Latest / Money Grows on Trees / #340 - Serious About Building Wealth In Australia Without Property?

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#340 - Serious About Building Wealth In Australia Without Property? · Money Grows on Trees

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You do not need to own a house to get rich in Australia. Most people think
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renting is dead money and property is the only safe investment. But
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the reality is sinking your entire net worth into one illiquid asset
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with a 30-year debt sentence is actually incredibly
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risky. And there are far better ways to compound your money.
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I'm Lloyd J. Ross, seven-figure investor and entrepreneur. I help thousands of everyday Australians,
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Americans, New Zealanders, and Canadians. get out of debt and build real
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wealth. And in this video, I'm gonna show you the exact assets that you could
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consider to build a multiple million dollar net worth or portfolio without
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ever buying property. But before I do that, go
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ahead and hit the subscribe button and be prepared to participate in the comments as
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I dive deep into how to get rich in Australia without
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buying property. The first thing to understand is there's a
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big property myth. The property myth is when I buy a house, I'm going to get rich. Sure,
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in the last 40 years with the tailwinds that have happened, without question, with
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leveraged property, lots of people have got rich. However, because
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a lot of them live in the house that grew in value, they haven't actually got richer, meaning
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they haven't actually changed their lifestyle at all. So, they may
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have bought a house for say, I don't know, $300,000 in
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the 80s, is now worth millions, but they're literally living in the
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same house, doing the same thing, working the same job. They haven't realized any
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of the wealth. So, are they richer? Most
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people living on their home equity. So, for example, like, oh, I did really
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well, I bought it for 400, it's now worth 1.2. I'm like, great, you're still living
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on top of it. What does that mean? Oh, I don't know. They're
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still going to this shitty job, you know? What's
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the point in all the equity building up where
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you're living on it? You know what I mean? Now, some have
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borrowed against their home and spent the money. That's certainly one way
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to do it for sure. But there is a myth to
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suggest that real estate is the only way. Certainly has been a way
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without question, particularly if those who have
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been able to develop portfolios outside their home. that
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generates income. But by and large, property is pretty poor cash
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flowing vehicle generally, because you've got to pay the
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operating costs of the property, including if it's a property investment, the
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property management of that. And then you've got to actually pay the interest which quite
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at the moment is a lot higher than the rent. So
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you're taking a loss and then you got to pay tax if you're generating a profit from
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the rent So it's not the best net
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cash flow asset out there where it comes into its own is
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in the leverage So when you borrow 90% of the assets value And
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it doubles you you're definitely getting a huge cash on cash return there,
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you know 3 to 5 X And that's what a lot of people have done. So
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I don't think it's gonna I don't think it's gonna repeat I've said so
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many times on
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the show, I don't believe all the tailwinds that we've experienced are
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gonna be repeatable. Like 0% interest rates, not repeatable. Finding
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another spouse into the workforce, not repeatable. The immigration boom
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that we've had, it is repeatable, but I think it's gonna destroy the fabric of
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the society and they're gonna change that. So I don't think a lot of those things are
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repeatable, so we're not gonna see the same growth. So that's the
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first thing. And the other thing is that people do disconsider And
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they eliminate all the other ways because they're so obsessed
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with property. And I think the reason for that is because property is very
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simple to understand. You don't have to be a genius to work
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out there's a place someone wants to rent at the end. It's just not
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that hard. It's a very simple asset class which
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is why I think a lot of people gravitate to it because you don't need You
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know, you don't necessarily need a lot of skills and I
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know you're gonna debate this in the comments, you need skills, right? You don't. I
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got a friend of mine, she got no skill. Same job,
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you know, and her house has grown from 300k to 3 million and
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she's done nothing. So, there's no, it doesn't need skills. I'd say if any skill,
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it's just patience and not moving around a lot maybe. But
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it doesn't require a lot of skills. So, I think that's why it's popular. I think it's easy to
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understand. And I think the reason why people don't like shares is because it
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takes a little bit of brain power, a little bit of reading, a little bit of understanding, a little bit
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of thinking. It does. And that's why they've not really been
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that popular. But now, the Gen Zers and a lot of millennials are
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really starting to pick up here and the boomers, they're starting to really invest a lot more in
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shares. In fact, I think it's You know, there's been a lot, there's
