Property Investment & Wealth Creation Australia | The Michael Yardney Podcast

The 8 Golden Rules of Successful Investing - part 2

There are only 8 rules to successful investing according to Stuart Wemyss, my guest on this week's show.

According to Stuart, investing is as easy as winning a game of monopoly when you know the rules.

Last week I talked to Stuart about the first four rules of investing. This week we're going to continue the discussion by explaining the remaining rules.

If you haven't yet, make sure to listen to last week's episode, The 8 Golden Rules of Successful Investing - part 1.

The Golden Rules That We Discussed Last Week:

• Rule #1 Play the long game
• Rule #2 Know how much income you need and by when.
• Rule #3 Spend less than you earn and invest the difference regularly
• Rule #4 Grow your asset base first and then tilt towards income

The Golden Rules That We Discuss This Week: Golden Rule #5 Set your asset allocation to reduce risk and maximise returns

• Asset allocation is the decision where to invest: property, shares, bonds, commercial property, cash, etc.
• Asset allocation is an investor's most important decision as you cannot control markets and returns – but can control where you invest.
• My advice is to adopt a strategic long-term asset allocation and then make small tactical tilts to accommodate asset class (under/over) valuations.
• Property is lumpy so: (1) look at ex-property allocation on a year by year basis and (2) project/aim to have a more balanced asset allocation by the time you reach retirement
• Need to reduce volatility – i.e. don't lose money. If you lose 50%, you need to make 100% back.
• Volatility: Shares = 20%, bonds 7-10%, property 10%.
• Invest in negatively correlated assets e.g. shares and bonds. Property has very little correlation with shares and is negatively correlated to bonds.
• Your allocation depends on your starting point, risk profile, goals, time until retirement, etc. – I back-test various allocations in the book.
• You need professional and independent asset allocation advice.

Golden Rule #6 Invest in the share market using low-cost passive investments

• Two types of management styles: active and passive.
• Depending on the study, between 70 and 96% of active fund managers fail to beat the market over the medium to long run. The longer the period studies, the worse the results. So, picking an active fund manager that beats the market is like finding a needle in haystack, just invest in the haystack (index).
• Other benefits of a passive approach include: lower fees, less tax (turnover), more diversification.
• Indexing works because
  • Fees are low
  • It relies on a rules-based approach which is repeatable and testable; and
  • You don't have to put your faith in one index methodology. Instead, use various, robust, and proven index approaches (e.g. traditional market cap, fundamental indexing, dimensional):

• You can access low-cost index funds through Exchange Traded Funds and managed funds.
• Super: some industry funds offer indexing, BUT it is only traditional indexing – I believe you must diversify. Optimising returns and fees typically will have a greater financial impact than extra contributions – so optimise the way your super is invested and the fee you pay first.
• I have included example portfolios in the book i.e. which fund to invest in.

Golden Rule #7 Only invest in 'investment-grade' property

• Definition of investment-grade property: doubles in value every 7-12 years
• Three factors that all investment-grade property must have: (1) Strong land value component (2) scarcity in terms of land supply and property type (3) proven performance.
• That is why off-the-plan property doesn't make a good investment – it fails all three criteria.
• I believe that you must pay for asset selection advice from a reputable buyers' agent.
• Quality trumps quantity – that is, in my experience, investors rarely need more than 3 quality assets to be able to fund retirement
• Constructing a property portfolio: diversify geographically, diversify across various price points, diversify your tenant profile, investing in a different market to where your home is located.
• You must seek professional loan structuring advice to ensure your tax, cash flow and risk are optimised.
• Must have a debt exit strategy i.e. how are you going to reduced debt to an adequate level by the time you reach retirement? Some of these are covered in the book.

Golden Rule #8 Protect your investments from expected and unexpected risks

• Investing is about getting the highest return for the lowest risk. To achieve this you must mitigate all risks.
• You must insure your most valuable asset i.e. your ability to earn an income. Insurance is simply an investment expense. If you are going to borrow to invest, you must insurer yourself. Its early black and white i.e. all or no cover – more correctly it's about finding the right level of cover. I talk about the how to get the best (cost-effective) cover in the book.
• Life and TPD insurance should be held inside super (not in personal names).
• Interest rates – use fixed loans and stagger maturity dates.
• Consider asset protection, especially if you are self employed and in a higher risk occupation.
• Must have landlord insurance if you invest in property.
• Estate planning – make sure wills and power of attorneys are up to date and robust enough.
• Consider relationship breakdowns i.e. cohabitation agreements, financial agreements

Selecting an advisor you can trust

If you have decided that you want to use property to build wealth, great. If not, you need independent advice to help you work out which asset classes to invest in:

• To avoid all the horror stories, only seek advice from an independent advisor:

1. Take no commissions, referral fees or kickbacks
2. Offer fixed fees
3. Have nothing to sell you
4. Be privately owned with an AFSL and with no links to banks or investment providers
5. Demonstrate deep knowledge of all asset classes (especially property and shares)

• Remember, you're paying for experience, not knowledge. Experience tells us how and when to apply the knowledge.
• Getting advice is not opinion shopping. Advice can be proven to be correct using simple math and logic. If it doesn't make sense to you then its likely you are dealing with the wrong person.

