My Apprenticeship

INTRODUCTION 

This first essay in the Financial Freedom series is titled My Apprenticeship but the more I wrote, the more I thought it should be called How Not to get Ripped Off! So much of my financial failure can be attributed to episodes of me foolishly trusting others. As you read on you will understand why I have such a dim view of investment middlemen. They are lined up on each side of your journey through life, dangling the juiciest of financial carrots in front of you to induce you to give them control of your hard-earned money.

However, I do not blame these people for what happened to me. I take full responsibility for my actions. My very hard-earned lesson was to eventually become my own boss, my own captain and the master of my own destiny. That is by far the most important decision you need to make with your finances. Without learning this lesson you will be fleeced over and over again, just like I was.

Trusting others will never give you the experience and wisdom needed to become financially successful. A good upbringing might help, but not a lot. A good marriage will definitely help. But for most of us the elusive goal called “financial wisdom” seems to reside at an oasis somewhere out in Neverland and very few people will get to it. 

This is the very reason I have created this essay. I want you to feel empowered so you don’t need to purchase endless products or courses, or enlist the services of financial middlemen. Instead, I want you to have the wisdom, guts and confidence to believe in and back yourself. 

FINANCIAL MIDDLEMEN

If you really want to use a financial professional to help you get started in your quest for financial independence, then yes they have their place. However, I believe it is important to spell out in detail some of the facts and myths of this profession. Financial middlemen have been around since the dawn of commerce and they can be a very useful part of your investment plan if they are well trained, professional and truly have your interests at heart. However, a middleman or woman is by definition, planted between you and your investment. They are there because of your lack of time, confidence or knowledge. They have to be paid for their services in order to feed their own families and you are the person who pays them. Therefore, your financial performance will usually be below what it would be if you learnt the skills of investing for yourself. 

The list of middlemen below is not exhaustive but represents both my personal experience with this part of the investment landscape and the experience of people I know personally. If I come across as cynical at times then I do so in order to protect you from the mistakes I have made.  

 1. FINANCIAL ADVISERS

The term “financial adviser” is used a lot these days by people who want to sound sophisticated. But if you were financially sophisticated you wouldn’t need one would you? Below are some questions you should always ask in your investigations when dealing with someone from this profession. 

First and foremost, are they personally wealthy? I would never seek financial advice from someone who has personally made less than one million dollars from their trade; and I don’t mean from commissions but from investing in the products themselves. If someone is going to tell me where to put my hard-earned cash, why should I listen to them unless they are personally successful in the same field of work as they promote, so proving the worth of their products? Would you hire a plumber who had only worked on two homes, or a real estate agent who has never bought their own house? 

If you want to be successful in investing you must sit at the feet of those who have climbed the mountain before you. An adviser who is still selling financial products is highly unlikely to have made a fortune from investing in his own products. In fact very few people make a lot of money from structured financial products, period! I actually once asked this question of an adviser. He didn’t like the question! He was making money from people like us through fees and commissions, not his own products. It was not until I personally had earned over one million dollars in capital gains from my investments that I considered myself qualified to start writing these essays and helping inquisitive personal friends with the knowledge I had discovered. I have also lost a million dollars in the Global Financial Crisis (GFC), bounced back and passed the two million dollar mark. I absolutely know there is much more to come. It’s like riding a bike, once the skill is learnt it is never forgotten. 

If you have less than $10,000 to invest you can forget about an investment adviser altogether. They usually want to talk with the “big fish” middle class investors so they can earn bigger commissions. They will earn so little commission from your small pile of cash that it will hardly be worth their time. Save yourself their expensive fees and buy twenty good books written by people who have been successful themselves. I have listed some at the end of the essay entitled The Mental Ladder. Educate yourself, then take some baby investment steps. Knowledge is power. Investment advisers derive their strength from your ignorance. Get educated. I repeat; GET EDUCATED! 

