Speaker 1: Good morning everyone, and welcome back to Sugar Mama's Fireplay podcast,
Speaker 1: the podcast that ignites your financial journey with inspiring stories
Speaker 1: and innovative strategies. I am your host, financial planner, Anna Campbell,
Speaker 1: and today we are back chatting with my financial mentor,
Speaker 1: my only financial mentor, and that is, of course, the
Speaker 1: one and only Peter Thornhill, the self funded retiree that
Speaker 1: just simply gets richer and richer as time goes by.
Speaker 1: And he has written his own book, Motivated Money, which
Speaker 1: is one of the best books you could possibly read
Speaker 1: if you are serious about being financially independent and having true, authentic,
Speaker 1: sustainable freedom in your life. So we're going to be
Speaker 1: chatting with Peter. I'm going to be asking him a
Speaker 1: whole pile of questions and I guess you could say
Speaker 1: maybe reinjecting that serious financial motivation back in your life
Speaker 1: to think about your financial stress. Now, before we begin,
Speaker 1: a reminder that all of my content will it be
Speaker 1: something on Instagram, podcast, YouTube. It's always general in nature
Speaker 1: and for educational purposes only, so please always bear that
Speaker 1: in mind. All right, let's get started. Peter, Thank you
Speaker 1: so much for coming in again. I'm so incredibly grateful
Speaker 1: for how generous you are with your time and also
Speaker 1: how you help educate and inspire every day people about
Speaker 1: the power of Australian Industrial shares and investing for the Lauren,
Speaker 1: how are you today?
Speaker 2: I'm absolutely fine, Thank you Kenna, and delighted to be back.
Speaker 1: Well, thank you coming in now. Can you give me
Speaker 1: a bit of an elevator pitch that is like a
Speaker 1: thirty second spiel as to what your personal financial strategy
Speaker 1: or philosophy.
Speaker 2: Is basically buying quality businesses that produce a growing income
Speaker 2: stream and allow my wife and I to float through
Speaker 2: life in a totally sustainable, enjoyable and amazing manner.
Speaker 1: Can I ask you who actually inspired you to start
Speaker 1: this journey and to change the way that you're investing
Speaker 1: away from the generic you know, do a risk profile,
Speaker 1: go with a balance manage fund. Who was the person
Speaker 1: that actually led you to this path and enlightened you
Speaker 1: with the power of Australian Industrial Shares.
Speaker 2: I think that there was no one individual Canna. It
Speaker 2: was more the way things evolved in terms of career.
Speaker 2: So the eighteen odd years that began as a working
Speaker 2: holiday in England with my wife and stretched out to
Speaker 2: eighteen years. The only reason I came back to Australia
Speaker 2: was because I was headhunted. But it was that apprenticeship
Speaker 2: in England where I guess the reasons for investing in
Speaker 2: shares was slowly absorbed by me as I was surrounded
Speaker 2: by so many successful investors. And it's that legacy that
Speaker 2: carries us today in the lap of luxury, because.
Speaker 1: Would you say, like Osmosis, almost you just absorbed their
Speaker 1: strategies because the proof was in the pudding and could
Speaker 1: see it was working.
Speaker 2: Yes, there was no sort of epiphany. But coming back
Speaker 2: to Australia, the difference between investing attitudes in the UK
Speaker 2: and in Australia are just chalk and cheese. Can you
Speaker 2: explain further well, Property in England is largely to live in,
Speaker 2: just a lifestyle asset, a lifestyle act. Yeah, And in
Speaker 2: Australia it's the be all and end or of a
Speaker 2: person's life. And it's that the bulk of the productive
Speaker 2: capital of this country is locked up in residential property.
Speaker 2: The bulk of Australian businesses are owned by overseas investors.
Speaker 2: So we have I think the figures for twenty two
Speaker 2: over forty billion dollars of dividends from Australian companies disappear
Speaker 2: overseas because Australians don't like shares because they're risky.
Speaker 1: Our ego is completely fixated and obsessed with property, even
Speaker 1: though it is quite often the stupidest and most painfully
Speaker 1: expensive asset to hold. But we're just fixated on the
Speaker 1: idea of a tangible asset, even though it can be damaging.
Speaker 2: I know, and it knocks my socks up. You know,
Speaker 2: if you own a property, what have you got, whether
Speaker 2: it's a rental property, your own, You've got rates, You've
Speaker 2: got repairs, You've on and on and on. I buy shares,
Speaker 2: what do I pay from that point onwards? Nothing? And
Speaker 2: they pay me. And if you have an investment property
Speaker 2: and you get rent, well, negative gearing would have to
Speaker 2: be about the dumbest thing I've ever heard of. You
Speaker 2: borrow money to buy something that doesn't cover the interest costs,
Speaker 2: and apparently that's really good because you avoid paying tax
Speaker 2: on some of your income. Oh do you? But despite that,
Speaker 2: when I get a dividend, that's all well and good,
Speaker 2: But you've got to add the franking tax credits on
Speaker 2: top and the fact that owning those shares basically holds me,
Speaker 2: costs me little or nothing.
