Michael Yardney's Guide to Getting Rich

GUIDE TO

GETTING RICH

Discover why the rich keep getting richer and how you can become one of them

Michael Yardney

Published by:

Wilkinson Publishing Pty Ltd                

ACN 006 042 173                    

Level 4, 2 Collins Street                

Melbourne, Vic 3000                    

Ph: 03 9654 5446

www.wilkinsonpublishing.com.au                    

Copyright © Michael Yardney 2015

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means without the prior permission of the copyright owner. Enquiries should be made to the publisher.

Every effort has been made to ensure that this book is free from error or omissions. However, the Publisher, the Author, the Editor or their respective employees or agents, shall not accept responsibility for injury, loss or damage occasioned to any person acting or refraining from action as a result of material in this book whether or not such injury, loss or damage is in any way due to any negligent act or omission, breach of duty or default on the part of the Publisher, the Author, the Editor, or their respective employees or agents.

Creator: Yardney, Michael, author.

Title: Michael Yardney’s Guide to Getting Rich / Michael Yardney.

ISBN: 9781925265613 (paperback)

Subjects: Finance, Personal-Australia, Wealth, Investments

Dewey Number: 332.024

Cover and page design by Spike Creative Pty Ltd

Richmond, Victoria. Ph: (03) 9427 9500

spikecreative.com.au

Cover photography: Rodney Stewart

This publication contains the opinions and ideas of the author. It is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, tax, investment, insurance, financial, accounting, or other professional advice or services. If the reader requires such advice or services, a competent professional should be consulted. Relevant laws vary from state to state.

Additionally, it is important to note that Australian laws and regulations are subject to constant revision and amendment and as such, some of those mentioned in this book may now be out of date. Any opinions, conclusions or recommendations set forth in this book are subject to change without notice.

The strategies outlined in this book may not be suitable for every individual and are not guaranteed or warranted to produce any particular results. Past performance may not be a reliable indicator of future performance.

This book has been written without taking into account the objectives, financial situation or needs of any specific person who may read this book, which means that before acting on the information in this book, the reader should seek appropriate professional or financial advice.

No warranty is made with respect to the accuracy or completeness of the information contained herein, and both the author and publisher specifically disclaim any responsibility for any liability, loss or risk, personal or otherwise which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents within this book.

Note to reader

Many people have influenced my life, my thoughts, my values and my business and property investment success. Creating wealth is never a solo effort. Similarly this book would not have been possible without the support and encouragement of certain people who have contributed to my life in many ways.

In particular, my wife Pam for encouraging me, supporting me in every way and putting up with all my late nights and weekends on the computer. She endures my almost fanatical attitude to business and property investment and continually encourages me through all the good times and through all the things I still need to learn. I am humbled by her love and devotion, which I try hard but never quite succeed to match.

Special thanks go to my mother and my family, including our six children in our blended family, as well as our grandchildren for their love and encouragement.

Further thanks to my business partners, Gavin Taylor, George Raptis, Shannon Davis and Kevin Turner, and the whole team of property professionals at Metropole, including my executive assistant Jo Fitt. And thanks also to our many clients whose collective inspiration has given me strength.

Over the years I have read almost every book about wealth creation and property investment ever written. I have learned a lot along the way and there are many ideas sprinkled throughout this book that I have learned from others. I guess I had to learn everything from someone at one stage, so I am sorry I cannot acknowledge everyone – I really can’t remember where I first came across many of my strategies.

Where I recollect first hearing about an idea I try to give credit where it is due, but if I have omitted mentioning your name, please excuse me as I shamelessly acknowledge borrowing other people’s good ideas picked up from observation or from conversations, books, CD’s, DVD’s and seminars. As knowledge about becoming rich and successful investing isn’t one individual’s sole domain and there are really no secrets, I can only assume that these people also learned from and copied other people’s ideas, books, CD’s, DVD’s and seminars.

I must make special mention of Robert Kiyosaki, Robert Allen and particularly to Tom Corley, who contributed to some of my concepts about wealth discussed in this book.

I have also learned from the many successes, and even some of the failures, of the over 2,000 property investors I have personally mentored through my 12 month mentorship program. I am very proud of your successes.

I must thank Michael Wilkinson from Wilkinson Publishing for having faith in me, and in 2006 publishing my first book How To Grow A Multi-Million Dollar Property Portfolio – In Your Spare Time. Since then this book has become a property investment classic, and having now published four revised editions has become one of Australia’s top selling books. Michael has become a friend and mentor and continues to encourage me to write.