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been a lot more than ever before who've opened brokerage accounts outside
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their super and invested in direct ASX listed shares
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or international shares for that matter. It's more prevalent now because it's easier
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now than ever because of the platform availabilities there. You don't have to call up
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a shop broker and ask him for stuff and they invest all your money until it's all gone. it's
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just more accessible. And also, properties become so expensive
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that pound for pound for wages, like 10 times annual wage now
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to buy a house, it's just become less
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affordable. So people are finding their way to these other ways of building wealth
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outside property. So let's go back to what you could do that's
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not property. The first thing you may want to do to build wealth,
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whether it's not property, is you could contribute more to your superannuation. Because
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at the end of the day, they are shares. A lot of people are
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like, I'm so scared to invest in shares. And boom, little do they know,
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all their superannuation's in shares. So the greatest fear has
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already come true in their share portfolio with their greatest retirement asset outside of property, it's
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in shares. Most of you already own shares. You just don't know it, right? Because
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most people don't even know where their super is going. They don't even know what super is. So
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your superannuation contributions could go up. There's obviously a limit to
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how much you can put in there, but it's a very tax-effective way to buy
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shares, right? And you can do the same thing with property. However, it's
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shares that I'm talking about now because it's the alternative to property, okay? So superannuation, putting
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more into that is one option. because it's tax effective up
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to three million, then it becomes the government's money. Then
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we've got a taxable brokerage account where you're actually paying tax on the money, it's your
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savings, you're opening a separate brokerage account that's not your super, and you're buying
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shares there too. And one of the most effective ways to do that is just to buy a
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good quality index fund or ETF, where you're buying a group of
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companies and over time it scales. And everybody knows by this
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point, and if you've been listening to my show, you definitely know that the S&P 500 has
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returned about 10.2%. since
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1957 on average. So it's been a tremendous wealth
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builder and will continue to be so. So I think that's probably the
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simplest way to compound wealth outside property
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and outside super. Because you can select what you buy, whereas in
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superannuation you can't always select it if you're in a retail fund. So
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there are two ways, shares through superannuation or shares
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in a taxable brokerage account. Sadly in Australia we don't have things like Roth IRAs. Like
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in the States you can get a Roth IRA which is tax-effective growth
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in your money where you can take up to $6,000 a
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year roughly and put it into an account that is
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tax-free as it grows and you can select what you put it
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into and you can max it out every year. I feel like it would be
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good to have that in Australia but we don't. That's just over and above their 401Ks which
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is like their superannuation in the United States. So, they're
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the two core ways. Alternative to that, I
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really do feel that the best way to really build actual
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wealth truly is a business. Now, you can either build a
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business. We're built and continuing to build because
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you don't just arrive. Every business is consistently under
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construction and you've got to keep your finger on the pulse. You have to
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always be involved, okay? to some extent with the
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businesses you're building. So, we're building, we're built
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and are continuing to build four businesses and we
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have bought one. So, I bought one, built
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and building four. And I would say without question, they
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have been the ultimate wealth builder. That and shares for
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us have been a dynamic duo. So, build or buy a business, put
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the extra cash on the shares which is where you're effectively buying public companies which are
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businesses. And I think businesses are the best way to build wealth, because
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they produce the most. And they're also the best for society. You
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know, shelter is good too, but it
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doesn't compromise anyone's shelter if the prices stay
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lower, but everyone can participate in the economic growth of companies and businesses. And
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they are very much, very scalable. They're much more scalable than shelter. So
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I would say, that building a small business will
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be able to amplify your income up to 10x. That's
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genuinely what you can achieve. A lot of small businesses stay
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small so they can't 10x their income because the particular owner doesn't want
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to scale and create any more risk. Fine, but at least it
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gives you your independence. Kind of understand what
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wealth is, like how to build wealth or how to get rich. I really think it's
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all about how to own your time, you know, how to own parts of your
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life, how to escape depending on someone for a paycheck. I
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think it's better to depend on yourself for a paycheck than some other random boss at some other company.
