Get Rich Slow

1. Take Responsibility: Financial success starts with you.

You cannot escape the responsibility of tomorrow by evading it today.

No one else is coming. Stop waiting for a windfall, a partner, or a lucky break. Your financial well-being is your responsibility, and the power to change your situation lies within you. Excuses and blame are unproductive; action is essential.

Wake-up call. Recognize that your current financial situation, whether good or bad, is a direct result of your past choices. This realization is not about assigning guilt but about empowering you to make different choices moving forward.

Empowerment through ownership. Taking ownership of your finances extends to all areas of your life, fostering self-reliance and the ability to help others. It's about securing your own oxygen mask before assisting others, ensuring you're in a position to weather any financial storm.

2. Embrace Slow and Steady: Sustainable wealth beats overnight riches.

Slow and steady wins the race.

Reject quick-rich schemes. Avoid the temptation of get-rich-quick schemes and understand that true wealth is built through consistent effort and a long-term perspective. "Overnight success" stories are often the result of years of hard work and dedication.

The tortoise and the hare. Emulate the tortoise, setting a clear plan and working towards it steadily, rather than the hare, who becomes complacent and loses focus. Consistency and perseverance are key to building sustainable wealth.

Sustainable model. Focus on building a solid foundation through proven strategies, such as spending less than you earn, saving regularly, and investing wisely. This approach may not be as exciting as chasing quick gains, but it's far more likely to lead to long-term financial security.

3. Aim for More Than Zero: Shift from debt management to wealth creation.

If you aim at nothing, you will hit it every time.

Beyond debt repayment. While eliminating debt is crucial, it shouldn't be your sole financial goal. Aim for more than just a zero balance; focus on building assets and creating wealth. Debt repayment is a stepping stone, not the destination.

The debt spiral. Recognize the cycle of accumulating debt through credit cards and personal loans, and break free by shifting your mindset from simply managing debt to actively building wealth. This requires a conscious decision to stop aiming for "nothing" and start moving forward.

Savings visualization. Imagine a future where you have savings goals and a growing wealth. This positive vision can motivate you to take action and break free from the cycle of debt.

4. Distinguish Good Debt from Bad Debt: Leverage wisely, avoid pitfalls.

Debt is like any other trap, easy enough to get into, but hard enough to get out of.

Good debt vs. bad debt. Understand the difference between debt used to acquire appreciating assets (good debt) and debt used to fund lifestyle expenses or depreciating assets (bad debt). Good debt can build wealth, while bad debt hinders it.

Gearing up. When borrowing to invest, aim for a gearing ratio of around 30% to balance risk and potential returns. This means your total debt should be no more than 30% of the value of your assets.

Avoid borrowing for depreciating assets. Never borrow money for things like cars, holidays, or shopping sprees. These purchases offer no long-term financial benefit and can quickly lead to a debt spiral.

5. Time is Your Greatest Asset: Start early to harness compounding.

Every journey starts with a single step.

Don't delay. The power of compounding works best over long periods, so start saving and investing as early as possible. Every day you delay is a day you miss out on potential growth.

The income sinkhole. Reflect on how much you've earned throughout your working life and ask yourself where that money has gone. This exercise can highlight the importance of saving and investing early.

Compound interest. Understand the power of compound interest, which allows you to earn interest on your initial investment as well as on the accumulated interest. This effect can significantly accelerate your wealth creation over time.

6. Understand Investment Basics: Capital, income, risk, and liquidity matter.

Do not wait; the time will never be ‘just right’.

Investing defined. Investing is putting your money into something you believe will provide an increase in overall value at some time in the future.

Key investment characteristics. Before making any investment, consider its capital growth potential, income generation, risk level, and liquidity. These factors will help you determine if the investment aligns with your financial goals.

Risk vs. return. Understand the relationship between risk and return: higher potential returns typically come with higher risk. Choose investments that offer the return you need for the lowest level of risk possible.

7. Cash is King for Stability: But don't let inflation erode its value.

A penny saved is a penny earned.

Cash as a foundation. Cash is a stable and low-risk investment option, ideal for short-term savings, emergency funds, and providing stability in a larger investment portfolio.

The hidden cost of inflation. Be aware of the effects of inflation, which can erode the purchasing power of your cash over time. A dollar today will buy you more than the same dollar will buy you in the future.

Compound interest in cash. Maximize the power of compound interest by reinvesting the interest earned on your cash savings. This will help your money grow faster over time.

8. Shares Offer Growth Potential: But require understanding and patience.

You only have to do a very few things in your life so long as you don’t do too many things wrong.

Ownership, not lending. Consider becoming an owner of companies through shares, rather than simply lending money to them through bank deposits. This allows you to benefit from both capital growth and income.

Active vs. passive investing. Decide whether to actively manage your share portfolio, seeking to outperform the market, or passively invest in an index fund, accepting the market's average return. Each approach has its own advantages and disadvantages.

Dollar cost averaging. Invest in shares regularly, regardless of market fluctuations, to take advantage of dollar cost averaging. This strategy can help you buy more shares when prices are low and fewer shares when prices are high, resulting in a lower average cost per share over time.

9. Property: A Long-Term Game: Requires careful planning and cash flow.

Experienced investors will tell you there’s no ideal time to buy an investment and, if there was, most people only recognize it with hindsight.

Property as a tangible asset. Property is often seen as a safe and easily understood investment, offering the potential for both capital growth and rental income.

Capital gains tax. Understand the tax implications of selling an investment property, including capital gains tax. This tax is payable on the difference between the purchase price and the sale price, less any allowable expenses.

Long-term perspective. Property is generally a long-term investment due to the high costs associated with purchase and sale. Be prepared to hold the property for several years to realize its full potential.

10. Invest in Yourself: Boost your earning potential through skills and knowledge.

An investment in knowledge pays the best interest.

Increase your earning capacity. One of the most effective ways to build wealth is to increase your earning capacity through education, training, and skill development.

Tax benefits. Take advantage of tax deductions for education and training expenses related to your field of work. This can help offset the cost of investing in yourself.

Follow your passion. Pursue a career you love, as this will make it easier to work hard and passionately, ultimately leading to greater financial success.

11. Superannuation: A Powerful Savings Vehicle: Maximize its tax benefits.

It is always wise to look ahead, but difficult to look further than you can see.

Superannuation as a tax structure. Understand that superannuation is not an investment itself but a tax-advantaged structure that holds investments. This structure offers significant tax benefits, particularly in retirement.

Tax benefits. Take advantage of the tax benefits associated with superannuation, including concessional contributions, low tax rates on investment income, and tax-free withdrawals in retirement.

Government co-contribution. If you're a low-income earner, take advantage of the government co-contribution, which can significantly boost your retirement savings.

12. Master the Psychology of Money: Understand your habits and beliefs.

I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.

Upbringing and beliefs. Recognize how your upbringing and belief systems have shaped your attitudes towards money. These attitudes can either limit or enhance your financial outcomes.

Identify bad habits. Identify and break bad money habits, such as overspending, neglecting bills, and failing to check for value. Small changes in these areas can have a significant impact over time.

Quality over quantity. Focus on buying quality items that provide lasting value, rather than accumulating cheap, disposable goods. This approach can lead to greater satisfaction and long-term savings.

Last updated: February 23, 2025