Links and Resources:

Michael Yardney

Metropole

Stuarts's special offer: Save 30% off the price of his book Investopoly

Go to http://investopoly.com.au/ and follow the links to buy. Use the code "Yardney" to get a 30% discount.

Some of our favourite quotes from the show:

"While you can get a lot of information you can get off the internet, there's an element that you just can't get, and that's perspective, that's experience, that's on-the-ground knowledge of what's going on." – Michael Yardney

"I'd rather own one Westfield shopping center than 50 properties in regional Australia." – Michael Yardney

"I've found most of our successful clients have advisors in various areas of their life, and they see them as an investment, not as an expense, and really having good advisors is another risk mitigation strategy." – Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Investing is easy when you know the rules, and according to today's guest, there are only eight rules to investing.

If you're interested in becoming a successful investor today's show is for you as we discuss the eight rules of investing with Stuart Wemyss.

Stuart is a financial planner, an accountant, a mortgage broker, and a successful property investor. He's also an author, and he's with us today to talk about his book Investopoly.

Interview with Stuart Wemyss

Why did you write Investopoly?

• Investing is easy when you know the rules – just like winning the game of Monopoly. I wanted to shares these rule – a simple formula to help people build wealth and not get fooled into investing in dud investments.
• The rules aren't my opinion. They are simple, irrefutable laws, rooted in math and logic. They are evidenced-based and can be observed working in markets for decades.
• Applying those laws makes it very easy to (1) avoid making mistakes (2) work out what to do next and (3) be a successful investor.

Golden Rule #1 Play the long game

• Long term financial decisions promote exercising delayed gratification – patient investors are rewarded, impatient ones are not
• Market are not efficient in the short run – so thinking short term creates anxiety and doesn't help you invest wisely
• Over the past 30+ years returns are relatively similar: Aussie market = 9.25%, property market = 12%, US market = 10.5% - so its not a question of which "asset class" provides the best returns. More about which asset class suits you and your stage of life.
• Best question you can ask yourself: "what action can I take today that will result in me being a lot financially stronger in 10, 15 and 20 years?" Completely ignore short term impacts.

Golden Rule #2 Know how much income you need and by when

• Stephen Covey's advice: "begin with the end in mind".
• You don't need a map until you have a destination.
• You need to set two important goals: how much income you need in retirement and by when?
• Look at what you are spending today – that's probably a good indication of what you will need
• You have to expect to live a lot longer due to medical advances. Will you live until 90? 100? Therefore, you don't want to have to eat into capital in retirement = get asset mix right.
• Retirement increases the risk of clinical depreciation by 40% - due to the absence of contribution and growth. So, maybe the answer is to keep working? Or find something to do in retirement that "contributes" to others and things that promote personal "growth".

Golden Rule #3 Spend less than you earn and invest the difference regularly

• Commit to an annual surplus that you will contribute towards building your financial future (this could be home loan repayments, super contributions, property, shares, etc.), then spend what's left over.
• It is your ability to consistently allocate a surplus cash flow (year after year) that will have a massive impact on whether you will be a successful investor.
• If you are not a "saver" then redefine "saving" as "future spending"
• Merely just measuring cash outflow is typically enough to bring it back into line:
• I suggest allocating all outflows into seven categories: financial commitments, utilities, health and education, shopping and transport, entertainment, cash and other.
• If you don't have a surplus income at the moment:
• Reduce the regularity of any big discretionary items e.g. go out to dinner once every 8 weeks
• Commit to saving future income increases (pay rises, bonuses, etc.)
• Make sacrifices like holidaying every 2-3 years instead of annually
• Get help from an accountant to help you measure and manage cash flow.

