realized that I would need to create my own perpetual money machine by taking as much income as I could put aside and invest it in assets that I could borrow against (so that I could buy more), but still had enough income to cover the costs of owning those assets. Real-estate (and, to a lesser extent a small portfolio of hand-picked stocks) could fit the bill. I also learned that starting a business is the best way to increase income. More income means more investments and more investments means more real wealth.

 

MC: What are some of the most common mistakes investors make?

AC: The most common and costly mistake is confusing good and bad debt with cheap and expensive debt. Because so many people have trapped themselves into bad credit card debt, which they should pay off as quickly as possible because it’s just so expensive, they have been lead to believe by so many financial pundits that they should pay off all of their debt, including their mortgages. For most people, this is actually a mistake.

 

Instead they should pay off expensive debt (such as credit cards, and auto loans) as quickly as possible. But, as soon as their remaining loans are at a lower rate than the cost of an investment loan (such as you might get to buy an investment property), why pay it off just to take out a bigger, more expensive investment loan?

 

The second mistake is thinking that your house is an investment: it’s not. The chances are that you will never be able to sell that house, even when you retire. Retirees plan on selling their big houses but they rarely move into a small, two bedroom condo. They realize that they either don’t want to move, or they want to stay close to their children, or move into an expensive retirement community. That and the moving costs (plus, are you going to move old furniture into a nice, new condo?) mean that they pocket a lot less than they thought. Suddenly, there’s a huge hole in their retirement budget.

 

MC: What is the most common question you are asked?

AC: Mostly, people ask me how I became rich. I tell them on my blog because it’s something that anybody can do.

 

That’s the interview! What did you think?

Another reader question …

Eddy asks:

I am 21 years old living in Los Angeles CA. I dropped out of [college] after 2 years of studying because of lack of stimulation. I’ve had a job since I was 15 and have been in sales since I was 18. I currently work as an account manager at an IT outsourcing company. Oh, and I forgot to mention one small detail, I am also $40,000 in college debt.
My only plan right now is to gain enough experience and a set of skills in sales to make six-figures. After that I will begin investing. I know its to early to doubt myself, but I am constantly reminding myself where I am and where I am going to make sure I am on the right path.
My question is this, am I on the right path? A lot of my colleagues do a great job reminding me about the glass ceiling above me because I don’t have a college degree. Also, once I start making six-figures, how do I learn how to invest?

I told Eddy that I don’t/can’t give personal financial advice (laws aside, I simply don’t know enough about him … or any other reader).

BUT, I can make some general observations about the e-mailed question:

To succeed in life requires tenacity … and, to make any sort of large Number (e.g. $7 million) in any sort of soon Date (e.g. 7 years) requires super tenacity; if it didn’t, everybody would be rich!

More on this a little later …

Eddy’s second problem seems to be his unwillingness to even begin investing until his income reaches the “6 figures”.

But, it’s important that Eddy begins investing NOW.

[AJC: if you haven’t already done so, Eddy, please read this posthttp://7million7years.com/2011/05/26/the-pay-yourself-twice-wealth-strategy/]

If Eddy does, one day, it may not even matter that he didn’t complete college 😉

Back to Eddy’s first problem …

The first thing that I look for in anybody who tells me that they wish to succeed financially is “show me evidence of your ability to follow through”.

With this e-mail, I see a couple of red warning flags:

The first one is, what sort of return on investment is there in a $40k college loan for a college degree not completed?

I’m guessing none … after all, you don’t need two years of college to work from age 15, nor to get most typical 18 y.o.-level “sales” jobs. So, by not completing college, Eddy seems to be $40k worse off than anybody else entering the same sales job at the same age!

 

Are polar bears left-handed?

polar bear

Here’s some interesting ‘information’ that I picked up:

Apparently, all Polar Bears are left-handed.

Well, it seems that there are two types of people in this world: those who will now run off and propagate this ‘fact’ at trivia and pub nights, and those who will go and check their sources.

