Why are some property investors able to grow significant wealth while others who have the same information, the same opportunities and the same resources are just not able to make a success of their investments?
BY MICHAEL YARDNEY
Here’s why… while certain knowledge, techniques and strategies are critical in becoming a successful property investor, it’s just as – if not more – important to have the right mindset.
The fact is that both poverty and riches are the result of a state of mind, which means you must develop a prosperity consciousness and become financially successful in your thinking before you can achieve it in reality.
Why you must change first.
One of the most important steps you can take along your road to financial independence is a change in your mindset – your way of thinking. This must happen before anything else happens because most of us were programmed to fail in our early childhood.
Much of what we know about money is based on false assumptions because we’ve been taught a range of myths and misconceptions about what it takes to create wealth.
Most Australian’s were taught to think ‘poorly’ by their parents, teachers and the media. And they just take for granted what they were told in much the same way as others assumed the world was flat. As a consequence, only a small percentage of Australians join the ranks of the wealthy.
Let’s have a look at some of the false assumptions you may have been taught:
1. A good job will make you wealthy. Many of us were taught to get an education, find a good job and work hard at it. But this rarely leads to wealth. You become rich when small efforts produce large results. Poverty is when large efforts produce small results. You should see a job as a temporary inconvenience, a method of generating cash flow for living expenses while you grow your property portfolio, which will eventually become your source of financial independence.
2. Saving is good. How many millionaires do you know who became wealthy by saving their money
? Don’t get me wrong – saving is a required discipline when you begin your investment journey because you need to save your funds to develop a big enough kitty to invest in growth assets, but you can’t save your way to wealth.
3. Debt is bad. While there’s some truth to this, it depends on what kind of debt you’re talking about. Consumer debt is bad, so avoid borrowing money to buy things that go down in value. But borrowing money to invest is another story. You can never become wealthy without some form of investment debt. Leverage, borrowing other people’s money to purchase investment properties, is a wise use of investment debt.
4. Failure is bad. I’ve had my share of failures and mistakes and I used to be ashamed of them, until I realised that failure is a part of success. A very important part.
If you develop a positive mental attitude about failure you can learn a great deal from it. One of my early mentors had gone broke three times before he became one of Australia’s most successful property developers. In fact I don’t know any successful person who hasn’t risen to the top without some failures.
Successful people often have more failure than failures do. But they keep going. Failure isn’t bad. In fact one good failure can teach you more about success than years of studying at university. Failing can be the best thing that ever happened to you.
5. Wealth is measured by material possessions. It took me many years to realise that wealth is much more than money. Money is just one of the appearances of wealth, which is really a state of mind, an attitude. Wealth is your thoughts, not your things. You can become wealthy without having lots of money and you can be rich yet not wealthy.
6. Abundance not scarcity. Successful investors have a feeling of abundance, while many Australians have a scarcity mindset. They see wealth as a win-lose game. A dirty business in which the rich take advantage of the poor. That’s why they have come up with the expressions such as ‘filthy rich’ or ‘dirty money’.
The truth is whatever amount you get has nothing to do with how much or how little anybody else has. It never has and it never will. Those with an abundant mindset believe they don’t have to steal from your pile in order to create a larger pile for themselves. Your wealth is in addition to and not in subtraction to anybody. Unless you truly believe this you’ll always suffer from wealth inhibition.
The sad reality of life is that because of their programming many people assume that wealth is the result of luck, connections or inheritance. The last thing they want to hear is the plain truth that the rich think differently from the average Australian, or that they have a different mindset and different expectations when it comes to money.
How do you develop a wealthy mindset?
The first step is to understand how your programming as a child has caused you to make certain assumptions that have now become your reality – the way you filter what comes into your mind from the outside world.
Then you need to model wealthy people who have gone before you and done what you want to do. Look at successful investors and study what they do, how they behave and how they think and then do the same.
And guess what? By taking this approach you can often repeat their success.
Michael Yardney is the director of Metropole Property Investment Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Investment Update blog