And finally to you, the reader – thank you for choosing to invest in this book. Please take advantage of the information I have to offer by using it to obtain the financial independence you deserve.

Acknowledgements

Many people have influenced my life, my thoughts, my values and my business and property investment success. Creating wealth is never a solo effort. Similarly this book would not have been possible without the support and encouragement of certain people who have contributed to my life in many ways. In particular, my wife Pam for encouraging me, supporting me in every way and putting up with all my late nights and weekends on the computer. She endures my almost fanatical attitude to business and property investment and continually encourages me through all the good times and through all the things I still need to learn. I am humbled by her love and devotion, which I try hard but never quite succeed to match. Special thanks go to my mother and my family, including our six children in our blended family, as well as our grandchildren for their love and encouragement. Further thanks to my business partners, Gavin Taylor, George Raptis, Shannon Davis and Kevin Turner, and the whole team of property professionals at Metropole, including my executive assistant Jo Fitt and Teale Collison, who assists me looking after our team of Buyers Agents. And thanks also to our many clients whose collective inspiration has given me strength. Over the years I have read almost every book about wealth creation and property investment ever written. I have learned a lot along the way and there are many ideas sprinkled throughout this book that I have learned from others. I guess I had to learn everything from someone at one stage, so I am sorry I cannot acknowledge everyone – I really can’t remember where I first came across many of my strategies. Where I recollect first hearing about an idea I try to give credit where it is due, but if I have omitted mentioning your name, please excuse me as I shamelessly acknowledge borrowing other people’s good ideas picked up from observation or from conversations, books, CD’s, DVD’s and seminars. As knowledge about becoming rich and successful investing isn’t one individual’s sole domain and there are really no secrets, I can only assume that these people also learned from and copied other people’s ideas, books, CD’s, DVD’s and seminars. I must make special mention of Robert Kiyosaki, Robert Allen and particularly to Tom Corley, who contributed to some of my concepts about wealth discussed in this book. I have also learned from the many successes, and even some of the failures, of the over 2,000 property investors I have personally mentored through my 12 month mentorship program. I am very proud of your successes. I must thank Michael Wilkinson from Wilkinson Publishing for having faith in me, and in 2006 publishing my first book How To Grow A Multi-Million Dollar Property Portfolio – In Your Spare Time. Since then this book has become a property investment classic, and having now published four revised editions has become one of Australia’s top selling books. Michael has become a friend and mentor and continues to encourage me to write. And finally to you, the reader – thank you for choosing to invest in this book. Please take advantage of the information I have to offer by using it to obtain the financial independence you deserve.

Introduction

Your Guide To Getting Rich

This is not another personal finance book and it’s definitely not a motivational book.

And heaven knows the world doesn’t need another get rich quick book.

Unlike many books about money, it’s not been written by someone who has studied the rich, it’s been written by someone (me) who is wealthy and who has mentored over 2,000 successful businesspeople, entrepreneurs and investors for well over a decade.

I’ve followed the progress of many over the years, sharing their success stories and being disappointed in their financial failures.

In my journey, I wondered why some people take all the available knowledge and

can immediately apply it to improve their situation and become rich, while others struggle to make even the most basic changes. What separated the ones who succeeded from the ones who did not?

Albert Einstein made an interesting observation: We can’t solve problems by using the same thinking we used when we created them.

From my experience working with thousands of investors I’ve discovered where many get stuck along the road to getting rich. As Einstein suggested, there are levels of thinking that got them there and now keeps them there.

So I’ve written this book as a powerful plan to help you, the reader, to get your finances in shape and become rich. I am going to share with you a road map of proven principles plus, more importantly, updated strategies for the current financial era that have worked for me and those I have mentored.

As I speak at seminars all around Australia, New Zealand and South East Asia, people ask the same questions: Why does success seem to come so easily to some people, while others have to struggle? or How do I build the financial freedom I’ve always wanted?

One of the realities of life is that despite living at the best of times in one of the richest countries in the world, most people today are struggling financially. And the gap between the wealthy and the average person only seems to be getting wider.

You only have to turn on the TV, open the newspaper or browse your iPad to realise we

are living in interesting and, for many, fearful times. The good news however, is the same events that have made many feel uncertain about their financial future will produce some

of the best opportunities that you will experience in your lifetime to realise your own

financial independence.

Having said that, there has been a great deal of talk by economists, social analysts, some politicians and the media about our need to lower our expectations and shrink our lifestyles to cope in the current economy. They see the rich getting richer and want them to share more of their money with the rest of the country.

