272: Partnerships and Serving People – Health and Wealth
Investors visit the PropertyInvesting.net website because they are interested in making superior returns on investment – simply put – making serious money. The objective of this Special Report is to provide context around how one can successfully acquire then keep net worth – far exceeding the norm. As they say “it’s easy making it, it’s very difficult to keep it”. Too many people make it then end up losing it through:
· Spending – on consumer and material items, goods and services (holidays, fast car, partying)
· Divorce – one of the biggest value destroyers around
· Business – lose track of cashflow, get into trouble then have to sell assets at fire-sale prices
· Disaster – fire, crisis, lack of insurance, legal issues
· Health – through accident, injury, poor health, poor health of their partner or their family – and bereavement – depression
Now we will be very simplistic and state that you should try and risk mitigate and avoid all the above. This sounds so obvious – but it’s worth thinking about. If you have multi-million pound investments - do you not have a duty to your business as a professional to consider key business risks? We probably spend too much time considering interest rates, house prices and the state of the unknown property market and less time on risk mitigating the above. So will give a few insights and pointers – to help you not only improve your long term investment performance, but keep the gains when you have made them. It’s critical to keep the wealth safe once you get it. And everyone has stories of how people have lost the lot. Bankruptcy, disaster struck, someone supposedly got unlucky…
What we say is “most of the disasters that happen would not happen if proper risk mitigation was put in place – to control the investment environment”. We’ll go into this now:
Spending – do not waste money on rapidly depreciating consumer items such as new cars, luxury cloths, expensive holidays. If you buy a new car, after one year it will have lost ca. 40% of its value. Massive net worth destruction. If you invested the same amount of money wisely, you’ be up at least 20% if not 40%. Every dollar spent is a dollar not invested – and if the dollar that is invested is making stellar returns, then overall, you’ll be missing a big opportunity whilst putting strain on your cashflow.
Divorce – stay married. Keep your partner happy. Keep your family happy. Take time to communicate to your partner. Try and work out ways of resolving any issues. Okay, we are not marriage guidance counsellors – but what we do know is, if you break up, you will immediately loose close to half of your net worth then you will end up paying maintenance (if you are the key money provider), then you may never see your kids much again. You’re ex-wife, a new wife and the tax man will take almost all your net worth. It will likely depress you severely, affect your business performance and could set your whole portfolio through a tipping point – leading to conflict with banks, your partner then bankruptcy. We would hazard a guess and say that anyone entering divorce has a five-fold increase of being declared bankrupt in the following 2 years – then if you survive intact, on average you would end up with only 35% of net worth at the end of proceedings. Avoid at all cost! Don’t fake yourself into believing with a little more freedom you will be a happier person. You will likely lose your financial freedom and with it your overall freedom. You could end up on your own, a lonely broken and bitter person. Lonely broken bitter people are not the people that make serious money! The happier you are, the more likely you will have the confidence to go out a make serious money. Try to either bring your partner into your investment world, or at least let him/her understand your values and why you are interested in investing – you want to do this for e the family – because you love them. You want to provide security for your family by investing and building up net worth. If you are a bloke, women back winners – so make sure you stay on the winning streak and they will back you. If you are a women, you husband may not understand your motives – try and explain how it will benefit the whole family. And make the family financially free in its totality.
Business – most bankruptcies are caused by lack of cash – another way of describing this is – poor management of cashflow. Never let cash run short – otherwise you will be exposing yourself to big pressures – the first big negative shock that happens would then tip your business over. The pressure will make you miserable, worried, and you might panic and not make rational business decisions. Always think well ahead with regards to your future cashflow – at least 18 months ahead. You need to model your cash requirements and constantly update. So you know where the money is going, and the uncertainties around how cashflow may improve or deteriorate. One example is – that only the foolhardy in the UK would assume interest rates stay at 0.5% for the next two years. You should be projecting your cashflow position assuming that rates go up by 1% by year end (to 1.5%) and by another 3% (to 4.5%) by end 2010 – this on top of the 4% differential the market currently holds between interest rates and mortgage rates – as a downside scenario. If you model yourself running very short of cash with this scenario, you should be working on ways of raising funds now – not when you start to get into trouble! Be proactive, model trends and stay ahead of any potentially deteriorating business condition.