I’m in the latter … now, I’m not obsessive about it, so this information ‘seems’ right, but I’ll let a polarbearophile prove me right or wrong with these Polar Bear Myths:

A hunting bear will cover its black nose while lying in wait for a seal.

Canadian biologist Ian Stirling has spent several thousand hours watching polar bears hunt. He has never seen one hide its nose, nor have other scientists.

The great white bears are left-pawed.

Scientists observing the animals haven’t noticed a preference. In fact, polar bears seem to use their right and left paws equally.

Polar bears use tools, including blocks of ice to kill their prey.

Scientist Ian Stirling believes that this assertion can be traced to unsuccessful hunts. After failing to catch a seal, a frustrated and angry polar bear may kick the snow, slap the ground — or hurl chunks of ice.

A polar bear’s hollow hairs conduct ultraviolet light to its black skin, thus capturing energy.

This theory was tested—and disproved—by physicist Daniel Koon.

The polar bear has a symbiotic relationship with the arctic fox, sharing its food in exchange for the fox’s warning system.

Not only is the bear-fox relationship not symbiotic, the little foxes often annoy the bears. An arctic fox will sometimes tease a bear by darting in to nip at its heels and will sometimes try to drive a bear off its prey.

Orca whales prey on polar bears.

This has never been observed.

Polar bears live at both poles.

Polar bears, of course, live only in the circumpolar North. They never encounter penguins, which do not live in the same regions as polar bears.

[AJC: Polar bears = Arctic and Greenland; Penguins = Antarctic, Australia and New Zealand. Get it??!!]

Source: http://www.polarbearsinternational.org/bear-facts/myths-and-misconceptions/

So?

Well, if this is how many myths polar bears can generate, imagine how many there are about our favorite subject: personal finance?!

Here are just some that I have tried to dispel on this site:

The myth that entrepreneurs are driven by greed

The myth that a high income equates to wealth

The myth that diversification is one of the most important personal finance tools around

The myth that retirement planning centers around replacing your income

… and, I have written many, many more (just type the word ‘myth’ into the search box at the top of this page).

What myths (personal finance or otherwise) have you recently had cause to question?

 

If you were interviewing me …

If you were interviewing me …

… here is what you might ask:

At least, these are the questions (and my responses) just sent to me by a journalist who writes for a number of newspapers. This time, he has been contracted by a company that researches – and writes about – the wealthiest families in America.

I’ll let you know if/when/where the interview will be published, in the meantime, here goes:

[EDITthis is a link to the actual interview in Millionaire Corner; I recommend that you read it there, instead … it’s been slightly edited to make it read better. Donald, the freelance reporter, is the consummate professional and a hell of a nice guy, to boot!]

1)      A little personal background information. I understand Adrian J. Cartwood is a nom de plume?

Yes. I share intimate personal details about my financial background. If I used my real name, I’d just be bragging instead of sharing. Seriously, I started off by inheriting a family business that was failing, and I was $30k in debt. By slowly fixing the business (while starting another), living mainly off my wife’s part-time salary, and investing EVERY penny that we could spare into real-estate and stocks, our net worth grew to $7 million in just 7 years.

2)      What inspired you to start your blog? (what did you do pre-blog—what do you do now besides)

In 1998, when I was still in debt and my businesses were still struggling, I found what I like to call my Life’s Purpose … or “Life After Work”. Others call this retirement, but who wants to wait until they’re 65 to start living their passion? I decided that I really wanted to be traveling and working on things that I was passionate about in just 5 years instead of the usual 20 to 40 years.
So, I calculated my Number, that is how much I would need in the bank in order to stop working. That Number was a very scary $5 million. I missed my 5 year / $5 million target, but made $7 million in 7 years, instead.
Now, starting $30k behind the 8-ball, $5 million in 5 years seems like an impossible target, so I started reading every single personal finance book that I could get my hands on. What I quickly realized is that they are mostly written by people who became rich BECAUSE they wrote a book about how to get rich. Needless to say they were mostly full of rubbish.
So, I found one of my passions! It was, and remains, to be the first true multi-millionaire to write about personal finance, hence the blog.
In my spare time, I develop property and make angel investments, primarily in internet businesses. I am also putting the finishing touches on my first personal finance book.

