The Difference between the Rich 200 and us

Just before I began writing this article, I had been browsing through BRW's Rich 200 edition. It's always interesting to see how the richest 200 people in Australia make their money and also how significantly their fortunes increase each year. For example, Kerry Packer has increased his wealth from $ 6 Billion to $ 8 Billion, that's an increase of 33%. Others have increased their wealth by percentages much greater than a "modest 33%".

Now, if you read through the profiles of each of the people in the Rich 200 a couple of things become apparent. They have all made their money in one of two ways. The first one is by building a good business in which they have a substantial ownership share or by investing wisely. None of them are employed by someone else, they all own or manage their own business even if all it does is invest in other businesses or invest on the markets. However, one thing is consistent with all of them, they are all investors, and probably very good at it too. But how did they become good at it? Was it expensive advisers that told them where to invest? That's probably part of it. Could it have been they were privy to "insider" information that average people never hear about? That is probably true also. But there is one thing that can't be ignored, most of them started from nothing and have built fortunes of over $ 85 million (which was the cut off point for the Rich 200). This should give us some encouragement.

However, most of them did have a good idea and then built a good business around that idea and that's what made them rich ..right? That's true, but their wealth was only realized when their business was listed on the stock exchange, so in effect they just became major investors on the stock exchange, albeit in their own business. Kerry Packer's wealth is almost all related to investments on the stock exchange, not just his "flagship" Publishing and Broadcasting (PBL). He is a very fortunate investor indeed. Why so fortunate? Well, because he is approached very early on in the piece to invest in new companies that are months away from a prospectus offer. This is sometimes called a private placement or a Pre-IPO (Initial Public Offering). He gets to buy shares in a venture before anybody hears about and then when it does list, he makes another few million. Nice work if you can get it!

His average return on an investment like this would probably be at least 100%+.

How do I know this goes on? Well, I have been lucky enough to be involved in investments at the Pre-IPO level and one thing I look for is Packer family involvement. The latest one I am involved with involves the supply of internet ready computers to families at a budget price, and sure enough I noted Packer and all the "big boys" were in there already. This is was good enough for me, the business plan was sound and Packer is rarely wrong, so I invested. A prospectus will come out in the next few months and a listing later in the year. So, how do you get on to investments like this? It's not easy, you need one of two things; contacts that can put you into them (which is difficult as you can imagine); or knowledge of where these investments can be found, or others like them. You know, those investments you always hear about after it's too late. This is what I spend most of my time doing, spending hour after hour tracking down these investments, chucking out the scams and lousy ones and investigating the good ones. The good ones end up in my books. And do I personally invest in the investments in my books? I certainly do. Also, you may be wondering why do I write books about it? Why do I tell anybody about what I find? Why do I need too? These are questions I am asked on occasion. Well, the truth is investing is really boring once you have sent off the cheque, so I write books and run my own publishing company for something to do because you can mow the lawns and wash the car only so many times, you have to do something with your life. I choose to do this, as well as invest professionally.

A greater percentage than you would expect. In fact most of them. Becoming rich doesn't happen overnight, it takes time, patience, discipline, sacrifice and good information. I would say "Information" is the crucial ingredient, without it you end up investing in "dogs" and laggards" and wondering where you went wrong. Most of the millionaires in Australia have money in the Australian stock market and the richer ones probably have money in investments such as the ones in my books such as US and European Shares, Trust Funds, Unusual Investments, Offshore Investment and Managed Funds and some investments right here in Australia. Now, most of these 240,000 millionaires are just like you and I (you may already be one of them), but the difference between them and the other 98% of the population is that they know where to put their money to make even more money. Putting it into under performing super funds, banks or purely Australian managed funds is not the way. You must diversify into offshore investments, non-equity investments and "undiscovered" offshore equities. This is where the "real" returns are. We are talking returns from 25% to 100%+pa year after year. If you haven't started investing, now is the time, it's never too late. Facts prove that a consistent investor that chooses their investments carefully always does better than a "market timer" or a procrastinator. So, start today and you too can end up in the growing ranks of Australia's investment millionaires.

For more information on this subject, please read the following Trident Press titles:

Future Wealth

The Internet Special

High Yield Investments 1 & 2