Golden Rule #4 Grow your asset base first and then tilt towards income

• When we build a house, we do it in a certain order because that yields the most efficient and robust build. We should invest in a certain order too – for similar reasons.
• More income = more tax. Whereas with growth you don't pay tax until you sell the investment. This is the power of compounding capital growth.
• Compare two investments that generate a gross return of 10%: 4.5% income + 5.5% growth versus 2% income + 8% growth = 21% higher return in 20 years' time after all tax is paid! That is the power of investing for growth first and then tilting towards income.
• Select assets that provide most of their total return in growth and relatively low proportion of income
• How will capital growth help fund retirement? Sell assets, with enough time income will be substantial, invest in other income-style assets, sell one property and reinvest in bonds, etc.
• You need to develop a financial model in order to work out how much to invest, when and in which asset classes.

Links and Resources:

Michael Yardney

Metropole

Stuarts's special offer: Save 30% off the price of his book Investopoly

Go to https://www.prosolution.com.au/books/ and use the code "Yardney" to get a 30% discount.

Some of our favourite quotes from the show:

"I've found that it's not just understanding the rules, you've actually got to stop people making mistakes. You've got to stop people from doing what they feel like doing and getting emotionally involved, rather than sticking to the rules." Michael Yardney

"You're going to require a lot more money in retirement than you think. First of all because you shouldn't compromise on your lifestyle, and also because you're probably going to live a lot longer, so you don't want your money to run out before you do." Michael Yardney

"If you don't have an asset base, you don't have any money choices." Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

What are Australian properties going to be worth in a decade?

What's going to make a good investment property over the next 10 years?

What are the major trends that are going to affect our property market?

It's interesting to look at the difference between predictions that were made 10 years ago and what really happened between then and now.

In today's show, I'll share a discussion I had with Ahmad Imam about the major property trends and influences to expect over the next 10 years. Then I'll share my predictions for what will make a top performing investment over the next decade.

You'll hear us discuss:

• The major trends that will affect our property markets over the next decade including.
• Demographic trends
  • Population growth – household formation
  • How we want to live
  • Where we want to live
• Economic trends
  • We're transitioning from a manufacturing country and a resources led economy to an economy based on service industries
  • What will this do to where job growth will occur – wages growth will occur – obviously affect housing
• How we're going to invest in a lower inflationary and wages growth environment
• How the forecast strong population growth will affect us – it's not all good news – there certainly are some challenges ahead
• Population growth and the wealth of the nation will underpin property values – we need both.
• Over the year to September 2017 the annual growth in Australia's estimated resident population picked up to +395,600. This is the largest annual increase since 2013 in absolute terms, if not in percentage terms.
• More than half of this growth is due to immigration – Australia's permanent migrant intake is capped at around 200,000 per annum, but the overall pace of net overseas migration was faster than this, partly accounted for by international students.
• The estimated rate of population increase through net overseas migration is a bit faster than might be implied by the issuance of permanent residency visas, with the growth international students accounting for some of the difference. Where all these people are moving to
• Why population growth alone won't create economic growth, and what is really needed.
• A big demographic trend that will shape our property markets but doesn't seem to be mentioned much.
• Our ageing population means we have more one and 2 people households, meaning the type of property that will be in continuous strong demand will be different in the future with more people trading backyards for courtyards and balconies. More single older people, more DINK's, more empty nesters, more young singles getting married later.
• Smaller average household size means we need more dwellings for the same number of people

WEALTH RETREAT 2018

We also discuss Wealth Retreat 2018 which be held on the Gold Coast on June 9th to 13th.

Click here to find out more and register your interest

By the way…

• Wealth Retreat is not really a property seminar, even though we do spend a lot of time talking about property.
• Wealth Retreat is about creating lifetime wealth and leaving a legacy.
• It is aimed at already successful property investors, business people and entrepreneurs.
• We have Australia's leading faculty of property, tax, finance, financial planning economic and business growth experts.
• I've found many of the attendees from previous years felt isolated in their wealth creation journey and by joining us they suddenly developed a peer group of like-minded people.
• Find out more at com.au image how you will be different after 5 days immersed with a room full of successful movers and shakers.

My predictions for the next decade:

• We are in for a period of slower capital growth – can't count on the market doing the heavy lifting
• Strong population growth will occur in our capital cities compared to regional Australia
• We have 2 super star cities, but strong capital growth in big 4 capital cities
• There will be disproportionate wages growth in some locations because of the jobs that will be created in the service industries
• Some commentators have got it wrong saying buy in regional areas as we're going to be the food bowl of Asia – I hope we will – but not high wages growth and tourism leads to part time / casual jobs
• Don't fight the trends – invest in the 3 big capital cities
• Learn from the big overseas property markets
• More people will trade space for place – and backyards for balconies and courtyards
• Location will do 80% of the heavy lifting but you still need the right property

To ensure they buy an "investment grade" property that outperforms the market, investors should consider using my 6-Stranded Strategic Approach, which means that they would only buy a property:

1. That appeals to owner occupiers. Not that they should plan to sell their property, but because owner occupiers will buy similar properties pushing up local real estate values. This will be particularly important in the future as the percentage of investors in the market is likely to diminish.
2. Below intrinsic value – that's why I would avoid new and off-the-plan properties which come at a premium price.
3. With a high land to asset ratio – that doesn't necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.
4. In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area as mentioned above.
5. With a twist – something unique, or special, different or scarce about the property, and finally;
6. Where they can manufacture capital growth through refurbishment, renovations or redevelopment rather than waiting for the market to deliver me capital growth.