3)      When did you launch your blog? How many visitors does your blog get?

I don’t do any advertising, marketing, or promotion for my blog at all. I’m not even sure how you found me! Yet, in the three years that I’ve been writing it, I’ve somehow built a dedicated audience in the thousands who seem to read my blog every day. I hope to never disappoint them.

4)      For whom is your blog intended?

This is an excellent question because I often get comments from new readers who say “well, my 401k is company matched, so it’s a great investment” but, I say “sure, but it won’t make you rich”. So, my blog is specifically targeted to people exactly like me: those who realize that their life isn’t merely about money … rather their money is simply there to support their life.
Now, for those readers who truly get this, suddenly they realize that that they, too, want to stop full-time work to pursue their passions – be it writing novels, traveling, researching great wines, writing their own blogs, volunteer, whatever. The kicker is, when they calculate their own Numbers – how much they need in passive investments to support them while they work part-time or quit paid work entirely – it’s inevitably something like $2 million in 6 years. If you run their starting position (say $100,000) through any simple online compound growth rate calculator, as I encourage my readers to do, they quickly see that they need to achieve a 65% compound growth on their investments. Given that their 401k can’t achieve more than 8% over 40 years, it’s clear that they need somebody to teach them how to become rich.
That narrows down my readership to those who have done the same kind of self-reflection that I did 7 years ago and realize that they actually NEED to become rich.

5)      What do most hope your readers get out of it?

I hope that my new readers realize that they should evaluate their lives and see if what they are currently doing is going to truly satisfy them. If so, don’t change anything. But, for those who need more out of life, I hope that they walk away with the tools to evaluate what they truly want to do with their lives, how much money they will need (and by when), and the real personal financial steps that they need to take to bridge the gap … quickly. It’s not about getting rich quick. But it is about getting richer, quicker.

6)      For those unfamiliar, what would be some representative posts?

I really like this one, because it encourage you to start thinking externally rather than internally, which is the first step to financial freedom:
And, this one because it shows that WHERE you invest your money is more important than HOW MUCH you put aside each week or month:
Finally, this one, because it introduces the 20% Rule that tells you how much you can spend on a house:

7)      Did you grow up in a financially literate household? Did your parents discuss money matters with you?

I grew up in a poor household. The rest of my family grew up in a rich one. The trouble was, it was the same house!
You see my father lived beyond his means, but I was the only other male in the family, so he only confided his true financial situation in me. Therefore I grew up paying for all of my own clothes, cars, and so on. The rest of my family still lives on handouts from richer relatives.
That knowledge only taught me financial responsibility, it didn’t teach me how to make money. That came from my $7 million 7 year journey. Naturally, I taught my own children about money from birth. My son is a natural entrepreneur. My daughter more social. But, both know how to save and how to spend responsibly.

8)      If not, were you self taught? Were there any books, for example that influenced you? Or financial pundits?

The books that greatly influenced me were Rich Dad, Poor Dad by Robert Kiyosaki and The E-Myth Revisited by Michael Gerber. The first is about money and the second about business.

9)      How did you get started in investing?

