Ormond - 1 Million for Life : How to Make It, Manage It, Maximise It

Contents

Praise for How to Give Your Kids $1 Million Each!

Ashley Ormond shows parents and grandparents how to set their offspring on course to understand, and benefit hugely from, the two Golden Rules of investing start early and be disciplined. Its a simple but effective approach which just about any family can use to learn about money and build long-term wealth.

Dr Don Stammer, economist and investment commentator

A timely and practical introduction to investing with a distinct focus on long-term strategies it will be particularly useful for anyone with an independent approach who wants to broaden their investing plans to include the future financial security of the whole family.

James Kirby, editor, Eureka Report

A well-researched and informative piece, without the complexities of financial jargon.

Topics ranging from savings and inflation, right through to finding the right equity investment, all are visited in this highly referenced guidebook. He outlines a number of effective growth assets to ensure a great return in the long run, enabling substantial financial backing for the kids and more control over their lives... one of the most basic yet useful reference books out there on the market.

Ailene Belesina, Your Mortgage Magazine

The book is a great way to teach your children the value of money and to get them involved in the savings routine from a very early age.

Karina Barrymore, Herald Sun

His plan is simple, effective and smart.

This book should be read by all parents Im an instant convert and am starting the plan immediately for my two bundles of joy.

Tania Grieg, Fitness Life Magazine

First published September 2007 by Wrightbooks

an imprint of John Wiley & Sons Australia, Ltd

42 McDougall Street, Milton Qld 4064

Offices also in Melbourne

Ashley Ormond 2007

Reprinted November 2007

The moral rights of the author have been asserted

National Library of Australia Cataloguing-in-Publication data:

Ormond, Ashley.

$1 million for life: how to make it, manage it, maximise it.

Includes index.

ISBN 9780731407002 (pbk.).

1. Finance, Personal. 2. Wealth. 3. Saving and investment. 4. Tax planning. 5. Estate planning. I. Title.

332.02401

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Cover design by Brad Maxwell

Cover image iStock International Inc./Vaide Seskauskiene

Wiley bicentennial logo: Richard J Pacifico

Microsoft product Screenshots reprinted with permission from Microsoft Corporation

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based upon the information in this publication.

Acknowledgements

Thanks to the many thousands of readers of my first book for their feedback and encouragement to write this second instalment. I also need to thank the hard-working team at John Wiley & Sons for getting the book from idea to fruition. A big thankyou also to Phil and Bob who kindly reviewed drafts of the book.

Once again I thank my wife and family for putting up with me while researching and writing this book. Now that its finished Ill have to find another excuse to spend days on end up in the attic.

Authors royalties

At least 50 per cent of the authors royalties from the sale of this book go to the AJKM Charity Foundation (ABN 38 788 499 680), which is a registered charitable foundation that provides assistance to a range of causes, including disadvantaged families and children in Australia and developing countries, and medical research.

My wife and I started out with nothing and worked hard for 20 years until we were about 40. We live in the best city in the best country in the world, we have everything we want, and we have enough investments to provide us with all we could possibly want for the rest of our lives. Our luck is a pure accident of fate.

On the other hand, hundreds of millions of people are suffering in other countries (and even some in other parts of Australia) simply because of when and where they happen to have been born suffering because of family circumstances, disease, civil wars, religious conflicts, corrupt governments, despotic dictators, natural disasters and dozens of other reasons not of their own making. We established the AJKM Charity Foundation as a way of helping people less fortunate than ourselves.

Specifically, royalties from this book are going to World Visions Micro Enterprise Development Program to fund the establishment and running of a new community bank in a rural township in northern Swaziland, a small country between South Africa and Mozambique. Swaziland suffers from chronic poverty and has the highest per capita HIV infection rate in the world (over 40 per cent of the population). There are 120 000 orphans out of a population of only one million, and life expectancy is under 35 years.

The community bank established by royalties from this book provides essential, low-cost funding to families with small enterprises to help them generate money for food, health care and education for their children, and also creates employment opportunities in the local community. See < www.worldvision.org/worldvision/appeals.nsf/stable/med_home >.

Your purchase of this book has directly benefited hundreds of children and families in this township. Your assistance will go a long way towards improving their lives.

Preface

Australia is a nation of spenders and borrowers, not savers and investors. Australian households spend over $10 billion more than we earn each year and we have had a negative savings rate for several years. Australia and New Zealand are about the only countries in the western world with negative household savings rates.

If we spend more than we earn, where does the extra money come from? It comes from borrowing more or eating into our savings. The result is that, despite the tremendous economic growth and prosperity we have enjoyed over the past 15 years, we are carrying bigger levels of debt, there are more personal bankruptcies and there are more people relying on welfare than ever before.

These days it has become far too easy to spend money and to borrow money to spend even more. We are constantly being bombarded with offers of pre-approved credit cards, personal loans, lines of credit and mortgages, and its all just too tempting.

At the same time, however, investing money wisely is a seemingly difficult process. Its hard to find simple, low-cost, tax-effective investments that can be used to build wealth. Aspiring investors have to wade through a sea of get-rich-quick schemes, through the thousands of complex, expensive products loaded with myriad unnecessary fees and charges, through all the experts who are just looking for their next sales commission, and through a whole lot of jargon and paperwork.