There is also an ever-present conflict of interest between the adviser and the advice they give, especially if they are commission-based. Your desire is to maximise your return while their natural inclination is to maximise their commissions. As ex-Australian Prime Minister Paul Keating once so eloquently put it; “In any race I’ll back the horse called “Self Interest”. Commission-based financial advisers have quotas to reach every month, just like sales representatives in most industries. Do yourself a favour and don’t go to see them in the last week of the month. If you do, after they have shown you their pet products, ask to see all their low-commission products and compare them to what you have just been shown. 

In 1987 I knew an acquaintance who became really friendly when he found out I was about to sell my home. Surprise, surprise, he was a financial adviser. In my ignorance I allowed him to set me up in a commission-based financial product with the sale proceeds from my house. When the paperwork came back he had actually signed me into two identical products, each with half the funds. He had just earned himself twice the commission without my permission. I refused to ever speak to him again.

Marketing and propaganda is not a substitute for financial advice, but is often passed off as such. Read that sentence again so it sinks in! We live in an age of very sophisticated marketing. Financial advisers will be trained in the use of propaganda techniques that will play on your greed, fear and ignorance in an effort to convince you to sign away your hard earned dollars. The hard-core investment spruiker fringe use “free seminars” as bait to get you through the door. Add in glossy brochures, slick advertising, bragging about past returns, sophisticated software presentations, free nights in a nearby resort and overly complicated jargon and the average person can’t wait to part with their money. 

The following questions should be tucked under your arm on your first trip to the adviser. Verbal answers may sound good, but watch the body language for the real message. They are about to become your employee. You are going to pay them to do a job for you, so question them as hard as you would any job applicant. Ask them the following questions

Do you personally put your savings into these products?

How much of your own personal wealth has come from investing in these products?

Can you put into writing every single fee and commission you are charging me?

Which of these products has the highest and lowest fee structure?

 Why should I put my money with you instead of with your competition?

 Are these commissions and fees negotiable?

 Is there a secondary market for this product so I can sell it down the track?

 What are the exit fees if I leave before 12 months, and after 12 months?

 Why do you do this job?

 How much risk is there of capital loss?

 Can I monitor this product’s daily performance?

 Do you still take out fees or a commission if there is a negative return?

 Does this product passively track the local stock market or does it actively invest?

 Where did you study for your qualifications?

 How long have you been in this industry?

 Who was your previous employer? Can I have their phone number?

 Do you have registration with the government?

 How much money do you have invested and where is it invested?

 What type of car do you drive?

If you find an investment adviser who is not irritated with having to answer these questions you are well on the way to finding an adviser with a servant heart. They are in the minority but they will be one of the few that recognise that the best advertising is referrals from satisfied customers. 

Finally, use your network. If you still wish to use an investment adviser, the best place to look is with your network of friends and family to see who has given them sound advice. After exhausting this avenue, find someone who is brave enough to take no commission from the products they recommend but who will charge an up-front fee by the hour. They do exist but are few and far between. They are the brave ones who live and die by the quality of their advice. The trouble is that most of us want something for nothing so we keep going to commission-based advisers because we don’t get a bill when we leave the office.

Always ask your prospective investment adviser if they are registered with the national securities and investment commission, or your country’s equivalent. This industry has bred so many sharks that most Western governments have been forced to progressively establish a strict licensing process to try and clear the blood from the water.  

2. SEMINAR SPRUIKERS

Perhaps a story is the best way to introduce this section. In my ignorance and gullibility I will confess to once having attended “free” real estate investment seminars. I have even been duped into “free” follow up consultation from the “adviser” and was in the process of being sucked into a “free” trip to a resort. Thank goodness for a wife with intuition! Annette smelt a proverbial “rat” and after an hour this adviser admitted defeat and left. There is no such thing as a free lunch and there is no such thing as a free trip from a generous sales rep. After two days in a “free” resort you will be given the hard sell on the real estate products you have been viewing and unless you are strong they will have you signed up before the flight home.  