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And you have a lot more freedom. So I think getting wealthy or getting rich in
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Australia means you get rich in your time. So
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I think there's no better way of doing that than building it or buying a business We
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bought our launch about business for quarter million bucks and straight out of the gates
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and produces almost a hundred grand in profit it's amazing business and
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I don't think there's that much risk now. Can you do that now? Probably
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not. I mean You could when we got it, but I don't know if you can sure
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you could but You gotta find it, right? At the time, I
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was being seduced really to buy a $2 million, well
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$1.8 million apartment, three better, here locally and
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that would have produced, if it was rented out, it would have produced, I don't know,
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maybe $1500 a week, so 75k a year. $1.8 million,
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it's a lot and I didn't decide to do that. Instead, we
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took the money and we bought a laundromat. And that laundromat produces
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more income than that property, and for a tenth, almost a
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ninth of the price. I remember being in the bank, going to sign the
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loan docs to buy this laundromat, and the young guy behind the
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desk, working for ANZ, he
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said, he was 24 or something, he said, why are you buying this? Why aren't you buying property?
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Like because I must because I understand numbers you dimwit.
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Have you not seen the deal? Well, I know as
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I made the reason why I'm on this side of the desk and you're on that side of the desk Right, and I didn't want
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you know, I mean arrogance or anything like that But I was just like mate. Are you being brainwashed
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turns out? He had been brainwashed because he just bought a one-bedroom apartment in Labrador,
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which is a local suburb here for like a 800 grand now you
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couldn't rent that out for probably more than 500 a week so here I
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was buying an asset for 250 K Producing what really
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had a two million dollar property was producing and and that's the difference So
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you have to be open to other types of
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businesses. Now, please don't listen to this podcast and run out and
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look for a laundromat, okay? If everyone gets all freaked out about
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laundromats, oh my god, there's work to it, it takes risk, it takes effort, you
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got it, there's not, it doesn't just operate itself. Now,
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looking at the other types of businesses we have, we, you know, we've built and I've mentioned
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this before, I think network marketing is a great business to get into the beginning of
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your journey because it teaches you so many business skills you can't learn anywhere else. And
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I see this quite often where people wanna build or buy or run other
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businesses and they do lack a lot of foundational marketing and
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selling skills. And because they lack those essential marketing,
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selling, and even leadership skills, because in network marketing you build leadership skills, communication skills.
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Because they lack those, they have a lot of failure rate in business. Because
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they think that it's just, you know, that you just get a business and
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all of a sudden you learn the skills. That's not the way, that's not the case. So I would say
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that network marketing is a brilliant way to get to
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build wealth, like some of my friends have made, I
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don't know, 15 million in profits, 15 million in profits in that industry.
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And it can send you all around the world for free. We're about like, no joke, tomorrow
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we're going, we've got a trip, the company's paid us to go
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to Club Med in Thailand for a week and fully
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paid expenses paid. So, there's more to life
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than just money rich, it's like adventure rich and
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life experience rich. And I don't think there's anything that's given us
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a more rich life than being successful in network marketing because I've shared stages
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with some of the best. I was on a stage with Jesse Itzler last year
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in Phoenix, where was it, Phoenix? I've spoken on huge stadium
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stages with 7,000, like I've done things that you would never imagine to
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do because of network marketing. So, when I'm talking about
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building wealth, it's not just money, it's life experiences too.
