Change – What’s it Gonna Take?

A few weeks back my wife and i were sitting at the dinner table, both on our laptops. I was probably reading fund manager reports, or something else she found equally as boring, whilst she (seemingly trying to balance out the subject matter) was watching a webinar – a woman from Ireland with a ridiculously chiseled body who calls herself ‘The Sculpted Vegan’. Now, i don’t usually go much for women who could bench press me – nor for their ‘calorie deficit’ advice, but in between her health & lifestyle advice she said something that made my ears prick up…something quite profound.

She was talking about motivation and why people find it so damn difficult to make positive change, and you know what she said?

“People don’t change because It never got bad enough”

Things haven’t descended to such a terrible, shameful, and desperate place that you’re essentially forced to change.

  • You’re not quite morbidly obese enough to need mobility aids… yet
  • Your shortness of breath hasn’t turned into a full blown heart attack ….yet.
  • Your high cholesterol hasn’t quite sealed off an artery and you haven’t had a life threatening stroke…yet.
  • Your sleep apnoea hasn’t ruined your marriage…. yet
  • You’re just managing a smile frequently enough that you couldn’t possibly be depressed… surely

You’re just hanging in there millimetres above that critical threshold where you’re broken, you’ve hit rock bottom, you’re forced to take a long hard look in the mirror and finally embrace the change you’ve been avoiding for so long. Its terribly sad, but sometimes we humans need to experience the worse depths of pain in order to be inspired to change for the better.

As well as feeling a little guilty that i need to join my wife for a run or hit the gym more often, i couldn’t help but think how true this is of people’s financial health as well. How long have you perpetuated a sub-optimal financial situation because your situation isn’t bad enough? A bit too long? Well how bad are you going to let it get before you’re motivated to change?

Perhaps the situation is even worse than that. Perhaps you don’t even know how sub-optimal your financial health is?! After all, you can’t easily take a quick BMI test for your financial health or look in the mirror every morning and see that you’re not the healthiest you could be. You can’t even compare yourself to the average person in the street because cheap credit allows people to live above their means and pretend to be wealthy! But somehow, even though you can’t quantify it maybe you have a feeling – a feeling that things could be better, that you could be working smarter, not harder, that you don’t have as much to show for your ‘hard earned’ as you’d like.

Far too many people come and see me AFTER the financial equivalent of a stroke / heart attack / come-to-jesus moment, but you don’t have to wait. You can make positive change NOW, you can start reaping the rewards NOW – prevention is better than a cure.

If any of this is striking a chord, then its time to make a change….



    Qualify: What do you want? Seriously… what do you actually want for your life. A big house? Regular expensive holidays? To set the kids up? Financial freedom? Be debt free?… all of the above?

    “If you don’t know where you want to be, its awfully difficult to develop a plan on how to get there”

    Quantify: How much do you need to support your goals? When do you need it by?

    Without quantifying your financial goals, you’re flailing around in the dark. Knowing how much you need (and when) allows you to prioritise your goals, to work out how much to save, how much to trim your expenses, how aggressively to invest.


    If you haven’t read it already, read Good debt vs Bad Debt… and then aggressively pay off your bad debt.

    If there is too much of it and the task seems insurmountable, see a financial adviser / finance broker and talk to them about debt consolidation. 

    Bad debt will destroy your ability to achieve your financial goals, so pay off the credit cards, personal loans, car loans, and other high interest debt so you can move forward.


    Two coffees a day = $7.00 p/d = $35.00 p/w = $151.66 p/m = $1,820 p/a

    Investing $151.66 p/m into a diversified portfolio of managed funds earning 8% p.a compounded over 30 years = $226,038. Of that amount, you’ve chipped in only $52,780.

    Talk about a good effort to reward ratio! So what other expenses / habits can you ditch in order to double, triple or quadruple that saving?


    The best way to save is to deprive yourself of the cash before you get a chance to spend it! If you can setup an automated direct debit to deprive you of a portion of your paycheque and direct it to a savings / investment account, you’ll work out a way to survive on the rest. Pay Yourself First (Thanks Robert Kiyosaki).

    Compounded returns on regular savings make a MEGA difference over time. Start NOW!

    “Saving” might not necessarily mean into a ‘savings account’ earning 2% interest – it could be extra home loan repayments, contributions into an offset account, an investment account, or superannuation.

    Seek advice about the best home for your “savings”, but use the process to create the discipline you’ll need to reach your goals! 


    If you’re trying to hit it out of the park with your investments and make too much too quickly stop, take pause, rationalise, and assess how realistic your expectations are. Risk & reward are two sides of the same coin. What happens to your goals if an overly aggressive investment strategy goes wrong?

    How much is too much?

    According to a 2018 Forbes Article only 48 / 4675 (1.03%) of Mutual Fund managers in the USA who have been around for longer than 10 years, achieved 10 year investment returns exceeding 13.39% p.a.

    – Over the 30 years to Dec 31st 2017, the average annual asset class returns were as follows:

    Australian Shares: 9.1%
    International Shares: 7.8%
    USA Shares: 11.0%
    Australian Listed Property: 9.4%
    International Listed Property: 10.6%

    For perspective, the average professional fund manager fails to beat the average index return!

    If your return targets exceed these averages you need to have a frank discussion with yourself and assess whether you’re a) in la-la-land, b) taking more risk than you’re actually comfortable with, c) prepared for significant capital losses (either temporary or permanent) or d) Actually invested in a way that is likely to achieve your return objective, with a level of risk that you’re prepared to accept, for a timeframe that balances both of those things.