Speaker 1: You know what I find it is the retirees who
Speaker 1: are late in their retirement that only finally then cotton
Speaker 1: on to how powerful franking credits are because they get
Speaker 1: their refunds back of those franking credits, and it boosts
Speaker 1: the retirees income from say forty five thousand dollars to
Speaker 1: say fifty two fifty three thousand dollars. Only then later
Speaker 1: life are they realizing how powerful and how valuable and
Speaker 1: how important those franking credits are. But they've wasted so
Speaker 1: much time in their life not actually acquiring those assets.
Speaker 1: Like it's the penny's dropped very late in life, unfortunately.
Speaker 1: But anyone who's listened to this podcast today actually has
Speaker 1: the advantage and the opportunity to learn this, to understand it,
Speaker 1: and then but and apply it and accumulate these types
Speaker 1: of quality assets.
Speaker 2: Can It grieves me and I try not to spend
Speaker 2: too much more time thinking about it, but financial literacy
Speaker 2: in this country is virtually non existent.
Speaker 1: It's embarrassing and I'm ashamed that it's so bad. And
Speaker 1: that's what I'm obviously trying to do something about it.
Speaker 1: But you know, and at times I say this personally
Speaker 1: like it feels like I'm banging my head against a
Speaker 1: brick wall. You know, you'll see something, you know that
Speaker 1: have finfluence, so someone who's not even qualified talking about
Speaker 1: like trading a certain stock or you know, purchasing this property.
Speaker 1: But then you know, you put something up about a
Speaker 1: share portfolio. The other day, I shared your chart of
Speaker 1: one hundred thousand dollars invested in nineteen seventy nine what
Speaker 1: would be worth today, and it is worth seventeen point
Speaker 1: four nine million dollars. I think it got seventeen likes
Speaker 1: or something ridiculous. And then the comments I got were, well,
Speaker 1: I don't have this much time to invest, And I'm like,
Speaker 1: you don't have to necessarily build a seventeen point five
Speaker 1: million dollar investment portfolio, build a one point seven million
Speaker 1: dollar investment four follow that's also incredibly amazing. But we
Speaker 1: are feeding people these solutions and strategies that are based
Speaker 1: on evidence and facts, and they aren't being absorbed, Like
Speaker 1: what is this? Why are people being so thick? And
Speaker 1: I sound like I'm being a bit of a bitch,
Speaker 1: but I mean, I follow this advice myself, and I
Speaker 1: see for myself how valuable this industrial share path is.
Speaker 1: What's going on?
Speaker 2: Yep, It's a sad fact of life, Kenna. And the
Speaker 2: reason that I spout a lot and the reason I
Speaker 2: wrote the book, Yeah, people deserve a hell of a
Speaker 2: lot better. We're a relatively young country. So the history
Speaker 2: has been basically property from the moment Captain Cook set
Speaker 2: foot and it has remained so. And it is a
Speaker 2: very sad waste of the productive assets of this country.
Speaker 2: And foreign ownership of our Australian companies. I could weep.
Speaker 2: You know. We talk about the Big Australian BHP. BHP
Speaker 2: is over seventy percent foreign owned. Where do the dividends go? Overseas?
Speaker 2: Rio is the same. And you can look at virtually
Speaker 2: any Australian company and often the shareholding is majority owned
Speaker 2: by overseas investors. So tens of billions of dollars flow
Speaker 2: out of this country every year as the dividends disappear.
Speaker 1: It's just heartbreaking, isn't it?
Speaker 2: It is? It just seriously is Look.
Speaker 1: I can proudly report that the listeners of Sugarama's Fireplate
Speaker 1: and how they thought that absolutely love what you have
Speaker 1: to say, and you know, whenever we post something now
Speaker 1: that you've said, or a clearp or you know, an
Speaker 1: audio file, it goes mental and people starting to really listen,
Speaker 1: and people are finding your philosophy and your concept a
Speaker 1: breath of fresh air. Now, I want to talk to
Speaker 1: you about the shift are listed investment companies you've a
Speaker 1: views have explained in the past, predominantly your portfolio was
Speaker 1: the individual companies, you know, the supermarkets, the banks, the
Speaker 1: transportation companies, the pharmaceutical companies and so forth. But over
Speaker 1: the last maybe ten years, you've been shifting those assets
Speaker 1: slowly and steadily into your listed investment companies. Can you,
Speaker 1: obviously I understand the benefits of this, but can you
Speaker 1: explain to our listeners why you chose to do this
Speaker 1: and the benefits of doing this?
Speaker 2: Okay, the one thing I don't want to do is
Speaker 2: spend one minute of the time that I have left
Speaker 2: on this planet looking at shares. And it concerns me
Speaker 2: the number of people who will, probably predominantly males, who
Speaker 2: retire and then spend their time in front of a
Speaker 2: computer watching shares and trading shares. And if I can
Speaker 2: give you the definitions invest the use of money productively
Speaker 2: so that a regular income is obtained, speculate buying and
Speaker 2: selling in an attempt to benefit from a fluctuation in
Speaker 2: the price. Now a lot of what you see in
Speaker 2: the media, and god, bitcoin, I find difficulty using the word.
