Ellerfield played host to one of 40 tables in an overflowing ball room at the Hilto, where team members and clients were witness to a highly motivational and captivating seminar hosted by Peter Thornhill, Financial Commentator and Public Speaker.
Peter Thornhill refuses to subject himself and his family to the risks of investing in fixed interest and property; and during a seminar at the CBD Brisbane Hilton he passionately and succinctly explained to a ballroom full of Advisers and clients why they should refuse as well.
“But Peter, my money in the bank cant go bust.” - You’re right, as long as that bank is in operation your money is safe.... so why not buy shares in the bank itself?
“Ok, but what about property? Property is tangible, no matter what happens in the economy I can’t be thrown out of my house!” - That’s right, but you can be starved out! A house produces nothing but costs while shares produce income at no cost. If you would have bought shares in CBA bank when it floated in 1991 the dividends would have paid back the original investment over 4 times plus increased in capital value in excess of 10 times. Show me a property or bank account that can do that! Also, If property is such a good investment why does the bank lend you money to buy it? Why wouldn’t they buy it themselves to produce income and value for their shareholders?
“Ok, but what about commercial property that is a good investment right.” - Compared to shares NO. For the return on commercial property to be higher than the return on shares the rent the companies (ie shares) were paying to the property developer would have to be more than the profit the company was generating....
Peter adamantly identifies the overlooked but obvious facts. Property does not PRODUCE value, money does not PRODUCE value. If they did we would still be living in caves digging up gold bars. Real value is created by research and development, innovation, discovery, processes and services - all of which is PRODUCED by companies.
Value is not the same as price and the price of something is not always determined by its value, it is determined by the perceived value.
The price of property and money is determined by what people are WILLING AND ABLE to pay for it. What people are WILLING AND ABLE to pay for it is determined by how much money they make. How much money they make is determined by the profitability of the company they work for. So, no matter what happens the value of non-producing assets will never outpace the value of companies because companies PRODUCE VALUE.
Throughout the seminar, Peter stressed on three crucial points:
- Spend less than you earn
- Borrow only what you can afford
- Invest in assets that PRODUCE VALUE
Sean Nigh B.Bus (FP) View Sean's profile
Sharan Sheth M.Com (ACC & FP) GDM View Sharan's profile
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