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Charts Of Interest 28/11/14

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Six Reasons Most People Will Never Get Rich …and How To Make Sure You Do! by Michael Yardney

Michael Yardney is an investment and wealth creation expert and a guest contributor for the Trading Game.

Successful investors do things in a certain way that helps them become rich while others continue do things differently and in general they tend to struggle.

I’ve come to the conclusion that when you do what most successful investors do, you get to become one of them, and if you don’t, you won’t.

So lets look at six simple reasons most people will never get rich and how to make sure you do:

Reason 1 – Most people wait to long to start:

Most people can’t wait to succeed; yet they are willing to wait to get started on the road to success.

Many investors are waiting for everything to be “perfect” before they get going. They wait for the right time in the cycle, the right property, the right economic environment or the right interest rates. Which means they never get going.

The longer you wait to get started with your investing, the longer it will be before you get the financial freedom you want. It takes time for compounding to work its magic and grow real wealth.

Fact is, the timing will never be perfect. There will always be reason not to invest “now.”

Reason 2. Fear stops them

Fear keeps many of us from getting what we want, especially in matters of money. Be honest with yourself and count the number of times fear has prevented you from taking action, and in the process cost you a lost financial opportunity.

Fear holds many potential property investors back. Some fear taking on more debt, others fear failure and some even have a fear of success.

Successful investors have learned to harness their fears and rather than focus on the negatives, they use fear to force them into positive action.

Rather than allowing fear of debt to stop them, some investors use the fear of being stuck in their job for the rest of their lives, without the financial independence that they are craving, to motivate themselves to take on the commitment of an investment property.

Reason 3. Waiting until they know enough

The fear of not knowing enough prevents other investors from getting started.

However the irony here is that the more you learn, the more you learn that you don’t know! The trap is that many investors think that the way to escape this paradox is to learn even more, so they read more books, go to more seminars, listen to CD’s and watch DVD’s.

As they learn more they find a whole heap more things they don’t yet know.

The way out is to recognize that while you don’t know it all, and you never will, you do know enough to get started with your investing and you will learn more along the way as you apply your knowledge in the real world, surviving any mistakes and challenges along the way.

Reason 4 – Focusing on linear income instead of passive income:

It is important to realise that not all income is created equal. Some streams are linear and some are passive.

Linear income is what you get from a job. You work for an hour and get paid once for that hour’s work, and that’s it. If you don’t turn up to work you don’t get paid.

Passive income is when you work once but continue to get paid over and over again from work you’re no longer doing. The way to become wealthy is having passive income coming in whether you go to work or not.

That’s what happens to property investors. Initially they work long hours, save a deposit and then invest in property. Now their money starts working for them and keeps giving them returns “passively” in the form of capital growth and rental income.

To put it simply “if you’re not making money while you sleep, you’ll never become rich.”

Reason 5 – Not using systems for making money:

A system for making money is something that takes the emotion out of your investment decisions and makes the results more reproducible. Make your investment boring, so your life can be exciting.

Reason 6 – Not being patient

Warren Buffet once said: “wealth is the transfer of money from the impatient to the patient.”

To become a successful property investor requires patience and persistence. Property is a long-term investment, not a get rich quick scheme.

Yet many investors speculate looking for that “big deal” which will land them a jackpot in a short period of time. In general these types of deals rarely occur and are speculative in nature and more risky.

Some investors look for the latest fad or try finding the next hot spot or speculative growth areas. If you are tempted to do this remind yourself that real estate has been the number one long-term multimillionaire maker throughout Australia’s history, yet most people that speculate in the latest fads have not made much money.

You don’t have to look for the latest fads or the latest speculative growth areas if you create your own capital growth through buying a good property at a fair price, then adding value through refurbishments, renovations or redevelopments. By doing this you are manufacturing your own capital growth.

So, it’s really quite simple…

Decide to do these six things that successful property investors do and you are much more likely to become a successful and wealthy property investor. If you don’t do them, then you may never get rich.