Speaker 2: But the media talks about people who invest in bitcoin,
Speaker 2: they talk about people who invest in diamonds, who invest
Speaker 2: in and so on. You cannot invest in any of
Speaker 2: those items. You can speculate, And I wish the media
Speaker 2: would define what they're doing rather than just classifying anything
Speaker 2: you buy jewelry, wine is an investment, it's not. It's
Speaker 2: the use of money productively so that a regular income
Speaker 2: is obtained. And therein lies the key, very simple definitions.
Speaker 1: Exactly it's two dimensional assets or forget about it. I'm
Speaker 1: going home. I'm not listening at all. And if people
Speaker 1: just don't realize the risk that they're actually taking to
Speaker 1: go and speculate with those types of assets, they have
Speaker 1: no idea the potential danger they're inflicting upon themselves. And
Speaker 1: at the end of the day, whether your portfolio is
Speaker 1: worth two million dollars, if it's not paying you anything,
Speaker 1: what's its purpose. I would rather have a one million
Speaker 1: dollar asset paying me, say, fifty thousand dollars a year
Speaker 1: and growing consistently, consistently growing passive income than two million
Speaker 1: dollars in something that I don't even know if I
Speaker 1: can actually sell at that price because there isn't necessarily liquidity,
Speaker 1: And then I've got to go and pay a whole
Speaker 1: pile of capital gains at tax, Like, how does that
Speaker 1: help me in my financial freedom? Nothing at all? And
Speaker 1: the risk and stress as well, just it's just absolute stupidity.
Speaker 2: Well that's the sad part kind of you know, fear
Speaker 2: is based on ignorance. That's why people don't like shares.
Speaker 2: They think they know property because they're surrounded by it.
Speaker 2: And I've had people say to me, oh, yeah, but
Speaker 2: you know I can go and see the property and
Speaker 2: you know, tangible. Yeah, apparently they've never walked into a
Speaker 2: supermarket and acknowledged that as being something. But they've never
Speaker 2: walked into a bank.
Speaker 1: Oh dear, Well, you know, we were just chatting obviously
Speaker 1: before we walked into the studio, and we're talking about
Speaker 1: you know, we're fixated as a country on property. But
Speaker 1: what do we do when we go and buy a property.
Speaker 1: Most of us give it a fresh, fresh lick of paint.
Speaker 1: Where do we buy a paint from. We might get
Speaker 1: a tradesman, and we might buy a new washing machine
Speaker 1: or a new fridge. We might maybe do a bit
Speaker 1: of a renovation, you know, we might buy a new sofa.
Speaker 1: Where is all that money is going to the businesses?
Speaker 1: People just think so one dimensionally with property and they're
Speaker 1: missing ninety five percent of the other side of the
Speaker 1: story and how to build wealth. So with you switching
Speaker 1: from the individual stocks into listed investment companies, you mentioned
Speaker 1: you want your time back. You don't want to be
Speaker 1: sitting in front of a computer screen all day. And
Speaker 1: the simplicity obviously of having a listed investment company is
Speaker 1: tax reporting. You're not collecting to probably if you had
Speaker 1: to say, thirty stocks in your portfolio and each of
Speaker 1: them pay a dividend twice a year, the amount of
Speaker 1: paperwork involved. You're looking at sixty statements to be able
Speaker 1: to handovers to your account it or to do yourself to
Speaker 1: try and do your taxes. It's all done simply within
Speaker 1: two simple, consolidated, concise statements.
Speaker 2: And ken of what concerns me is people who buy
Speaker 2: shares at an early stage and then use the dividend
Speaker 2: reinvestment plans. So two dividends a year over thirty years
Speaker 2: gives you sixty individual capital gains tax that you're going
Speaker 2: to have to deal with if you ever come to
Speaker 2: sell the shares.
Speaker 1: Well, my goal is never ever to sell. I will
Speaker 1: pass that tax issue onto my state. They can deal
Speaker 1: with it. But I mean, I have always been acquired.
Speaker 1: I mean, and I will put my hand on my heart.
Speaker 1: I do own property, but I own property to get
Speaker 1: back into shares because the bank will lend me money
Speaker 1: at a lot lower interest rate than I will if
Speaker 1: I didn't have property there. But all I want to
Speaker 1: do is just continue on acquiring reinvestmor I can purchase
Speaker 1: more and continue to make sure my portfolio is diversified.
Speaker 1: And I, like you, am very much aligned to the
Speaker 1: I guess you could say the simplicity and the peace
Speaker 1: of mind and the delegation of a listed investment company.
Speaker 1: And that is definitely something I have started to do
Speaker 1: with my dividends, coming in using them to require more
Speaker 1: of my listed investment companies because there's a lot less
Speaker 1: paperwork involved and there's a lot more time that I
Speaker 1: get back as an investor, building my passive income through dividends.
Speaker 2: I couldn't agree more Kenna, and again we're behind the
Speaker 2: eight ball. A teen years in Europe, I became very
Speaker 2: familiar with the fact that long term residential leaseholds on
Speaker 2: most property in Europe gives people security of tenure in
Speaker 2: this country because a lot of the property is owned
Speaker 2: by institutions in Europe. In Australia, residential property is owned
Speaker 2: by idiot owners who then rented out. But you're on
Speaker 2: what you know, today's notice to quit.
