11 investment lessons from the BRW Rich List

While the studies show that the rich keep getting richer around the world, the recently released BRW Rich 200 list gives us some insight into what’s happening to the fortunes of Australia’s wealthiest individuals.

I’ve always found there are interesting lessons to learned by following the fortunes (and misfortunes) of others.

This year there were more billionaires than ever (53) and and the average wealth per person is $987 million, up from $974 million last year.

A quarter of the Rich List made their money in property, with Meriton’s founder Harry Triguboff claiming the top spot with a personal fortune of $10.62 billion.

These 50 property rich listers, are now worth a collective $68 billion, almost three times the value of 16 resources rich listers who are now worth a collective $23 billion.

So, what can we learn from Australia’s wealthiest individuals?

1. Property is still the number one source of wealth

While the industrialists’ and mining billionaire’s fortunes wax and wane, looking back over the years no matter how the Australian economy changes, the Rich 200 has always been dominated by property entrepreneurs.

This year 50 of the Rich Listers made the majority of their fortune in property, while many of those who made their money in other sectors stored it in real estate.

Remember, there’s nothing wrong with seeing what other successful people do and applying those principles to your own life.

If so many extraordinarily wealthy people have used real estate profitably, it stands to reason that there’s money to be made in this sector.

2. Anyone can become rich in Australia

While many people inherit their wealth, most on the Rich List are self-made successes, some coming from working class backgrounds and having no tertiary qualifications.

Harry Triguboff is the Chinese-born son of Russian immigrants, who studied and started working in the textile industry and got involved in his first property deal in his late 20s.

Other Rich Listers also proved that attending a private school or having an elite education is not a prerequisite to joining Australia’s wealthy.

3. The markets move in cycles

The stock market is flat, the mining boom has ended and many of the mining magnates are worth much less than they were a year or two ago.

Gina Rinehart, who had occupied the number one slot since 2010, has slipped to 4th place with her wealth falling from $14.02 billion to $6.06 billion last year, due to a combination of falling commodity prices and a legal battle with her daughter Bianca, according to BRW.

However, successful business people and investors think long term, taking advantage of the opportunities to buy assets when they are on special. So it will be interesting to see the results next year and how these counter cyclical investors fair.

Remember Warren Buffet’s famous quote: “Be fearful when others are greedy, and be greedy when others are fearful.” 

4. The rich work hard for their money

You’ll find plenty of people on the list who are still working hard and making money at an age when most Australians are looking forward to retirement.

You see, it takes time to become uber wealthy – unless you’re left a handsome inheritance.

Harry Triguboff has been in every BRW Rich List since its inception 33 years ago, slowly working his way up to the top. Like all those on the Rich List, Harry still works hard at the age of 83, because he’s passionate about his work and isn’t interested in stopping.

In fact, he recently rejected an offer of over $6 billion for his empire, explaining he wouldn’t know what to do with himself or with the money.

5. Take risks early on, but not once you are established

While many rich listers took big risks to get their enterprises going, these successful business people then preserved their wealth by cautiously investing rather than taking further risks. This leads to the next insight…

6. They make their millions and then reinvest rather than spend their money

This is really just using the power of compounding to grow your asset base before you start spending up big.

7. Have one good idea and repeat it

One core trait that successful entrepreneurs share is the ability to take a good idea and repeat it over and over again.

You become an expert by doing one thing one hundred times, rather than doing one hundred things once.

Look through the Rich List and you’ll see so many entrepreneurs stick to the same concept for years and just expand in different locations – particularly overseas into Asia.

8. Go for growth

Sure, cashflow is important but to become really rich you need a large asset base. While the average Australian tries to increase their cashflow, the wealthy are obsessed with building their asset base.

It’s much the same as those on the BRW Rich 200 list who concentrate on building their balance sheets even more than they do on their profit and loss accounts.

9. Surround yourself with a good team

Triguboff has a reputation for being ruthlessness, but is also known for saying that as he pays good money to his team, he should listen to them or otherwise he is stupid.

As I’ve often said – if you are the smartest person in your team you are in trouble.

10. Take action

All the people who made it onto this year’s BRW Rich 200 list started with a dream They had a vision – created a plan to achieve it and then took action.

11. You’re never too young and you’re never too old

Tim Gurner is this year’s youngest Rich List debutant, aged only 34 and with a $460 million fortune made in property and another property investor, Stan Perron is the oldest member of the list at age 93.

What have you learned from Australia’s richest people?

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.