B Invested

A War On People’s Psychology

As we approach the 18-month mark of this mess we know as the Covid pandemic, Australian cities are still taking turns going in and out of never ending lockdowns.

And we are not alone. In fact, around the globe, an estimated 2.6 billion people are in some sort of lockdown. That’s around a third of the world’s population.

All that uncertainty around jobs, health, livelihood… not only is it putting a strain on various economies, but it’s heaping extreme psychological pressure on people.

Some are describing the lockdowns as the world’s largest psychological experiment. How well will people cope? Can they look after themselves and their families? It’s hard when there’s no end in sight.

And while we’re in lockdown, we are encouraged to keep consuming. Netflix, YouTube, TV and social media are all being used more than ever before as we wait for permission to go out and live our lives once again. To be allowed to work so we can pay rent or a mortgage and buy food for our family.

A product of the world

The vast majority of the population is affected in such a way because they have been conditioned to live their lives within a certain system. To consume, accumulate debt, spend their whole lives working on a salary in order to get out of that debt with enough money left over to scratch out a meagre existence in retirement.

It suits the systems in place to have all these good folks as consumers rather than producers. It reinforces society’s existing structures and keeps the wealth gap expanding.

Be a producer, not a product

How would you feel right now if the current lockdown (or the next one, depending on where you are) meant nothing more than not being able to go out for dinner or go shopping in person?

Let’s say you had gone against the grain and achieved a level of financial independence, which meant that not being able to work a regular job didn’t mean you were in immediate danger of defaulting your mortgage or going hungry. Sure, it would still be tough on your mental health, but it would be one less major weight on your shoulders.

The key to doing this is to stop consuming unnecessarily and instead build up your wealth. And by that, we mean real wealth, good quality assets. Not cash wealth, because cash is losing value every single day.

The right vehicle

In Australia, when you talk about choosing the best vehicle, the conversation is usually about Holden versus Ford. But when we talk wealth vehicles, there is an asset class that grows steadily in value over years and decades, while bringing in cashflow returns in the form of rental income.

b Invested founder Nathan Birch amassed a property portfolio of 230 plus investment properties. Sound impossible? He didn’t do it all at once. The best way to eat an elephant, as they say, is one bite at a time. In the early 2000s he was buying houses on city fringes for affordable prices that were positively geared. Then he was using the equity for his next investment, until bit by bit, he got himself 20 properties, then 50 and so on.

You might think property is too expensive and you’ve missed the boat, but it’s all relative. A $250,000 house in Western Sydney sounds so cheap today, but if you asked someone in 1995, they’d say the price was way too high.

The longer you hold property, the more value it accrues and you can keep increasing the rent over time too. Imagine you had 20 properties, each purchased for $200,000. Every time you raised the rent by $10 on each property, you’d be making an extra $200 a week. That’s a $10,000 pay rise every year. Meanwhile, a single growth cycle could double your property portfolio value from $4 million to $8 million, while your debt is the only thing that doesn’t go up and is rendered insignificant over time by inflation.

And that’s how you escape

Eventually, you can sell some properties to pay off the others and then live off the rent for the rest of your life without having to work. Or hold the lot and put the equity to use elsewhere. You will have the luxury of choice with real assets providing a foundation for wealth and simultaneously paying you a wage.

If you want to know more about how to fight back and live life on your own terms, reach out to b Invested.