Speaker 1: There's no stability whatsoever. And until our government looks at
Speaker 1: changing the regulations about immersent properties and making sure that
Speaker 1: you have to sign you know, you have to make
Speaker 1: the property available for five years, ten years, whatever it
Speaker 1: may be, I don't see any other solution in the meantime.
Speaker 2: No, it's sadly our politicians are all Australians and.
Speaker 1: They all own property themselves.
Speaker 2: Having laid my hands on the Register p Unary Interests
Speaker 2: for the Australian Federal Parliament and if anyone's interested, it
Speaker 2: is publicly available. I spent a couple of nights doing
Speaker 2: a little bit of research. The vast majority of the
Speaker 2: politicians in this country are up to their eyeballs in
Speaker 2: negatively geared property, not a lot owned shares, which means
Speaker 2: the politicians.
Speaker 1: Are just as stupid as everyone else is.
Speaker 2: Correct, which means meant for me that when I become
Speaker 2: Prime Minister, I'm not going to have one Australian in
Speaker 2: my cabinet. I'm going to hand pick every one of
Speaker 2: the members of my parliament overseas and hopefully create a
Speaker 2: mix that will give us Australia as a whole the
Speaker 2: productive use of its capital rather than the totally unproductive
Speaker 2: use it has.
Speaker 1: Now, what are your thoughts for people who are he
Speaker 1: to start investing and they understand everything you're saying about
Speaker 1: the property market, it's not for them. They want to
Speaker 1: build this diversified investment portfolio of growing passive income. What
Speaker 1: are your thoughts of starting with a listed investment company
Speaker 1: and then as your experience and confidence changes and evolves
Speaker 1: over time, then thinking, you know what, I'd like to
Speaker 1: actually own more of that bank or more of that supermarket.
Speaker 1: Do you think that that's still something that people can
Speaker 1: consider as a strategy but at least they've gotten started
Speaker 1: the meantime, or you think just stick with the list
Speaker 1: investment companies.
Speaker 2: The whole way through their life is not should not
Speaker 2: be involved in something they know nothing about. If you're
Speaker 2: going to buy a direct share, are you going to
Speaker 2: go and interview the board of directors? Are you going
Speaker 2: to go and analyze their financials? Leave it out and
Speaker 2: leave that to the specialists. You get on.
Speaker 1: With your life, get your time back. Don't sit in
Speaker 1: front of a computer screen and the stress and pressure
Speaker 1: of making you know, some may people were scared of
Speaker 1: making the wrong decision that they actually end up doing
Speaker 1: nothing at all.
Speaker 2: Correct. Focus on the things that are important in your life,
Speaker 2: your family, your career, and your friends, and your health
Speaker 2: and your health.
Speaker 1: How many listed investment companies do you think one needs
Speaker 1: in their investment portfolio? This is when I really struggle
Speaker 1: with some interest to hear your thoughts.
Speaker 2: Well, I've got four, and that's probably because there are
Speaker 2: I could have five or six. Maybe six would be
Speaker 2: the ideal because then you're getting twelve dividends a year.
Speaker 2: But I've stripped it back to just four, and honestly,
Speaker 2: the only contact I guess I have at large is
Speaker 2: I get notification the dividends have arrived. If you own six,
Speaker 2: you get twelve. I own four. I get eight dividends
Speaker 2: a year, but oh my god, are they large dividends.
Speaker 1: Oh, it's previously spoken about what your retirement looks like,
Speaker 1: and you by far have the best retirement of anyone
Speaker 1: I know, like multiple trips overseas with your beautiful wife.
Speaker 1: Can you tell everyone again about your experience with your granddaughters.
Speaker 2: Yes, what a joy to be able to spoil them
Speaker 2: rotten and have so much fun with them. And yeah,
Speaker 2: you know it's nerve armor and not one ounce of
Speaker 2: financial concern at all.
Speaker 1: That must feel so liberating.
Speaker 2: It is I sleep at night, I wake up and
Speaker 2: I'm full of joy for the next day we have
Speaker 2: to see the granddaughters, what have you? But oh god, yeah, no,
Speaker 2: I'm incredibly lucky, Canna.
Speaker 1: Well, they're lucky to have you as well. Now I
Speaker 1: can ask you how we how does one remove themselves
Speaker 1: or ignore? And I'll probably just answer the question by
Speaker 1: asking you, but how do we learn to turn down
Speaker 1: the noise when it comes to the media and these
Speaker 1: ridiculous clickbait driven headlines? You know, X billion of dollars
Speaker 1: wiped off mom and dad investors today? How do we
Speaker 1: just learn to shut it off? And is where do
Speaker 1: you go to get your news and stay informed.
Speaker 2: I get Actually I'm very naughty now because I only
Speaker 2: get one newspaper. And the only reason I get it
Speaker 2: is so my wife can do the sudoku and the crossword.