These are often the worst form of financial adviser. After another “free” evening seminar that promised the world, I sent Annette to a follow-up $2,000 weekend retreat on the strong advice of a friend, who was actually after a 50% rebate on the cost of their own attendance! The first day didn’t exactly electrify Annette, but you could get your money back at the end of day one if you were not happy. We foolishly enrolled for the second day thinking we would learn enough to justify the fees. The second day was full of legally questionable strategies that largely consisted of putting you money into the spruiker’s cosy real estate deals. One attendee threatened to sue and got his money back. We licked our wounds and soldiered on. Lesson learnt.

Investment spruikers are to be avoided at all costs. I have heard of friends who literally paid hundreds of thousands of dollars for these seminars and years later were yet to make use of them. Spruikers will rarely ever help you look into your heart and mind to uncover the internal mechanisms that hold you back. They want your money and are oh-so-clever at getting it out of the pockets of trusting and financially gullible people. 

The craze of late has been free seminars on foreign exchange currency trading (or swaps, options etc) leading to weekends in Sydney or some other large capital city to learn the secrets of leverage in the currency markets. Once there the slick presentation will pander to your ego, with the sharks on the side suggesting that you are one of the special talented attendees who should think seriously about enrolling in the next level of training where the real secrets of making millions will be disclosed to an elite few. Boiler rooms like this will always be with us and sadly there will always be those greedy and gullible enough to keep these people in business. I know of one working class woman who has attended three of these retreats at a cost of some $30,000, and who has yet to trade a cent. 

3. FULL-FEE STOCK BROKERS

In the good old days before the internet you had no choice but to use a real living broker to make any transactions on the stock market. Thank goodness that has changed. But back in the mid 1990’s, when I first dipped a toe in the stock market, I signed up with a reputable Brisbane-based broker. Fees were in the vicinity of 1-2% each way, so it was a costly business and each decision should have been made with a lot more homework than was typical of me or available in the financial press back then. Information was so scarce that you were utterly dependent on the broker to feed you whatever crumbs he knew from his network of contacts. The financial pros in the capital cities held all the aces and made all the money. 

My broker was an ex-accountant who was a decent man. What I should have realised though was that he was being paid on commission with a small percentage of each of my buy and sell orders. The more transactions I made, the more money he earned. It was called “churning” in the jargon of the industry. I was a typically impatient novice investor and was often easily convinced to drop one limping investment behind for the next hot tip. 

The trouble with the hot tips was that they came from the company’s back office researchers. After a year or so even I, dumb as I was, came to the conclusion that these guys had rocks for brains. Over half of their recommendations went backwards. They obviously had never learnt the keys to making money in stocks. They were not investors themselves! Alas, even my broker was too trusting of his own middlemen.

With the invention of the internet all the amateurs of the world suddenly found themselves inside a broker’s computer screen with the click of a mouse. I now see online what my broker was looking at in 1994. However, the internet has also given me access to a global network of information on any company, industry, stock market, international event, commodity trend, and government action. What’s more, all of it is free!

You don’t need a full-fee broker. Get educated and take the plunge. Make your own investment decisions. You will become ever so slightly more wise with every investment decision you make. Just make sure you don’t make foolish decisions and run out of capital before the learning curve is complete.

4.OFF-SHORE INVESTMENT SCHEMES

At home I have a book on my shelf that I found at a second-hand bookshop, which is all about off-shore investments. Yes, I will seek out information anywhere if it is cheap! It makes for dull reading but has some interesting investment suggestions for the brave. Some are garden variety investment schemes, some were a little esoteric, and some were downright hair-brained. I have no intention of following them up because I lack the knowledge to understand them fully, and I no longer trust financial middlemen anyway. To me, if it isn’t simple then I am not interested. The more complicated an investment is then the more you need a middle-man. The whole purpose of this book is to free you from these money suckers.

The marketing angle of most off-shore investment schemes usually involves low tax or extremely high returns, or both. It is as if there is a land out there somewhere where there is a wizard who knows how to get you to El Dorado. However, most of these wizards come with a gold-tooth bling smile and a slimy sounding bank address. If the returns sound too good to be true they probably are. Don’t believe them, don’t trust them and don’t go anywhere near them. You can earn high rates of return in your own backyard. Knowledge is the key to high returns, not distance from home.   