Disaster – even though we often hear bad luck stories about a crisis that occurred, these are often things that festered for a while, then broke out. Examples are: fire (no valid insurance), gas explosion (no valid gas safety certificate); bad tenants (no adequate referencing, conflict with tenant rather than an amicable resolution). Most disasters have multiple causes – and their route causes are from human mismanagement or misjudgement. Just like in car accidents – each accident is the result of poor driving, hazard awareness, equipment malfunction, road design, lack of speed awareness etc – ultimately all are human failings – from one or more driver (or designer-constructor). It’s not just bad luck. Luck only comes into it if you survive an accident. Make sure you think hard about safety 0 avoid accidents, increase your risk awareness. Avoid driving at risky times in the day (11.15 am in the UK on Saturday springs to mind, not a good time to go for a walk in a city centre either!).
Health – stay healthy! That might sound ridiculous but it you over-eat, never get any exercise, smoke heavily, drink too much and live and work in a polluted environment, then you will live less long. You will then not have as much time to make serious money. If ill health hits, and hits early, then your quality of life will be poor and no amount of money can help. It will most definitely affect your investment performance – poor health is bad for business. So best to:
Eat healthy food – fresh fruit, vegetables, nuts, fish – packed with vitamins
Drink in Moderation or Not At All – if you do drink, make sure this is in moderation, not binge drinking (a glass of red wine a day is actually supposed to be good for your overall health)
Don’t Smoke - especially don’t smoke heavily. This will knock many years off your life expectancy. They do say the negative health effects of having a few cigarettes a day (less than 5) cannot be detected, but it’s almost impossible for most people to smoke such a small amount – they will rapidly gravitate to 20+ a day – so stop smoking! If you partner smokes this will affect your health as well – if they do insist on smoking, make sure they do this outside to avoid toxic fumes.
Exercise – ten minutes rigorous exercise a day is supposed to be just about enough – if you can supplement this with a few hours at the weekend, then this should be sufficient. Try and make time or excuses to get some exercise – walk to work, walk to the shops, leave the car, catch the train and walk to the station, cycle. Exercise is NOT a waste of time. Every hour you spend exercising will probably add three hours to your life. So get out, enjoy the exercise – and when you get back, you will have added to your life bank and feel better for it! You need to be disciplined and get into a routine. If you partner complains – get an agreement that it is part of a health routine. If this fails, get a dog – then you’ll have to take it out for some exercise. This is one reason why they think people that have dogs live longer – they get more exercise 9and the dog is a health social companion for the lonely and families alike).
Sleep – they say 7-8 hours sleep a day is optimal. Any more of less will not be as good for your health. If you have 5-6 hours a night, try and grab 10 minutes power nap at 2pm – it will help rest that poor brain and give you a late afternoon boost!
Weight – probably the biggest (silent) killer – if you are overweight or obese, then huge extra pressure is put on your heart, limbs and organs. To make the point, if you are 10 kg overweight, this is like strapping 5 dumb bell weights around your neck. You will have to lug that weight around everywhere you go. It will lead to fatigue, lack of motivation to exercise and a downward spiral – ultimately into ill health. Then you muscles will get smaller, then these will need to burn less calories then you will put more weight on (fat does not burn calories). Not pleasant. Its best to exercise regularly to build up muscle size-mass and strength, then you will burn more calories even when you are asleep. You butt and thigh muscles are the biggest muscles, so if you walk or jog, these will increase in size and lead to you looking trimmer, leaner and loosing lots of weight. Pump bell weights while you are watching TV – this will also help! If you really want to lose weight, start by pumping iron and/or walking-jogging – you will be amazed at how rapidly the weight starts coming off. If you have a bored moment, get the bell weights out! Costs $3 for two. It’s all about reducing calorie intake and building up muscle mass- simple! And you got this advice for free – no charge!