Links and Resources:

Michael Yardney

Metropole

Wealth Retreat

Some of our favourite quotes from the show:

"In the last year in Australia, population growth was almost 400,000 people. It was estimated to increase by 395,000 people. That's the largest increase we've had in population growth, in absolute terms, since about 2013." Michael Yardney

"We're having significant growth, more than any other developed nation in the world." Michael Yardney

"Don't fight the trends. Buy in capital cities." Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Are you lucky? How important is luck in your success in property investment, in business or as an entrepreneur?

We often think success comes as a reward to the hardest working, most focused, and most talented individuals.

But is that really the case?

Believe it or not, luck may play a bigger role in success than you think.

Today I'll be talking to Louise Bedford about what science has to say about the role that luck plays in success in business and property investment.

Some of the things we discuss:

• Whether or not people create their own opportunities
• Why people may have difficulty seeing opportunities
• Some of the findings put together by Scott Barry Kaufman and published in Scientific American
• A study by Italian physicists Alessandro Pluchino and Andrea Raspisarda and Italian economist Alessio Biondo that attempts to quantify the role of luck and talent in successful careers
• How people can learn to see opportunities when they arise
• The most important keys to achieving success
  • Long-term goals
  • Studying and learning
  • Building a team of consultants and mentors
  • Optimism
  • Decisiveness
  • Specialise rather than diversify
  • Admit to mistakes and correct them
• The greatest driving force for people who have achieves success
• What people can do when they fear change but are eager for the opportunities that change can bring
• The top three things that Michael would want to say to young people
• How the people you associate with can affect your ability to achieve success
• Michael Yardney's Wealth Retreat

Links and Resources:

Michael Yardney

Metropole

Wealth Retreat

The Trading Game

Some of our favourite quotes from the show:

"Luck finds positive people – people who seek opportunities. I've found luck favours the persistent." Michael Yardney

"You must invest your time and energy in yourself – in your personal development perfecting your skills and knowledge." Michael Yardney

"Never quit on your dream. Luck does not visit quitters." Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

What's happening in the property markets around Australia?

In today's episode, I'll speak with four experts to give you an update on what's happening state by state.

You'll hear how our property markets peaked in September last year, and while the boom is over, it seems we're in for a benign correction.

Some areas are still growing, while others are slowing down.

In most capital cities, I believe that we'll end up with values higher at the end of the year than they were in the beginning.

Here's some of the things we discuss:

Melbourne Property Market with Kate Forbes:

• The Melbourne property market is consistently performing well. It may not be the best capital city performance at the moment, but it has been one of the best performers on a consistent basis over the last decade.
• Capital growth will continue in the Melbourne market, but not to the same levels that it has been.
• Melbourne is experiencing a population boom because of its economic activity
• Melbourne will continue to see rental hikes over the next couple of years
• Investors are less able to get into the market in Melbourne due to new APRA regulations
• Advice for investors looking to get into the Melbourne market

Sydney Property Market with Ahmed Imam:

• Why the Sydney market is fragmented
• Dwellings aren't being built fast enough to keep up with population growth and migration in Sydney
• How many houses are being built each week in Sydney – eyet there is still a deficit
• Infrastructure projects than are occurring in Sydney
• How Sydney property ownership will look different going forward

Brisbane Property Market with Brett Warren:

• What was holding Brisbane's property market back, and why it's doing better in 2018
• What's on the horizon for Brisbane's property market
• Interest in Brisbane from overseas
• Why homebuyers are getting back into the Brisbane market, and how that affects property values
• Rental prices are continuing to grow in Brisbane
• What type of Brisbane properties are best for investing in
• Property performance on the Sunshine Coast and Gold Coast

Economic Factors Affecting Property Markets with Ken Raiss:

• External factors that are affecting Australia's economy
• How unemployment, wages growth, and infrastructure expenditures are affecting Australia's economy
• How the infrastructure boom is going to affect Australia's economy in the coming years
• Whether the average Australian household is in good shape to take on more property debt
• Despite the slow wage growth, there are no major speed bumps ahead in the Australian economy

