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Transforming the Game with Kristina Katsanevas is the podcast for game-changers, risk-takers, and industry shakers. Don’t hate the player—hate the game? Not here. These leaders are rewriting the rules. From high-net-worth entrepreneurs, founders of Australia’s most iconic brands, and those disciplined enough to keep stacking those habits to success. We dive into the minds of pioneers innovating in media, business, fashion, sport and transformation.
Want to know how to break the mold and redefine success in your career, business, and life?
Tune in and start transforming the game.
Kristina Katsanevas (00:51)
Gary, welcome to Transforming the Game.
Gary Brown (00:54)
Thank very much for having me. I'm very excited to be on today's show.
Kristina Katsanevas (00:57)
we're excited to have you. If it's anything to do with money, I love it. And if it's anything on how to make more money, I love it more. So when it comes to accountants, financial advisors, people just think they are accountant is an accountant is an accountant. You think it's tax return and you think bass pretty much. But what makes you different? Why are your clients getting so much financial clarity into their future and coming out more successful than most?
Gary Brown (01:23)
Yeah, I think it just goes back to what we want to see our clients do or achieve. We want them to be financially free. And if you think about the number one reason for divorces to happen in Australia, it goes back to the finances and money. So if we can help our clients get control of their money, invest for the future and remove that pain point for them, more likely than not, they'll have a higher chance of success in their personal lifestyle.
Kristina Katsanevas (01:45)
Mm.
And when you say financially free, what does that mean to you? What does that mean to your clients? Because I know what it might mean to me, but it might mean something different to others.
Gary Brown (01:57)
Yep. So for me financially free is the choice to get up each day and to...
you know, to work or not to work. So to have enough passive income to come in to pay the lifestyle expenses. So say the average earner makes $100,000 per year. I think that's the latest statistics have just come out and going, well, how do I replace that income? So I've got the choice if I want to work for that boss or run that business or be associated with those people. So I want to earn enough money that I get up and go, you know what? I choose to come to work. Like I just had a one hour training session with my whole team, just sporadically, because that's something that I love to do.
And, you know, we just thought we, you we talk about wealth creation, we talk about how to make more money, and we make sure that they're achieving their personal goals, not just the goals of my organisation, which are important to me, but they're achieving their goals for themselves as well. So we don't just help our clients do it, I want my whole team to be doing it as well.
Kristina Katsanevas (02:51)
So
you're practicing what you preach is what I'm hearing here. Okay, okay. So passive income. And so what you're talking about here is not just about doing time for money, but you're actually helping people, educating people and empowering people on how to get their money to work for them pretty much. Yes. So what
Gary Brown (02:55)
Absolutely.
Yeah, yeah.
Kristina Katsanevas (03:11)
What are common financial mistakes then people coming in? What do you see more often than not that we're all doing in your life? Just stop and your life will be that little bit better.
Gary Brown (03:17)
Yeah.
I think it's overspending on lifestyle. So again, if you think about, if we say the average income is a hundred thousand dollars and you're a wage earner means that you're getting super paid for you. So 11 and a half percent super now, then you still should be investing for your future yourself personally. Shouldn't you just be relying on the super fund or your industry or retail super fund? You should be putting money away. So the number one mistake that I see that
Kristina Katsanevas (03:22)
Yeah.
Thank
Gary Brown (03:43)
you know, 95-96 % of Australians would be making would be that they're spending too much on lifestyle and then they make the justification that you had a really busy week at work so they go out and get drunk on the weekend or they had... Yeah, yeah, oh... Yeah.
Kristina Katsanevas (03:56)
You only live once, Isn't that something? You only live once, who knows? I could get hit by a bus tomorrow, so I might as well
just blow it on that like boss shirt.
Gary Brown (04:04)
Yeah, yeah, or the handbag or the fancy computer to play games on, whatever the device is. And it's not about, it's just like working out what's a reasonable amount of money to spend and enjoy today.
Kristina Katsanevas (04:06)
Yeah.
Yeah.
Gary Brown (04:16)
and focusing on the future because most of our clients are able to become financially free, which means that I no longer care what they do with their money. They can spend 100 % of it on lifestyle because I know that they're set up for the future. Whereas someone that's got 20 grand, 30 grand credit card debt, struggling on their mortgage repayments, the cost of living is really creeping into them. It's because they haven't structured themselves correctly and they've over-extenuated on expenses before they should have.
Kristina Katsanevas (04:21)
Okay.
But that's really hard, I guess, for a lot of people when we talk like that and it's about, you need to be investing in yourself. And there's so much out there and there's so much noise about where do I start? Who do I see? And what does that look like? And they don't actually have that financial acumen to go even understand half of it. So what's the first step? If people go, okay, yeah, look, I have to take control of my future for me and my family. I can't rely on super.