This may be valid advice for those who are prepared to accept governance by circumstance; but for you and I lowering our expectations doesn’t make sense. As long as there is money, wealth and riches out there it is your right to attract it and acquire it by combining the right thinking, strategies, actions and behaviours that I’ll share with you in this book.

And there will be opportunities aplenty since we are living in a very different financial era – a time of fast change brought about by globalisation of many markets and changing technology.

Let’s be honest: most of us don’t like change. We would prefer a predictable future in terms of our job security, for our businesses and for our investments. Unfortunately, all these are subject to the whims of the markets and the economy, and therefore not predictable.

Successful people not only adapt to change; they exploit it. While the majority will sit on the sidelines feeling sorry for themselves, successful business people, entrepreneurs and investors are looking for and buying opportunities created by these changes. That’s why some people will thrive, while the majority will just survive in the years ahead.

While it may seem difficult to believe given the amount of negative news bombarding us on a daily basis, the truth is fortunes are always made in times of change.

As you read this book you will realise that over the next few years the gap between the rich and the average people all around the world is going to widen. Financial freedom will become more and more elusive to the majority of people, because the rich will be able to adapt, take advantage of the opportunities that arise and avoid the financial storms better than most because they are financially fluent and understand how money works.

This worries me because when you look at what most people want out of life, it is freedom.

If you ask people, What does money mean to you?, they’ll generally say freedom. When asked what freedom means to them they’ll say things like: I can live my life in my own way or I can order in a restaurant without having to look on the right column of the menu to see how hungry I am or I can buy things for my family without worrying about the price.

One of my aims is to show you the road to riches and at the same time open your eyes to the fact that the way you have thought about money for most of your life is most likely flawed and this has been holding you back.

It’s not your fault... most of what you were taught about money was probably taught to you by people who were not wealthy and our education system has failed you. But now is the time to educate yourself – to learn how to become rich by understanding how the rich think, feel and behave and then by doing what the rich do.

Now is the time for you to become financially fluent

The rich got to where they are today because at some point in their life, they made the choice to prosper and then acted accordingly. And if you are committed to becoming rich you too have a choice to make... you can choose to just survive or you can choose to thrive.

You can choose a life of mediocrity or one of fulfillment. Regardless of who you are and how confused or frustrated you may be with your current financial situation, don’t worry and don’t throw in the towel. Instead, let me be your guide as I teach you a comprehensive, easy to follow set of rules of wealth creation that you will be able to understand and implement.

What’s different about this book?

Well rather than a personal finance book that rehashes the same old tips and methods and lectures endlessly about drawing up budgets and pinching pennies to save your way out of debt, I will present you with concepts that are exciting, innovative and most importantly, effective.

Let’s face it, the old rules of money management didn’t really work for most of us in the past. This book contains strategies that will revolutionise the way you think about money and investments and I will show you how you can truly achieve financial freedom.

Remember, everyone who picks up this book is seeking the same thing as you. Every individual has the same potential to take charge of their financial situation, but not everyone will get there. Whether you make it or not is entirely up to you.

Almost everyone starts off life with dreams, hopes and fantasies of somehow becoming wealthy. And most of us have a much better chance to achieve that dream than our parents or grandparents ever did. We live in a world that is rife with opportunities and like I said earlier, now more than ever this is true. We are living at a time in history that presents us with a whole new realm of possibilities. A time when anyone can get rich.

Having said that, the fact remains that financial success is rare. Only five percent of our population achieve financial independence, which means they are able to stop work at around the age of 65 and continue to live in a comfortable lifestyle. It doesn’t mean that they’re rich; it just means they’ve got enough money coming in to support a basic lifestyle. Unfortunately only one person in a hundred becomes what many people would call rich.

This means the odds against you ending up financially successful are 19 to 1 and the chance of you becoming truly rich are 100 to 1.

Those 99 out of 100 people who fail to generate their financial freedom are not necessarily lacking in a good education, or common sense, or the drive and determination to make their lives more prosperous. The essential problem is that most of what they were taught about money and wealth creation was completely wrong. Additionally, they were taught about money by people who have very little of it themselves!

Think about what your parents, teachers and peers taught you about money, whether it was subliminally (watching your parents struggle on a daily basis to make ends meet), or directly (your teachers telling you to get a good education, a good job and work your way to eventual retirement). Has it paid off so far?

It’s interesting to note that of the people who follow the good education / good job / work hard / retire formula and finally reach the ripe old age of 65; 95% end up dead-broke or requiring support or a pension in order to scrape by. And only 1% of the population in Australia is what many would classify as rich by the age of 65.