Michael Yardney also contributes to Real Estate Talk, Yahoo Personal Finance and Property Update


What Einstein can teach you about investing Michael Yardney

einstein1Michael Yardney is an investment and wealth creation expert and a guest contributor for the Trading Game.

Investment is certainly not rocket science and while you don’t have to be a genius to succeed in property or in fact nay type of investing, it never hurts to learn from great minds when trying to achieve great things.

So let’s look at some quotes that have been attributed to Albert Einstein and see how we can turn these pearls of wisdom into profits from investing.

1. If you can’t explain it simply, you don’t understand it well enough.

There’s lots to learn about success in investing and this can be overwhelming for the beginning investor.

But it’s not really complicated. Take the time to educate yourself and learn what’s really possible rather than get fooled by some of the smoke and mirrors get rich quick schemes which promise you millions with no money down and little effort.

2. Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will spend its whole life believing that it is stupid.

We are all different, with different abilities and different strengths. That’s what makes the world interesting isn’t it?

You’ll be good at some things and not others. It’s OK if you’re not a genius in tax or structures or finance. Investment is a team sport so surround yourself with experts in the areas you’re not good at.

einstein23. A little knowledge is dangerous. So is a lot.

Many first time investors jump into the market without having a plan or a good team of advisors around them.

If it’s real estate investing they buy one of the first properties they come across, often close to where they live (because it’s familiar) or where they enjoy holidaying or where they want to retire. These are all emotional reasons which almost always lead to investment disaster.

While you need to have a sound understanding of property investment strategies and structures, and a good knowledge of the market on which to make your buying decision, there is such a thing as information overload.

I’ve seen many would be investors not take action and stuck in analysis paralysis. Either they’re too confused by the many mixed messages constantly barraging them, or they’re spending too long trying to educate themselves so they understand “everything” or they spend too long looking for the “perfect” investment that ticks all the boxes

I’ve found while these people are waiting for the market to be perfect, the realists are busy buying properties and making money.

4. It takes a touch of genius – and a lot of courage – to move in the opposite direction.

This is a brilliant quote, because the practice of going against the crowd and investing counter cyclically is what makes many successful property investors stand out.

Warren Buffet put it eloquently when he said: “Be fearful when others are greedy and be greedy when others are fearful.”

Sure it is easy to jump on the buying bandwagon when everything is rosy with the markets, buyer sentiment is high and economic conditions are favourable. But you need courage and foresight to take action when everyone else is paralyzed by fear and uncertainty.

Making your own path rather than following everyone else’s can be daunting, but in doing so you will enjoy many more lucrative opportunities as an investor. Because as Einstein said…

opportunity5. In the middle of difficulty lies opportunity.

Just as every boom paves the way for the next downturn, each slump sets the scene for the next upturn.

Many investors who own substantial property portfolios today sewed the seeds of their fortune during the difficult economic times when the property markets slumped after the 2003 boom or the severe downturn 12 years before that.

They took advantage of the opportunities the buyers market of their day provided and then waited for time, compounding and leverage to work their magic.

6. The world we have created is a product of our thinking; it cannot be changed without changing our thinking.

If what you are doing is not working for you then something needs to change.

When things don’t work out most investors jump from one strategy to the next. They try positive cash flow properties and when this doesn’t work they try off the plan or options or renovations. But this is rarely the solution.

These unsuccessful investors blame the economy, the banks, the market, interest rates etc. All these are out of their control.

It (whatever “it” is that is stopping you achieve what you want) won’t change until you change.

This means to become a successful investor you must work on yourself first.

Become financially fluent so that you understand the economy, our property markets and the way world of finance tax and the law as they relate to real estate.

Get a good team around you, engage a mentor who can see your blind spots and join a mastermind group of like-minded investors so you develop the right mindset.

Attend (the right) seminars and never stop working on your own personal development.

And finally…

7. Anyone who has never made a mistake has never tried anything new.

The power of all this knowledge is in its implementation. It has no benefit unless you take action.

