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When Maturity Influences Your Attitude to Money

Andrew Nicol has a different attitude to money these days and, as a father, that’s just fine.

25 February 2024

I was very aggressive when I started out in property investment.

I’ve used flipping strategies; I’ve traded properties; I’ve signed up for a property and sold the contract to someone else, but I’m not that person anymore.

Sure, I don’t need to be. But also, it’s important for me not to be.

Someone’s “money mindset” refers to the mental filter you use to look at your finances. If your overall mindset is negative, it will be a big hurdle in your financial journey.

But here’s the thing, as you go through life your thoughts, emotions and priorities will change … and so should your attitude to money. Here’s how it changed for me.

My first investment property was a four-bedroomed property in Christchurch. I couldn’t afford the mortgage without tenants paying rent to help me out, so I agreed on a “deferred” settlement. This meant I could buy the property, but I didn’t have to pay the money for a few months.

Growing wealth

But it did mean I had to complete my “renovations” while the current soon-to-be-divorced owners lived there, somewhat bitterly. I use quotation marks for the word “renovations”; it was just ugly wallpaper and terrible paint choices. But the reason for all this was to grow my wealth.

I grew up in a working-class family in Waltham. I had nothing to start with except my own savings, but I realised somewhere along the way that I didn’t necessarily get rich by starting with lots of money.

But I needed to take some risks. And I made a lot of mistakes doing so. This was the case for my first investment property. My cockiness to shun a property manager backfired, and my tenants were awful. I sold that property six months later, but that’s ok.

At 19, I had the whole of my property investment career to make up ground. I made $27,000, having spent only $3000 on renovations. This allowed me to buy my next property. And, ultimately, a better one.

The three stages of property investing (the starting blocks, running your race and crossing the finish line) is the whole premise of my book, Wealth Plan – How To Invest In Property and Retire on Real Estate.

It goes almost without saying that your attitude to money will change as you move through these three steps. Where I see people go wrong is when a 60-something-year-old applies the same money mindset as a 20-something-year-old.

The right strategy

Yes, I’m generalising the age a bit. Sure, that may be fine for your particular situation but, generally speaking, that strategy won’t be the right fit for you. My point is once you start moving past the early days and are building some wealth … you don’t want to risk losing it.

It’s a bit easier when you’re 20 and you can recover from the bad things that happen. Like me, because you’ve got the benefit of time, you can look for very high-yielding risky investments when you’re younger. Sure, they carry more risk, but you have a chance to make more money. This is what you need.

But once you get older, you might have to accept something lower-yielding. It’s more stable, and that becomes more important. The same goes for debt.

I was talking to a journalist over the weekend who asked me: “What happens when people build a decent-sized portfolio?”

Generally, their LVR position starts to decrease. This is the amount of debt they have compared to their portfolio. So, you start with a high amount of debt and it goes down. This is all because your personality should change when it comes to money.

Fast forward 20 years, and I’ve now got a daughter and a fiancée. So, I need to think about money a bit differently. Yes, you’ve got to invest for your personality. This is absolutely true, but your personality is also going to shift over time … so you’ve got to be prepared to move with it.

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