Gary Brown (04:52)
Ahem.
Kristina Katsanevas (05:10)
what's the percentage they should put should it just be in savings or offset? what's just a first step?
Gary Brown (05:16)
Okay, so a little bit about myself was I bought five investment properties before owning a PPR, so a primary place of residence. so when you think about that and you think about the investment mindset there is that I was a renter for, know, good, excluding when I was at home with my parents, like, you know, let's exclude that, but I was a renter as an adult for...
maybe eight years or nine years. So I did that. But at the same time, I built an investment property portfolio and part of that was while I was an employee. So my first investment property, I purchased while was an employee. My second one, those two compounded into buying three and four, but I did that all before buying a PPR. So.
Most people don't like this, but if you haven't bought a family home to live in, you probably shouldn't. You shouldn't do that until you're set up financially. And then the second part is, if you've already got one, you go down to the bank and you ask them what your borrowing capacity is. And most of the time, statistically, if we think about the statistics, they're going to turn around and say you have no borrowing capacity to do anything. And the problem here is, and we just use some basic numbers, is if I buy a million dollar property, I put $300,000 cash in.
Kristina Katsanevas (06:24)
doesn't
get too much anymore.
Gary Brown (06:25)
It doesn't, it doesn't. And
I put $300,000 cash into it and I buy the right investment property in the right area and it ticks certain boxes. I'm more likely than not going to get a 30 % ROI on my, so return on investment on my deposit per year. But then if I was to rent a million dollar house, yeah.
Kristina Katsanevas (06:42)
If we go back on the numbers there,
I've gotten a million dollar loan, I put 300,000 in and you say 30 % you should get return on a good property. Is that 30 % of the million? So of the deposit, so okay, that 90 grand.
Gary Brown (06:49)
Yep. Of the deposit. yeah, so
I should be making 90 grand a year. And then if I do the, if we think about that 90 grand, so one, investment property should make me 90 grand a year. Two, if I buy that same, you the house next door to live in, in the same suburb, same parameters, then the same million dollars, and it goes up by, you know, say 5%, then that's going to go up by 50 grand.
But for me to own that property and to live in it, I'm going to spend obviously money on interest and that interest expense, the council rates, the water rates, the insurance is going to exceed that of me just renting that property from a random person, the exact same property. So if you think about your rental yields in Australia, it's around that 3.7 % of the value of a property is what you'll pay on rent. So a million dollars, million dollar property on average, if you think about the whole of Australia will cost you $37,000 a year in rental income.
whereas I save $37,000 because I don't have to pay rent to someone else but I'm going to be spending more on interest, more on council rates, more on water, know, water power, all that type of stuff, whereas if I'm the investor and I buy an investment property I'm going to make $90,000 and that means $90,000 can pay the rent on the property that I need to personally live in.
Kristina Katsanevas (08:04)
Yeah, so let me me like recap that because I think that's important for anyone listening here on the scenario is you are person A and person B and your neighbours, same, same suburb, everything will same house, let's say, but next to each other. They've one buys it, who's investing it and rents it out for a million dollars. One buys it and lives in it. They've got a beautiful family home and they've got their kids and their dog. They buy it for a million dollars.
Person A is now making 90 grand a year return. that does that include like, and that let's just put all the other bits and pieces of like the tax depreciation and the interest and stuff aside. And then person B has got a lovely home, but is actually spending like whatever you said, 40, 40, 45 grand on living there.
Gary Brown (08:37)
Yeah.
Yeah, probably 40, probably 45 on the interest, right? Yeah. On
just living there, yeah.
Kristina Katsanevas (08:51)
So, and the purpose of this is how do you get ahead, how do you create financial wealth? So that's a really good perspective for people to go, because I was speaking to a close friend just yesterday and they're looking at a house and they were looking at this other and I said, you know, it can make sense that you actually buy this property you like and rent it and then go live in the place you like. And she's got such a fixed mindset on.
I need to buy my family home because I want to start a family and things like that.
Gary Brown (09:20)
And that just goes back
to, if you think about it, that's an emotional decision getting made on a analytical investment decision. Because if we say that the average Australian will have super and their family home and that's it. So then if you think about that, that...
They live in their family home. You always need somewhere to live. So you can't like sell one bedroom to have access to money, right? So you always need a place to live. But if you stack the deck at the very start by focusing on the quote, the family home, then you miss out on the opportunities to expand and grow your wealth. And if you think about if the goal here is to become financially free by 30, by 40, you by whenever you hit the next decade, if you keep doing exactly what you're doing today, will it get you there? And you can just run the numbers on it. It's really simple to do time value.
money calculator, it's simple to do. Or you can do something that I've done and now I'm worth a lot of money and I didn't get any handouts from parents, I didn't get any inheritance, I didn't do anything, I'm all self-made. have 16 properties in Australia, 16 residential properties in Australia, two commercial ones. The value is...
the value is quite substantial. don't buy any properties less than a million dollars now. You know, I look at that and go, it's all because I made the right financial decisions at the start, rather than playing with a handicap going, I need to buy a two bedroom house, I'm going to start a family, I'm going to have one child, then I'm have a second child, I'm going have to sell the house, buy a new house, a three bedroom house, and then the three bedroom house isn't big enough, so I'm going to do a $250,000 renovation.
and then within five years you've had all this massive amount of stress, massive amount of money going into lifestyle, but you're not building the wealth to become financially free.