I mention these schemes here because of two personal experiences. Firstly, one of our friends lost a staggering amount of money through an off-shore investment scheme. If that isn’t enough to convince you, another person I knew was sucked into an elaborate off-shore high-interest investment scheme that somehow enabled him to buy a top-of-the-range new car and have the interest from the investment pay it off tax-free. Needless to say the scheme collapsed soon after he invested his hard-earned money and he was left with a sharply depreciating asset and a big fat debt. There are other disaster stories I could tell, most of them from the heady days of the real estate boom in the first decade of this century. Most of these people are still broke many years later.

5. INVESTMENT NEWSLETTERS

Been there, done that! I won’t name the publication but in the dark ages before the internet it was just so hard to get information about the stock market. The professionals and the big end of town had such an information advantage. So, after seeing a financial newsletter at my brother’s house I signed up and used the information to help place orders with my friendly Brisbane-based stockbroker. My brother, who is a successful farmer, was much smarter than I and ditched the idea of stocks soon afterward. He then told me he was only going to put his money where he knew what he was doing, which was farmland. He is now a multi-millionaire farmer. 

I however craved information and between reading this newsletter and the Australian Financial Review newspaper, I was finally on the road to riches. Yeah right! The newsletter is still in circulation and has now morphed into a listed investment vehicle as well. It is all very clever really. They sell the advice then charge people again to put money into their listed investment fund. But back in the early ‘90s this newsletter didn’t publish any charts of recent price history for their recommended “buy” stocks. I would buy when they said to and watch the price go backwards, only to find out later that the “buy” came at a price peak! They were just herd followers.

This was my first lesson in the difference between fundamental analysis (research) and technical analysis (charting). One of their recommendations, Stanlite Pacific, went broke. Why is it that I can still remember the name after nearly twenty years? It may have something to do with the fact that it was my first five digit loss in on single investment!

Recently I saw an advert for a very well-known digital stock market newsletter on television. The sales pitch centered on their ability to “hold your hand” and “ease the pain” of the investment making process. Note carefully the spin-doctoring. It is all about relieving your fears. The one true antidote for fear is knowledge and I can tell you from experience that in this century all the knowledge you need is free or can be obtained for the price of a paperback or an internet connection. The best investors retire and write books because they get bored. For $20 or $30 you can get a lifetime of wisdom and experience. Why pay hundreds of dollars a year in newsletter fees when your local library is stacked with investment books?

6. INVESTMENT EDUCATORS

Be careful of newspaper and magazine advertisements that tell you an organisation will teach you how to invest, trade options, futures, CFD’s, or invest in real estate. I know because I answered one once. Some organisations are of high repute and very worthy of your tuition fees. Others are downright dirty. 

My personal experience with investment education packages encompasses the high end of the market with my $3,000 Australian Securities Institute course. It was basically a technical education course for the investment industry. There were eight subjects. The information on superannuation and taxation made me very angry at the way politicians have rigged the system. The only folder I have bothered to keep taught me how to read company reports. One day I will understand it! The biggest lesson I learnt about company reports is there is only one figure you can trust and that is the taxable income statement. This is because if they try to cheat they go to prison; nearly every other figure can be fudged. 

My experience with investment education packages also encompasses the dirty end of the market. It involved a Brisbane-based futures trading educator. I spent several years in the 1990s trying desperately to master this elusive art of futures trading. I was again sucked into the lie that if you pay a high price for information then it must be very, very good. What a stupid assumption. I look back now and wonder how, in good conscience, an organisation can charge thousands and even tens of thousands of dollars for a few books, some charts and a glossy box. Yes, I was that dumb! 

Once you are in their system, these “educators” will often string you out with a series of layered products and seminars promising to take you to ever higher levels of their secret investment wisdom. The problem with a lot of these organisations is that when you reach the top of the mountain you find the owner of the business sitting there laughing at you, with a suitcase full of your tuition fees half hidden behind his back.  