Things won’t always work out as you’d hoped and of course there are risks involved in getting into the investment markets. But there are bigger risks to your financial security if you don’t.

Michael Yardney also contributes to Real Estate TalkYahoo Personal Finance and Property Update

9 pearls of ancient wisdom for investment success – Michael Yardney


Michael Yardney is an investment and wealth creation expert and a guest contributor for the Trading Game.

Confucius say… “investor looking to create wealth from property can learn much from ancient Chinese proverbs.”

Okay, so I’m not quoting Confucius verbatim, however the teachings of the ancient Chinese philosophers still ring true in today’s very different, modern world and have clear application when it comes to the business of investment.

Those investors who understand the importance that mindset plays in their wealth creation journey should gain some insights from the following Chinese proverbs – a handful of my favourites…

“Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny.”


I have found that your level of wealth will seldom exceed your own personal development. That’s because your way of thinking regarding money, wealth and prosperity will determine the financial heights you reach.


You see… your thoughts lead to your feelings; your feelings lead to your actions and your actions lead to your results. Your inner world (your thoughts and feelings will determine your outer world (your results and destiny.)


So first work on yourself, because your wealth won’t grow unless you do. And if per chance you do happen to stumble upon a financial windfall and your wealth takes a lucky jump, unless you grow out to where it is, it will go back to where you are because it is very likely you’ll lose your money through mistakes or mismanagement.


Mr-T-fools“He who asks is a fool for five minutes, but he who does not ask remains a fool forever.”

One of the big mistakes beginning investors make is to think they can do everything themselves. They do a bit of research, crunch some numbers and suddenly they’re industry experts.


And of course you can’t tell them anything because they know it all.


As I frequently say: if you’re the smartest person in the room, you’re in the wrong room, so recognise the areas where you need help and don’t be afraid to seek out expert advice. There are no foolish questions, just foolish people who were reluctant to ask.


One more thing: don’t be put off because a learning opportunity costs money. We all pay learning fees – either to someone who helps us or to the market because of our mistakes (which are usually very expensive.)


“A single conversation with a wise man is better than ten years of study.”

Finding a mentor is the fast track to acquiring the type of property investment insights that can never be found in a book.


Seek out mentors who have already achieved the goals that you aspire to by successfully investing through a number of cycles and just as importantly who’ve managed to retain their wealth.


mouse“One mouse dropping ruins the whole pot of porridge.”

One bad asset can be the proverbial fly in the ointment that hold back your portfolios overall growth. So review your investment portfolio regularly.


If you find a property or stock that, knowing what you know now, you would not buy again today consider selling the, err, “mouse dropping” in order to make room for a better addition to your “pot of (property) porridge.”


“A single spark can start a fire that burns your entire house down.”

Every year unforeseen X Factors come out of the blue to test us, so look forward to the best of times, but prepare yourself for the worst.


Protect yourself and your portfolio against unforeseen crises – be it a personal one, like losing income due to ailing health, or something on a larger scale. Insure yourself as well as your assets and maintain a financial buffer you can dip into, should the need arise.


“Don’t be afraid of growing slowly, be afraid only of standing still.”

Sustainable wealth creation through property investment is not a process you can rush. It takes time for compounding and leverage to work it’s magic.


Warren Buffet put it a different way: “Wealth is the transfer of money from the impatient to the patient.”


tree“The Best Time To Plant A Tree Was 20 Years Ago. The Second Best Time Is Now.”

It’s never to late to get into the invetsment game. Sure it would have been nice to do it when the median price of a house was $100,000, but interestingly that seemed expensive to most investors twenty years ago.


There are always opportunities in the market. The sooner you start, the sooner you are on track to reaping long-term riches.


“Man who stand on hill with mouth open will wait long time for roast duck to drop in.” 