Other Capital Cities in Australia:

• Adelaide: Adelaide is very fragmented and has few growth drivers. Overall, home value growth is low
• Perth: Perth's market peaked in June 2014 and hasn't reached bottom yet, although it's getting close. It's too early for a counter-cycle of investment
• Hobart: Hobart is Australia's most affordable capital city and has delivered the highest capital growth over the last year. However, the market is very small and it has few long-term growth drivers
• Darwin: Darwin is still suffering from the end of the mining boom. Housing prices will likely continue to fall through much of this year.
• Canberra: Canberra has a strong economy and above-average population growth. However, Canberra has very high rates of land tax that are probably going to get higher. This disincentivizes investors.
• Regional Markets: Some regional areas perform better than some capital cities, but overall the trend is toward capital cities being a better investment.

Links and Resources:

Michael Yardney

Metropole

Kate Forbes

Ahmad Imam

Brett Warren

Ken Raiss

Some of our favourite quotes from the show:

"You shouldn't change your long-term strategy because of short-term ups and downs in supply and demand or finance." Michael Yardney

"I see the next major spending spree is really the infrastructure boom which is going to drive us through the next decade." Michael Yardney

"This year's hot spot very quickly becomes next year's not-spot." Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Who wouldn't like to buy their parents' house at the price their parents paid years ago?

In today's show we're going to look at the past as I have a chat with Pete Wargent to see what clues it can give us about the future of property.

We discuss what would happen if Crocodile Dundee would have to assess the changes that happened to our property markets in Australia since 1986 – maybe he'd gone on a walk about State Side for a few decades.

What Mick Dundee would think of present-day Australia could give you a very different perspective on current conditions.

Having the benefit of hindsight can give you insight into the future. While you may not be able to go back and change past decisions, maybe you could use this information to predict how things are going to unfold going forward.

Some of the things we discuss:

• How and why the population in some of Australia's cities, like Sydney and Melbourne, have dramatically increased in the last 30 years
• The changes in Australia's workforce over the last few decades, including that how the female workforce has increased to the highest levels yet
• How the general perception of debt and interest rates have changed along with the demographics in Australia
• How entertainment has changed in Australia since the 1980s, and how increased screen time has increased connectivity between people
• How crime rates have changed over time, particularly in the cities.
• The way the increasing population in our cities affect the quality of life
• Why Australia's economy is improving and will continue to improve in the near future
• How immigration has affected the median age in Australia
• What Australia might look like 30 years from now

Links and Resources:

Michael Yardney

Metropole

Wealth Retreat

Pete Wargent Daily Blog

Pete Wargent on Property Update

Some of our favourite quotes from the show:

"You've got take into account the general economic circumstances, what's happening to the economy, inflation, the cost of goods, when you understand what interest rates are and whether you should take on debt. Good debt has never been an issue, not way back then either." Michael Yardney

"Many houses have more television screens than they have people, and then they wonder why the money doesn't last the month out and why their budgets don't meet." Michael Yardney

"One of the things I've noticed is that we're now the second-wealthiest country in the world on a per-capita basis, in terms of household wealth." Pete Wargent

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Why are the best business owners and entrepreneurs crushing it, while most are struggling?

Just in case you hadn't noticed, it's tough out there at the moment for business owners, entrepreneurs and many people in professional practices.

Having said that, while many are struggling, some business owners are crushing it - so what can we learn from these successful people?

A little while ago I was having a chat with Mark Creedon, my personal business coach and a director of Metropole Business Advisory about the reason why many business owners & entrepreneurs don't succeed.

We were discussing that in fact the reason why certain businesses were crushing it are down to 3 fairly simple behaviours (and it has nothing to do with having unlimited marketing budgets or having hundreds of people at your 'beck and call').

In fact they were so simple that I couldn't resist myself, so I pulled out my iPhone and recorded the conversation which I wanted to share with you today

Are you having money problems?

Are you where you hoped to be financially at this stage of your life?

Well…if you want to be in a better financial situation, then this week's show is for you because I'm going to debunk 15 Myths that could be killing your wealth potential.

You see…money doesn't discriminate; it doesn't care who you are or where you come from.

No matter what you did yesterday, today begins anew and you have the same rights and opportunities as everyone else to become wealthy.

Yet the sad reality is that the majority of Australians will never achieve financial freedom.

So, join me in today's show as I explore the common myths about money that hold many people back from achieving their financial goals.

Myth # 1: It takes money to make money

Despite what some people believe, it doesn't really take a lot of money to make money.

Many Australians have untapped equity in their homes that they can use as seed capital for investments, while others will have to learn the discipline of saving to get some start up capital.

