Who wants to be a millionaire?
07 October 2016
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On mobile, on digital, on demand, this is Old Mutual Live Money Coach. Hello and welcome, my name is Chris Gibbons. Who wants to be a millionaire? It’s a question from an old song of the same name. If your answer isn’t the next line of the song, ‘I do’ then Old Mutual Live Money Coach may have just the sheet music for you. It comes in the form of a very simple to read book called How To Make Your First Million.
We’re joined now by its author, Warren Ingram. Warren, welcome to Old Mutual Live Money Coach. If I had one key takeaway after reading your book, it is that the first million is available to just about everyone. You don’t have to be Warren Buffet or George Soros or Christo Wiese; but you do have to be ruthless disciplined about your spending and saving habits.
Warren Ingram: I think that pretty much encapsulates the book in a sentence Chris, I think that’s about perfect.
CG: Let’s not get ahead of ourselves, first off you recommend that anyone who wants to make that first million has to have a vision. What do you mean by that and why is it important?
The importance of having a vision
WI: The thing about money for most people is that people who struggle to save and build up an investment portfolio very often, when you chat to them about why it’s so difficult. They’ll give you a very long list of probably good reasons as to why they couldn’t save this month or last month.
They had unforeseen expenses and things that just absolutely had to get paid. So there becomes this increasing list of reasons why you can’t save and why you can’t build up your money. The problem with money, of course, it’s always limited. There are very few people in the world who can’t spend everything that they earn on a monthly basis.
You need to find a way and something that’s so important to you, something that is so critical to who you are as a human being. That will drive you start saving and actually start making the hard decisions. Because ultimately it’s going to be about a trade-off. You’re going to sacrifice something to save money now for a future benefit.
It’s very hard to think about yourself in 20 years’ time. I think for most of us, we don’t really picture ourselves in 20 years’ time. We can barely picture ourselves in three weeks’ time. So it’s important to find something that’s meaningful to you right now to allow you to make those sacrifices.
CG: What do you then say Warren to someone who replies, a vision, all well and good, sounds very grand. But I just muddle along in my job, in the office, I just try and make ends meet.
WI: That’s great, if that’s how you want your life to unfold. By the time you’re 65 you move into a muddled and long retirement, that’s a choice that you need to make. I think the important thing to note there is, 95 out of every 100 of us will get to retirement age and really not have sufficient money to maintain the lifestyle that we had while we were working.
If you do want to muddle along, that’s fine. Just know that that’s most likely going to be the outcome that you’ll have in your life. You’re going to have to compromise the lifestyle that you’ve had when it comes to the time that you need to stop work. If it’s not important enough to you to make sacrifices now and you want to muddle along, it’s not our place to judge you. We wish you all the best.
But in my view, people who want to be financially independent, who want to take control of their money and not be a slave to the bank or a slave to their employer. Who want to take control of everything in their lives. Then they’re going to find a reason to make these sacrifices now and start taking control of their money.
Why investing is a great way to save
CG: Saving, good, got it, understood. But there’s more to saving than just sticking money into a piggy bank isn’t there? When you use the word ‘saving’ you actually mean investing?
WI: I think the two are massively linked. It doesn’t help you at all, it’s a great start if you save all your money. You do put it in the piggy bank, that’s a heck of a lot better than most people do. But unfortunately if you just did that or you just kept your money in a bank account. It’s not going to help you beat the slow poison of inflation. That’s really the big issue when it comes to money. Is once you’ve started building up a pool of savings, you need to deploy those savings in a way that they can beat inflation. That’s when we start talking about investing.
CG: How do I know which investments are going to be right for me?
WI: I think it’s going to be a couple of factors. One, it’ll be about what’s important to you and your level of knowledge. If you’re a complete novice investor and you don’t want to get involved on a day to day basis in investing your money in any way, shape or form. Then I think you would do well to choose something like an exchange traded fund or a unit trust.
Something that is very simple, very transparent, that will deal well with monthly debit orders. Then make sure that you stick to your goal, which is to put your savings in there every single month of every single year. I think the thing about the book is, I try to give as many different examples of people who have made their money and built up their investments in a range of different ways.