Some people think that announcing their plans to become a rich real estate tycoon to friends and family over the dinner table, will somehow make the magic just happen. In property, opportunities rarely come knocking or fall in your lap. You have to seek them out and be prepared to create your own.


The big difference between successful investors and the average Australian is that they set themselves goals and then take decisive action to achieve them.


“A fall into a ditch makes you wiser.”

Fact is: you’re going to make mistakes when you invest. We all do. However it’s not how often you fall in the ditch that matters, it’s how often you get up, dust yourself off and try again that matters.


Hopefully you will minimize your mistakes by learning from these wise Chinese sayings.

Michael Yardney also contributes to Real Estate TalkYahoo Personal Finance and Property Update

11 Lessons from the BRW Rich 200 list – Michael Yardney

Once a year the Australian magazine BRW publishes its list of Australia’s richest people and as you examine the list you’ll see every year the rich are getting richer.

So, what can we learn from Australia’s wealthy individuals?

  1. Invest in property

Property remains the single biggest source of wealth.

This should come as no surprise – looking back over the years no matter how the economy changes, the Rich 200 has always been dominated by the property entrepreneurs. And it’s much the same all over the world.

Remember, there’s nothing wrong with seeing what other successful people do and applying those principles to your own life. If so many extraordinarily wealthy people have used real estate profitably, it stands to reason that there’s money to be made in this sector.

The other lessons I learned by reading the various entrepreneurs’ stories are:

01_Porsche-911-Carrera-GTS_9912. Anyone can become rich.

While last year 17 percent inherited some of their fortune, most on the Rich List were self made successes, some coming from working class backgrounds.

Attending a private school and an elite education is clearly not a prerequisite to joining Australia’s wealthy. While some forged important networks at school, many went to public schools and others didn’t even finish high school. In fact less than half have tertiary qualifications.

3. Invest counter cyclically.

Remember Warren Buffet’s famous quote: “Be fearful when others are greedy, and be greedy when others are fearful.”

4. Make your millions and then reinvest it – don’t spend it.

This is really just using the power of compounding to grow your asset base before you start spending up big.

5. Take risks early on, but not once you are established.

While many entrepreneurs took big risks to get their enterprises going, successful investors then preserved their wealth by cautiously investing rather than taking further risks.

6. Have one good idea and repeat it.

One core trait that successful entrepreneurs share is the ability to take a good idea and repeat it over and over again. Look through the list and you’ll see so many entrepreneurs stick to the same concept for years and just expand in different locations.

2015-mclaren-p1-fd7. Pick the trends.

This is different to picking fads, which are transient.

8. Go for growth.

Sure, cash flow is important but to become really rich you need a large asset base. While the average investor tries to increase their cash flow, the wealthy are obsessed with building their asset base. Much the same as those on the BRW Rich 200 list who concentrate on building their balance sheets even more than they do on their profit and loss accounts.

9. Surround yourself with a good team.

As I’ve often said – if you are the smartest person in your team you are in trouble.

10. Take action.

All the people who made it onto this year’s BRW Rich 200 list started with a dream and then took action.

11. You’re never too young and you’re never too old.

The youngest member of the BRW Rich 200 last year was aged 35 and had a greater estimated wealth than the oldest member who was 92.

What lesson can you learn from Australia’s richest people? What can you differently to become a successful investor and get ahead of the pack?

Michael Yardney also contributes to Real Estate TalkYahoo Personal Finance and Property Update

World Collapse Explained in 3 Minutes

One from the vault of Clarke and Dawe who remain probably the best commentators on the financial system going around.


Santa Claus Is Coming To Town

Around this time of year there is always a bit of chatter regarding a Christmas rally, so instead of relying on myth and hyperbole as most of the financial community do I thought I would fire up excel and have a look. The table below is of the average percentage gain for each month going back 30 years.

Screen Shot 2014-11-26 at 9.14.03 am

It seems that most markets do indeed enjoy a lift in December. However, the thing that interested me about this data was the bump in the middle of the year for the Nikkei – I am not certain why this is so.


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