Speaker 2: And then is she used to wrap up the vegetables
Speaker 2: before we toss them in the other bin. But yeah,
Speaker 2: I don't have an easy answer to that. It's just
Speaker 2: you know, the way life is. I mean, I cannot
Speaker 2: ignore what's going on in the world. But the important
Speaker 2: thing to remember is that history repeats itself over and
Speaker 2: over and over again. So we're going to have a
Speaker 2: crisis in the seventies. They are oil crisis, back in
Speaker 2: nineteen seventy three, share markets tank, the global financial crisis,
Speaker 2: the COVID, it just goes on and on and on.
Speaker 2: But to suggest that this is a reason for saying,
Speaker 2: oh God, you know shares blah blah blah blah, do
Speaker 2: all the businesses in the world shut down?
Speaker 1: Absolutely not, absolutely not.
Speaker 2: And I think human endeavor is the driving force. So
Speaker 2: one just sits back and enjoys the efforts of a
Speaker 2: lot of very productive people doing very very good jobs
Speaker 2: who then pay us.
Speaker 1: And if anything, when there are these clickbait driven times,
Speaker 1: you know about very normal and natural short term quality
Speaker 1: in the market. Quite often the best opportunities to be
Speaker 1: able to acquire bigger and better quality in income streams
Speaker 1: at a discounted price exactly the same. And it's you know,
Speaker 1: boxing day sales. Do we run away from the supermarket
Speaker 1: and the shopping malls. No, we turn up with our
Speaker 1: hot own money and shop. Why are we doing the
Speaker 1: same with the stock market?
Speaker 2: Well, exactly. And one of the things I do like
Speaker 2: about the listed investment companies certainly that we hold is
Speaker 2: from time to time they come back to their existing
Speaker 2: shareholders and say, we are going to raise fresh capital
Speaker 2: for investment, and we will therefore be offering new shares
Speaker 2: at a small discount and no brokerage to add to
Speaker 2: your portfolio. And the tax rules say that if it's
Speaker 2: not more than thirty thousand dollars, it's there's no fees,
Speaker 2: no tax, no nothing. You can just tip that money in.
Speaker 2: It's dream time.
Speaker 1: It's a no brainer, absolutely, And this is why if
Speaker 1: you're investing, you've also got a stockpile of your cash
Speaker 1: for these opportunities as well, so when they present themselves,
Speaker 1: you can jump on them. Above and beyond obviously, of
Speaker 1: course emergency money, but you know you want to just
Speaker 1: be focused on growing your income and acquiring more of
Speaker 1: these assets that help you grow your income.
Speaker 2: And the beauty with the share purchase plans is you
Speaker 2: can put in anywhere from one thousand dollars up to
Speaker 2: thirty thousand dollars with absolutely no implications whatsoever.
Speaker 1: Yeah, I mean, this is the power of listed investment
Speaker 1: companies and this is not available for ETF holders.
Speaker 2: Nope.
Speaker 1: Yeah, what would you say is the number one biggest
Speaker 1: mistakes young Australians are making these days when it comes
Speaker 1: to their money, their lifestyle and their financial.
Speaker 2: Future their lifestyle.
Speaker 1: But can you elaborate more?
Speaker 2: Well, my wife and I, oh my god, I'm seventy seven,
Speaker 2: and you know we're going way back ancient history. But
Speaker 2: my wife and I didn't have a rosy between us
Speaker 2: when we met and married. But I was lucky because
Speaker 2: I happened to marry someone who was a saver like me,
Speaker 2: and so throughout our lives we've never spent all weird.
Speaker 2: I've never owned a new car. My current automobile is
Speaker 2: a two thousand and five Toyota Corolla. But I am
Speaker 2: a petrol head. But I enjoy renting high falutin cars
Speaker 2: just so I can have a real fun time and
Speaker 2: then hand the keys back. I don't know. It's simple,
Speaker 2: but I feel naughty saying it like that.
Speaker 1: It sounds fare, but you're full of wisdom. There's nothing
Speaker 1: naughty that you're saying at all.
Speaker 2: Yeah, and no secrets at all. It is just spend
Speaker 2: lesson you earn, borrow lesson you can afford and be
Speaker 2: sent But I think one thing that strikes me now,
Speaker 2: having three sons and five granddaughters and people that we other,
Speaker 2: young people that we know, their lifestyle has to be
Speaker 2: top of the line from day one.
Speaker 1: Champagne's be a budget.
Speaker 2: Yes, and that was one thing that when my wife
Speaker 2: and I married, it was years before we could take
Speaker 2: a holiday.
Speaker 1: The entitlement and the expectation these days is concerning.
Speaker 2: We never ate out, couldn't afford it, Yeah, And we
Speaker 2: walked a lot. Didn't have a car for quite quite
Speaker 2: a time, and when we did it was was it God?
Speaker 2: It was a nineteen forty six Comma van that we
Speaker 2: used for touring.