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Just quickly, if you're ready to take control of your finances, but feel stuck on
12:12
where to start, I have a solution. My book, Money Buys Happiness,
12:16
simplifies investing and wealth building with practical steps to help
12:19
you achieve financial peace. Get your copy via the
12:22
link in the show notes, and let's get your money working for you. Now back
12:25
to the episode. We've traveled the flipping world in the last 10 years, man. We've got
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this wall at our house, and I had a business coach come over once. He goes,
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oh, nice wanker wall. And it's this big wall of all
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the cool shit we've done. And so we call it our wanker wall now, it's pretty funny. But
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you know, that's part of building wealth too, is the experiences, not just
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the money. So that's been a good business for that. The laundromat's been a
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good business to purchase and there are other great ones to purchase too, you could. As
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long as you're not purchasing a job, you could have some leverage in it. Then
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the other business the education is I mean, of course is absolute this
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wonder in being able to Consult so building a consulting business
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and a lot of authors will build a consulting business around their books, you know, we've
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done that There's actually a really famous book out
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there called The subtle art of not giving a fuck you've
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seen that red that orange cover. If you didn't know
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this, the guy that wrote that's got a workbook and he's actually built a huge consulting
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business out of it. Again, there's another book called Good to Great. It's
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a very, very well-known business book. And Jeff Bezos
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read the book and then hired that guy to build Amazon with
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him. And they built the perfect business from the ground up from that book. Scott Pape,
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he's got an email list. There's Daniel Priestley, he's really great to
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follow. I follow Daniel. He's an Aussie guy. He's written
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some wonderful books, probably seven books now. And he's built a great
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consulting business and multiple business of the back of that. Martin Golden, Russell Brunson.
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If you're building a consulting business, then building
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these assets that go with it is an effective way of building businesses.
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Like, you know, books, courses. We're now currently developing
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software that we're gonna launch very soon. There's so many things
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you can build off the back of a personal brand around consulting. So
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I think Gary Vee's been really big on this since he wrote his book, Crush It. many
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years ago. So I think that's a great business to be in because it's
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capital light, it commands a lot of skill set, you definitely have a lot of
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heavy lifting in the early days but social media has made any
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business so accessible to build like there's people
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out there making money hand over fist in the most obscure ways
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you could possibly imagine. It certainly enabled network marketing to
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scale. It's enabled consulting businesses to really scale. It
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hasn't necessarily helped our laundromat business. It's not probably even helping
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our accounting and advisory business. That marketing doesn't depend on that at all. But
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for a lot of businesses, it does. So I think what you've got to do to build wealth
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outside property is you've got to consider either
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building or buying a business because it's the one thing that
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will give you the most wealthy outcome, which is control of your time. And
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if you don't control your time, it means you don't have a business, you have a job, and it means you have
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to put some people or some systems in place to alleviate some of that time suck
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that's taken from you, okay? And again, if you wanna learn how to do
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that, go get the book, Become Time Rich, and I talk about the four time rich laws you
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should apply to your life to win back your time, okay? What
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else is there? Outside that, a lot of people will talk about crypto and
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gold and these types of alternative assets. The challenge I face with
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them, if you haven't been listening to this show, is
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that they don't produce any cash flow. I mean, crypto in
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itself is speculative. I just saw that Michael Saylor just sold a ton of it. Like, that's
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gonna go to zero. It's just gonna go nowhere. It's
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not very durable, I don't think. Gold, more durable. I
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think I'd be a lot more comfortable holding gold than crypto. But again, it doesn't produce income, so
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you've got to figure out when you're going to sell it to realise some of the cash. Whereas
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with shares, you can generate cash from
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dividends. Particularly in Australia, there's these things called franking credits, where
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the company will have already paid the tax on the dividends, and you're getting this income
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to you, and if you're earning an average tax rate of 30%, you don't pay any tax on
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those dividends. So you can generate tax-free income from Australian shares
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if you live in Australia, depending on your tax rate. So that's
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cool. Businesses give you cash flow. So I think if
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you want to build a wealthy life, it's like, well, how do you get enough
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cash flow to cover your expenses? And then you've got absolute freedom, which
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is the ultimate wealth hack is time freedom. And
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I think if you look at shares and buying or building businesses, that's
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in the cohort there, that makes a lot of sense. Whereas with property, Property
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is one of those things where you don't generate cash flow quickly, and
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you're very unlikely to go through what we went through in the last five years, which
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is where it just basically doubled in five years. That's very unusual. It
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doesn't operate like that. And so your expectations, if you've seen that,
16:38
will be out of kilter. Like if you're a 25 year old now, and you saw the
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last four years, or even if you're 30, or the last five years, you would think that's normal. But
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it's not. It's very abnormal. And so it's got a
16:48
long gestation period. And I think those that have built tremendous
16:52
wealth, I don't know if it's going to repeat in the next 40. I just don't see it. It
16:55
will grow, but I just don't think to the extent that it has. But if
16:58
you have a personal place of residence and you live in it long term,
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And you get to the point of your life where you got, you know, you're like, you know what, we could sell this.
