How much money is enough?


How Much Money is Enough? My Growth Property Story

By Cam McLellan

How much money is enough? That’s the first question I asked myself when I wanted to start building wealth. It’s a tricky question. Some might say it’s an unanswerable one. But here’s how I went about trying to find the answer.

It all began when I was 23. I had just scored a job that more than doubled my salary (from $40k to $100k), which to my younger self felt like heaps of money, a humungous salary. But after a year, I realised I hadn’t saved an extra cent more than before!

This is so common, I think it’s the Aussie way of life. No matter how much we earn, we fund lifestyles rather than save. And that’s no way to build wealth.

Getting Real about Building Wealth

Once I realised I wasn’t saving enough to become wealthy, I started looking at ways to rectify this and to achieve financial freedom. Back then, I just wanted to supplement my $100k income so I narrowed my options to:

  • Saving
  • Cash-flow-positive property
  • Growth property

No Saving: My Switch to Growth Property

I’d already proven to myself that I couldn’t save my way to financial freedom, so the saving option was out.

I knew property was a good option for achieving financial freedom but when I looked at cash-flow-positive property (where returns exceed expenses), I realised my poor saving record would also shoot me in the foot.

You see, even if I got a property to earn me $400/month clear, I knew I’d just blow it on a bigger lifestyle. I was never going to save it, duplicate my portfolio and substitute my $100k income.

And so, unless that property also experienced growth, I’d just be spinning my (ever more exotic) wheels. Hence, cash-flow-positive property was also a flawed approach for me.

I realised then that growth property was the best option for me to achieve that $100k.

(You can watch our video on which investment option is better for you – cash flow properties or growth properties – here).

Growing Up Via Property Portfolios

Let’s look at that in today’s figures using a $500k growth property price and a (conservative) annual price growth of 8%.

Remember, I earn $100k and want $100k per year coming in to replace that.

3 x $500k properties = $1.5m value.

$8% growth x $1.5m = $120k per year.

By buying three growth properties, I can make $120k on average once growth occurs. That’s $20k more than my goal. But that money isn’t for me to spend on cars or lifestyle. That money is growing my equity base that I can use to duplicate my portfolio and get more and more growth on it.

Unlike the savings and cash-flow-positive property options, the growth property option gives me cake to eat. Great. So when do I eat?!

Well, once I exercise the patience to duplicate my growth property portfolio several times, I become wealthy enough to buy the cake factory. And have as much as I damn-well want. That’s why growth property is the way to true wealth.

Once you get going with growth property, the limit isn’t the sky – the limit is up to you. And so, the answer to the great question: how much is enough?

As much as you want!

Of course, if you do choose to go down this route, chances are you’ll want professional property managers to make the most of your housing portfolio.

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