Any stock market educator should have become a wealthy person through their own investing experience, not through your tuition fees. If they haven’t then they should never be teaching. If they have, then their course would be free. Success from a decade or two ago is also useless; it must be present and ongoing success. But then they wouldn’t need to educate you if they were actually making good money would they? The owner of this particular course hadn’t traded for over a decade and still called himself an expert. He used our money to fund his interest in collecting rare cars. 

To be honest though, I did actually turn my original $10,000 futures trading fund into $30,000 over a 12 month period. However, most thanks for this should go to the Asian debt crunch of 1997, which made me look good. After that initial success we moved interstate and it all withered away. In my hubris I thought I could make a living doing this. In the meantime I had spent over $20,000 on “education products” from these people.

The biggest lesson I learnt from this era of my life is that the shorter the time frame of your investment, the less your success will be from sound fundamental research and the more will be due to charting patterns and the casino effect, which is a fancy name for dumb luck. With their very expensive futures trading system I was looking to invest for a few days rather than months or years and I was using 90 per cent margin. The risks with futures trading were enormous and I was like a lamb to the slaughter. In the end it cost me a lot of money to learn how to read a chart really well.      

7. PROPRIETARY INVESTMENT SOFTWARE

For once I can tell you I haven’t stuffed up and bought the secrets of the universe stitched up inside a little black software package. The reason is simply because I am a computer Neanderthal. I have a friend who has bought a piece of charting software. It cost him about $600 and it dazzles him with bollinger bands and other rarefied indicators. But he hasn’t made any money out of it. The biggest problem with investment software is that it requires a human to actually push the buy and sell button. At that point a lifetimes worth of conditioning, greed, fear, lack of trust and a million other emotions take over. Charting software is only good for telling you when to buy a company or index. It is near useless for showing you what to buy for a sound, long-term investment. 

I know a man who recently tried to master the art of futures trading using proprietary software. His $10,000 turned into $4,000 but he was convinced it would work because he said two of his large losses were only because he pushed the buy bottom instead of the sell button. Why not simply get on the internet and do some free research? Investment software, by definition, can only help you in the area of technical analysis, or chart reading. Charting only ever gives you quantitative data; it can never tell you why you are buying. When you don’t understand the fundamentals of why you are buying a company, commodity or index you will never quite feel safe. The software becomes the trusted middleman. The less said about proprietary software the better. 

8. DERIVATIVES TRADING AND HEDGE FUNDS

Ok, I know what you are now thinking, surely not this too? Yes, this one was the granddaddy of all my losses. I lost half of my first house in the 1987 stock market crash and I lost all the value of my second house in a managed futures trading fund in 1992. Details escape me as to how we learnt of this small boutique investment fund, but it was probably through another newspaper advertisement. By now you should be wised up to the dangers of answering any advertisements in the financial press for courses, investment funds, financial coaching, trading tips, newsletters, or any other secrets to the financial Holy Grail. 

Futures funds were in their infancy back in 1990 when we got involved while living in Adelaide. As usual, the previous trading history was shown to be fabulous, somewhere near 100 per cent per year. It made me salivate with greed. Just on cue, it started to plummet not long after we tipped our house money into the fund, against Annette’s wishes of course. We were renting at the time and had just sold a debt free house at the ripe old age of 29. I cry just thinking about it! The fund finally went belly up while we were working as volunteers in Papua New Guinea two years later. We had planned to use the profits to fund our work. We tipped in $100,000 and took out $12,000, and lived like paupers the whole time we were there. 

The world of derivatives trading and hedge funds is one I would advise you never to approach. The whole industry lives on a knife edge of a margin call. By the way, if you haven’t seen the 2011 movie Margin Call or the 2015 movie The Big Short, then please do. Consider it part of your tuition fee. The derivative markets are growing exponentially at present and they threaten to soon dwarf not only world physical trade, which it outgrew a long time ago, but also global currency transactions. In 1998 a derivatives trading fund, Long Term Capital Management, collapsed in the USA and its debts of some US$4 billion sent a shudder through all its contract counter-parties. There was, for a while, the very real danger of a domino type collapse of the entire US financial system. This potential collapse was only averted through some very nimble footwork by the US Federal Reserve chairman, Alan Greenspan. 