Kristina Katsanevas (10:58)
Yeah. Okay, so let's go back to most people have bought their family home and they haven't started out with the five properties now at 16. So they don't have the passive yet. So if you do have your family home, what's some other ways apart from saving this epic amount for a deposit, you might have some equity in your home, but it's just too hard now. So maybe what's some baby steps just to get people feeling like in 12 months time.
Gary Brown (11:16)
So hard.
Kristina Katsanevas (11:23)
We could set this goal, it's realistic and you can achieve financial freedom wherever you are at, would believe. But we would give some guidelines.
Gary Brown (11:29)
Yep. So, yeah.
So what I would say is, again, for those people that have owned the family home, it is what it is. I'm not going to try to convince you to sell it because nobody ever does, right? So, if you... I would. Yeah.
Kristina Katsanevas (11:40)
But would you? Would you advise? I've got a family home.
Gary Brown (11:44)
I'd say that if you
Kristina Katsanevas (11:44)
Like should I?
Gary Brown (11:45)
don't have, and when I define investment property, just so everyone's clear, I define an investment property as a property that one will go up in value and two has a rental yield of 8%. And then all those people that will say that you can't get it so hard, you can't find it blah, blah, it's because they're not.
you're not one looking properly and you're not experienced enough to know where those 8 % rental yards are. So if I take one property I bought in Cape Sound, is in Victoria, it was 1.39 million. It's right next to the beach. It is a terrible house, by the way. I wouldn't want to live there because it's investment property to be honest. I don't want to live there. It's not up to my standard of living, but my standard might be a bit
Kristina Katsanevas (12:21)
Yeah.
Gary Brown (12:26)
higher than other people's. But it generates over 110 grand a year in rental income.
investment property hits my rental yield, it's right next to the beach,
Kristina Katsanevas (12:34)
Okay.
Gary Brown (12:36)
at some point I'm going to bulldoze it and I'll put up some townhouses and I'll sell it. Right? So it's...
So for me, I would say if you've made a mistake of buying a lifestyle property, then instead of moving out of the lifestyle property, renting it out for 3.7 % rental yield or 4 % of rental yield, then I would look at this as a five year strategy and says, okay, if I was to sell this today and I was to buy a real investment property that was going to go up in capital growth and it had a high rental yield income and I built a strategy around that, would I be better off in five years time? And if you did it correctly and you followed
followed a correct strategy, then you would be better off. So for me personally, I would exit out of my mistake because it's
Kristina Katsanevas (13:13)
Okay.
Gary Brown (13:18)
a sunk cost. already made like I make mistakes all the time on the stock market and it doesn't mean I hold on to them for the next 20 years.
Kristina Katsanevas (13:18)
Yeah.
Gary Brown (13:25)
Like why is a family home any different to me buying Telstra shares at $2.81? Then they went down to like, sorry, at $4.81. Then I watched them proceed to go down over the next three years to like $2.80. And then I was like, this is the dumbest decision I ever made. And it was one of the bad investment decisions I made, but I sold it. I didn't hold onto it. And at the moment, you know, might be $4 at the moment. So you might be like, Garry, but if you held onto it, you would have made the money back.
Kristina Katsanevas (13:43)
Yeah.
Gary Brown (13:49)
But again, my share portfolio is trading at like 50 % year-on-year growth for the last four years and it's over $2 million now. like getting out of bad investments, we do it all the time in the stock market. So why would we not do it the same in the property market?
Kristina Katsanevas (14:04)
Yeah, I guess that's it's that emotional buy again, isn't it? And it's that security of a family home. So I guess before anyone goes out and just quickly sells their home, we would advise they go speak to a special financial advisor. But in saying that I have in the past when I started
Gary Brown (14:17)
Thank
Kristina Katsanevas (14:19)
earning some good money. I'm like, right, I need to get into financial advisor. I need to get that professional to coach me. I went and found the most successful person I knew who was a CEO of a billion dollar company. And I said, who's your financial advisor? And he told me who it was. That guy obviously was a bit too high net worth for me. And they gave me his counter because there is a hierarchy. Now I went to him. This is my first one. And my first experience was, you're doing everything right. No joke. That was the advice I got. And I was like,
Gary Brown (14:31)
Yeah.