Then all they need to do is invest in high growth investments such as residential real estate and use the magic of compounding, leverage and time to grow their asset base.

Myth # 2: I don't make enough money.

Almost everyone makes enough money to become an investor.

The truth is most people don't have an income problem, they have a spending problem.

Look at your current wage and ask yourself; how much am I likely to earn over my lifetime? For most of us, the answer will probably be over a couple of million dollars.

The problem is most of us spend as much as we earn. You've got to start living within your means, paying yourself first, saving a deposit for a property and investing in order to break your current pattern.

Myth # 3: My job and superannuation will take care of my financial future.

If you accept my definition of financial freedom as having enough passive income to finance the lifestyle you desire, without having to work; you will never achieve this through your job or superannuation.

Instead you will need to take control of your financial future by investing. You just can't save your way to wealth

Myth # 4: I'm not smart enough.

In our country everybody has the ability and opportunity to become rich. Successful people come from different backgrounds and while some have university degrees, others never finished high school.

To reassure you that an education doesn't equal a financial fortune, here are a few multi millionaires who never graduated from college: Bill Gates (Microsoft), Michael Dell (Dell Computers) and Steve Jobs (Apple).

The truth is you can do whatever you want; not being smart enough is just another excuse.

Myth # 5: Investing is complicated.

Developing your own financial freedom is only as complicated as you make it.

Sure gaining the knowledge to become financially independent is challenging, but many new things seem more difficult than they are until you develop an understanding of them.

Investing is no different.

It's easier than ever before to learn the fundamentals of wealth creation, with limitless tools available in today's high tech, info-laden world.

The key is to learn from the right people – those who've already achieved what you want to achieve.

Myth # 6: Investing is risky.

The dictionary definition of "invest" is: "To commit (money or capital) in order to gain a financial return."

The word "risk" doesn't even get a look in.

However, many people speculate when they think they are investing – they buy a property in a secondary location or off the plan "hoping" it will increase in value. Speculation is risky.

On the other hand, finding a property with an element of scarcity so it will always be in strong demand, in an area that has always outperformed the averages and buying it below its intrinsic value, is a proven investment strategy that minimises your risk.

Myth # 7: You have to know how to time the investment markets.

It's often said that timing is everything when investing, but that's not really the case.

Sure timing matters – you don't want to buy property at the peak of the boom, but successful investors find that timing isn't really that important.

Have you noticed how some investors do well in good times and do just as well in bad times, while others do poorly in good times and even worse in bad times?

The truth is, successful investors know how to create wealth at any point in the property cycle while unsuccessful investors manage to lose money at the same stages of the cycle.

This suggests to me that it's not our external world that determines whether we make money; it's something inside us – our mindset.

Myth # 8: The rich are lucky.

The truth is that success in wealth creation is no more about luck than is success in anything else in life. To become wealthy you have to be in control of your finances and not count on good fortune.

When you have a proven investment system or strategy, luck becomes unnecessary.

I've played Monopoly a couple of times with some financially intelligent people and I realise now that, contrary to what I thought when I was young, it's not a game of luck.

Good players know the right spots on the board to get the best return on their investments. They know how to acquire and control the best "monopolies" in order to collect the highest rents.

They've learned to negotiate and find ways to make great deals. They've learned how to take the luck out of Monopoly and consistently win big as a result.

To me, this sounds a whole lot like the real world of investing. You need to learn how to take the luck out of wealth creation and instead develop smart strategies to get ahead. First you need to learn how to play the game, and then you need to know how to win the game.

Myth # 9: To become rich you must diversify.

Wrong! Yet that's what most financial planners suggest isn't it?

Diversification leads to an average outcome. I've found that successful investors don't diversify -they cultivate the skills required to make better, smarter investing decisions and specialise in one niche.

"Wide diversification is only required when investors do not understand what they are doing" Warren Buffett

"Many financial advisors recommend that you diversify for your own protection. What they fail to tell you is that it is also for their protection. Since most financial advisors cannot tell you exactly which stock or mutual fund is a great investment, they tell you to buy a bunch of them" Robert Kiyosaki

Myth # 10: Paying off your house provides security.

This is one of the old myths many of us learned from our parents, who probably learned it from their parents.

But it doesn't make sense in the new financial era.

The problem here is that once you've paid off your house, you end up with idle equity sitting under your roof doing nothing; equity you could use as a deposit to buy an investment property and grow your wealth.

Myth # 11: All the good investments are taken.

Opportunities are always out there – in every market.

Sometimes there are a lot and sometimes there aren't. Some are obvious and others are opportunities you create by understanding investment markets.

