Peninsula Partners Accountants

The Tortoise of Wall Street

Jordan Belfort, the man who's life story was the basis of the movie The Wolf of Wall Street, did not make his pile of money by investing. He made it by taking advantage of investors that were looking to get rich quick, charging them commissions to buy risky stocks. Belfort would get paid no matter what return the investment provided, and he had no shortage of customers.

Trying to get rich quick is a human trait that has existed for centuries. The Ballarat goldfields were flooded with people from across the globe looking to become overnight millionaires and four times a week we are one Lotto ticket away from living the rest of our lives on a yacht on the Whitsundays.

Trouble is, for every winning Powerball ticket, there are 76,767,599 losing ones.

For this first in a series of financial advice articles I'm going to be publishing each week, please indulge me by talking about my father. He arrived with his family as a refugee from post war Europe. His family had two suitcases, the clothes on their back, and £10 cash in an envelope the Australian government gave them. When disembarking in Port Melbourne after weeks at sea, they accidentally left the envelope on the boat.

My dad managed to retire at age 60, and did so via the less glamorous but extremely effective method of accumulation. He always used to say that the best way to have $100 extra dollars was to save $50, invest it wisely, and let time give you the remaining cash.

It is a simple philosophy, but the practice of earning returns on your investment, and then accumulating further returns on those earnings is a powerful one. Saving $50 a week as a twenty year old, investing it wisely to average a 10% return over that period has yielded him $1.265 million by the time he retired.

The investments he made along the way were anything but exciting. High interest savings accounts, property investments and shares in blue chip companies don't have the same sexy sales pitch as the products that armies of financial advisers may propose (products that often pay the adviser a healthy commission to sell). But in the long run, they have always remained the proven way to ensure a life free from financial stress.

Jordan Belfort was the wolf of Wall Street, and ended up in jail. His investors were the hares of Wall Street, trying to reach the financial security finish line the fastest, and they ended up broke. My father is the tortoise of Wall Street. In the end, the tortoise always wins.