What lessons can investors learn from the BRW Rich 200 list?

The rich are getting richer according to the recently released BRW Rich 200 list. They made it through the challenges of the GFC and the total wealth of the Rich 200 members is up 19% from last year.

So, what can we learn from Australia’s wealthy individuals?

Firstly, property remains the single biggest source of wealth with 59 real estate entrepreneurs in the Top 200 list, compared with 25 resource magnates and 23 financial services magnates. And many of those who didn’t make their fortunes in property have stored their wealth by investing in property.

This should come as no surprise – looking back over the years no matter how the Australian economy changes, the Rich 200 has always been dominated by the property entrepreneurs.

Remember, there’s nothing wrong with seeing what other successful people do and applying those principles to your own life. If so many extraordinarily wealthy people have used real estate profitably, it stands to reason that there’s money to be made in this sector.

By the way, with the cut off mark to enter this year’s list being $180 million, I think there are a lot of other property investors who would have made the list if they had a higher profile, but many have chosen to keep their affairs private.

The other lessons I learned by reading the various entrepreneurs’ stories are:

1. Invest counter cyclically. Many successful investors took advantage of the opportunity to buy up big over the last year or two when others were gripped with fear of the Global Financial Crisis. Remember Warren Buffet’s famous quote: “Be fearful when others are greedy, and be greedy when others are fearful.”

2. Make your millions and then reinvest it – don’t spend it. This is really just using the power of compounding to grow your asset base before you start spending up big.

3. Take big risks early on but not once you are established. While many entrepreneurs took big risks to get their enterprises going, successful investors then preserved their wealth by cautiously investing rather than taking further risks.

4. Have one good idea and repeat it. One core trait that successful entrepreneurs share is the ability to take a good idea and repeat it over and over again. Look through the list and so many entrepreneurs stick to the same concept for years and just expand in different locations.

5. Pick the trends. This is different to picking fads, which are transient.

6. Go for growth. Sure, cashflow is important but to become rich you need a large asset base. While the average Australian tries to increase their cashflow, the wealthy are obsessed with building their asset base. Much the same as those on the BRW Rich 200 list who concentrate on building their balance sheets even more than they do on their profit and loss accounts.

7. Surround yourself with a good team. As I’ve often said – if you are the smartest person in your team you are in trouble.

8. Take action. All the people who made it onto this year’s BRW Rich 200 list started with a dream and then took action.

What have you learned from Australia’s richest people? Please leave your comments below.

Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia’s leading experts in wealth creation through property. For more information about Michael visit www.metropole.com.au and www.PropertyUpdate.com.au.


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