Any financial myths you think ought to be busted?
Since the global financial crisis, one of the best rules you can apply is to focus on building equity in your property. Most people revalue their property to borrow more money, but when a crisis hits, the value drops so you lose equity and are left with debt. The rule I follow now is have more equity and less debt – so you can sell a property to keep your business going if you need to.
Another, related, rule is you have to have enough money to keep your family functioning no matter what happens. As we’ve seen in the Covid crisis, many Kiwis now don’t have enough savings for even a few weeks, which is a wake-up call. We must never put ourselves in this position ever again.
When people come to my office for potential careers I ask them: Could you write a cheque on the spot for $10,000 to $20,000 if you had to for a family emergency? Most say no. At this point most will be inspired to create change so they can provide security to their family.
A third rule is to stick to what you know best. Only do business with people you trust and get on with, and get reference checks. Not everyone who walks through your front door is who they claim to be.
What are two money tips you’d give to a 20-year-old who wants to become a millionaire?
A 20-year-old has youth on their side, and time is more valuable than money. My first tip is use your energy wisely. Work hard first and party later – if you work first, by the time you’re 30 you’ll be in a position to employ all your friends to work for you if you want.
My second, again related, tip is act like you own the company. Go to work one hour earlier and go home one hour later than anyone else. If you work for the company first, not the hourly rate, you will get noticed and promoted. When I was getting into real estate I applied the principle that if the No 1 agent worked
50 hours a week and I worked
72 hours, I would take over as No 1. And that happened within a year.
Every time a crisis happens everyone predicts the property market will slump or crash, and that’s a myth. In fact, history shows that every time it drops, it bounces back to a point three times greater than the value of the initial decline.
You only lose when you sell in a down market; if you are in it for the