My very first investment was an apartment that I bought soon after college because a friend of mine was buying one in the same block. I knew nothing other than to copy him. I sold it a couple of years later to pay for a trip overseas. It’s safe to say that was not the start of my financial journey!
When my financial wake-up call arrived 7 years ago, I made my first real real-estate investment. Rich Dad, Poor dad was my motivation, but it was very short on ‘how’. So, like most people, I knew that I had to invest in real-estate but I had no idea HOW.
One day I was driving around my neighborhood and saw a ‘for sale’ sign on a condo in an older block of 12. There was an Auction just about to start! I figured that not many people would know about it, because the sign was by an out-of-town agent, so I figured it was likely to go for a good price, so I stopped to check it out.
My next problem was that I had literally no idea of how much to pay. But, I saw a young guy in a trademan’s outfit measuring doors and windows and so on. I guessed that he was planning to buy it for himself, fix it up and flip it. I decided to bid against him and pay $1 more. I figured that if he was looking to take a quick profit that he would be operating on a tight budget, and that I could then afford to pay just that little bit more to buy and hold.
And, that’s what happened.
I found myself as the winning bidder for a property that I had never been in before. I had to call my wife (who was NOT pleased) to rush over with my checkbook. We still own that condo today and it has been a start performer, although we went on from there over the next 5 years to buy our own block of condos, an office building and so on.

10)   What were some of the defining lessons you learned when you first started out?

 You can’t save your way to wealth. Running some simple numbers through that online calculator quickly showed me that my 401k would never be able to fund my retirement even if I waited until 65: investment returns from mutual funds are simply too low and fees are too high, not to mention inflation eats up half of everything every 20 years.
I realized that I would need to create my own perpetual money machine by taking as much of income as I could put aside and investing in assets that I could borrow against (so that I could buy more) but had enough income to cover the costs of owning those assets. Real-estate (and, to a lesser extent a small portfolio of hand-picked stocks) could fit the bill. I also learned that starting a business is the best way to increase income; more income means more investments; more investments means more real wealth.

11)   What are some of the most common mistakes investors make?

The most common and deadly mistake is confusing good debt and bad debt with cheap debt and expensive debt. Because so many people have trapped themselves into bad credit card debt, which they should pay off as quickly as possible because it’s just so expensive, they have been lead to believe by so many financial pundits that they should pay off all of their debt, including their mortgages. For most people, this is actually a mistake.
Instead they should pay off expensive debt (such as credit cards, and auto loans) as quickly as possible. But, as soon as they remaining loans are at a lower rate than the cost of an investment loan (such as you might get to buy an investment property), why pay it off just to take out a bigger, more expensive investment loan?
The second mistake is thinking that you house is an investment, it’s not. The chances are that you will never be able to sell that house, even when you retire, to  truly down-size. Retirees plan on selling their big houses but rarely move into a small, two bedroom condo. They realize that they either don’t want to move, or stay close to their children, or move into an expensive retirement community. That and the moving costs (plus, are you going to move old furniture into a nice, new codo?) mean that they pocket a lot less than they think. Suddenly, there’s a huge hole in their retirement plans.

12)   What is the most common question you are asked?

Mostly, people ask me how I became rich. On my blog, I tell them because it’s something that anybody can do.

13)   What are some key dos and don’ts you think investors should consider?

I think that you should find out what you’re passionate about e.g. real-estate, stocks, business and learn all you can about that subject then base your investment strategy primarily about that.
I don’t think that you should buy any “how I made $1 million by invest in …” books, instead you should find one author whom you feel speaks your language and learn all you can, then go ahead and try out what you have learned. But, first, you should make sure that the author actually made his/her money from the financial strategies that they speak to you about. You’ll find that most made their money either by writing their books or in the business of offering financial advice, rather than actually from investing.
I think that you should buy a house, but then you should not put more than 20% of your net worth into any subsequent or upsized houses.
I think you should not take on debt for consumer purchases, such as gifts, cars, or furniture but you should borrow reasonable amounts of money to invest (say, 20% down real-estate).
I think you should start a business, but you should not quit your job until you have proven the business model with at least some paying customers

14)   The most important question: How much do you miss the Deerfield Bakery?

I still have a home in Deerfield as well as my other home in Australia, so you might say that I am in the fortunate position of being able to have my cake and eat it [pun intended].

<- Now, if you want actually HEAR me interviewed, check out eventual millionaire ->

So, that’s a bit about me; now, why don’t you tell me a bit about you?