How to be wealthy?

According to statistics in the Western World, less than 1% of people will retire wealthy by the age of 65. 99% of people will try to go to school, go to university, get a great job, save, invest, pay their pension, pay their taxes and then fail to retire wealthy at the age of 65!

Is that you?

The system is broken and if you try to work harder in this system, YOU TOO will also FAIL.

As Einstein says, “We cannot solve our problems with the same thinking we used when we created them.”

Then what do we do?

They always say in life the best way to succeed is to ask better questions.

As Tony Robbins says, “If you want to be successful, find someone who has achieved the results you want and copy what they do and you’ll achieve the same results.”

So what are the questions you need to ask? “Who do I know who is wealthy and what are they doing?”

If you want to be wealthy, then think of someone who is wealthy and copy what they are already doing.

Since 2004 I have been running our business and helping thousands of wealthy people (more than 3000 people), from 46 countries, invest in real estate on four different continents. I have had the incredible privilege of watching what they do. I would have to be a complete idiot to not notice trends of what they do and don’t do. Although there are many, I want to focus on the most important trend which I have learnt since the Global Financial Crash (GFC) in 2008.

I know you think this is going to be really complicated. I know the Financial Industry has taught you that if it is not complicated then it is not important and that you need a fancy Financial Planner to explain these complex financial investment strategies so you can get wealthy. This is completely wrong. I believe that if something is complicated, if people use fancy words or abbreviations then they don’t understand what they are actually doing or they are trying to confuse you to hide their fees.

Yes, getting wealthy is really simple. I believe you just need to copy what wealthy people do and have the discipline to keep doing it.

So what do they do?

  1. Wealthy people invest in INCOME producing assets.
  2. Middle class and everyone else, invest for CAPITAL GROWTH.

It can’t be that simple?

Let’s review this hypothesis or statement.

Most people invest in houses or apartments? If you are honest with yourself, why do you invest in houses or apartments? Is it for passive income or is it for capital growth? Whether this is New York, London, Sydney, Shanghai, Johannesburg, Cape Town or anywhere else in the world the majority (99%) of people invest for capital growth.

Compare this to my first real understanding of what wealthy people truly invest in. It was 2009 and I met two USD Billionaires in Bondi Beach, Sydney, Australia. They were investing in Medical Buildings and I remember asking, “Why medical?”. They explained to me there were 3 reasons. The first is that no matter what happens in the global economy, people need doctors, and so they are economically resilient. The second is that doctors never leave their premises. I remember thinking back to when I was a kid and the medical premises I went to see the doctor at. In my case the doctor has passed on, but they are STILL medical premises today. Thirdly doctors are wonderful at what they do, but they are not accountants and so they sign long term favorable leases. Basically this is long term passive income, which is economically resilient.

Let’s compare this to another example in another country. When we started investing in America I remember asking one of our medical partners what their experience was in the 2008 / 2009 real estate crash. This was the heart of the GFC and the American real estate crisis. In the residential space the market lost between 40% to 70% of its value, on average, across the country. Yes, if you owned a house which was worth $200 000 before the crash, after the crash it was worth less than $100 000 and you probably still had a mortgage for at least $160 000, which you still owed to the bank. This is why more than 10 million American’s lost their properties. My medical partner replied, “We didn’t loose ONE tenant.” What does this mean? His passive income didn’t change at all in the worst time in the American economy since 1929. That is how you manage risk. His capital value may have gone down (and might not have as the income didn’t change), but it didn’t matter as he kept the same level of income. In the long term, over the last 9 years, he has experienced significant capital growth as well.

More recently I met a USD Billionaire who is worth $3billion and has been investing in medical buildings for 42 years. His average occupancy has been 96% over 42 years. Not bad…

And what I find even more interesting is that wealthy people who have passive income, actually BUY their best assets in moments of economic crisis. They buy assets from people with a middle class mindset who are chasing CAPTIAL GROWTH. For nearly a century we have had economic cycles, which change every 8 years, when the economy goes from good to bad. In these bad times the people chasing capital growth generally find themselves in trouble and this is when wealthy people, using their passive income, have the resources to buy these assets at discounted prices.

You think this is all real estate?

Baron Rothschild says, “The time to buy is when there’s blood running in the streets.” He was talking about the stock market and businesses.

Warren Buffett says, “Be fearful when others are greedy and greedy when others are fearful.”

I got asked a question on Christmas day, “But what about the fact that the stock market and real estate are so different?”

I used to think that people who invest in real estate hate the stock market and people who invest in the stock market hate real estate. I was wrong. After nearly a decade of looking for trends, I finally realized that wealthy people from both industries are focused on the same thing – INCOME.

In 2009 I asked my Uncle, a very wealthy investor in the stock market, what he was investing in and he replied, “Coca Cola. No matter what happens in the world economy, people will drink Coca Cola, I will be paid my dividend and it is diversified across virtually every country and currency on the planet.” It was all about the passive income and also the safety of receiving this income. Years later I found out Warren Buffett owns 9,4% of the Coca Cola Company, one of his 5 biggest assets, for the same reason.

Most of us are chasing the next big thing whether it is houses or apartments, the next exiting stock or even Bitcoin. Why are we doing it? We have been trained by the financial markets that the way to get wealthy is to focus on capital growth. We all want to get rich quickly.

If you want to be wealthy, start DOING what wealthy people are doing and start focusing on INCOME.

In 2018, I commit each week to bring you a weekly Wealth Insight on a Friday morning (lessons from wealthy people) and also monthly lessons, Wealth Webinars, where I will go deeper into how you COPY wealthy people. I will also be doing live webinars with #AskScottAnything sessions.

Our purpose is to solve the Wealth Gap and we can only do that by empowering you, your friends, your family and those close to you with the knowledge of wealthy people. If you think this will be of value to you or anyone important to you, then I would ask that you share it with them and also follow me so I can share this knowledge with you.

Here’s to making 2018 a year of Wealth for you and those important to you!

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