How To Invest Money For Long Term Financial Security
Zen Notes, 20170606
From buying property, to Angel investing, Bitcoin, Ethereum and index funds - this is how Yaro invests his money. You can really start investing with as little as a few hundred dollars because the idea is to make money work for you.
Yaro enjoys books that use storytelling as a vehicle to teach financial education. Throughout history it is how people have passed down knowledge.
This book by George Samuel Clason teaches the story of a young man's journey to accumulate wealth in early Babylon and the mentoring he received. These are some important principles:
The idea with any business is to make your money work for you by investing it wisely. Depending on the outcome you're trying to achieve will determine how much time you need to put into your business and the returns you're likely to get.
In the beginning you may not have a lot of capital and you may have to spend whatever you make on rent, food and bills just to keep yourself afloat. At this stage your goal should be to generate cash.
Around 1999 Yaro was 19 years old and had no money so he asked his father for a loan to invest in the dot com mania. His dad wasn't an investor but gave Yaro several thousand dollars to invest in an online shopping company and another tech stock.
As the year 2000 rolled around Yaro became increasingly concerned about the Y2K bug. With his stockbroker away partying and out of contact he pulled the plug on one of his investments which continued to rise.
When the dot com crash eventually happened it wiped out Yaro's investment.
Having lost his dad's money and with very little of his own Yaro worked on his business and over the next seven years continued to save at least 10% of his income each year. After five years he had saved $35,000.
Growing up Yaro saw a lot of people became wealthy through property. The Business Review Weekly published an article stating 80% of Australia's wealthiest people made their wealth through property.
This was clearly a vehicle to grow wealth and Yaro needed a place to live so it made sense.
In 2007 Yaro sold his editing program for US$100k and he started a course which was making $10k per month so together with his savings he bought a 3 bedroom townhouse in Brisbane Australia for $335k together with a new $26k car. On reflection it would have been better to buy a secondhand car and invest the difference.
This means buying and selling blogs, forums and websites, flipping virtual properties. If you're interested in pursuing this strategy then there's a whole course on Yaro's website.
it wasn't easy money but it was cutting edge and nobody else was doing it.
Yaro made some really smart investments that treated him nicely. After buying a portfolio of sites for $20k, three years later they were sold for closer to $55k and they were making $2k per month from ads.
It's harder today but there are still really good deals if you do your research.
Over time Yaro's business continues to grow and more products are added to a point where he's making $200,000 per year and then $500,000 a year with a 75% profit margin.
As the capital base grew Yaro bought a second dream investment property in Queensland and turned the first one into a rental revenue stream.
Around 2005 Alborz Fallah built caradvice.com.au and Yaro was a friend so he got the inside scoop on what was happening. Yaro was asked to invest in the start-up but turned it down the first two times, the third time he took a 0.78% stake in the company.
For five or six years that seed investment is now worth closer to $1 million.
Over the last few years a couple of websites have caught Yaro's attention.
EquityZen brings together investors and employees interested in companies before they make an initial public offering (IPO).
Through EquityZen Yaro invested $20k into a unicorn tech company called Palantir founded by Peter Thiel and others. Palantir specialize in big data analysis.
AngelList is more of a social network for people looking to work for a startup as well as people looking to invest. Yaro backs a syndicate lead by Tim Ferriss so when Tim invested in a company Yaro put in $5k.
This book by Tony Robbins really spells out why the rich get richer and what we can do to invest like them.
One strategy involves investing just 10% of what you earn annually. Another strategy is to invest in an index fund to get a long term stable 10% growth.
Tony sought advice from the top experts who said to stay away from mutual funds and financial advisors because they make their money from fees and trading. It's better to find an index fund with low fees like WealthSimple that doesn't do a lot of trading over the long term.
Yaro drops $5k a month into WealthSimple and it is giving him 10% growth annually.
This demonstrates the power of compounding. After investing just $1200 at the beginning of each year, after 30 years of 10% annual growth the result is an amazing 217 thousand dollars.
After the dot com crash a few companies rose from the ashes like Ebay, Google and Amazon. Unfortunately Yaro didn't have the capital to invest but when Facebook started growing then adding an advertising platform he did invest.
He also came across eToro which allows you to copy other investors. eToro allows trading of Etherium which is a blockchain currency built on the Bitcoin platform and is doing really well at the moment.
You should only gamble money that you're prepared to lose.
As of 2017 Yaro has 1 property in Australia with most of his investments in WealthSimple and eToro.
We end where we began with your business because that is where cash flow comes from. With cash flow you can reinvest to grow your business and earn more but without capital you don't have options.
YT How I Invest My Money For Long-Term Financial Security