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Finance guru who boosted retirement income to $400,000 share tips to protect cash during COVID-19
A veteran and established investor who has managed to build up his retirement income to a staggering $400,000 per year has shared his top tips for managing your cash during COVID-19 – and the one thing you shouldn’t do right now.
Peter Thornhill, who is the best-selling author of Motivated Money and one of Australia’s leading investors, has been working in finance since 1982, before ‘semi retiring’ and living off the money he made from his shares portfolio.
According to Peter, the one thing to avoid doing right now is selling any shares or investments, and if you can he said you should invest a little more and chip away at your portfolio.
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A veteran and established investor who has managed to build up his retirement income to a staggering $400,000 per year has shared his top tips for managing your cash during COVID-19 (Peter Thornhill pictured with finance advisor Canna Campbell)
Peter Thornhill (pictured) has been working with money since 1982, before ‘semi retiring’ and living off the money he made from his shares portfolio.
‘Right now during COVID-19, I am doing pretty much the exact same thing I did when the Global Financial Crisis hit,’ Peter told Sydney-based financial advisor Canna Campbell.
‘I am chipping away and buying more parcels on existing holdings, so I have more shares to maintain.
‘I am buying shares to create even more passive income.’
Peter, 72, from Melbourne, said that while some people might think he has ‘nerves of steel’ to be buying shares when the market is at such a low, during these times it’s vital to ‘turn down the noise’ and focus on your own narrative:
‘The noise from stories and what is going on is crazy, but I shut it out because it’s too much information and it’s designed to inflame,’ he said.
‘It’s good to be informed, but you don’t need to get overwhelmed.’
When it comes to how Peter is investing right now, the finance guru said he is sticking to a ‘couple of listed investment companies’ that he trusts.
‘There is no need to go with too many, as you get the diversification at a grass roots level as each of them has 100 or 100 plus individual shareholdings,’ Peter said.
He owns shares with LICsi Argo, Milton, Whitefield and BKI Investment Company, and said these are all good options as they have ‘been around for a long time and have a fabulous history’.
‘If I was an 18-year-old right now, I would pick a listed investment company and accumulate,’ Peter said.
‘Take those dividends and use them to buy more units in the company.’
Peter said you should always take up bonus share plans when you can, and have money available so that when bonus share plans come up, you always have cash ready to invest
‘You also need to look at your portfolio as the bottom line, so you’re building,’ he said.
Peter added: ‘If you can, chip away with a little bit. Invest slowly and steadily using a buy and hold strategy.
‘It doesn’t matter how much, it’s more the emotional price of doing it and the reward you’re going to get later on when the share price is back up.’
Peter (pictured with Canna said) ‘if you can, chip away with a little bit. Invest slowly and steadily using a buy and hold strategy’
What are Peter’s top tips for investors?
Peter (pictured with Canna) shared his top tips including spending less than you earn and borrowing less than you can afford
1. Spend less than you earn: This one is absolutely key and will set you up for financial success in the long run.
2. Borrow less than you can afford: This might sound simple, but almost no one does it.
3. Invest in a diversified basket of dividend-paying shares: Own a portfolio of productive businesses which deliver a passive income stream.
4. Use your dividends to buy more shares: The best thing to do with extra dividends is to use them to buy more shares.
5. Keep building your portfolio until your dividends exceed your spending: Use your monthly savings and your increasing dividends to continue growing the portfolio.
6. Retire and live off your portfolio: By this time, you should be able to retire and live off your portfolio.
Peter outlined that his nvestments began in the 1980s when he got a job in London at one of the big merchant banks as a private client adviser and was later promoted to director.
‘What I learned there has irrevocably changed mine and my wife’s lives for the better,’ Peter said.
He explained that the first investment he made was shares in the company he worked for, before he went on to invest in a diversified portfolio of dividend-paying shares elsewhere and slowly built up his portfolio.
‘The lesson was that it is all basically about creating an income stream and letting that income stream create all sorts of fabulous opportunities in life,’ Peter said.
‘It’s a bit like taking an avocado, planting it and watching it grow.’
Peter’s philosophy over the years has been to buy shares and build his holdings when he could afford to, until he reached the point where the dividends exceeded his spending and he could live off that passive income (pictured with Canna)
He said the lessons he learned during the ‘tough’ early years – when he was trying to build a portfolio as well as raise his children – still applied today.
‘Spend less than you earn and borrow less than you can afford,’ he said.
While they sound obvious, Peter said ‘so many’ people find it impossible to do.
‘If you can stick to those two things alone, then I can guarantee you will have a comfortable lifestyle down the track,’ he said.
Peter’s philosophy over the years has been to buy shares and build his holdings when he could afford to, until he reached the point where the dividends exceeded his spending and he could live off that passive income.
For more information about Peter Thornhill, please click here.
Source: Daily Mail australia
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