How to get richer: always try to think big

People who take the path less travelled with their personal finances have a better chance of being like billionaires.

Good things do not come in small packages for wealthy and successful Australians.

Instead, they think big – in business, investing and life, and often it pays off.

The recent release of The List – Australia’s Richest 250, by The Australian, shone a light on the nation’s 139 billionaires, many who built huge fortunes from virtually nothing through hard work and big plans.

These billionaires and other famous faces can inspire people to super-size their own dreams.

Many years ago I was motivated by a quote from a well-known real estate investor and businessman: “if you’re going to be thinking anything, you might as well think big”.

It came from Donald Trump – long before he thought really big and became the most controversial president in US history.

While the quote still packs a punch, I cannot respect a man who only last week very publicly described a woman as “Horseface”.

Fortunately there are plenty of other inspirational quotes about thinking big.

Like this one from best-selling author Tim Ferriss: “Life’s too short to think small”.

Or another from Sir Richard Branson: “If people aren’t calling you crazy, you aren’t thinking big enough”.

And this from John F Kennedy: “Those who dare to fail miserably can achieve greatly”.

My favourite quote is attributed to Leo Burnett, the advertising giant who died more than 50 years ago but left the world with Toucan Sam of Kellogg’s Froot Loops fame. Burnett reportedly said: “when you reach for the stars you may not quite get one, but you won’t come up with a handful of mud either”.

Most of us do not think as big as billionaires, but we can employ a similar mindset with our finances and investing to achieve surprisingly good results.

Billionaire Sir Richard Branson is literally reaching for the stars through his Virgin Galactic business. Picture: BINGE/HBO

Here’s how it can work for people who weren’t born into wealth or are yet to develop their big business idea.

REAL ESTATE

Property is the easiest way to think and invest big because people only put a relatively small amount of their money into the investment.

Once a first property has equity, investors can use it to buy more properties without needing any of their own cash, and over time their wealth can multiply.

However, almost three quarters of real estate investors own just one investment property, while about 10 per cent own three or more, according to ATO data.

DEBT

Piles of debt scare most people, especially in times like today when interest rates have surged and pushed borrowing costs up about 50 per cent.

But big debt delivers big results, as long as it’s used wisely to buy assets or businesses that grow in value.

I would much rather owe $5 million than $500,000, as long as that debt is working hard to grow good long-term assets and the repayments are manageable even if interest rates keep rising.

SUPERANNUATION

There’s been a lot of talk lately about extra tax on people with more than $3 million in super, but even 30 years from now that is likely to affect just 10 per cent of the population.

It’s a number that more people can aim for, despite being way above Australia’s current median super balances of $45,000-$60,000.

Extra contributions, generating tax deductions and making the most of existing super rules are keys to unlocking a larger nest egg. And, of course, thinking big.

Originally published as How to get richer: always try to think big