August 19th, 2021 by

The single best lesson for how to become a millionaire.

I grew up in a large family, where money was tight. It was the 70’s, in Brisbane. One thing I promised myself, was that my children were not going to have the same issues with money, that I faced. I wanted to learn how to make money, but had no one to learn from.

Then I read a book, that would change the trajectory of my financial life, by a guy called Noel Whitaker; Making Money Made Simple.

Three things I learned after reading this book.

1/ I could learn everything I needed to know about financial literacy, in books. I just needed to read every book on creating wealth and improving financial literacy, that was current and Australian (There were no blogs, podcasts and internet back in those days). I read them all. This confirmed my suspicion. There were no secrets, to wealth creation.

2/There were three areas I could invest: Property, Shares and Cash. That’s still about right today. My opinion, is that everything else is a gamble. (I am still unsure about Crypto despite my brothers’ testimonies.)

3/ Timing was important, but it was more about time-in rather than timing. (Getting in quickly, at any time, was more important than getting in, when the timing was right.) In other words, I was introduced to the ‘Magic of Compounding Interest.’

In his book Making Money Made Simple, Noel Whittaker wrote about compounding interest in the form of a fairy-tale called ‘The Fairy Godmother and the Magic Train‘. I have never forgotten this lesson. This was the single most important lesson, of my financial life. Save and invest early and often, to harness the power, of compounding interest.

With ‘The Fairy Godmother and the Magic Train”, the purpose was to illustrate the power of compound interest, told as a fable about a good fairy.

The fare to take that train journey is just $2.83 a day ($1000 a year) and a child would take this train ride from the day of birth. The pay-off is that the child could have $3.8 million at age 65. A millionaire 3.8 times over for a tiny investment of $1000 per year. The figures are based on the assumption that, the money is invested in quality share trusts, and that these trusts earn an average of 9 per cent a year if all income is re-invested.

The story also shows, the massive cost of delay. If you put off investing that $2.83 a day until age 21, to keep pace and achieve almost $4 million at age 65, you would have to invest $600 a month for the next 44 years which is around $19 per day and that is a whole lot more than $2.83.

I have seen the magic of compounding (time benefit) with bank accounts, shares and capital gain in property.

It really is that simple. Thanks Buddy. This changed my life.


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