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How the millionaires do it: Tips for 2013

Tags Financial Lessons
Category Personal Finance
Millionaires boat

Most of us have dreamt of becoming a millionaire at some stage, especially if you’re a small business owner. But unless you were born into money or scoop the lotto, how can the aspiring tycoon reach their goals? Guest writer Anthony Fensom talks about how we can you follow in the steps of Aussie millionaires and start on the path to success in 2013?

 

RaboDirect previously explored some of the key traits of the self-made rich, including hard work, determination, staying in, being money smart, a fast learner and embracing risk.

Taking on these qualities will give you a shot at the big time, but the new rich are exploring some different areas to earn wealth in the current volatile economic environment.

Invest in ideas

While Australia’s uber-rich include a number with inherited wealth, the new rich are increasingly making their money from smart ideas and innovations.

Among the top 100 young rich of 2012, 24 made their fortunes from technology, with two of the top five spots held by tech entrepreneurs. After leading the field since 2009, coal baron Nathan Tinkler was knocked off top spot last year by Atlassian founders Mike Cannon-Brookes and Scott Farquhar, with a shared fortune of $480 million.

Since founding Atlassian straight out of university, Cannon-Brookes and Farquhar have grown the enterprise software developer into a business employing over 500 people worldwide and with more than $100 million in turnover in 2011.

Concentrated gamble

While the Atlassian founders may have displaced Tinkler, they have expressed admiration for the mining magnate’s appetite for his concentrated gambles, which until the recent coal downturn seemed to have paid off hugely.

Cannon-Brookes told BRW magazine that he admired Tinkler for his entrepreneurial risk taking, saying, “[He] seems to double down with everything he has. He’s willing to let it all ride, which is the mark of an amazing type of entrepreneur.”

After starting his career as a mining apprentice in the Hunter Valley, Tinkler launched his own machinery maintenance business at the age of 26 before making his most successful bet in buying the Middlemount coal mine in Queensland. His wealth peaked at $1.13 billion in September 2011 following his successful mining deals.

Financial engineering

The power of compound interest to generate wealth is well known. However, as well as investing in high interest savings or term deposits, the rich also earmark a portion of their portfolios for more speculative assets such as hedge funds, commodities or infrastructure.

“Risky assets can offer opportunities in 2012,” Deutsche Bank has told its private clients, including stocks paying high dividends, convertible bonds and high-grade corporate debt.

Love your work ”“ and relax

Work-life balance is out the window for the young rich, who typically work 80-plus hours a week yet do not even consider it a job. However, such success can have a price, with relationship problems reportedly being not uncommon for the young rich.

Digital entrepreneur Llew Jury of Reload Media says it is important to stay relaxed to “polish” your entrepreneurship.Â

“The big thing is to relax and have patience, because the more relaxed an entrepreneur is, the more work comes through the door,” Jury says. “It becomes a natural lead generation process, not just trying to be a bit artificial.”

Building blocks of success

Paul Clitheroe, who founded his own financial advisory business, ipac, with $20,000 along with four partners, describes in Make Your Fortune by 40 his 10 building blocks of early success:

  • Concentrate risk
  • Be persistent
  • Have a good idea
  • Network
  • Plan and research
  • Take advantage of good luck (right time, place)
  • Learn from experience
  • Be a good problem solver
  • Get the right education
  • Be disciplined.

Nobody ever said it would be easy, but from studying how the young millionaires do it, it can be possible to get a head start on wealth in the new century.

Sources

http://www.brw.com.au/p/sections/features/atlassian_topples_miners_in_young_hJO3cs5owrbvh5HV3My9fJ

http://www.afr.com/p/personal_finance/smart_money/secrets_of_the_wealthy_6Lu6UPUo8zwoV1oCAeAtrJ