16 Apr Never too early or late to start – Luke Harris
Luke Harris from The Property Mentors believes that we do not teach our kids soon enough in life about creating a wealth plan for life. He says it should start in school but it is never too late.
Kevin: My next guest is a gentleman I’ve had on the show in the past. Luke Harris is from The Property Mentors. He joins me once again.
Good day, Luke. Thanks again for your time.
Luke: Good day, Kevin. How are you?
Kevin: Yes, good mate. The subject this time is talking about developing a wealth creation plan to achieve a lifestyle you desire. Is it about making a plan? We all want to get on in life, but that we don’t quite know how to make the plan, Luke?
Luke: That’s right. In school, we’re not taught how to actually set out our goals and our plans for our wealth creation. Wealth creation wasn’t a topic for me to choose at school, unfortunately.
Kevin: Okay. So, how do we go about doing it?
Luke: How do you do it? Look, the main thing for most people is to really work out why are you investing in the first place? What does wealth creation mean to you? Because for everybody out there, they’re going to have a different take on wealth creation and what that means.
For some people, they assume that wealth creation is having super yachts and Ferraris and traveling first-class everywhere. That’s what a lot of people think wealth creation is about, but for some people, it’s just as simple as being able to live a comfortable retirement – having the bills paid, fixing the car when it breaks down, and having maybe a cleaner come in once a week – and it’s not about having a lavish lifestyle. So, it really does vary for each individual.
Kevin: It’s not about money, is it? It’s about freedom, surely?
Luke: Yes, exactly. A lot of people assume that wealth creation is about greed and being money hungry. And you’re exactly right; it’s about what is it that ultimately you need in your lifestyle to actually give you that comfort?
Kevin: How do you help people create their plan, or come to that understanding, Luke?
Luke: The main thing that I actually have learned over the years after speaking to thousands and thousands of different investors out there is that most people actually haven’t got a really clear understanding as to how they got to where they are right now.
So, what I’ve actually worked out over the years is that before you can actually work out where you want to get to and what your wealth creation plan actually looks like, how did you get to where you are now?
A lot of people have never actually sat down and worked that out. They’ve never actually sat down and worked out “How did I get to the financial position that I’m at in life, and how did I get these credit cards, and how did I get this car loan and the mortgage that I’m in?”
Kevin: For some people, though, they might find that difficult to put a handle on, because for most of us, we just wake up one day and we just do what we do. There’s no planning to it.
Luke: You’re exactly right. And the biggest challenge, I think, for a lot of people out there that most people want to, at some level, improve their life and improve their lifestyle. They want to improve their financial situation for their family, or they want to help charities, or whatever it might be, or they want to leave a legacy when they leave the planet. But at the end of the day, most people aren’t really taught how to work on their financial life to get better results.
And so, what most people are doing is going out there and they’re reading magazines and reading the newspaper and they’re researching online to try and find a silver bullet or something that’s actually going to give them the financial returns that they’re after.
But what we’ve found is that most people out there, they’re actually not basing that on anything. So, they’re chasing high returns, or they’re chasing the next hotspot, but they’re not actually relating that back to their own personal situation.
Kevin: Because they don’t have a plan. Who helps you develop a plan? Who do you need on your team?
Luke: It’s a tricky one, because there’s no real people out there who are just focused on developing a plan. A financial planner that will be able to help you to a certain extent. I’m not a financial planner; I don’t want to be one. But a financial planner will be able to talk about your insurances and your life insurance and your TPD and things like that, and they’ll be able to talk to you about certain financial products, but they can’t talk about direct property, which is a $7 trillion industry. It’s funny that they can’t even talk about the biggest industry that we have here in Australia. So, it’s funny that financial planners can’t help you on a true plan.
Your accountant will help you a little bit as far as tax planning, but they’re not going to help you with your investment and your wealth creation plan. They’ll help you on getting the best tax outcome from that, but they’re not going to help you on a full holistic plan. Your mortgage broker is going to help you to a certain extent, but your mortgage broker, again, they’re just there to get you the best loan product to suit your end goals.
And all of those professionals will touch on what your goals are and what you want to achieve through getting your tax returns done and through getting your next loan and through getting your insurances up to date, but what they won’t do is actually do a full plan on working out how you got to where you’re at in your financial life and where you want to get to in your financial life.
Kevin: So, who will?
Luke: Who will? Look, Matt and I actually started The Property Mentors business a few years ago, because as property investors ourselves, we actually went out there and did what most investors do. They’re going out there looking for the next shiny object, and they’re chasing high returns, and they’re chasing the next hot spot, and they’re trying to manufacture growth, which is what people hear in a lot of these articles and magazines, that you need to go out there and do renovations and subdivisions and try and do stuff that you may not have the experience to do.
So, what Matt and I did is we actually stripped back the whole property investment space and said “What do we like out of it? What works for people? What doesn’t work for people? And how can we actually bring to the market something that actually genuinely helps people for the long-term?”
See, what we found was there’s a lot of companies out there that are… A lot of them do have good intentions and want to do the right thing, but there are also the sharks and the cowboys, as we call them, that are out there looking for the unsophisticated investors.
What we did is we thought “Let’s look at property investment for the long-term,” which is what we’ve done. We’re long-term property investors, so as such, let’s set out a business that can actually help investors long-term and teach them about how they’re making financial decisions in their life. Let’s look at how they got to where their financial position is. So, how did you get the credit card debt? How did you make those decisions?
And what we actually did is put together a really solid system to actually educate people around their financial decisions that they’re making and how to really work out to get from where you’re at right now, to where you want to get to.
But before we start investing, Kevin, it’s about setting out your point B position. To get from point A to point B, you have to know exactly where you want to go. The same as if you jump in the car and you want to go to a destination you’ve never been before, you can punch the destination into your GPS these days, and the GPS will recalibrate and guide you the fastest and most efficient way.
That’s exactly why we’re here at The Property Mentors, to help people to get from their point A to their point B position faster and safer and more predictably than what they’ve been doing.
Kevin: Always good talking to you, Luke. Thank you very much for your time. Luke Harris there, from The Property Mentors. I appreciate your time, mate.
Luke: Thanks, Kevin.