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Category : Investment

How to be a Millionaire!

  • Willard Lloyd
  • November 22, 2019
Reading Time: 6 minutes

Most people want to be millionaires…how much do you need?…the key is to find investment returns better than the basic average of 6.7%…and more…

There are two kinds of responses to this

One would be people that genuinely want $1,000,000 as it’s life-changing money.

The other would be the people that see it yet do nothing at all. They think they’ll never get it, someone else will so why bother.

Now it’s unlikely you’ll ever get $1,000,000 legitimately for doing nothing. But what if I told you that you could get $1,000,000 without too much effort? Again, there will be two kinds of people that consider this.

Some will be interested in how they could get $1,000,000 without too much effort. Then there will be those who think it’s not possible and it’ll never happen for them, so why bother at all. 

Now if you think you’ll never get close to being a millionaire, then stop reading. This isn’t for you. But if you want to understand how a simple strategy can be put into place long term to open up the possibility to be a millionaire…read on.


How much do you need?

We know that most people will reach retirement age and not have anywhere near enough money in retirement. Instead, they’ll be dependent on the pension and maybe a trickle of savings accumulated over the years.

They will not be able to afford the lifestyle they had whilst working. And many will simply have to try and maintain work beyond retirement age just to get by.

What good is busting your backside for 40-odd years to have little to nothing to show for it at the end?

Our view is that one of the biggest threats to the Aussie economy long term is people’s financial illiteracy and the attitude of living for the here and now — instant gratification.

Of course, you will get automatic super contributions. And that’s fortunate. But that’s still unlikely to be anywhere near enough. Most people just don’t earn enough income to get to the numbers needed.

There are different views on how much you will need in retirement. But the estimates range from around $500,000 for a ‘comfortable’ retirement to $1,000,000+ for a retirement you deserve.

The question is, at 65 in your current situation, will you have a lump sum of $500,000? What about $1,000,000?

For many people, the answer to that is no. But that doesn’t mean you can’t change the game. You can make small moves now, while you still can to make it to millionaire status at retirement. And we believe anyone can achieve.

Here’s the difficulty though.

To get to $500,000 (not counting superannuation), a 30-year-old would have to put away $14,285.71 in cash for the next 35 years to hit that figure. That’s $275 per week, every week, without fail for 35 years.

To get to $1,000,000 a 30-year-old would have to stick away $549.45 a week every week, without fail for 35 years.

For some, that might be achievable. For most, it’s not. Not considering having to pay bills, living expenses, buying food, paying for the kids, and all the other overheads it takes to run a life.

So if the average person can’t save those figures for 35 years, how the heck can anyone even get close to becoming a millionaire?

I argue that anyone that’s earning an income today has a chance, long term, to become a millionaire. But you’ve got to be smart about it and you have to change your mindset.


The MINDSET needs to be, ‘I can become a millionaire so long as I follow my long-term strategy and make my money work for me.’

There’s nothing wrong with being rich. There’s nothing wrong with being a millionaire. There’s nothing wrong with not having to rely on the state for retirement income.

It’s just whether you want to be like everyone else and think it can’t happen to you or do something about it now and have no worries later.


The numbers — how to become a millionaire

According to information from the Credit Suisse Global Investment Returns Yearbook 2018, Aussie equities (stocks and shares) averaged 6.7% real returns over the last 119 years.


Now that might not sound like a huge return. And it’s not. But it’s far better than the 1% that cash does for you right now. And note, the interest you get from cash is only going to get worse as the country heads towards negative interest rates.

Understanding how different asset classes work is important if you want to climb your way to becoming a millionaire. Stocks and shares are long-term, the best asset class for growing your wealth.


Yes, there are risks, prices go up and down, and there’s no guarantee your investment in ‘Company A’ will be worth more than what you paid for it. But with the right diversified selections, there’s the potential to achieve average returns of around that 6.7% every year, long term.


Now let’s say you could get on average the basic 6.7% return for the next 35 years on your investments. Besides, you were regularly adding money to these investments. That’s a critical part of this strategy.

If you started with just $1,000 and added $50 per week getting 6.7% per year, after 35 years you’d have around $350,000. Bugger, that’s not quite $1 million. But it’s a start.


