Dear Wealth Creator,
1. With 2 fully paid-up properties, I do consider your parents to be some sort of successful property investors themselves to a certain extent, though they could easily have many more properties now, had they are not been as "conservative" as they have been before or now.
2. Please also bear in mind that our own life priorities changes with our own age and with the present stage of our family life cycle as well as the stage of our own wealth creation process which we are presently in.
3. When we are young or/and new to the wealth creation process, we tend to take more risks and want to quickly expend our asset portfolio as fast as we can. I remember reading a book whereby the author will classify the assets into 2 types: Growth Asset Portfolio and Security Asset Portfolio. The riskier Growth Assets must have high capital growth averaging 20%p.a or higher whereas the Security Assets will average 3%-5% (1%-2%pa. above inflation rate) but with its main emphasis on asset protection and capital/wealth preservation.
4. Thus, when we are young or/and newly into the wealth creation process, we will invest most of our available funds into acquiring the Growth Assets. As our Growth Assets expand and grow into a substantial portfolio size, it is recommended that we begin to pay down part of the outstanding loans still prevailing for the Growth Assets Portfolio maintenance, and transfer the newly " non-encumbered" assets into the Security Assets Portfolio. As time goes by and when we become more successful, and with increasingly more of our Growth Assets loans are being paid down, "dis-encumbered" and transferred into the Security Asset Portfolio.
5. Finally, when we have become multi-millionaires or billionaires and with most of the assets fully paid up, free and held under the Security Asset Portfolio, the emphasis now focus on wealth preservation and retention to generate continuous life-long passive income to fund our own retirement lifestyles, rather than to create new wealth to add into our portfolio, as in the past. We then become financially free and live the life we have always want to live and now opt to take minimal risks and avoid all investments that might put all security assets or/and our newly found wealth, at risk. How we spend our remaining limited earthly life-time and our use of (leisure) time now becomes paramount and much more precious than actual monies spent, so as to be "Care-FREE" happy with ourselves and our own lives.
6. Thus, although in monetary terms, your parents may not be seen as very susccessful in their lives, yet with no more worries and all their assets fully paid up, your parents can now start to enjoy the blessed bliss and be finally free, not to have any more new worries as to how to get more monies to pay for their next meals or/and fund their retirement lifestyles.
7. In the true sense, they are blissfully "wealthy" and carefree to freely enjoy their lives at their age now, though they may not be the usual financial multi-millionairies.
8. Roger Hamilton, the up and coming Asian Wealth Creator Guru who authors the book, "Wink and Grow Rich" ( as opposed to Napolean Hill's book, "Think and Grow Rich") , have this to say, "True Wealth is what we are left behind after we have lost all our monies (after our entire lifetime of wealth acquistion/creation!".
9. Thus, while I can appreciate where you are presently coming from i.e to try to use your parents' house equity to help them create more wealth through property investing, know at the same time that perhaps your parents are starting to enjoy the true wealth and inner peace with/in themselves that Roger Hamilton is talking about. Consequentlky they may prefer not to take any more new risks to acquire more new Growth Assets to expand their property protfolio anymore but to be able to sit back, be totally care-FREE enjoy their simple but much more blissful retirement lifestyle with their fully paid up Security Asset portfolio.
10. Consequently, if they are indeed truly motivated to want to take more risks towant to further expand on their existing portfolio as you seems to be telling us in this forum, then I will also make the same suggestion as Aceyducey i.e " to teach them how to fish, rather than to fish for them". I certainly knew that both your parents how know how to fish to a certain extent, so instead of getting them to catch small fishes, I will try to show them how to catch the big fishes if I am indeed "smarter" than them, at my present young age.
11 On the other hand, I will encourage you to go back to ask your parents and clairfy honestly who are really the "fishermen" this time round i.e is it YOUR dreams that they are actually supporting and prepared to risk losing their A$230,000 house equity in order to create the opportunity for their children to learn, grow and be successful in their future adult lives now or truly as you said, THEIR dreams i.e you are merely helping them to achieve their life dreams to further on their financial assets holding and wealth for the family.
12. Some food for your thought, please.
13. Thank you.
God Bless,
Kenneth KOH
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