The nightmare returned in 2007-9 magnified 10 times when the world came within a few days of a total collapse of the global banking system. This was also due in large measure to the derivatives monster growing too big for the world regulators to handle. The unwinding of the $700 trillion or so of derivatives positions will take the best part of a decade and there is a lot more pain to come for the entire planet, including you and me, because of the derivatives monster. The next crisis will be another order of magnitude larger than the global financial crisis of 2008.

THE EVENTS THAT CHANGED EVERYTHING

Having read this whole section on my experiences you can be forgiven for thinking I am the last person who should be teaching others about financial independence. However, it is so important for me share these experiences with you because they are very common. Most people keep their financial disasters a secret. Brokers won’t tell you how bad their track record is. Seminar speakers won’t tell you where they failed. Fund advisers won’t tell you about their stuff-ups. 

It is my consistent experience that when successful, people crow loudly from the rooftops about their gains. But when they suffer financial loss they simply go quiet, very quiet. I too was quiet for a long time. Only my long-suffering wife Annette felt the pain as much as me. Please see me as an ordinary fellow traveler who has made all the mistakes and felt all your financial pain. 

It is embarrassing to have to tell everyone how incompetent I was, but I was chasing a dream and just kept banging my head against walls at each dead-end. I would wander around, financially dazed and wounded for several years, before popping my head up for another shot at the dream. If only I had met someone who could mentor me and objectively teach me how not to get my fingers burnt. Unfortunately everyone I turned to had an agenda. They wanted some of my money in their pocket.

Do I blame these people for doing what they did? Not at all. I was the fool who made all the decisions to trust people’s fake promises. I am the one who must take total responsibility for my past actions. I have learnt that those who succeed as investors always take ownership of their mistakes. Those who blame others never succeed. Their egos are too fragile to face the truth. 

So what changed? Below are four significant events that occurred close to each other between 1999 and 2003 that rewired my brain and my future. Here they are in order. Can you see yourself in these four issues?

1. DEALING WITH MY INNER DEMONS

One external event in particular needs to be briefly mentioned as a cause of my mistakes. In the autumn of 1986 the car I was driving was hit by a drunk driver at Deniliquin in southern New South Wales. My brother-in-law Stephen, my beautiful first wife Elizabeth, and my nine-week-old son Mitchell were all killed instantly. This shocking event at the age of 25 caused untold grief in my life, and this grief lasted about four years, until I married my darling Annette.

However, I was totally unaware that, for 13 years, I was also suffering from post-traumatic stress disorder (PTSD). It was during those 13 years that I made all of my blunders mentioned above! I had no idea what I was suffering, but my family could see it manifest itself in a restless and gypsy spirit. I blew the financial value of over two homes during this time and was constantly poor. 

It was very early in the year 2000 that, through Annette’s desperate prayers, I was freed from this mindset. A month later we owned our first home in ten years with a 20 per cent deposit, which was all the cash we had left. Some of you will also have a smouldering subconscious mindset that keeps tripping you up financially. The hardest thing you will ever do is face that inner demon and kill it because it means facing the pain that caused it. But you must if you are to change your destiny. Prayer is a great place to start.  

2. TAKING OWNERSHIP OF OUR DESTINY

A little later in that pivotal year, Annette and I made a decision that has proved to be a huge game changer. We made a solemn oath to never again allow someone to get between us and our money. We would be totally responsible for the success or failure of our investments. We would sink or swim on our own strength and knowledge, or lack thereof. It was a bold decision at the time and it felt a little scary. We could surely lose money again but have no one to blame but us, which usually meant me. Looking back though, it was one of those life-defining moments. We were no longer looking for a professional hand to hold but were going to walk into our future holding each other’s hand. Interestingly, most people never make this decision because of the fear of failure. Fear is the biggest thief of a better life.