Speaker 1: It's interesting you say that because I think some of
Speaker 1: the best moments I've had personally, the most the deepest moments,
Speaker 1: the most moving moments are the ones that have actually
Speaker 1: been broke, you know, and thinking. You know, you appreciate
Speaker 1: life so much more in those moments, and it teaches
Speaker 1: you so much about the respect of a dollar, how
Speaker 1: hard it is to earn a dollar, how important it
Speaker 1: is to save and invest a dollar. Those actually the
Speaker 1: really rich moments, filled with wisdom and give you the
Speaker 1: opportunity to change your life and reshape your life, to
Speaker 1: grow something incredibly beautiful and do so mindfully. But we're
Speaker 1: just living in the clouds with this. You know, I
Speaker 1: want it, I'll have it right now, and the best
Speaker 1: of the best, And you know it's we've lost our
Speaker 1: way a bit. We've just consumers and materialism at its
Speaker 1: finest it is.
Speaker 2: And you know, you're quite right. We go back to
Speaker 2: the nineteen seventies when Freed and I were starting our
Speaker 2: life together. Very very simple things were incredibly pleasing, but
Speaker 2: they were infrequent, and there was often a special effort
Speaker 2: to save up for that little item or what have you.
Speaker 2: But oh my god, how happy we were when it
Speaker 2: occurred when we were finally got four wheels and we
Speaker 2: could drive around and visit friends, Heavens to Murgatroyd.
Speaker 1: We're missing that sense of pride and accomplishment. We're robbing
Speaker 1: ourselves of it, and we're robbing our children of it
Speaker 1: as well. Yes, yeah, all right, what is the biggest
Speaker 1: mistake you've ever made with money?
Speaker 2: Golly, isn't it funny? I can't think of any one
Speaker 2: huge one, but there have been a hell of a
Speaker 2: lot of trip ups along the way. And I'm sure,
Speaker 2: actually I've never really thought about it, Canna, this is something.
Speaker 1: It's someone who retired with over ten million dollars and
Speaker 1: only really started investing properly in his late fifties. I
Speaker 1: don't think you've probably made too many mistakes, So no,
Speaker 1: wonder it's a hard question to answer.
Speaker 2: Well, with the finances were the ones that supported us.
Speaker 2: And look if I go back to the very early days,
Speaker 2: when I've still got the original share certificates of my
Speaker 2: first investments in Australia. I worked in Melbourne for a
Speaker 2: broking house for a while and as I say, I
Speaker 2: haven't actually framed them yet, but every one of those
Speaker 2: share certificates everyone, there were three of them. All the
Speaker 2: companies went bust. So yeah, my early steps into the
Speaker 2: share market, every single one of them were total disasters.
Speaker 1: And that's the thing with you know, we're all made mistakes.
Speaker 1: That's part of life. But you've got to be okay
Speaker 1: with that and learn from that and obviously try not
Speaker 1: repeat that mistake every again. So if you have a
Speaker 1: go at this and picked the wrong investment, don't give
Speaker 1: up on investing. Go back to the drawing board. You
Speaker 1: got motivated money. Learn about the power of listed investment
Speaker 1: companies to help you get you back on track again.
Speaker 1: And if you've follow that formula, listed investment companies and
Speaker 1: just delegate it to an expert that can do all
Speaker 1: the investing and the timing and the negotiating of share
Speaker 1: prices and all your tax reporting. Just stick to it.
Speaker 1: Don't try and reinvent the wheel. When it comes to,
Speaker 1: you know, getting ahead financially and investing your money wisely,
Speaker 1: I think we put this and the media you know
Speaker 1: does this, and obviously I think also the financial product
Speaker 1: providers they create these complicated, unnecessarily complicated financial products so
Speaker 1: they can just layer up a whole pile of fees
Speaker 1: for themselves and then sell it to us so that
Speaker 1: we feel like we have to lean on them to
Speaker 1: in order to be able to get ahead financially, which
Speaker 1: is just so wrong. Correct, The simple answer is right
Speaker 1: in front of us.
Speaker 2: Everybody thinks it's becoming more sophisticated. In fact, it's becoming
Speaker 2: messier we as we move along.
Speaker 1: I have mentioned this to you before, but I'm interviewed
Speaker 1: Angus Gluski, who's the seat Oh yeah, of white Field,
Speaker 1: of Whitefield, lovely guy. And you know, we were talking
Speaker 1: about fee and their fees have been coming down, and
Speaker 1: I think they believe they're around about maybe three point
Speaker 1: three point five percent. It not three zero point three
Speaker 1: point five percent. So if I put one hundred thousand
Speaker 1: dollars into white Field shares for three hundred and fifty
Speaker 1: dollars a year, I'm paying them to do all my
Speaker 1: investment decisions, all my tax reporting, organize all my dividends
Speaker 1: to be paid to me. And I do not need
Speaker 1: to lift a finger in working out what's stock to
Speaker 1: be buying, what's stock to be acquiring more of? You know,
Speaker 1: where's the next best thing, where's the value? I don't
Speaker 1: have to for the measly three hundred feet dollars when
Speaker 1: you sit down and look at the amount of hours
Speaker 1: involved to do all of that work, it literally would
Speaker 1: work out to be about twenty cents an hour. Like
Speaker 1: it is just it is the best value for money.