Friends and family – married men tend to live far longer than unmarried men. Marriage does not seem to negatively or positively impact the length of women’s lives though. This could be down to men’s lack of skills, interest and ability at looking after themselves (food, exercise, social aspects) without someone to police them! In any case, if you have harmonious family, friends and positive relationships, this will benefit your health. Lonely people tend to have poorer health. Married and happy people with many friends who stay active tend to live longer and healthier lives.
Pollution – if you have a job that is very polluting (mining, chemical manufacturing, industrial waste disposal, refining) then consider this as a health risk – and consider changing occupation. If you live in a polluted area – e.g. next to a chemical works, refinery, heavy industry – try and move away to somewhere with fresh air-breeze. If you have asthma, lung or bronchial problems - clean air is even more important. Getting out the house, get some exercise and some fresh air – this will improve your health.
Now just to give some anecdotal examples of people who are married, healthy and wealthy – and seem to work at their relationships:
Married Healthy and Wealthy
· Richard Branson
· David Beckham
· Bill Gates
· Warren Buffett (with regret, his wife of ca. 45 years died a few years ago)
· Tony Blair
· David Cameron
· Barrack Obama
· Barrack Obama
· Bill and Hillary Clinton
· Bill and Hillary Clinton
· Philip Green
· Philip Green
· Jamie Oliver
· Jamie Oliver
· Elton John (with partner)
· Andrew Lloyd Webber
The other thing these people seem to have in common is – lack of binge drinking, lack of smoking, general good health through exercise, and lack of divorce. Because of their discipline in what they do, they are the sort of people it would be difficult to envisage being declared bankrupt of going through divorce. David Beckham is a classic example of a positive role model – he is a family man, makes time for his kids, maximises his talents, is a genuine nice person and does not come over arrogant or selfish. He never complained after being dropped from the England side –then he worked his way back into the side – excellent role model. Ryan Giggs in another – a true professional that quiet has gone about his business of being one of the best footballers in the world for a 25 year period – amassing huge wealth at the same time. Compare this to George Best who retired from football at aged 24. Our hat comes off for Ryan Giggs and David Beckham. Other role models are Melissa and Bill Gates for their outstanding work for charity – and Warren Buffett for pledging almost all his wealth to the Gates Foundation.
If you acquire huge wealth – the best way of retaining and growing this is by staying married, healthy and thence wealthy. And one day, you’ll be so successful that you will be able to give it away and have more fun doing this – just like Melissa, Bill and Warren.
Serve Your Partner and Leverage and Serve People -Our final point is about serving. If you serve your family, your partner – they will serve you. If you are selfish, self centred and do not appreciate or want to serve your partner – they will be off in a flash. Don’t be arrogant. Be respectful. Serve everyone around you. If you give good service, you will get it back in spades. If you want to become hugely wealthy, you have serve people. And the more people that you can serve, the more money you will make. If you van start by keeping your partner happy by serving them their requirements. Then leverage up and serve millions of people – then you will be wealthy beyond your dreams. Look at Bill Gates again – he indirectly serves practically all people on earth through the PC and M software. Google directly serves about 35% of the world. If you can own a business (rather than be an employee) then market your service to millions – you will then have a very valuable company. We’ll expand on this point in a future Special Report – it’s a large topic worthy of expanding. But please consider how you leverage money, other people and technology to serve the maximum amount of people – duplicating good practices. This is how huge companies are built. By leveraging resources, growth, keeping costs down and duplicating a winning business strategy and business process-system (e.g. Virgin, Coca Cola, SAP, MacDonalds, GE, ExxonMobil, Toyota, Berkshire Hatherway, Berkeley Homes, Rightmove).
We hope this Special Report has given you some pointers are insights into how you could build serious wealth by managing life’s risks and staying healthy - preferably with your partner.