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$1 MILLION FOR LIFE – How to make it, manage it, maximise it
I wrote this second book after receiving lots of feedback from parents who had bought my first book (‘How to give your kids $1 million each’). Essentially, they were saying to me – “That’s all very well for the kids, but what about us? We’re in our 30s or 40s or 50s, we’re earning good money and building assets but we’re also building up lots of debts! How do we get our finances back under control so we can be financially free?”
Want to build wealth that will last you a lifetime?
‘$1 Million for Life’ is a step-by-step guide to financial freedom. It outlines dozens of practical ways to increase wealth, regardless of your starting point. It doesn’t matter how much you earn - it’s what you do with the money you have that makes the difference.
Inside you’ll learn how to:
- save money and pay off debts quickly
- use low-cost, tax-effective ways to invest in shares
- invest in residential and commercial property
- maximise the performance of your superannuation
- protect your investment plans and your lifestyle.
There are no get-rich-quick schemes or trading systems involved here - just practical steps almost anybody can take. $1 Million for Life gives you the tools to build enough wealth so you can start doing what you really want to do for the rest of your life.
Details:
Published : 2007
Publisher : Wiley-Wrightbooks
Print length : 304 pages
ISBN-10 : 1742168655
ISBN-13 :9780731407002
Dimensions : 20.83 x 2.39 x 20.83 cm
Contents
- Acknowledgements viii
- Preface xii
- The problem 1
- Step 1 — money sense 26
- Step 2 — own your house outright 72
- Step 3 — superannuation (part I): how to use super 115
- Superannuation (part II): maximising super performance 138
- Step 4 — invest outside super (part I): shares 171
- Invest outside super (part II): property 239
- Invest outside super (part III): other asset classes 288
- Step 5 — protection in case things go wrong 317
- Step 6 — do what you love doing 338
- Putting it all together 359
Preface
Australia is a nation of spenders and borrowers, not savers and investors. Australian households spend over $10 billion more than we earn each year and we have had a ‘negative savings rate’ for several years. Australia and New Zealand are about the only countries in the western world with negative household savings rates.
If we spend more than we earn, where does the extra money come from? It comes from borrowing more or eating into our savings. The result is that, despite the tremendous economic growth and prosperity we have enjoyed over the past 15 years, we are carrying bigger levels of debt, there are more personal bankruptcies and there are more people relying on welfare than ever before.
These days it has become far too easy to spend money and to borrow money to spend even more. We are constantly being bombarded with offers of pre-approved credit cards, personal loans, lines of credit, and mortgages, and it's all just too tempting.
At the same time, however, investing money wisely is a seemingly difficult process. It's hard to find simple, low-cost, tax-effective investments that can be used to build wealth. Aspiring investors have to wade through a sea of get-rich-quick schemes, through the thousands of complex, expensive products loaded with myriad unnecessary fees and charges, through all the ‘experts’ who are just looking for their next sales commission, and through a whole lot of jargon and paperwork.
But in among all the offers of easy money, easy loans, complex products and investment scams, there are some low-cost, tax-effective, low-maintenance products and investments that ordinary investors can use to build wealth, even if they are starting out with just a small amount of money. Most people don't have time to spend on trading schemes and investment plans that require constant attention. The plan I outline in this book is a simple, low-cost, low-maintenance, ‘set-and-forget’ way to build wealth over the long term.
Although the negative savings rate is a national problem, the solution is in your hands. I believe that everybody can take small, simple steps towards their own financial security, starting with as little as $1, and starting today.
My first book — How to Give Your Kids $1 Million Each! — was a description of the savings plan I started for my two kids. This plan will provide them with financial security for the rest of their lives. It also teaches them about money and how to make money work for them, not the other way around.
The same type of plan works for adults as well. In fact, my wife and I have been following the principles used in the plan for many years. We started out on our financial journey in the mid-1980s, before we were married. We have both had busy careers, working full-time for 20 years from the early 1980s to the early 2000s. However, we found that despite our incomes from working full-time, most years we made more money from our shares and property investments than from working. We discovered a very important lesson in life: income from working pays the bills — it doesn't build wealth. Only investing builds wealth.
Fortunately, we were able to build our investments up to a point that enabled us to stop working in our early 40s, while the kids are still young, and live primarily off our investments. The plan is based on sound principles that have been around for centuries and will remain constant forever—like the principle of compounding, spending less than you earn, and putting money away for the long term before spending it. But putting the plan into action involves particular products and investments, and these do change over time.
Most people don’t lack the motivation to spend and borrow less, and save and invest more. All too often it’s simply too difficult and complex. They start out with the right intentions, but don't know where to look and what to do. One of the aims of this book is to make investing money as easy as it is to spend and borrow. I outline a plan almost anybody can use to build wealth for life, enough wealth so they can live the kind of life they really want to live, without having to worry about money.
Why am I talking about money?
Western society is dominated by the pursuit of money and material possessions, but there are far more important things in life. There are bigger problems we should be spending our time and energy trying to solve. More than a billion people survive somehow on less than $2 per day. The world is plagued by religious and ethnic wars, wars on terror, and the ever-present threat of nuclear war. Every day 30,000 kids under five die of preventable diseases. So why am I talking about making money? There are several reasons:
- We can't help others less fortunate until we get our own affairs in order.
- Money problems are a major contributor to family break-ups, and family break-ups tend to lead to more financial and emotional stress for all concerned.
- Money issues tend to consume so much of our time and energy. If you can solve the money issue, it is like lifting a huge weight off your shoulders, and frees up your time and energy to think about more important things.
The plan outlined in this book doesn't take a lot of time or effort. You can start building financial security and freedom for yourself and your family straightaway. Once you get the plan underway, you can stop worrying about money and work, and that will allow you to turn your mind to the bigger issues in your life and in the world.
Ashley Ormond
Sydney
August 2007