Most people dream of being millionaires. While a million dollars used to be a lot of money years ago, by today’s standards it isn’t really that much is it? In the future, most people will become millionaires just by paying off their house.

How many millionaires are there?

Does it surprise you to hear Australia has more than 1.2 million millionaires? If it does, just think about how much we invest in housing.

According to a 2014 Global Wealth Report by Credit Suisse, Australia has the highest median wealth in the world, with household wealth growing at an average annual pace of 11%. This country is home to 443,500 high net worth investors; those with investable assets of more than $1 million. This group controls $1.6 trillion in assets, nearly equivalent to the entire retirement savings industry. There are also 580,000 emerging high net worth Australians with $500,000 to $1 million in investable assets.

This Credit Suisse study of global wealth trends found the median Australian adult was worth more than $US225,000 (A$258,000) There are a couple of reasons for this, but one of them is the composition of household wealth in Australia – it is heavily skewed towards real assets such as homes and apartments.

It’s much the same around in major cities around the world with the rich getting richer due to real estate. As of the most recent data, despite the U.S. housing collapse after the subprime meltdown of 2008-9, home prices in San Francisco are up 96% since 2000. They have more than doubled in Washington, D.C. and have risen more than 75% in New York City. The Canadian experience has been far more dramatic as Canada, like Australia, did not suffer a housing collapse. Since the beginning of 2000, Vancouver house prices have risen 280%, while Toronto has boasted a nearly 235% rise.

This enormous rise in home values and the fact that the rich own real estate is one of the reasons they keep getting richer and the wealth inequality gap will widen. Over the past century much of the new wealth has come from owning land rather than from other forms of capital.

In 2014, Australia minted 43,500 new millionaires, but the question to ask is: are these people really wealthy?

Many people are technically considered millionaires even though they lack the lifestyle of a millionaire. They don’t have an abundance of both time and money. In other words, they need to keep working; keep plodding away on the incessant treadmill in order to earn an income, only to give up much of it in taxes. They are often asset rich but cashflow poor.

You probably know somebody like that, don’t you? Becoming asset rich and cashflow poor really isn’t really smart is it? Having money stuck away where you can’t get at it is pointless.

My aim in writing this book is not to hand you everything you’ll need to know about finance and wealth creation on a silver platter – that’s really impossible to do in just one book. What I really want to give you is the foundation and framework to build your secure financial house of the future. One that can weather any storm and remain standing strong.

With solid foundations and the right framework, you will be able to secure your family’s financial future over the next ten, fifteen, twenty or thirty years. By giving you a level of financial fluency, you’ll be able to move through the clutter of all the financial hype you read in the papers or that’s presented by people with vested interests.

Financial freedom

While it may not be politically correct to say it, the brutal reality of life is that if we are completely honest with ourselves, 80% of our problems could be solved with money.

I know that we’re taught to believe money doesn’t make us happy and I realise that it takes much more than money to make you truly happy, however a lack of money can certainly make life miserable.

The biggest dream for many people is to have an improved financial situation. They crave the financial freedom that would allow them to do many of the things they aspire to. The harsh reality is there’s only one way to get financial freedom and that’s to buy it. You can’t rent it,

you can’t just wish for it; you buy it and then you own it. And I’ll show you how.

But what is financial freedom?

Well because we all have varying ideals and value systems, financial freedom means different things to different people. To some it means being able to pay off your credit card debt and manage your bills. For others it means being able to go out every night and party and some would like to take two vacations a year. To me, being financially free means that you are able to support the lifestyle you desire without having to work.

There are two important aspects to my definition:

Firstly, I’m talking about the lifestyle you desire – not the one you currently live. This is a significant distinction, because too often we limit our lifestyle to fit in with our income.

Or even worse we live beyond our means by paying for a lifestyle we can’t afford with accumulating consumer debt and credit cards. Financial freedom is not about limiting our lifestyle; rather it’s about living the life you desire and having the means to support it.

Secondly, financial freedom means you don’t have to work to support your lifestyle. It means you derive enough passive residual income from your assets to allow you to pay for the lifestyle you choose, without having to go to work.

Passive income is money gained from sources other than your own time. Things like share dividends, interest, rental and capital gains. In other words – passive income means you don’t have to trade your time for money. Passive income gives you choices and the more you have, the more freedom you generally enjoy.