However, we want you to become a millionaire.

If you bumped that weekly contribution amount to $75, then in 35 years at the very Aussie average of 6.7% per annum you’d end up with around $515,000. An extra $165,000 just for slightly higher regular contributions.

But still, that’s only just over halfway to millionaire status.


However, even with this strategy, you’ll still hit the million mark, just at 45 years, not 35.

The key is to find investment returns better than the basic average of 6.7%.

What does it look like if you can achieve a higher average return on your investments? Well, the good news is that with a long-term strategy, you don’t have to get massive, crazy, eye-watering returns at once.


If you have $1,000 to start and pop in $75 a week for the next 35 years, your investments only need to average 9.65% per year to hit $1,000,595.


The thing is, there’s a good chance your earning capacity increases over time so that $75 ongoing contribution becomes easier and easier to manage. In fact, over time you might even increase that regular contribution and get to the million-dollar mark even faster.


Or you might have invested in slightly better performing investments and get more than 9.65% on average. Again, all ways to bring that million-dollar figure even closer.

Of course, there’s the opposite side of this coin too. You might not regularly contribute. You might get the average annual performance of less than 9.65% or even less than 6.7%. These are of course risks in growth asset investment like stocks and shares. And that pushes the million-dollar figure out further.

That’s why it’s important to understand risk, know that regular long-term contributions are critical to the strategy and getting the right advice as to what to invest in, and how, is also important.


But these aren’t crazy numbers. They’re not wildly optimistic investment returns. The key aspect of the strategy is the long-term nature of it. It’s not rocket science, it’s simple, straightforward planning and investment.

You need to start early and keep it regular, with smart, long-term investments. The longer you leave it the harder and harder it gets, until one day…it really is impossible to become a millionaire.

But it doesn’t have to be that way.

Young, smart, forward-thinking individuals can all be millionaires in our view, it just depends on putting the simple, smart strategy into place for the long term.

What are ETFs?

  • Willard Lloyd
  • November 1, 2019
Reading Time: 2 minutes

Like a traditional managed fund, an exchange-traded fund (ETF) offers the opportunity to invest in a portfolio of securities, such as shares or bonds.

As with a managed fund, each ETF unit represents an undivided interest in the underlying assets. In Australia, this interest is usually in the form of a unit in a unit trust. ETFs and managed funds also both offer professional management, so you don’t have to keep track of every security your fund owns. However, ETFs are different in that they can be traded throughout the day on an exchange at a market-determined price.

Most ETFs use an indexing approach. Index ETFs are built so that their value can be expected to move in line with the indices they seek to track. For example, a 2% rise or fall in an index should result in approximately a 2% rise or fall for an ETF that tracks that index (before fees and expenses).

Short-Sighted Risk Aversion

  • Willard Lloyd
  • October 31, 2019
Reading Time: 4 minutes

Would you take this deal? I’m going to flip a coin. If it comes up heads, you win $200.00. If it comes up tails, you lose $100.00.

Most would decide not to play. It’s just not worth it. The odds are not in your favour. It’s nice to win $200.00 but nobody wants to lose $100.00.

This mindset applies to clients who fret over their account balances daily. In a bad market, the odds appear to be heavily stacked against us. It’s just not worth taking the risk when every day brings bad news when the odds are not in our favour.

What if you offered to flip the coin one hundred times? That would give somebody pause. The odds appear better. They may not be, but the long game is more appealing. It seems we have a better chance of winning over time.

Australia is rich, dumb and getting dumber…

  • Willard Lloyd
  • October 14, 2019
Reading Time: 3 minutes

Bangladesh, Cuba, Iran, Mali and Turkmenistan share an unexpected connection to Australia, and it isn’t membership of a tourist destination hotlist.

All are among the economies that are so lacking in complexity, and have such limited natural opportunities to develop new products, that Harvard University recommends they adopt industrial policy straight out of the post-colonial developing world: the “strategic bets” approach.

The advice comes from the Harvard Kennedy School’s Center for International Development, which two weeks ago launched an online database of 133 economies that combines remarkably rich data with beautiful presentation.
Designed to map, literally, the economic progress and opportunities of the industrial and non-industrial world, the Atlas of Economic Complexity exposes an under-appreciated truth about Australia.
The enormous wealth generated by iron ore, coal, oil and gas masks, and probably contributes to, an economy that has failed to develop the industries needed to sustain its position among the top ranks of the developed world.

