Follow the Millionaires
By Hitesh Mohanlal
I love Switzerland, a picturesque alpine nation, which is renowned for its scenic tourist spots.I have been there a few times and every time I go it takes my breath away.There is something else that is interesting too. Switzerland is a significant global financial hub, and it boasts an impressive number of millionaires.You probably do not know this, but I have been informed that in Switzerland, 1 in 7 adults is a millionaire.
That’s a lot.
Let me put this into perspective. America is seen as the land of opportunity. And yet despite this, Switzerland has five times more millionaires than the US by population size.
And that got me thinking. What the heck are they doing?
And what they do will be completely surprising to you and I because we have all been brought up on the mantra that owning property is the be all and end all. More on that later.
But once I found out this very interesting fact I went into full blown research mode wearing a white lab coat and messed up my hair to make it look like a mad scientist. It appears wearing a white lab coat and looking mad does not help on the research front, so I had to become resourceful instead.
What drives Switzerland’s exceptional wealth-building prowess? This is what I found out.
Homeownership is not a priority
You would think that the nation is full of property owners and investors. It appears not.In Australia, 66% of us own our homes. USA? 65%. Switzerland? Only 41%. And strangely Swiss millennials prefer renting.The logic? Well, buying homes is expensive. Maintaining homes is more expensive. If you rent, then buying costs and maintenance costs are someone else’s problem.
There’s more.
In Queensland if you were to buy a home for $850,000 borrowing 80% over 30 years with an average interest rate of 5% you will pay your bank a whopping $1,314,000. Chat GPT tells me that over 30 years, council rates, water, insurance, misc. repairs would cost a further $400,000
That’s $1,714,000 outflow and that assumes you never improve anything such as a new kitchen or bathroom etc which we know is unrealistic. So, expect $2M over 30 years.
It appears what the Swiss are doing is investing in high yield investments what they save from not having to pay the banks and builders.
A Nation of Savers
The Swizz are natural of savers. They have been following what the Barefoot Investor has been telling us to do for years. Swiss families automatically allocate 20-30% of their income to savings before they begin spending.
Usually when I discuss savings with clients, they usually say there is nothing left at the end of the month or week. But that is because we have been doing it the wrong way round. Put your savings away as soon as you receive your money from your work or business.
Then spend. And somehow you work out how to make it work.
Self Investing!
Switzerland is a nation of learners. It is not surprising to find a Swiss adult spending about 10% of their income on developing more skills which they put into practice.They are a nation that love learning languages, new technology, and they also spend money on financial education which then allows them to make informed investments which rarely go wrong.
They Actively Pay for Advice
They realise that they are unlikely to be great when it comes to investments and building wealth, so they will invest and pay for advice.
They see fees to accountants and advisors as an investment rather than a cost. And because they do, they tend to invest in asset classes which grows wealth.
If you follow the above, will you become wealthy? No idea. But what I do know is that if you do exactly what wealthy people do then your chances of being wealthy increase substantially. So next Sunday instead of going out for Sunday brunch which you ‘’must’’ do maybe you say ‘’stuff that’’ and stuff the money in an index fund instead.