Sure, all of yesterday's deals have been taken, but tomorrow's deals have not. Someone will snap them up. Why shouldn't it be you?

Myth # 12: If you want to do it right, you have to do it yourself.

There's no such thing as a self-made millionaire. All successful property investors have a good team of professional advisors and supportive mentors around them.

That doesn't mean you should hand over full responsibility for your wealth creation to others. But the rich recognise that they can't be an expert in all aspects of wealth creation, so they find a team of experts they can lead in order to help them achieve their goals.

Myth # 13: I've done everything wrong! It's too late.

It's never too late to learn how to invest or to overcome your mistakes. There are many success stories of people who conquered all sorts of adversity, or started investing later in life and ended up achieving financial freedom.

In fact, Ray Croc was over 50 years old when he built his very first fast food outlet. You might have heard of it – it's called McDonald's.

Myth # 14: Debt is bad

Most Australians believe debt is a dirty word, but not all debt is bad.

Savvy property investors know how to use good debt to buy appreciating assets.

Myth # 15: It doesn't matter what I want – I just can't do it.

Subscribing to this myth is almost a guarantee of failure, because our beliefs and perceptions become our reality.

Some people who've had a few failed attempts "learn" that wealth is beyond their control and they can't affect the outcome.

They remain in a cycle of victimisation all their lives.

This is one of the reasons why the rich get richer – they believe they are in control of their destiny. You must also believe you're in control and act as if you're in control.

Then pretty soon you'll be surprised by the results you achieve. Invariably, the more success you have the more your thoughts about what you can and can't control will alter for the better. Yes – you can do it!

There's no way money can know who's in control of it, what their qualifications are, what ambitions they have or what they're going to do with it. Money is there to be used and spent, saved and invested. It can't judge whether you're worthy or not.

Now that you understand some of the myths that have held so many people back, the good news is you can do things differently. Choose to change your beliefs to produce outrageous results and reach every goal you set.

Of course while property investing may be simple it's not easy. And that's not a play on words.

Fact is, around 20% of those who get involved in property investment sell up in the first year and close to half sell their property in the first 5 years.

And of those investors who stay in property, about 90% never get past their second property.

So if you want financial freedom from property investment to fund your dreams, you're going to have to do something different to what most property investors are doing. You're going to have to listen to different people to who most Australian property investors listen.

You're going to need to set yourself some goals and follow a strategy that's known, proven and trusted.

Then you grow your property investment businesses one property at a time.

Of course…you need to buy the right type of properties.

One that has a level of scarcity, meaning they will be in continuous strong demand by owner occupiers (to keep pushing up the value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long term averages), at the right time in the property cycle (that would be now in many states) and for the right price.

To become a successful investor you will need to surround yourself with a team of independent and unbiased professional advisors (not sales people) – a team of people who are known, proven and trusted, so it is probably appropriate to remind you that in changing times like we are experiencing, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team at Metropole have no properties to sell, so their advice is strategic, independent and unbiased.

Links and resources:

• Michael Yardney's Mentorship Program
• Rich Habits Poor Habits
• Metropole

Quotes:

"Most people don't have an income problem, they have a spending problem." Michael Yardney

"My definition of financial freedom is to have enough passive income to finance the lifestyle you desire without having to work." Michael Yardney

"Take control of your own financial future by investing and building an asset base." Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

Why is Michael Yardney still working? | Learn the Money Habits of the Rich

Making money and creating wealth to achieve financial freedom is usually the reason why people invest in property.

This means that property is really just a vehicle for attaining money and that's one of the reasons today's show is about money.

I'm going to segment this show into three parts.

If you're like many other listeners of my podcast you may wonder why I'm still working.

Well today I break that down for you and share some insights into what makes my mind tick.

Then I share Jim Rohn's wisdom on changing your life, and Tom Corley is here to talk about the money habits of the rich.

Why Is Michael Yardney Still Working?

1. Yes I am truly financially free, owning a substantial property portfolio across a number of sectors. I've built a Cash Machine that gives Pam and me real choices in life.
2. I don't have to work, but I really enjoy what I do.
3. Enthusiasm is the reason successful people keep doing what they do. They have developed an intense enthusiasm for what they have been doing which results in being successful.
4. I still enjoy putting deals together, bidding at auctions, the psychology of negotiating, teaching and putting training programs together, and passing my knowledge forward. And I am still unashamedly enthusiastic about making money. I enjoy passing it on to future generations and contributing significantly to charity.
5. I'm very grateful for what I've got, and I believe that it is my obligation to repay the world. That is why I spend so much time writing, educating, and putting together this podcast. These activities are the least "profitable", but the most rewarding things I do.