There is a wise proverb that says when the student is ready the teacher arrives, meaning that when your mind is finally open to new ideas, you will see opportunities everywhere. Right on cue our very next investment was a Brisbane property, purchased in late 2000.  House prices doubled in the next three years! We made enough money to pay off our mortgage in one hit! Unfortunately due to a major arm injury, that was our one and only foray into the fantastic real estate boom of the first decade of this century. 

3. NEARLY LOSING EVERYTHING

Now, about that damned injury. With one investment property under our belt, and with many more planned, disaster struck. On the 26th of January 2002 I was severely injured in the surf, suffering permanent damage to my left arm. For the next twelve months I had virtually no use of my left hand. If it had been my right arm I would have lost my career as a teacher and my home, plunging my family into poverty. 

The shock of this realisation ran very deep. Through the fog of pain killers, over the course of the next six months my thoughts were galvanised. I made a solemn promise to myself that I would never put my family in this precarious position again. I would move heaven and earth to find a second financial source of security. I would create the income and the capital they needed just in case I was to die or become incapacitated in the future. I set this simple but profound goal knowing that real estate was no longer an option. I would have to master the stock market. I would turn adversity into a launching pad.

A year later, when the America invaded Iraq, I saw an opportunity to act on this decision. We knew from the previous Iraqi war 13 years earlier that the stock market would rise dramatically in the next 12 months that followed the invasion. We took a risk and started our own superannuation (private pension) fund with our pathetic superannuation savings of $23,393. Our accountant thought we were nuts. However, in the first year we made 107%! Taking ownership of this fund has changed our lives forever, as you can see in the table below. I have now averaged 45% compound returns for the last 14 years.

Since that time I have found that my passion is stocks, not real estate. I am an information junkie and I love learning. With one ear and eye constantly listening and looking over the future horizon I can now easily work out what will be affecting the world’s markets in the next year or two. I simply find a good quality company that is producing what the world needs next year, then buy in and wait. 

Superannuation Fund Annual Returns: 

June 2004                                +107%

June 2005                                +114%

June 2006                                  +56%

June 2007                                  +71%

June 2008                                  +60%

June 2009                                   -34%

June 2010                                +109%

June 2011                                  +25%

June 2012                                  +34%

June 2013                                   -27%

June 2014                                  +74%

June 2015                                  +26%

June 2016                                      0%

June 2017                                   +25%

Average:                                       45%

4. SETTING LONG-TERM WRITTEN GOALS

The next major change in destiny came soon after taking ownership of our retirement fund. I was now learning everything I could about stocks and finance. In about 2004 I read an important book on goal setting called You Can Do It, by Paul Hanna. It was a boring read, but full of profound ideas. Central to those ideas was the need to have specific written goals for your future. So I began to dream, stretching my imagination as far as I could. Then I wrote my financial and personal goals for the medium and long term future. One of those was to have two million in investments for my retirement.

When I shared this goal with an older friend his reply shocked me. He said my goal was far too low and that I was capable of much higher achievement! Wow! So I rewrote my goals, lifting my investment target to XXXX million dollars! That was thirteen years ago. Today we have reached that first target, and will arrive at the second within the next five to seven years.

When people ask me why is it that I was able to finish employment early, I always refer to that act of setting definite written goals thirteen years ago. 

CONCLUSION

So that’s the short version of my financial apprenticeship, the good, the bad and the ugly. It has been a life changing journey from despair to financial freedom. I made every mistake in the book and I am sure I am not alone in my learning curve.

How many of my mistakes can you see in your own investment experience? If I can pull myself up from the disasters I have been through then so can you. Now go out and learn to stand on your own two financial feet like I did! Feeling miserable about your mistakes is no excuse. You don’t need to have someone hold your financial hand. All the information is now at your finger-tips. The future CAN be different from the past; go out and create the future you want instead of the one you fear!

Begin the journey by making quality decisions and setting quality goals.