Smart and steady wins the race

The skill is picking the right advisers.

A targeted focus will pay off your home in very good time, writes Nicole Pedersen-McKinnon.

Do you have the attributes of affluence? Ever meet someone and think: That person's going to be rich. Or perhaps you've met someone rich and thought: Well, I can see how they managed that.

The fact is that people who hit the financial heights have some common characteristics.


You'll never get where you're going if you don't know where that is. Pretty straightforward.

You need a plan and you need one now - after all, the day-to-day chaos we all contend with can get all-consuming. And speaking of consuming, unless you have good reason not to, why wouldn't you just buy what you want when you want it? Sit down with your loved one/ones and dream a little.

What do you want the money you earn to ultimately do for you? Do you want a new car some time soon? A round-the-world trip in a few years? A holiday home in Fiji? An early retirement?

Establish goals and, most importantly, a timeframe in which to achieve them.


To paraphrase model Rachel Hunter: "It won't happen overnight but it could happen." Key to reaping the reward is to concentrate on your target date.

For example, say your goal is to pay off your mortgage as soon as possible (because you know from religiously reading this column that's about the smartest financial move you can make, saving tens of thousands of dollars, if not more, in interest and afterwards freeing up a whole bunch of money to invest).

You've determined you can throw an additional $500 a month at your $300,000, full-term 25-year loan. You can figure out your precise debt-freedom date on sites like At an average 8 per cent interest rate, it will take you less than 15 years, until early 2027 (and save you $155,000). Knowing how soon you could be debt-free should give you extra motivation.

Remember, too, that the magic of compound interest works with savings and investment. Start squirreling away $500 a month and make an average 7 per cent return and you'll have just over $400,000 in 25 years' time (from $150,000 in total saved).

Delay five years, though, and you'll need to find $770 a month to achieve the same end result. Wait a further 10 and that figure leaps to $2320 a month.

When it comes to making money, the tortoise could tell the hare a thing or two.


Beyond the sheer genius of repaying debt fast, you need to figure out how it is you want to grow your money - the investments that you believe will stand you in the best stead.

Some level of financial smarts helps, but don't forget there's a whole industry out there to assist. The skill then becomes picking the right advisers and managers, and securing their services at a good price.

Look up the risk questionnaire I wrote on August 9 to give you an idea of just how much investment heat you can handle and what specific asset mix - and products - that might imply for you. Even if you decide to outsource, it pays to know yourself and the basics of investing. That way, you can check the advice you are given.


I have a friend who readily admits that by age 40 he'll be either a millionaire or broke. And he's already been both. Here we're talking entrepreneurs and the special attribute that distinguishes them from the rest of us: a touch of the cowboy/girl. If this is how you choose to chase your financial goals, you'll need a higher risk-and-reward threshold than most because making money in business usually requires staking some of your own capital on one idea.

By contrast, you'll know that diversification is the mantra in investment - so one wrong call cannot cost you your portfolio. Entrepreneurs - although, of course, they'll do their due diligence - mostly don't have that luxury. But they stand a chance of making a lot of money fast.


When it comes to wealth building, a healthy sense of scepticism will serve you well. It will certainly put you at the lowest risk of being scammed or signing up for a product that promises pie-in-the-sky returns that will never eventuate or even eat up your initial capital.

Thousands of smart people get fleeced every year because they fall for the intoxicating notion that there might be a quick fix for their financial woes or an easy way to achieve their financial dreams. There ain't - but there are plenty of people trying to convince you otherwise.

From my observations, those are the attributes of affluence.

What do you think: could you - eventually - make millions?

Nicole is the editor of

Follow her on Twitter @NicolePedMcK.

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