The Australian’s Money Cafe: The one habit all rich investors have in common

On The Australian’s Money Cafe podcast this week: the difference between old rich and new rich in Australia, and why property still underpins great fortunes.

The difference between old rich and new rich in Australia, the global reach of the Rich 250, how the rich approach crypto and why property still underpins great fortunes. All in this week’s The Australian’s Money cafe podcast. Picture: iStock

Inside The Australian’s Rich 250 List are two distinct generations, the old money represented by industrial barons and the new rich who have made fortunes from technology.

But one thing all wealthy investors have in common is a willingness to speculate: To take risks not just in their daily business, but in their investing ventures outside the business which made them rich in the first place, says this week’s guest on The Australian’s Money Cafe, Rich 250 editor John Stensholt.

He explains how a willingness to speculate - and in tandem a willingness to lose money on occasion - is central to the money makers on the Rich List.

Rich listers consistently display a desire to place selected bets on the future especially in ‘green’ investments and ‘digital assets’ , particularly ventures linked to cryptocurrency.

We might have expected new technology entrepreneurs to take these risks, but he points out how veteran investors are just as likely to appear in these areas such as Geoff Wilson of Wilsons, Alex Waislitz of Thorney or Graham Tuckwell of ETF Securities.

Moreover, Stensholt says that among the new rich who have made fortunes faster than any generation before them, there is a capacity to take risks around the world, not just on their home turf.

No surprise then to see some very big local names in the recent NASDAQ float of Iris Energy which managed to ring two bills at the same time - a ‘green’ venture focused on mining cryptocurrency.

We also cover the rich list story everyone is talking about: The troubles of the high profile Magellan Fund and the divorce of the fund’s ‘key person’ fund manager Hamish Douglass.

Meanwhile, as always this week’s podcast features a string of questions we answer on every aspect of investing and business.

Question of the week

The question of the week this week was from Susan who asked: “The share prices of managed investment companies like Platinum Asset Management and Magellan have not been going in the right direction for some time now. But I would like to think that there might be some protection of an investment in such a managed fund (compared to buying shares in an ETF), when another major market downturn happens. Presumably the fees you pay for the fund manager to invest your money not only covers picking stock winners, but also protects or buffers you on the downside?”

The answer for Susan is that unfortunately there is little evidence that active fund managers do any better when ‘major downturn’ occur - the majority of active fund managers fail to beat the index in good times and bad times.

If you have a question for the money cafe please let us know via [e-mail]