Martin Lee @ Sg
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Thomas Matthew on Breaking the Millionaire Code

About a month ago, I didn’t get a chance to attend Thomas Matthew’s talk at the Smart Expo event. However, I did managed to listen to Thomas Matthew give a short seminar at an event organised by IPP Financial Advisers today.

I consider the talk a foundational one in impacting some of the basics of financial planning. The concepts are neither unique nor are they rocket science, but having a understanding of them should put anyone in good stead.

What probably made the talk more interesting are the many personal stories shared by Thomas. He certainly knows how to engage the audience and inject humour at the appropriate time in his presentation.

Thomas defines financial independence as having a fully paid home, sufficient savings and an income generating asset (IGA).  When you start off, you will use your employment or business income to build and grow this asset. An appropriate income allocation could be 50% for family expenses, 30% for savings and 20% for the home mortgage. The IGA can consist of:

  • Dividend paying stocks
  • Investment properties
  • Investment portfolio with ROI of 5-8%
  • Tactical portfolio

However, while we are building this IGA, things could happen that could disrupt our plans.  These shocks could be:

  • Timeline shock
  • Market shock
  • Self funding shock
  • No income generating asset shock

Therefore before you even think about growing the IGA, you will need to first construct a risk management portfolio. This is basically insurance to protect yourself and your family from unexpected events. In today’s context, everyone would probably need at least $1 million worth of insurance cover for himself.

Overall, Thomas Matthew shared a number of concepts and ideas. If I could sum it up in a few lines (steps), it would probably be this:

  1. Start with a goal in mind.
  2. Buy sufficient insurance.
  3. Do not overspend. Make sure you save sufficiently.
  4. Invest your savings wisely with diversification to achieve consistent and decent returns to beat inflation.
  5. When you leave this world, you take nothing with you. Plan in advance how your assets should be distributed.

Will all these really make you a millionaire?

Many people don’t realise that if they keep every dollar of the money they earn throughout their entire working life, it is probably enough to make them a millionaire many times over. Yet many people accumulate very little wealth even after working for many years.

When you take charge of your financial life and plan ahead, yes – it can and will make a very big difference.

Leave a Comment:

veryaliceang says 15 years ago

Thomas has also written his next book, “My Formula – Financial Planning For Lifetime Success”. A Must read book!

millionaire says 15 years ago

Becoming a millionaire takes having an ability to solve problems. By solving problems, self-made millionaires have the uncanny ability to create and provide value. When you can do that people are willing to pay top dollar for your service, experience and work.

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