Put simply, Australia is rich and dumb and getting dumber.
On the primary metric used in the database, an index of economic complexity, Australia fell from 57th to 93rd from 1995 to 2017, a decline that is accelerating. Australia’s top trading partner, China, rose from 51st to 19th over the same timeframe.

How defensive stocks ride out rate volatility

Reading Time: 3 minutes

Glenn Freeman  |  03 May 2019


Utilities and infrastructure companies are usually described as a “defensive” asset class because they deal in long-term contracts that help them ride out volatility – a factor that also affects their reaction to interest rate movements.

And like property trusts, utilities and infrastructure companies also have bond-like characteristics: they may not grow very quickly, but they provide a reliable income stream over the longer term.

Be in Control of your Financial Well-being- Is Money Holding back your Happiness?

Reading Time: 3 minutes

The Commonwealth Bank and the Melbourne Institute: Applied Economic and Social Research at the University of Melbourne, released a new benchmark measure of financial wellbeing of it stating weighing on the minds of a large number of Australians is their challenges of managing personal finances and putting enough money aside to ensure their financial futures. 

What is the CBA-MI financial scale? 

The scale combines banking data and peoples’ perceptions about financial outcomes.  The unique concentration of the individuals perception with the banking data reveals the barriers, drivers and behaviours that are linked to positive financial well being across both ‘self-reported and ‘observed’ scales. 

The financial Forecaster – Are they just fortune tellers in a suit?

Reading Time: 3 minutes

From how the dollar will perform, to whether we should invest in property or shares, despite the past record of forecasters often ‘getting it wrong’, or playing it safe, consumers will continue to seek market predictions, almost as if they are searching to find that one person with the crystal ball.

Using last year as an example, many experts, including Mike Wilson from Morgan Stanley, predicted tech stocks would continue to head the market, allowing it to remain strong.  What happened? The likes of Apple and Facebook fell over 40% from their highs. Even the S&P 500 ended the year well below the predicted 2840 with a concluding result of 2500.

So why are the experts so often wrong? To put it simply, it’s because they generally fall into two categories, and either way, they are playing it safe.

The Australian Share Market Slumped to a Two-Year Low.

Reading Time: 3 minutes

For around 12 months we have believed that Australian and Global equity markets have been extremely overpriced and riding on the strength of euphoria as we couldn’t find many opportunities for growth.

We had always been saying that the Australian and US equity markets have been overvalued and thus very early on had little exposure to both asset classes. Most Australian investors who aren’t our clients have a love affair with domestic and US shares thus seeing very large declines in their portfolios over the past 3 months {-12% to -22%}

Your E3 Visa remains safe.

Reading Time: < 1 minute

An announcement by Congress, concerning the current status of the E3 Visa, left a vicarious feeling amongst Australians planning on making the move to the USA.  As it stood, the E3 visa came as a part of a 2005 Australian-US fair trade agreement under the Bush administration.  It had become the envy of many nations as, unlike many other visas, it allows its recipients, and their spouse, to work within the US unrestricted and has unlimited renewals.  The Visa is relatively cheap and allows Australians to by-pass many other applicants attempting to gain entry in the US.  To qualify applicants must be employed in a specialty occupation, have a legitimate offer of employment in the US, and possess the necessary academic or other qualifying credentials. 

Payday Loans – The crack-cocaine of lending.

Reading Time: 2 minutes

Attractive advertising, paired with an individual desperation, is what helps to fuel the seduction of Payday (short-term) loans, and they are quickly becoming a menace to our society; more often than not leading people into a worse financial situation than where they began. 

Payday loans in Australia are part of the small loans market.  Statistics show that many people who apply for such a loan are already in financial hardship. They may have even already tried to apply for a small personal loan through a banking institution and been denied a loan.  The national consumer credit protection act mandates that all lenders ensure that the person applying for a loan can afford to repay the loan without substantial financial hardship.  Payday companies are not required to make such assurances for their clients and have made access to small loans of under $2000 increasingly easier with their online presence.