Yeah.
Okay.
Kristina Katsanevas (14:47)
That did not accelerate me because I'm like, I'm doing all right, but I could do so much more. don't know what I don't know. Then I went back a couple of years later and got very bad advice. Got told to buy this certain stock. It was terrible. I sold it. I lost, I lost plenty of money. But my point is, what are some warning signs or questions for everyone now going, okay, I don't know what I don't know.
Gary Brown (14:49)
Yeah, that didn't help, yeah.
Kristina Katsanevas (15:10)
Maybe there's another way, but then there's so many, I feel like, I've never gone back to a financial advisor. I've just been paddling through my own way because how do you know if you're getting good advice?
Gary Brown (15:16)
Yeah.
So, one, I think this applies to everything really, but you don't go see a doctor who's overweight. That's my view. Like I'm exceptionally healthy and every single time, yeah, I think it's both there. But you know, go to the, true about the physio trainer as well, right? But you know, I went to the doctor's the day and I just want like...
Kristina Katsanevas (15:29)
Sure. All right, let's go. You don't see a fitness trainer. You don't see a fitness trainer, so we'll get.
Gary Brown (15:42)
every single test you can do to make sure someone's healthy. Right? How do we want to define that? I don't know. Like, they're the doctor, I'm not a doctor. Just do the test. And that proceeded to take 20 minutes to convince them that I want it done. And the answer kept coming back to, you know, it's going to cost, you know, a lot of money. And I'm like...
Kristina Katsanevas (15:45)
Yeah, proactive.
Gary Brown (16:00)
I don't, this isn't a money question, this is I just want to make sure I'm healthy and I want to do this test every single year, so I went and did the blood and whatnot. And then I was like reflecting on this and I'm like, was reflecting on the doctor and I'm looking at the doctor, if I look at their personal appearance, I'd be like, is their body type the one that I'm striving to have myself? And answer was no.
So I'm like, do I really want to take that type of advice from that person? And if we relate this back to finances and say, do I want to take stock market, because you're referencing stock market, so do I want to take stock market advice from someone that has a smaller portfolio than what I do or that has inherited money? So what I would say is, first I'd start off with the advisories go, how much money do you have in the stock market personally?
And then if they don't tell you the answer, it's like, straight away, red flag. Because I tell people the answer. Like I've already said this on the podcast and you know, some people might not like that, but I share with my clients every detail that I think is important for them to make better financial decisions. Because I'm like, why should I keep it to myself? So I'd go with someone who's going to give me advice to invest in the stock market. Like how much money do you have in the stock market? And then what are you investing in? So the safest option.
Kristina Katsanevas (17:01)
Mm-hmm.
Gary Brown (17:04)
or the most comfortable option is just following an index.
Kristina Katsanevas (17:07)
Yeah.
Gary Brown (17:07)
So without giving
specific personal advice to anyone who's listening, the way that I, if I was starting my I-Share portfolio again, and I had less than $200,000 in the market, then I would just follow the index. I'd pick an index based on some advice and I would just follow that index. And an index is, you if you look at the top 200 companies in Australia, then effectively you put 200,000 in and you'd get a percentage of each of those top 200.
So if one goes really well and one does really poorly, you just get the average. And the average in Australia at the moment, because it's not going too well in the last five years, is around that 8-9 % growth per year in the Australian market. And that's a comfortable, consistent, easy one. If you did a time value money calculator, you could work out you could become financially free within 10 years if you put X amount of dollars into it. So you could do the maths backwards and see if that was an acceptable answer for you.
But then you could say if you had more than $200,000, then you could go to, again for me, I use a stockbroker.
Also, he's my best friend, so maybe there's some bias in us there, but my returns have been obscene. And yes, the tech industry has gone really well over the last five years. And yes, we had COVID and some of these events happened, but also I had the right advice around how much money to invest in each stock. And I've done exceptionally well. And he's got more money in the market than what I do. So I feel comfortable that he's not fluking it. Where there are financial advisors out there that manage hundreds of millions of dollars of clients' money that have no money invested in the stock market.
Kristina Katsanevas (18:31)
Yeah, okay. So the question you'd want to go in, if you're going, need some financial advice. And if they start talking shares, you can ask direct questions, you're allowed to and if they don't answer, it could be a red flag and they're entitled not to tell you, but then you're also entitled to not.
your money with them I guess is a good way to do it.
Gary Brown (18:48)
Yeah, correct. And the same with property. if someone's,
there's so many buyer's agents out there and I've used several, so like don't get me wrong, I've paid expert advice, some have been experts, some have been less expert-y. And the first question, the only question that I have is do they have more properties than what I have? And that's it. Because if they are the quote, the expert, then they should be killing it in the property market. Right?
Kristina Katsanevas (19:10)
Okay.
Gary Brown (19:11)
And if
you think about, and you've got to be really careful of who you're talking to. So a real estate agent selling a property is acting on behalf of the seller, not on behalf of the buyer. So the seller will say, this is the best investment property in Melbourne. And they have every right to do that because they're trying to get the highest sale price for whoever their client is. And then someone who's buying that property will be like,
Kristina Katsanevas (19:15)
Thank you.
Gary Brown (19:32)
that's a great investment property because the real estate agent said so and he's going to also rent it out for me.
Kristina Katsanevas (19:38)
So careful who you take advice from, in other words, and make sure that they're doing a bit better than you are, which I guess for a lot of people the bar could be a lot lower, depending on where they've gone in their financial journey.
What about for your kids and your family? Like what are you doing to set, you've got a little one I believe, so what are you doing to set your family up and do you start young or is it, you you don't have to go big straight away I assume or?
Gary Brown (20:03)
Correct.
Yeah, again, everyone's financial situations will be different, but I think about the struggles that I had as a teenager, as a young adult, and how much energy I put into or had to put into making money because I had no other choice. didn't have a safety net. So what I thought about was for my daughter, I only have one child presently, is that...
If I can take the stress out of her life from a money position, that means that she's free to do whatever she wants to do and she won't have that problem. So then when I worked out was I said, well, how much money is acceptable? And let's just, again, look at it and go, everybody here has the ability to put, you know, $500 a month away for your children. Well, if you don't, then we have to work out a strategy to be able to get to that point. But.
you starting off with $500 a month or $500 a quarter. And then again, looking at an index and thinking about over the next 10, 20 years. fortunately or unfortunate, I don't know how I'm going to perceive in 20 years time with my daughter, but the...
you know, she won't have to worry about money and that's because I work hard today to make sure that she has a share portfolio and that it's locked away. So any decisions that I make personally and maybe, you I make some terrible financial decisions, the money that I've already set aside for her in the good years will be, it's only her money when she's, you know, when she's 25. So I think about that saying, well, how can I, if we say the average house is a million dollars today, how can I get her to have a million dollars in 20, you know, 20 years time or 22 years time?
and then I do the time value money calculator to work backwards about how much money would I have to invest today to get to a million dollars in the future. And it's from a professional standpoint of people that are in this space doing the time value money calculator is really simple so you can get that advice around that.
Kristina Katsanevas (21:51)
You've mentioned this time value money calculator quite a lot. Where do people find one of these things?
Gary Brown (21:57)
Yep, so if you jump on Google and you type in TVM Calc, C-A-L-C, then a website will come up and then you can do it there.
What I recommend that, maybe it's because I'm an accountant, I'm like a numbers person, so I agree that not everyone will remember this from high school, but if you did maths in high school, you probably did these calculations. You just probably forgot. So what I'd just recommend is could just YouTube a video, time, TVM, calc, and someone will show you on Excel or show you on some other website of just how to do the calculation, then you can play with it yourself. But...
Kristina Katsanevas (22:11)
I'd say.
Yeah,
okay.
Gary Brown (22:31)
What I
recommend to all my clients is just $1,000 a month into an index for each child and then they'll build up to each child. because, yeah, they make more money or don't have the children. Right? Because everything, and this is the...
Kristina Katsanevas (22:39)
For each child, did you just say? A thousand a month?
Gary Brown (22:47)
It goes back to the same principle of why I waited until I had five investment properties before buying a house to live in or buying a PPR, was I made a conscious decision. So I said to, my wife or my wife-to-be, And I said that there's no way I'm having a child until I'm set up financially.
I would want to set myself up a certain amount before having a child so that I don't have to rely on the government for benefits because if they cut the benefits, I'm in a lot of trouble.
Kristina Katsanevas (23:12)
Yeah, okay. So you made a conscious decision there. Some people, their financial situation varies for different people on what their standards are, but it's about setting it up. Maybe that thousand for some might be a percentage thinking back, but what you're saying is put a little bit away. And if you can, so what do you think of an index or stock pots
Gary Brown (23:32)
so I would do an index if I just think about my own personal circumstances so I don't get in trouble, but I would look at like the NASDAQ, the NASDAQ 100, S &P 500, and an ASX 200. One thing I do definitely for like all my nieces and nephews, I give them...
Kristina Katsanevas (23:37)
Yes, it's.
Gary Brown (23:45)
We celebrate Chinese New Year and we celebrate birthday and we celebrate Christmas, right? So any money that I give to them, I actually just buy indexes for them instead. So I think about it saying that they don't get it now because all of them were really young and they're like, Gary never gives me any toys, which is true. But when they're at least, when they're, you know, when they're 20, they'll have 30,000 or 40,000 or 50,000 worth of shares and then they'll be able to sell and use it as a deposit.
Kristina Katsanevas (24:01)
here.
Yeah, okay, yeah, long
Gary Brown (24:12)
But I
Kristina Katsanevas (24:12)
term.
Gary Brown (24:12)
never
buy toys. That's one thing that I'll never do. So again, each to their own with their opinions on that one. I think everyone buys enough toys for my nieces and nephews that I can focus on their future.
Kristina Katsanevas (24:24)
You can do that.
What do you think of gold and silver? For the older generation, I feel like they it's it's safer and it's something tangible they can touch. So but what's your thoughts on that?
Gary Brown (24:28)
Yeah.
Okay.
Yeah, so I remember doing a calculation on this a couple months ago, so I try not to quote it exactly in case I'm slightly off, but I worked out that if you were to look at the average house in 1980 in Sydney, and the average house, again I'm trying not to say a number just in case I'm wrong by the number now, but it equaled 10 gold bars. And then if you look at the average house today, it equals like 11 gold bars.
So the question is, and this is what people forget, the question is that the Australian dollar loses value each year, Robert Kiyosaki always talks about that, but the average house is practically worth the same amount of gold bars as what it was 40 years ago. And therefore holding gold is just...
holding onto your buying power. all it's doing. it's, whatever your buying power is today with that, with $100,000 for example, it will get you the same buying power in 10 years time that's equivalent to $100,000 when you take out inflation. That's all gold is. So if you say that's the bare minimum, so I want to be able to buy the same amount of stuff, equivalent of the same amount of stuff in 10 years time as today, then I'm going to buy gold.
but it's not going to help you grow your wealth. All it's going to do is protect your buying power for that $100,000 worth of gold.
Kristina Katsanevas (25:54)
what you've
got. Is it better to have savings or gold?
Gary Brown (25:57)
Hmm better to have savings or gold. I don't have any gold so and Yeah And and and the reason for that is that Whatever cash savings that I've got and you know, I've got several businesses So that does build up over time, right? So I would put that into my offset account until I can do something better with it
Kristina Katsanevas (26:02)
So yep, so if we go back to your last advice.
Oh, let's talk offset. I want to ask you about that because I, get most of the time you're told to put all your money if you can into your offset, unless it's in investments or whatever, but you put it into an offset. Then you go to different wealth building seminars and, and, coaching things. And they're saying, don't do the offset, invest it, invested in business, invested in property, invested in yourself, but they don't do the offset. So I get conflicting info here.
Gary Brown (26:47)
show.
Kristina Katsanevas (26:47)
And
I do, I'm going to admit, I do have an offset. I do have a little bit of money in it.
Gary Brown (26:51)
Yeah,
so again, let's just start off with that return on investment. So if I think about the thing that's made me the most amount of money over the last 10 years, I'd probably go back until I was like 18 maybe. So maybe say 15 years, 16 years. It'd be like investing in myself, which is like the most cliché-ish thing to do. But if I had to start over again today, I would back myself to do quite well in the next 10 years.
So if your greatest weakness is you have no idea about money, then invest in some form of education or time. Maybe it's just time. Read, you know, Rich Dad Poor Dad, right? Look up, you know, invest in on YouTube. You can watch so many different videos about teaching about money. So doesn't necessarily have to be I spend 10 grand on a course. It could just be I invest time listening to this type of podcast. Right. So the first thing I'd say is investing yourself. The second part is that
If my goal is to build wealth and to become financially free and if I look at how long it's going to take me to pay down my mortgage and the old mentality especially of my parents generation is buy one house, pay off the house which means by the time they're 60 they can buy their second house. By the time they're 60 they don't want to buy the second house because they don't want have debt and they're comfortable and they don't buy the second house.
Kristina Katsanevas (27:50)
Thank
Gary Brown (28:06)
So that was a terrible strategy for 30 years. So what I would say is if your strategy is to build wealth and become financially free, use your offset account as a way to build up your cash buffer because you're to least you're saving interest at 5%, 6%, 7%. But you have to have a threshold and being like, I need $20,000 to live in my offset. So just as a buffer, I need $20,000. Once I get up to $40,000, I'm going to take $20,000 and I'm going to buy some form of index.
Because that index, mathematically, you would expect to generate a higher rate of return over a long period of time than what your offset is going to be. So if you keep it simple and you said, we use a big number so it illustrates the point. If you did a million dollars and you invested it into the ASX200 and that generated 10 % return, that's $100,000.
Kristina Katsanevas (28:36)
Okay.
Gary Brown (28:54)
So you make $100,000 a year. If you had a $2 million mortgage and you had that $1 million offset against your mortgage, you might be saving 6%, which would give you a $60,000 interest savings per year. But I would always prefer to make $100,000 than to save $60,000.
Kristina Katsanevas (29:08)
Yeah.
Yeah, makes sense, right? That's where simple maths comes in of going look at your percentage. I guess it comes back for people as well to make sure that you're aware of what your interest rates are and what your other options are and is it making you money or not. And not everything does have to be a financial buy. You can have your emotional buy every now and then, but be aware that that's an emotional buy and don't trick yourself into thinking that that's your financial freedom path.
Gary Brown (29:37)
Yeah,
and this is where people come to me again because we have a lot of high net worth individuals and they're like, want to buy that beach house as a family home. I'm like, okay, but you don't have any investment assets. So do we really want to be now buying that second, you know, lifestyle property or should we focus on wealth creation for a little bit? And then that whole emotional baggage comes into play.
So, what I would say is again, if you want to be average, do what the average person does. Average person buys a house, pays off the house, lives off their superannuation and hopes that nothing goes wrong. But if you want to live an extraordinary life, then you've got to make some tough decisions and...
I look at it as income. So if you look at you earn less than the average income, which I believe is now 100,000. I just got told this morning it was 100,000. So let's say that's correct. The first thing is, number one thing you've got to do is how do I generate $100,000 income in my current job, in my business, whatever it may be, I need to get to average. Once I get to average, it's then how do I get to $190,000 in income? So I have to come up with a different strategy to get to 190,000.
When I earn over $100,000, I should be investing 20 % of my money, including super. So super is at 11.5%. So 20 % of my money, including my super, should be invested in some type of wealth creation activities.
Kristina Katsanevas (30:50)
So just
just to clarify that people you're already getting the 11 % you've got to find the other 9 % to to get your 20 % here.
Gary Brown (30:57)
And then once you're, so if you earn over $190,000, then I say that you should be doing 25%. And if you earn over $400,000, which would put you in the top 1 % of Australia, then you should be doing more than 25%. Because again, you shouldn't be spending it all on lifestyle because if we can replicate your income that you need for lifestyle within a five-year, 10-year period, then you have the freedom to do whatever you want. And that's all I want from my clients. So it's not about...
Gary saying you can't go out and buy whatever, a five grand handbag. I'm like, well, you know, why don't you just buy a five grand handbag every month in 10 years time for the rest of your life? If that's what you care about, or you care about going on holidays to Bali and, you know, doing whatever. I'm like, that's awesome. How about we do it every single month in 10 years time? That's all I'm Yeah.
Kristina Katsanevas (31:44)
Yeah, delayed gratification, can they do it?
Okay, this is great. what are the misconceptions that you get people often have about financial advisors and why or what's the biggest mistake they make with their current one?
Gary Brown (31:59)
Hmm, yeah, two questions. I think that people undervalue the strategy. So because of the regulations we have in place, the amount of work that goes into building a strategy costs so much for the average person. And I don't disagree. It's like, know, $5,000 for a statement of advice, maybe more to come up with a plan over a 10-year plan.
Kristina Katsanevas (31:59)
Probably two questions there.
.
Gary Brown (32:22)
We don't do set of advices for wealth creation. We always refer to other people to do that for our clients. So it's not like I'm trying to sell something, but I would go back to that strategy. So you don't buy an investment property if you're going to sell it within two years. You don't buy a family home unless you're going to sell it after 10 years. So
if you can't work out right now and say, Gary, I'm going to buy that family home. I'm going have a child in two years time and have another child four years time. We're have to renovate it or we're to have to
sell it and we'll have to move on, then don't buy the property. So if I'm making decisions regarding investments and I want to have a strategy in place and that's where a good financial planner can come up with a strategy, it sucks about how much money it costs, and if you don't have the ability to spend that 5k, it's not the best 5k that you could spend today, then
again what I would suggest is do all the research, read the books,
focus on YouTube, podcasts, that type of stuff and come up with your own strategy, but then stick to it. So most people will say,
Kristina Katsanevas (33:20)
Yeah.
Gary Brown (33:22)
the worst thing I say as an accountant is people will come to me and be like, Gary, my ATO refund's two grand, but it needs to be 10,000. I'm like, why? Tell me the justification because I might have done it wrong, Because my credit card bill's 10 grand. I'm like, okay, what does that have to do with doing your tax return?
Kristina Katsanevas (33:24)
So.
Gary Brown (33:41)
and my point. Yeah.
Kristina Katsanevas (33:41)
They're almost using it as a savings account or
they're banking the money before they think, yeah, okay.
Gary Brown (33:46)
Yeah, and it's just because I don't have the right strategy in place. So they don't look at how much money should I, how much is it going to cost me to live my life to a good level of life, like enjoy it. Then, you know, I may have a spouse, so we start pulling our money together. And then how much money can I invest? And if I can get that 20 % in investments or 25 % investments, then you're going to do quite well. And then making sure I stick to that strategy no matter what.