17:06
Either go and downsize to a one better and then bang it into shares and
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get general income. That's what my mum did. My mum, she had a property,
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she sold it, bought another one. It really accelerated to like 1.2. She
17:17
sold that, debt free. Then she moved locations, bought
17:20
one for 700 and banged the rest of it into portfolios. Now got a million dollar share portfolio that
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produces passive income. That's intelligent. It's not intelligent
17:27
when you're just selling houses and moving to the ones at the same price all the way through your life
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and then you die. I don't think that's, you're not realizing the wealth in
17:34
the accumulation of the land value. So I think you have to
17:37
play it more smartly, more smartly? More intelligently
17:40
where If you've made gains in your
17:44
PPR, you kind of make that decision to go, okay, let's sell it,
17:47
let's downsize half, stick half in a cash producing asset,
17:50
and you're gonna probably alleviate a lot of the stress you have around money. You're gonna
17:54
have a lot of money for holidays, you're gonna have a lot of money for traveling, and you're gonna live a
17:57
rich life. I would say where the wheels fall off it is where people
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delay living their life in anticipation of future money
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in a big way through property And I think that's the challenge people are facing which
18:08
is why you might be a multi-millionaire on paper but you may not feel
18:11
like you are because you're completely in a dead-end job you don't like just
18:15
for all for the sake of equity gains that you're not going to realize for
18:18
20-30 years, you know That's real delay gratification, I
18:21
just don't think you need to play that game So I hope that makes sense. There's not a
18:25
tremendous amount. If you look at the real, real genuine ways to
18:28
build wealth, it's really buying companies through an index fund
18:32
or in shares and being patient and scaling that up and developing the cash flow
18:35
from it, and or building and buying businesses. I
18:38
encourage both at different times, not two at once, just one at a time,
18:42
where you're generating your independence and generating your income enough to then put
18:45
more into assets like shares, okay? So I do think that they're the
18:48
ways to build wealth in Australia that aren't property amongst
18:53
The basics, which is keep your costs low, you
18:57
know, get flipping it. If I'm a young person, I'm going to go and work on an oil
19:00
rig or something like that, or in the mines driving trucks like my sister used
19:04
to do. And I'm going to bank half my cash and I'm going to, you
19:07
know, put it into shares that produce income. I'm still getting a million bucks. That's
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my objective. That's all I'm doing. Keep my costs low, getting generating
19:14
income and, and you know, you can build a lot of success in 10 years doing
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that. That would be pretty smart. All right, what do you
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think? Does this make sense to you? Which part of this don't you understand? Which
19:24
part are you apprehensive with? Where have I taken
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you off the path? Would you disagree with me? Whatever it might be, pop it in the
19:30
comments below on our YouTube channel. And hey, we did hit a huge
19:33
milestone in our Spotify on... Our downloads for
19:37
our podcast, really cranking. So I want to say a big thanks to all of
19:40
our listeners. If you've been listening to this show in the car, on
19:44
YouTube, on Spotify, Apple Music, whatever it is you listen to
19:47
it on, thanks so much for your attention. Really appreciate you making this such a success.
19:51
And we will continue to bring out no BS financial
19:54
education and content that's up to date and applicable and
19:58
practical for you to actually make decisions with your money and
20:01
other things. All right. So thanks again. I appreciate you. Love you.
20:04
and I'll see you in the next episode of the Money Grows on Trees podcast. Thanks for listening to Money
20:08
Grows on Trees. If you enjoyed the episode, leave a five-star review on
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