Twice this week I’ve had conversations with men who, after reading books by Tony Robbins and Scott Pape, believe they know enough to have developed strong ideas on investing for their futures.
Both favour property without due consideration of what could go wrong. And absolutely no understanding why, by having all their loans at the same bank, everything they own is at risk if they default on one loan.
Banks love cross collateralised assets, it puts more assets at their disposal should something go wrong with your loans.
Both are leveraged to the hilt, with little equity in their properties, in the false belief property always rises. Anyone who’s been around a while knows it doesn’t!
They’ve done things to their super they don’t understand, that are likely negatively impacting their outcomes.
One guy wanted a second opinion and validation of his strategy before asking for free advice.
The second asked how we can work together.
I’m not sure I want either as clients.
They already have fixed beliefs, so it’ll take lots of work to educate them on the concentrated risks they’re currently carrying, before we can start creating strategies that could actually work.
Sadly, insufficient information plus a DIY money project can provide nasty results.