11 lessons from the BRW Rich 200 list

The rich are getting richer, according to the recently released BRW Rich 200 list.

The total wealth held by this year’s Rich List members was up 9.5% on last year, fuelled by a hot property sector, the continued emergence of technology entrepreneurs and a rebounding stock market.

A number of these business people have doubled their wealth since the end of the global financial crisis, and just in case you hadn’t noticed, the divide between the rich and the average Australian is slowly widening.

So, what can we learn from Australia’s wealthiest individuals?

1. Property is a potent wealth builder

Property remains the single biggest source of wealth, with 53 real estate entrepreneurs in the Rich Listers. And many of those who didn’t make their fortunes in real estate are piling into property faster than ever to restore their wealth.

Of course this should come as no surprise. Looking back over the years, no matter how the Australian economy changes, the Rich 200 has always been dominated by the property entrepreneurs.

The 18th annual World Wealth Report similarly found that Australia’s millionaires hold over 40% of their wealth in property, more than double the global average.

2. Anyone can become rich in Australia

While several inherited some of their fortune, many on the Rich List were self-made successes, some coming from working-class backgrounds.

Attending a private school or having an elite education is clearly not a prerequisite to joining Australia’s wealthy. While some forged important networks at school, many went to public schools and others didn’t even finish high school. In fact, many did not have tertiary qualifications.

3. Invest counter-cyclically

While some of the Rich List doubled their net worth taking advantage of the opportunity to buy up big over the past few years, many Australia investors were gripped with fear of the world’s potential economic problems.

Remember Warren Buffett’s famous quote: “Be fearful when others are greedy, and be greedy when others are fearful.”

4. Make your millions and then reinvest it – don’t spend it

This is really just using the power of compounding interest to grow your asset base before you start spending up big.

5. Take risks early on, but not once you are established

While many entrepreneurs took big risks to get their enterprises going, successful investors then preserved their wealth by cautiously investing rather than taking further risks.

6. Have one good idea and repeat it

One core trait that successful entrepreneurs share is the ability to take a good idea and repeat it over and over again. Look through the list and you’ll see so many entrepreneurs stick to the same concept for years and just expand in different locations.

7. Pick the trends

This is different to picking fads, which are transient.

8. Go for growth

Sure, cash flow is important but to become really rich you need a large asset base. While the average Australian tries to increase their cash flow, the wealthy are obsessed with building their asset base. Much the same as those on the BRW Rich 200 list who concentrate on building their balance sheets even more than they do on their profit and loss accounts.

9. Surround yourself with a good team

As I’ve often said – “if you are the smartest person in your team you are in trouble.”

10. Take action

All the people who made it onto this year’s BRW Rich 200 list started with a dream and then took action.

11. You’re never too young and you’re never too old.

The youngest debutant is 30-year-old Owen Kerr, the co-founder of online foreign currency dealer Pepperstone. He has wealth of $250 million. The oldest debutant is 81-year-old Michael Crouch, founder of Zip Industries, the maker of the Zip Hydro Tap. His wealth is $310 million.

So you didn’t make it on the list this year…

Well remember, there’s nothing wrong with seeing what other successful people do and applying those principles to your own life.

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy.