The Investing Philosophy of Denzil Duke
(This is not financial advice. Just my two cents)
The age of which I'm writing this article, I am 20 years old. The idea of investing has been at the forefront of my mind now that I've gotten a job in car sales, surrounded by colleagues who are conscientious about their own investments and futures.
For this article, I'm going to be exploring:
- Hormozi's outlook on investing
- Australian Super
- Crypto
- Education as an investment
- Real Estate
- Getting family involved
- Do I need a financial advisor?
- The plan
Alex Hormozi's Philosophy
From the content that I've consumed, he has a cash heavy philosophy. He hates to take on debt that does not make sense.
There are two costs, those related to living and business. He is quite risk averse, so he will stack up cash and minimise living expenses to take more aggressive bets on his businesses.
Bets such as education, certification, investing equipment, software, etc.
Also, get good at one thing. Or invest all your time towards one pursuit.
What About Super?
We're quite fortunate in Australia that our employers contribute a percentage our income towards our retirement savings.
Dave Ramsey advocates investing 15% of one's income towards their retirement. At the moment in Australia, it's 12%.
Do I make the voluntary contribution? Maybe?
The only thing with super is you cannot touch that money until you're 60 years old.
What happens if I want to touch it when I'm 50? I think it's arrogant to think that I will have enough money by the time I'm 50 to retire early.
I will still want to work. I've seen those who have retired must fill their days with recreation and leisure.
I want to still help my fellow man. The day that I retire from my work means I stop helping the world with my skills.
Crypto?
Back in 2020-2021, I dabbled in crypto. You only needed to be 16 years old to purchase unlike shares from the stock exchange.
I did make some money, but not enough to brag about.
(It was about $500)
Look, from the limited knowledge that I have, I would invest in Bitcoin. And that's pretty much it. Any crypto project outside of that scope, I have to raise my hand and say I have no fucking idea and consider it gambling at that point.
And what differs crypto from something like the stock market is how the value of a currency is priced. Supply and demand. Whereas the company stock can increase if the company is able to produce more value for its shareholders.
Where as the crypto space it resembles more of a zero-sum game rather than an all sum-game.
Education?
My mind is still considering whether or not I go to university. And the only degree I can see practically doing is Engineering.
In discussion with a close friend, he says it's probably good that I didn't do a Bcom degree straight after high school. I'd get bored of it, and the value you're getting from the degree is less than what you want.
For right now, working at a car dealership doing car sales is giving me a wealth of experience to learn how to sell and negotiate.
That's why I argue against getting the degree and then going into sales. If you've got the eagerness to learn, to get better and stick it out, a career in sales can be fruitful.
Alex likes to mention there's a debt that we are all paying. Specifically, an ignorance debt.
If you want to make a million dollars a year, and your income is $50k, then you are paying $950k to not know how to make $1M.
So, what are you willing to pay down to learn how to make $1M?
It also becomes a question of what are you willing to give up in order to achieve this networth?
Real Estate?
I am sort of against the idea of owning multiple properties as a means of creating wealth.
Why is that? Some part of me believes that owning my own house should be sufficient. I have a roof over my head that I can call home.
I'm lucky in the respect that I live in North Queensland, unlike the major cities like Sydney.
There is a great sense of peace that I do not have to pay a mortgage.
I remember Warren Buffet mentioning why he liked the stock market. The actual assets you hold is more liquid than real estate.
Also, by having a house, I own something that can increase in value.
Then again, I might try to get my foot in the door with the real estate market. It could even be a unit for all I know!
There's no greater peace than owning the roof over your head.
What About A Family?
For the majority of my life, I lived in a three bedroom unit with my family of four.
Now, will I let my future family experience that same thing?
Well, for some time my brother and I slept in the same room. Even to the extent of the same bed.
Having another room means guests can stay. Or a spare room for study, practise or recreation.
I like the idea of owning an apartment because you do not have to worry about maintaining a lawn or a garden. I won't need space to own a boat or a caravan.
The reference experience that comes to mind is my Aunty and Uncle's apartment in Singapore. In saying that, there was only one other child living there.
Coming from an Asian household, the size of the house does not matter necessarily. As long as the home is a place of love and where my family wants to come back after the end of the day, I'm satisfied.
The Local Financial Planner
At the first golf club I worked at, there was a financial planner who drove an AMG Mercedes Benz when he played golf. He also got onto the local newspaper for buying a mansion because of his investments in medicinal marijuana.
The cost of consultation is like $4000. Fully tax deductible. I'm just thinking if I can save it up to have that initial sit down and ask if a self-managed fund, or just one of the superfunds is fine.
He also helped one of the late owners of a local car dealership. And from the stories I am told, he was a hard working Dealer Principle.
Real recognises real. So, maybe the financial planner is the real deal?
Or, is the real issue an income probably, not necessarily a capital preservation problem?
The greatest tool for building wealth will be one's income. So, there would be no point in asking for advice at the wrong time.
So, What's The Plan?
Financial goals are:
- Have $100k in cash
- Own a house/unit/apartment
How are we going to achieve these goals?
- Invest in education
- Minimise costs
[BONUS] No New Cars?
It's funny that I currently make my living selling new cars. For the financial position that I am at, does it make sense to spend $60k on a new car?
That's like a downpayment for a $300k house.
As the car manufacturers know, cars are sold on lifestyle needs, not necessarily the practicality of getting from point A to point B.
What I would propose as good second hand car is a Japanese one. Specifically, an IS model sedan.
They still have a V6 engine. Some even with a V8.
For $25k, you can be getting a second luxury car that has sub 100,000 km mileage.
Speed is not necessarily something I'm after. It's the fact you enjoy driving the car that's probably the most important factor.
But I will tell you this.
When the time comes, and I can take the financial hit of buying a depreciating asset, I'll do it.