While passive income gives you the freedom to do what you want, I should explain that accumulating passive income is not a passive endeavour. Accumulating the assets to generate a stream of ongoing income takes time, financial fluency, skill and diligence. You can’t expect to sit back and have vast amounts of passive income deposited into your bank account regularly without lifting a finger.

The idea is to buy safe solid assets that will bring in income and increase in value over the

long term – I want you to create your own personal cash machine. This will take time; whether it is a business, a share portfolio or my preferred option – a portfolio of income producing residential properties.

While others have created wealth through businesses or shares, I achieved my financial freedom many years ago by investing in property. The choice is yours, but later on I’ll show you why investing in well located residential real estate is the easiest and safest way for the average person to become rich.

While it may take some time and effort to set up your streams of passive income, it won’t take nearly as much effort to maintain them.

To earn your salary you typically have to put in forty hours or more a week. Maintaining the same amount of passive income takes a fraction of the time. And the great thing is you can outsource many of the duties to somebody else. You can hire a property manager to look after you property portfolio, an accountant to monitor your assets and a business manager to run your business. You can’t hire a temp to take your place at work can you?

Having financial freedom gives you your life back.

One of the benefits of money is that you not only have monetary freedom, you have time freedom too. When you are financially free, you generate enough passive income to ensure all your future days are pre-paid. You may not want to retire when you get to this point (I didn’t) but you’re going to go work because you want to, not because you have to. You no longer have to trade your time for money.

When this happens you feel an amazing sense of freedom that allows you to set bigger goals, dream bigger dreams and you can enjoy much more abundance. Time freedom means your work is your play, your play becomes your work and you enjoy it. Work does not own you, you feel comfortable and calm. It allows you to take the time off you require; the days, the weeks and the holidays. And it gives you power and control of your own destiny.

Of course rich people still have problems, but I’ve heard it said that any problem money can solve isn’t really a problem. Now that’s interesting isn’t it?

But financial freedom is not merely about having a lot of money. This ignores the other half of the equation – expenses.

Financial freedom is also not about retiring from the nine to five grind. It’s about having the option to retire early. Financial freedom doesn’t mean you can’t work; it simply means you get to choose whether you work or not and in what capacity. Interestingly, most wealthy people chose to continue working because they enjoy their day job more when they no longer have the financial pressures most people feel.

There is no magic amount of income that leads to financial freedom. It’s entirely dependent on your lifestyle and expenses. If you earn $100,000 in passive income each year and have lifestyle expenses of $75,000, you are financially free. If you earn $200,000 in passive income but have $250,000 in expenses each year you are not financially free. As you can see your lifestyle expenses are a critical part of the equation.

There’s more to Life than Money

We’ve all heard the saying Money doesn’t buy happiness and I completely agree. The truth is, you can be poor and happy, you can be rich and happy and you can also be either poor or rich and completely miserable.

If you’re looking for money to make you happy, you’ll be disappointed. If you’re hoping that money will make you powerful, sexier, more interesting or better looking, you’ll also

be disappointed.

Money doesn’t do any of that. It might in your mind, but it doesn’t in reality. You can be all of those things without money; it isn’t money that makes you powerful, interesting or a nice person – money is neutral. Money makes you more of whatever you were before.

What I’m trying to tell you is that money isn’t everything. To me, it’s not even amongst the most important things in life.

But there’s no doubt that money does help. Having come from a poor background, I thought money was the answer to all of my problems, but after chasing the almighty dollar for the first part of my life and losing my marriage in the process, I realised that wasn’t the case.

True wealth is much more than just money.

In my mind, to be truly wealthy you need money plus the time to enjoy it, the family and friends to appreciate it with, the health to be able to live the lifestyle you can now afford and spirituality (whatever that means to you). To me it means contribution.

I hope you agree that you can indeed be wealthy without being rich. That’s why some people may suggest that being financially free is an unworthy goal – even perhaps morally suspect.

To me though, financial freedom is a means to an end.

Money by itself is neither good nor bad.

It is our own emotions, experiences and attitudes toward money that determine whether we see it as a positive aspect of the world in which we live, or something that has negative ramifications. Money is merely a tool that, when used correctly, can provide the financial freedom I’ve been talking about. It’s what you do once you become financially free that determines your level of happiness. That’s why I want to show you how to understand money – I’d like to teach you how to ethically make it, keep it and share it. This will add a positive dimension to your wealth.

I’ve found a lot of wealthy people contribute to the community; in fact that’s something that’s become very important for Pam and me as we’ve become wealthy. One of the reasons I still work at earning more money is not because I’m greedy, but because it enables