You Can't Change a Season, But You Can Change Yourself:

1. My mentor Jim Rohn believed in the power of choice and attitude. It's up to you to decide and determine your life through your attitude and your choices.
2. Life is full of seasons, and you need to learn how to handle the winters. You must learn how to handle difficulties, because they come after opportunities. Get stronger, wiser, and better.

Learn the Money Habits of the Rich with Tom Corley:

1. Habits are repetitive behaviours, thoughts, beliefs, or emotions.
2. 40% of our daily activities are habits. We are where we are because of our habits.
3. Habits are a reflection of our lives. If you have a great life, you have more good habits than bad habits. Such as…
4. Live below our means. Spend less than you make and save and invest the difference.
5. Don't gamble. Gambling is a tax on poor people.
6. Reading is about learning, and learning is about growth. We need to grow into the person we need to be in order to be successful. Knowledge opens our eyes to opportunity. History exposes mistakes of the past.
7. Rich people don't waste time watching TV and surfing the Internet.

Links and resources:

• Tom Corley
• Rich Habits Poor Habits
• Wealth Retreat
• Jim Rohn
• Metropole

Our favourite show quotes:

"I spend all day talking about property while drinking coffee and dealing with nice people. Why wouldn't I still be working?" Michael Yardney

"If you are doing something that you don't have an intense enthusiasm for the likelihood of success is slim indeed." Michael Yardney

"Everybody has the capacity for intense enthusiasm, you've just got to find the right outlet for it." Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.

If you are looking at buying a new home or investment this year, odds are you'll have to consider buying a property at auction.

So today we discuss the process of what to do before, during and after a property auction, including some great tips of what to do if the property passes in.

And even if you're not planning to buy at auction in the near future, listen in as I discuss the psychology of negotiating with agents before and after the auction with Bryce Yardney.

A property buyer's guide to auction success:

1. If they have a good property for sale with the likelihood with strong buyer competition, most vendors will put their property to auction.
2. So don't avoid buying at auction - there are a lot of good properties for sale by auction and if you know what you're doing it's a relatively transparent process.
   1. Do your due diligence
   2. Get finance pre approval
   3. Get your purchasing entity organized.
   4. Get a solicitor to check the contract
   5. Have any inspections or reports organised.
3. Prior to auction:
4. Attend as many auctions as you can and understand how they work. If possible check out the auctioneer who will be conducting the auction you're planning to buy at.
5. Do your research and understand your market. Know what the property is worth.
6. Let the agent know that you are interested before the auction, but play your cards close to your chest.
7. Get a copy of the contract and vendor statement checked by a solicitor.
8. Why not get an experienced buyers' agent on your team to bid for you?
9. Bring a cheque book or bank cheque to the auction or organize an electronic payment.
10. Determine the price you are prepared to pay prior to the auction. Pick three prices. A price you love, a fair price, and a walk away price.
11. Never stop bidding on a round number - give yourself 3 or 4 bids above a round number.
12. Arrive early at least a half an hour. Survey the landscape, see who is there, and find out who your competition is.
13. Dress nice and portray confidence.
14. Stand front and center and let people know that you are there to bid.
15. Start with a strong bid and make your last bid as strong as your first bid.
16. Be prepared to walk away if the price gets too high.
17. If the auction stalls, put yourself into position to negotiate with the vendor when the property passes in by being the highest bidder.
18. Don't follow the agent inside like they ask you to. Show a position of strength on your own turf.
19. Ask what the vendor's reserve price is? Sound surprised. Then ask what the lowest price they are willing to sell for. This is just another starting point for negotiation.
20. Don't be afraid to drag out the negotiations if there is no other competition for the property.
21. You are not obliged to meet the vendor halfway.
22. This is where you would benefit from having a professional property negotiator on your side.

Links and resources:

• Bryce Yardney
• Michael Yardney
• Metropole
• National Property & Economic Market Update Promo Code: Podcast
• Dr. Andrew Wilson
• Ken Raiss
• Podcast Episode 14: Do Real Estate Agents Tell White Lies to Make a Sale? | This Is the Best Predictors of Future Success
• Podcast Episode 13: Learn to Negotiate Like a Pro from a Negotiating Pro
• Property Update App

Some of our favourite show quotes:

"If you come prepared with a plan buying at auction can be a very exciting experience." Michael Yardney

"A lot of buyers see auctions as highly stressful events and they are worried that they may pay more." Bryce Yardney

"I like watching the auctioneer and the person selling the property. You will be ahead of the game understanding the techniques and psychology behind buying and selling a property." Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.