Speaker 1: But people bitch your own about fees and it's like, well,
Speaker 1: you can go and find a very complicated, you know,
Speaker 1: sexy financial product with the whole parlor of marketing behind
Speaker 1: it that's going to charge you probably three maybe four
Speaker 1: times that fee, and they will fill their pockets before
Speaker 1: they fill your pocket.
Speaker 2: And if you're concerned about the fees of elisted investment companies,
Speaker 2: which as you rightly say, are low, you know we're
Speaker 2: talking about KNOWERO point zero three. Are you really pissed
Speaker 2: off about your doctor, your dentist, your lawyer charging you exactly?
Speaker 2: Or are you going to do all of those things,
Speaker 2: your dental work, your legal work yourself exactly. Yeah. I mean,
Speaker 2: for some strange reason, the financial side of things is
Speaker 2: seen as some sort of circus, and boy, have we
Speaker 2: got some clown.
Speaker 1: I find it interesting, you know, And this is like
Speaker 1: going back to my days when I was financial planning,
Speaker 1: I'd meet with bdms and these mediums would turn up
Speaker 1: with and that we used to call them. This is
Speaker 1: a little bit that we used to call them borrough
Speaker 1: show delivery boys, which is very degrading, and I acknowledge
Speaker 1: that and we've moved on from there. But literally, these
Speaker 1: people would turn up with a whole pile of brochures
Speaker 1: and then you'd ask them about the product and they
Speaker 1: knew everything about it, but you'd ask them, do you
Speaker 1: invest in this? And they never did, and you just like, Okay,
Speaker 1: I'll see you later, goodbye. Like that's the financial products
Speaker 1: that are being created that we're being being sold in
Speaker 1: our face every day.
Speaker 2: Yep. And having worked for fund managers overseas and in Australia,
Speaker 2: the reason I left the industry in two thousand was
Speaker 2: because I could no longer stand in front of people
Speaker 2: and say this is what you should invest in, because
Speaker 2: I was not prepared to invest in it myself. And
Speaker 2: I'm sorry, I will not stand up and lie publicly
Speaker 2: to people.
Speaker 1: Yeah, and that is so important. And for anyone you're
Speaker 1: following on social media, if they're not muching to the
Speaker 1: beat of their own drum, they don't drum and don't
Speaker 1: have skin in the game, I would not give them
Speaker 1: any time of day. And this is why I'm so
Speaker 1: passionate about you know, teaching people about your philosophy and
Speaker 1: your message about power of Australian shares, in particular industrial shares.
Speaker 1: That is what I'm acquiring. If you gave me a
Speaker 1: million dollars today, it would be back into my share portfolio,
Speaker 1: and after obviously doing a debt recycling strategy. But that's
Speaker 1: another story for another time, because I hate my mortgage. Now.
Speaker 1: Is there a moment in your life where you, like,
Speaker 1: I guess, an anecdote or a poignant moment in your
Speaker 1: life where you're like, wow, we just got our first dividend,
Speaker 1: or wow, look at our dividends. They're really starting to
Speaker 1: build up now, because you look at the growth of
Speaker 1: investing over the long run, and we all know that
Speaker 1: it's boring, boring, boring probably for the first five, maybe seven,
Speaker 1: eight year, nine, ten years is boring. But then magic
Speaker 1: kicks in because of obviously the compounding interest and dividend reinvestment,
Speaker 1: and you can actually now really see the effect of
Speaker 1: the consistently growing dividends. Was there a moment in your
Speaker 1: love here you're like, holy crap, this is actually unbelievable.
Speaker 2: There was Canna, and it wasn't that long ago. As
Speaker 2: part of my presentation. Probably two or three years ago,
Speaker 2: I created a handful of new slides, and one of
Speaker 2: the slides is I looked at every investment I have
Speaker 2: made is in Microsoft Money, so I can take you
Speaker 2: back and I can show you my entire investment history.
Speaker 2: So I played around with them. So I looked a
Speaker 2: handful of the shares that I had sold, and I'd
Speaker 2: made a loss. Bugger, I thought another, hang on a second.
Speaker 2: Then I went back and got into Microsoft Money and looked, oh,
Speaker 2: hang on a second. The dividends that were paid are
Speaker 2: more than the loss that I made on the sale.
Speaker 2: So I didn't actually lose any money. And that was
Speaker 2: a bit of an epiphany for me. But yeah, it's
Speaker 2: all about the here now. Is the price up? Is
Speaker 2: the price down? Oh? For God's sake, I've got an
Speaker 2: attractive wife. I've got a few years left to run.
Speaker 2: So I'm going to make hay while the sunshine.
Speaker 1: All right, As we wrap up today's episode, I want
Speaker 1: to talk about, just quickly about mine, not Mine for Money.
Speaker 1: That's my book, Mind for Money, Motivated Money. All this
Speaker 1: alliteration going on. What made you want to write Motivated Money?
Speaker 2: I think it was the realization that financial literacy was
Speaker 2: virtually nonexistent in this country. Everyone you talk to, and
Speaker 2: this goes back to eighty eight when FRIEDA and I
Speaker 2: came back from overseas, it was all about property, property, property, property.