For example, if you like property, I’m not a big fan of residential property. But if you read the book there will be quite a few people that have found ways with property portfolios to build up their wealth and all power to them. If they’re willing to put in the time and the effort to either renovate properties or manage small ranges of apartments and manage with tenants etc.
I think the nice thing about this book and about money in general is if you’ve got a particular area of expertise or willingness to apply yourself in the labour, you can actually make your investment work for you. Rather than just putting it into a unit trust or an exchange traded fun. Me personally, that would usually be my first port of call, if I was doing this. I’d focus on my day job and outsource the investments to the market.
Discipline is so key to saving
CG: You list in your book and you just mentioned them, some inspirational clients that you have worked with over the years, are those real stories? They seem to have a lot in common but again, that word ‘discipline’ keeps coming up.
WI: You’re right Chris and the answer is yes, they are real people. What I did was try to find, I thought, you mentioned at the start of the interview, people like Warren Buffet and Bill Gates. They’re so far out of the realm of possibility for most of us that I don’t really think they become real examples.
I found some of my clients and some of my friends and people that I’ve met over the years, that have really inspired me with their life stories. From the lady who had to literally leave her house in the middle of the night because she was in an extremely abusive marriage. She was really in fear of her life. She took a bank card with very limited savings, her ID book and left. She started her own business and managed to build up her own financial life completely in a new city with literally nothing.
Then probably my favourite story that always puts a lump in my throat is Doc who grew up, I think it’s a cliché for a reason. But in a township with a few siblings, with no family, no parents to speak of. Managed to get himself into university and eventually became a medical specialist. He’s on a path to building himself into a dollar millionaire and he’s found every reason, every inspiration to make sure that he gets there. He didn’t give himself an excuse.
I think for most of us who might not be in such an extreme situation to start, the hope is that you’re going to look at these examples and say: I can find a reason why I’m going to save today and why I’m going to take an action that will be good for me as opposed to all the reasons why I can’t.
CG: Happily, right at the end of the book Warren, you also go through all the various investment classes. The various assets like cash and shares and property, also things like retirement annuities, you really make it simple.
A simple way to look at everything
WI: Thanks Chris. The bank is a follow-up to what I wrote called Become Your Own Financial Advisor. What I got from that book was a lot of feedback, thankfully most of it positive. Where people were saying we need more real examples of how we can do that.
That’s why this book exists, it certainly wasn’t my original game plan. I thought one was enough. But I had so many queries from people saying: You’ve got to tell us more and tell us how that I decided I need to be more practical and give people real examples.
CG: Let’s end off Warren, to make that first million and then hopefully the next few after that, what’s the golden rule?
WI: I think the golden rule is two-fold. One, you need to save every single month of every single year. Once you start investing and you know that you’re going to try and beat inflation with your investments. You have to focus on a 5-10 period at least. You can’t worry about what your investments are doing on a day to day or week to week basis.
Unfortunately, any investment that’s aiming to beat inflation will go through times when it’s going to go down as well as up. But you need to be prepared for both and you need to be patient and let your investments grow and eventually the compounding will start to work in your favour.
CG: There we’ll leave it. This has been another edition of Old Mutual Live Money Coach, my name is Chris Gibbons. With me has been Warren Ingram, author of How To Make Your First Million. Warren, if anyone would like a copy of the book, where would they find it?
WI: It’s in all the stores now, Exclusive, and on Amazon, so you can pretty much get it everywhere.
CG: Do you have a website?
WI: I don’t, the book has got its own Facebook page. I should mention that I guess all the proceeds from the book that I would earn actually go to a charity called Serendipity Trust. That has a website, for educating children.
CG: Warren Ingram. Remember, please feel free to get in touch any time if you have any questions for me or topics you’d like covered on Old Mutual Live Money Coach. Just send them direct to me at firstname.lastname@example.org, I’d be delighted to hear from you. Until the next time, thank you for listening. Old Mutual Live, on mobile, on digital, on demand.