So again, will never see me unless someone pays my my flights, you'll never see me traveling business, but I can easily afford business class. I can't justify spending the money and I have arguments like I have full on arguments with my friends, clients about using points and stuff to travel on business. And we literally have arguments, but but my point will go back to us. Yeah. Yeah, pretty much like.
Kristina Katsanevas (34:22)
if
You're like the plane gets you to the same destination. I don't care where I
Gary Brown (34:37)
And even if a client was, and the fact is, if a client was going to pay for me to fly business, then I'd just prefer them to pay me the money in cash and I'll fly economy. Because I'll invest that, because again, like I think about my strategy. So.
Kristina Katsanevas (34:46)
and then you'll invest it.
Gary Brown (34:50)
I just urge people to come up with a strategy, know, five, 10 year strategy and stick to it. And even if you earn more money than what you predicting to earn, then you would invest more money into it. So if you think about how much money you spent on lifestyle when you were 18 and how much money you spent today. So I'll use myself as an example saying I used to spend $20,000 a year on lifestyle for food, rent, bills, whatever they were, a car. And now I spend so much more than that.
so much more, like embarrassingly more when I think about it now. But the percentage of money that I invest each year is close to 50 % of the total income that I make. And it's always been like that and that's why I've accumulated so much assets is because as much as I would love to go out and buy a Ferrari, I don't have one. Not that I can't afford one, I can't justify spending the money on it.
Kristina Katsanevas (35:27)
Yeah. Yeah, yeah, yeah.
I love that. So I guess the parting words there could just be for our people is to, before you spend, is it an emotional, is it a need, is it a want, is it for a future thing, or can you delay your gratification if you want to actually have a bit more financial freedom because there is a lot.
of spending with, and it's easier and easier now with, what's it called? I don't even know, the ones that you pay now, you get now and you pay later. They take it out of your pay slips, I've seen. I can't imagine that's doing, it's a trap.
Gary Brown (36:00)
It's so amazing.
Yeah.
Yeah. It's a huge trap. So again, if
you can't afford to spend $300 on clothes, then you shouldn't be buying the $300 on clothes unless you need it for work, job interview or something like that. Right? Like for the average person, you don't need to spend $300 on clothes per week, so don't do it. Right? And...
And again, I just used that example of the Ferrari because I do talk about this when I'm up on stage and talking about wealth creation seminars and stuff that for me, one of the biggest things that I learned was that until I have two times the amount of money in that car in shares in Ferrari, I won't buy it. So for me, I have to get to, you know, $600,000, $800,000 worth of shares in Ferrari before I'm going to buy a Ferrari because the Ferrari will go down in value. Yeah. Yeah.
Kristina Katsanevas (37:00)
Or in actually Ferrari. Erato.
Gary Brown (37:03)
Because it's
going to get like this, the shares are going to go up in theory. Shares will go up because it's a good quality business, blah, blah. The car is going to go down. So why would I not first make my investment that's going to cover my lifestyle expenditure? That's my mentality. I don't have.
Kristina Katsanevas (37:18)
Very practical, very practical.
Gary Brown (37:20)
Yeah, and I don't have
them, I don't have that in shares at the moment in Ferrari shares, so I don't have one. I do have a lot in Tesla, if you follow me, I have a lot in Tesla, so I could buy any Tesla I wanted. My wife does want to buy one, but she'll probably buy one, so I'm okay on buying a Tesla. Can't buy a Ferrari yet, because it just can't justify it.
Kristina Katsanevas (37:24)
So you don't have to.
That's a very interesting approach. love it. love it. then that just goes to show the different mindset of people when they're thinking long term wealth creation to that day to day spending when you're like, well, hang on, I don't want my toy unless I know how I'm making money back on it. So that's very good. So Gary, it's been great. What's some parting words for our people before I let you go into your busy day and help all your clients?
Gary Brown (38:00)
Yeah, so I just focus on one, coming up with a strategy for wealth creation for the next 10 years. Two, looking at your budget and how much money you spend on lifestyle and, you know.
making sure that they are a necessity or making sure that you're not over-expending on certain things. And three, you've got to take care of your financial future, which means you need to find a way to invest. So either invest in yourself now so you can get the average income, so you can get $190,000 worth of income, so you get $400,000. Invest in yourself to get to that. And or invest in other property shares, businesses to help out as well.
Kristina Katsanevas (38:34)
I love it, I love it. Thank you very much for your time. There has been so many gold nuggets here that I know people can take away. I'll have links in my description and bio to be able to reach out to Gary. If you do have questions, you want to maybe get financial advice from his advisory company, or you can follow him on Instagram or Facebook as well. So thank you very much, Gary. It's been a pleasure. And I hope you keep changing all those clients live and transforming their game.
Gary Brown (39:01)
Thank you.