Speaker 2: If you mentioned the sheer market, most people would have
Speaker 2: shrugged it off. Oh no, a bit risky. Everybody feels
Speaker 2: they know property. And I think one of the attractions,
Speaker 2: and I mentioned this to you earlier, large number of
Speaker 2: zeros associated with property, whereas with shares it has to
Speaker 2: start small somewhere because you don't have the three hundred
Speaker 2: thousand to toss in the deposit on the property. You
Speaker 2: don't have that to toss into shares. So the number
Speaker 2: of zeros associated with property are very attractive to people.
Speaker 2: So it's really good if you can say at the
Speaker 2: dinner party, oh, you know, the property is worth three
Speaker 2: point five million, and yeah. I tried to avoid those
Speaker 2: conversations at dinner parties, you and.
Speaker 1: Me both, and I can't help myself. I think I'm
Speaker 1: becoming you because I'm like, well, how much of you
Speaker 1: did you pay in stamp duty?
Speaker 2: All right?
Speaker 1: How much have you paid for the wear and tear?
Speaker 1: How much you paid in council rates how much you
Speaker 1: paid in interest, and you sort of watch the color
Speaker 1: and their face drain out, and you know, going to
Speaker 1: that question put at that point in the moment where you, wow,
Speaker 1: this is incredible. I had won myself where I was
Speaker 1: sitting down adding up our passive income of what we're
Speaker 1: building and growing for our own financial freedom, and I
Speaker 1: call this a mindful money number where I'm trying to
Speaker 1: build up two hundred thousand dollars a year in passive
Speaker 1: income because that means Tom and I can stop work,
Speaker 1: travel be there for our kids. That's our goal and
Speaker 1: that's what we're on our way of achieving. But when
Speaker 1: I sat down, I said, okay, where I've got this
Speaker 1: and dividends, and we do own a couple of investment
Speaker 1: properties which we would love to get rid of, but
Speaker 1: for separate reasons which I won't go into today, we can't,
Speaker 1: and they are lemons of investments. But well, for me,
Speaker 1: that moment was I looked at what the share portfolio
Speaker 1: was worth and what the properties are worth, and I
Speaker 1: looked at the income and I'm like, wow, this share
Speaker 1: port follow is much smaller than the value of these
Speaker 1: lemon ridiculous useless properties, but the income was actually way
Speaker 1: more than the rental income from these properties. That is
Speaker 1: a far more efficient use of my cash flow and
Speaker 1: my heart earned money if I want financial freedom, and
Speaker 1: that's what people really miss, that point of comparison.
Speaker 2: And look, if you want to borrow money to invest,
Speaker 2: that's fine. It frustrates me because of the lack of
Speaker 2: long term leaseholes in this country. Frieda and I unfortunately
Speaker 2: have had to own property ever since we got back
Speaker 2: to Australia. Now that leaves me a little and so
Speaker 2: what I do is when we own a property, I
Speaker 2: immediately go to the bank and I asked for another
Speaker 2: mortgage and they say, oh, you know, what do you
Speaker 2: wonder for. I said, I'm going to invest it. Oh, well,
Speaker 2: that that's going to be an investment loan, so we're
Speaker 2: going to charge you X y z more than the
Speaker 2: mortgage rate. I said, no, no, no, it's a home
Speaker 2: loan that you were giving me. I had so much
Speaker 2: fun sitting with a bank manager going through this until
Speaker 2: eventually he had to acknowledge that the title deeds to
Speaker 2: our property they had and they had lent me the
Speaker 2: money holding that title deed to buy it. In the
Speaker 2: first place. All I wanted to do was renew the mortgage.
Speaker 2: Eventually they couldn't argue with me, so I now borrow
Speaker 2: against our apartment. Because it bugs me that I've got
Speaker 2: all this, these millions of dollars sitting in this blasted
Speaker 2: property doing nothing nothing. So I've gone to the bank
Speaker 2: and I've now got two mortgages, one in Frida's name,
Speaker 2: one in my name, and we have withdrawn that valuable
Speaker 2: capital and it's now invested in productive enterprise, producing fully
Speaker 2: franked dividends. The bank has lent me money to buy
Speaker 2: something that's paying me more than I'm paying the bank,
Speaker 2: and I'm very grateful to the bank for doing that.
Speaker 1: I bet you well. Peter, thank you so much for
Speaker 1: coming in today's episode. I really appreciate it. And for
Speaker 1: all of our listeners, please, please, please, can you go
Speaker 1: and grab a copy of Motivated Money by Peter Thornhill.
Speaker 1: I will link it in the podcast notes, And once
Speaker 1: you have read this, go and buy all of your
Speaker 1: family and friends this book. Tell them about it, demand
Speaker 1: that they read it and have a heated discussion at
Speaker 1: the dinner table over coffee as you go for a walk.
Speaker 1: Because this is a strategy, a concept that is so
Speaker 1: incredibly powerful, and you don't want to discover this too
Speaker 1: late in life and be filled with regret. Read it,
Speaker 1: apply it, and don't stop. Be committed, be dedicated, and
Speaker 1: keep your eye on the price. You're growing passive income
Speaker 1: of fully franked dibbits.
Speaker 2: Thank you, Peter coming, Thank you,