Financial Jungle

I have a confession to make. I’m a pretty nosey fellow. If you’re an over-achiever flourishing in an unforgiving world, you better watch out. Financial Jungle just might drag you into an interview, grilling you on all your financial philosophies.

Yesterday, I had the pleasure to meet Mike through a mutual friend of ours. The tall, slim-built, self-employed software solution consultant from Britain was half-jokingly proclaiming to be retired at a tender age of 30. And why not? He has accumulated enough net worth to sustain a modest retirement, but more importantly, he’s living the job of his dream. You see, Mike has a knack for solving corporate pains and sufferings, and he loves it. Stories of process improvements flared the initial 20-minutes of the conversation. In particular, Mike rejoiced at the time when his simple Excel Spreadsheet consistently salvaged 10 unproductive hours each week in a client’s time-tracking process. His high spirit feeds off the gaping look on his clients’ face, and he enjoyed being a super hero in the business world, so to speak. All that, and Mike still gets to choose his hours, projects and “get out of bed” rates.

Life hasn’t been always been honky-dory from day one. Like many of us, Mike was a prisoner with a salaried position in a corporate rat race for 12 years. But he concocted an escape plan: live within his means, and invest the difference - the tried and true method. He is a habitual analytical consumer. It doesn’t matter if he’s pondering on a bigger house or a trivial anti-glare feature upgrade on a laptop. If he can imagine living without them, he walks. And invest the money into real estate. Oh yes, he has a more ambitious plan to tackle on.

The Robert Kiyosaki (Rich Dad Poor Dad) inspired Mike has been on a string of real estate acquisitions. Four years ago, he immigrated to Vancouver while hanging on to his lone property in UK. His timing was impeccable as the Vancouver real estate boom was just at its infancy. After much research, Mike snapped up a condo in the prestigious neighborhood of Kitsilano. With his real estate holdings roaring over the past few years, he took another plunge by selling both his properties and leveraging up the proceeds to acquire 3 condos in Downtown Vancouver. Quite impressive for a 30-year old bachelor. If he keeps this up, his real estate portfolio just might multiply to 4, 5 or 6 properties within the next decade.

In addition to his consulting business and real estate, Mike also hauled away a generous stock option with him after fleeing his 9-to-5 job. When I asked what else was in his investment portfolio, he was stumped, and later replaced “investment portfolio” with “wealth”, which is broader in scope. He quipped that his wealth included both hard assets - real estate and stocks - as well as the intangibles, such as intellect. After all, he did invest countless hours and dollars to foster qualifications to become the heart-and-soul of his consulting firm. That should count for something. So much so he pegged his consulting know-how as an equal one-third weighting against his stock and real estate holdings.

I will summarize some of Mike’s key lessons contributing to his hat-trick performance:

1. Live within your means. Know the difference between needs and wants.
2. Invest, but only in something you understand. (E.g. real estate.) Collecting interests off a saving account is not investing.
3. Don’t abandon an investment too easily unless you have a more compelling alternative.
4. Take your time on key financial decisions. Leave your cheque book at home.
5. Have a 5- and 10-year financial blueprints.

I want to thank Mike for sharing his lessons with us. Please feel free to post any questions that you might have.