Investing with a millionaire mindset

JOHN WINTERS
The word millionaire used to feel aspirational and almost achievable, something only those who achieved an unusual amount of success or ran big businesses could achieve.

Today with the rise of the internet and social media, not only does it feel like the number of ‘overnight millionaires’ has exploded, but with rising house prices in many of Australia’s cities and regional towns, being a millionaire is starting to look like a necessity rather than an ideal.

A finance background isn’t required, nor is it about counting every single penny. Rather shifting focus to make thoughtful decisions to grow your wealth in a sustainable way can help you attain that elusive seven-figure status. And this journey can start with just $100 to reach your personal financial goals.

Budgeting and mindful spending

I have a pragmatic relationship with money. When I see money in my account, it represents a decision with two possible outcomes:

  • Spend: I get what I want now but that money is gone forever.
  • Save and invest: I can invest and grow my money, and then have even more money to spend later on something I really want.

A very important part of budgeting is understanding your values, which will help you determine the things you’re willing to go without in order to build your wealth for the future, as well as the things you’re willing to invest in now (enjoying life now is also important!).

You don’t have to completely forgo the things you love, but setting boundaries for yourself and cutting back will not only help you build your wealth but I find it also makes your experiences more worthwhile when you do decide to treat yourself.

An essential part of controlling your spending is also avoiding high-interest debt. Think about if a credit card suits your lifestyle, how you’re placed to take on additional debt and the value you’re actually receiving from it. Oftentimes unless you’re super organised and desperate for AMEX or Frequent Flyer points, the risks and costs often outweigh the benefits and can create negative habits around over-spending.

Start regular investing

You’ve stopped spending so much and let’s say you’re able to save $100 per week. Now it’s time to start making money from your money.

If you saved $100 per week, starting today at a 3% interest rate, you’d have $321,630 saved after 35 years. This might seem like a nice sum of money, but we can’t forget about a little thing called inflation which means that every dollar will be able to buy you less in the future.

With inflation sitting at 3.8% at the moment, we’re going to need more than 3% to get ahead!

To combat inflation and build wealth over time, you can invest your money in a range of different asset types. The two most common for Australians are property and shares.

Property

  • Pros: Physical assets, good historical returns.
  • Cons: High deposit needed, all your money in one property/location initially.

Shares and Investing Platforms

  • Pros: Low cost to get started, simple to diversify, good historical returns.
  • Cons: Can be volatile, not tangible and may require some research and knowledge.

Investing in shares can actually be a great way to save up for a house deposit, with lower minimums and the ability to diversify across different industries and companies. When it comes to your options for investing in shares, there are a few different types of investments with some of the most popular being:

  • Micro-Investing: Some apps allow you to pick ‘portfolios’ which are managed investments (they invest on your behalf) with small amounts of money.
  • Exchange Traded Funds (ETFs): These are ‘baskets of shares’ which hold and achieve the performance of an index, for example the ASX 200 (200 largest Australian-listed companies), or funds that have a focus on ethical companies. ETFs can help you achieve diversification across industries and countries without having to purchase lots of individual companies.
  • Shares in individual companies: Investing in individual companies can be great if the company sees highly unexpected growth, but unless you’re going to invest lots of time into research, expected growth is already ‘baked in’ to the share price by professionals. So trying to pick the right company at the right time can be risky as your performance is riding on one company.

To find the best option for you, you can compare different investing accounts using Canstar.


  • Websites: The Australian Government’s Moneysmart website.
  • Podcasts: Equity Mates, She’s on the Money and The Australian Investors Podcast are some of my personal favourites.
  • YouTube and Online Articles: If you simply search ‘how to invest in shares Australia’ or ‘investing in ETFs for beginners’ and you’ll find plenty of content to help you along the way.

Back to our example, if you’re able to invest $100 per week for 35 years, and achieve the average market return of 8.55% per year (the average return of Australian shares over the last 30 years), you would likely end up with $1,140,806.

Welcome to the millionaires club!

Cover image source: Makeshift/Shutterstock.com


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John Winters is the co-founder and CEO of Superhero, a share trading and superannuation platform making investing accessible, affordable and understandable.

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