    If you want to “keep it real”, here are some slightly conservative rules of thumb:

    Conservative Investor: (30% Growth Assets) – 4% p/a
    Moderate Investor: (50% Growth Assets) – 5% p/a
    Balanced Investor: (70% Growth Assets) – 6% p/a
    Aggressive Investor: (100% Growth) – 7.5% p/a

    *Growth Assets predominantly refers to Shares, Property & Infrastructure.


    This is perhaps one of the most simple, yet powerful choices you can make for your financial life….

    Two 30 year old identical twins (Fred & Ned) are alike in every way – They both began employment at age 20, began receiving employer contributions into their employers default super fund, and they both have a $50,000 balance. They earn $80,000 p/a, and their employer contributes the mandated 9.5% super – paid monthly. There is one small difference though…. The default fund that Fred’s employer opened on his behalf is a Balanced-Growth fund, which has been earning 8% p/a over the long term. Ned’s employer however elected for a fund that has a Moderately-Defensive default option, which has earned 6% p/a over the long term.

    At age 60, Fred’s super is worth $1,349,097, and Ned’s is worth $841,893. That is a difference of $507,204!!!

    Conversely, if you’re in retirement phase, and you’re still invested like a 30 year old, you may be exposed to an awful lot of risk.

    If the next GFC wipes 20% off the value of a default “balanced” portfolio, 30 y/o Fred’s account balance drops by $10,000. 60 y/o Fred on the other hand takes a whopping $269,819 hit!

    Review your super – you’re unique, so don’t assume the default option is right for you. If you’re creeping closer to retirement see an advisor – the home straight to retirement (last 5-10 years) is perhaps the most critical stage when it comes to investment & planning strategy. What you do (or don’t do) through this stage can make a massive difference to your retirement lifestyle.


    We’re all flawed – we’re human and its to be expected. We make irrational decisions, poor choices, suffer from our own inaction, we think we’re infallible, we think our intuition & judgement is better than it is, and worst of all….we don’t believe any of the above is true.

    I have become fascinated by our indelible flaws as human beings (with a particular focus on those that i am most affected by). With a better knowledge of ourselves, we can make better choices for ourselves and for our families. We can learn when to trust our gut, and when to trust the data, when to trust ourselves, and when to outsource our decisions to a 3rd party, and we can be more honest with ourselves about what we “know” vs what we think or believe.

    The following books have been amazing for my journey, i would encourage anyone with an interest in the way the mind works to read them. I’d recommend ALL investors read them.

    Thinking Fast & Slow – Daniel Khanemann
    The Invisible Gorilla – Christopher Chabris & Daniel Simons
    The Undoing Project – Michael Lewis
    Nudge – Richard Thaller & Cass Sunstein
    Freakonomics – Steven J Dubner & Steven Levitt


    Personal insurances refers to Life Insurance, Total & Permanent Disability Insurance (TPD), Income Protection & Trauma.

    Being overinsured is costing you a fortune – particularly if you’re in your 50’s or 60’s. Every dollar in premiums that pays for insurance cover above your actual needs is robbing “future you” of wealth.
    Conversely, being underinsured is a massive risk for you and your family. If you have debt (lets face it, most people do – and too much of it), make sure you’re not going to leave a massive issue for a loved one if you get hit by a bus. And, if the bus doesn’t manage to finish you off, but prevents you from working, make sure you can still service your repayments!

    Insurance is a double edged sword – a necessary evil. Make sure you’ve got the right amount & right types of cover. 


    If you have a loosely goosey method of tracking your investment performance you’ll always make your own results look more favourable than they actually are.

    For example – many people would assess their profit on a property buy / sell transaction as follows: Sell Price – Buy Price = Profit. Everyone looks like an investing genius when you do it like that, but unfortunately, you’re yanking your own chain. My wife and i just did one of these… here are the actual calculations

    Cost Base = 

    Buy price +
    Stamp Duty +
    Acquisition Costs (Legal) +
    Renovation Costs (Every single last receipt) +
    Cost of holding the property (Rates, land taxes, insurances etc)


    Net Sell Price = 



    Sell Price –
    Realestate Agent Fees – 
    Marketing / Advertising Fees –
    Disposal Costs (Legal) –
    All of the decorations my interior designer wife bought to dress the house up for sale – 
    Loan termination fees – 

    With a real underlying profit assessment, it gives you a much better ability to do a proper feasibility study on the next potential deal.

    When it comes to shares or managed funds, get yourself a Sharesight account, or use another suitable portfolio tracker. Compare your results to the relevant index for your investment profile. If you’re underperforming, hand your $ over to an investment professional. If you’re outperforming, don’t pat yourself on the back too quickly – was it a fluke or the result of a repeatable and diligent investment process that transcends market cycles? If you’re still outperforming in 5 years, consider starting a boutique managed fund… and please give me a call – i’ll be your 1st investor!

    There are some wonderful tools out there for tracking portfolios / returns, so start using them. If you’re in an SMSF, and its hard to track proper returns (not just increase in net asset value), consider Class, or consider whether you even need an SMSF – a Wrap Platform might do everything you need (except if you’re holding direct property or oddball investments like art or antiques)


    An obsessive focus on your portfolio is bad for your mental health and probably drags your attention away from multiple other “spot fires” in your personal and financial life that could turn into raging bush fires if you continue to ignore them.

    Life is the most important thing.
    Your finances just support your life goals.

    – Work out the life goals
    – Develop a financial plan to achieve them
    – Put your life on autopilot
    – Enjoy your new found freedom
    – Review regularly – but don’t obsess in the short-term…. its a long game.

 Have a wonderful 2019 everyone, and best of luck with my top 10 tips.