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Why are so few of us wealthy?

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Real estate, shares, futures trading, cash investments: there are plenty of ways, we’re told, for us to turn our savings into wealth. So why are you not incredibly wealthy already?
It’s a question that Bernard Kelly from www.retirelaughing.com has been asking himself.
“I’ve looked for the answer to this for years,” he says.
“But it’s only in the past few decades that a field of inquiry has emerged called ‘behavioural finance’.”
This study of human behaviour has shed new light on how we make investment choices.
“The problem appears to be that the human mind is hard-wired to participate within the group,” Kelly says.
“This was a valid approach for society to take for zillions of years, up until the economy developed to such an extent that it allowed individuals and entrepreneurs to flourish.
“But today, we are busy people in a complex world. We cannot possibly give in-depth consideration to every choice. So we revert to type – the brain takes a shortcut in evaluating our choices, and as a consequence, we ‘follow the herd’.”
This herd mentality may be one of the reasons why so few of us invest in real estate.
It’s estimated that only 4% of Australians own one investment property, while less than 1.5% of the population owns two or more investment properties.
We all know the old adage that property prices double roughly every 7-10 years.
So, when we know that the right investment property purchase is likely to substantially grow in value, and even double, why don’t more of us take the plunge and invest in real estate?
It comes down to changing your mindset, says Melissa Opie, co-author of Property Rich: Secure Your Financial Freedom.
It’s no easy feat, especially if your risk profile is set firmly to “low”, but it’s an area you’ll need to work on if you want to see your bank balance grow with any real significance, she says.
“Our culture is so hung up on success that we start to believe there could be nothing worse in the world than failing,” she says.
“But by saying no and fearing what might happen if you say yes, you will get nowhere. Yes, be cautious. But don’t delay your decisions unnecessarily, either. Procrastination is the grave in which opportunity is buried, and it’s the reason why so many people read all the property investment books and never actually buy anything.”
Procrastination comes from fear, she says, and “facing your fears is the only way to overcome them.”
Adds Kelly, “For anyone who is concerned about having enough [funds] for 20 to 25 years of dignified retirement – you’ll have to do something totally different to the herd. My advice is, don’t listen to the herd.”

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