What is real wealth?
Recently, b Invested founder Nathan Birch was taking a break at his beach house when he saw a set of duplexes facing water for sale.
Before long he found out that the agent had sold them for more than $4 million.
This was a bit of a surprise because they looked like knockdown rebuild projects. Nathan realised that to build new properties on the site to match the rest of the street, you’d be looking at a complete purchase and project price of more than $6 million.
And he thought to himself “wow, that’s a lot of money”.
If someone was earning $50,000 a year, it would take 120 years to earn $6 million. There is a lot of money in the property market and we don’t seem to stop and realise that all the time.
It got him thinking… “What is wealth”?
For a lot of people, wealth is a status symbol. A fancy car, owning luxury items, a dream home and so on.
When starting out, Nathan didn’t have much to his name at all. Now he has more than 220 properties and his position would be considered extremely wealthy by a lot of people. But he doesn’t consider himself truly financially wealthy because he’s not a billionaire.
When it comes to money, it’s all relative. After conducting more than 10,000 MAP sessions with clients over the years, he’s come to realise that people’s views of what makes you wealthy or rich are very different.
And Nathan also believes that it’s about much more than money.
Wealth of opportunities
Did you know that if you have a combined household income of more than $100,000 a year, you are in the top 1% most privileged people in the world? It’s quite staggering when you think about it.
A lot of people focus on what they want to possess, or achieve, but do they stop and think how wealthy they already are? By being born into a country like Australia, you are already wealthier and more fortunate than almost the entire world population.
Australians have so many opportunities. We have time on our hands, we have healthy food to eat, and we have choices in life and freedom.
True wealth is a combination of all of these things, not just a number on the screen when you log on to online banking.
Assets and generations
Nathan believes assets are much more of an indicator of real wealth than those numbers on the screen.
So now, thinking again about the property that Nathan saw, which would take lifetimes of work to pay off, maybe we need to think about multiple lifetimes with wealth.
If you want to set up your kids and your kids’ kids with wealth that transcends generations, assets are the things that will allow you to do so.
If you are a property investor, this could mean accumulating properties over a building phase, and raising their weekly rents over time until they earn enough to begin paying down the debt.
One day, they will pay themselves off and then your family will have unencumbered, income-producing assets, which will create intergenerational wealth.
Interested in building your property investment portfolio? Book in a Discovery Session with our Investor Relations team to see how we can help you grow your investment property portfolio.