Here’s Why Your Gym Routine Sucks, And Why it Makes You Unhappy

It was pouring down with rain as I ran from my car to the gym. Although the roads were a little slower that morning, I made it to my HIIT class in time (yes, I’m a fitness First member – high five!).

Whenever I’m at the gym, 99% of the time I’m training in a group class. A class with a small group of people and a trainer. What I really like about these classes is that there is a set time, usually 30 or 45 minutes. There is a set program. There is someone I’m accountable to (other than myself), and there is someone pushing me to go that extra rep, that extra kilo, those extra 5 seconds. As painful as it is whilst I’m training, I reap the rewards later (as long as I don’t eat too much pasta over the weekend…you know what I’m talking about!).

This class in particular intrigued me. There were two ladies who caught my attention (and not in that way). During each and every exercise, during each and every break, these two ladies were chatting away – non stop. Let me make one thing clear, there is no judgement here, just an observation.

We were all doing the same exercises, pushing ourselves to the max. I burnt almost 500 calories during that class, with an average heart rate of 150 bpm, and a max heart rate of 191 bpm. I think I’m reasonably fit, and by the end of this class I was completely knackered.

Now, unless these two ladies were super fit (which they may very could have been), I’m unconvinced they truly got what they could have got out of the session from a fitness point of view.

Why am I telling you this story? Because I believe it relates so closely to investing, our wealth, and our personal goals. How so I hear you ask? How many times have you found yourself wondering why you’re not achieving your goals, whether these may be from a health and fitness point of view, financial, or personal?

Just because you have engaged a financial adviser, just because you have a coach, just because you have a personal trainer, it doesn’t guarantee you success. You have a massive part to play in your success.

Your coach, whether fitness, personal, or financial, can help you set your goals, set the program, the exercises, he or she can be there to hold you accountable, but unless you’re doing your bit, the chances are you’ll fail. At our recent wealth breakfast, Paul Roos is quoted saying, “there’s no doubt they had a belief in me and trust in me, I think they also felt just because I arrived they we’re going to win games of footy. They’ve got a fairly big part to play in whether they win or lose.” – referring to when he first arrived at Melbourne Demons footy club.

How do you go from simply wanting something, to feeling like you’ve got your back against the wall and will actually do something about it?

The Power of Goal Setting

Almost three years ago I quit my corporate job and ventured down the path of one of my biggest goals – setting up my own business. The concept of goal isn’t exactly ground breaking. Yet most people don’t have a clearly defined set of goals. It was only a few months ago however, I started to write down my goals – personal, family, relationship, financial, and business. I’m clear on my ‘action plan’, the ‘outcome/result’ it will provide me, and my ‘why’.

Yale researchers conducted an intensive study back in 1953. They interview the graduating class just before they left school. They asked the students “Do you have a clear, specific set of goals with a written plan for achievement?” Less than 3% of the students answered “yes”.

Then, 20 years later, the researchers went back and interviewed the class members again to find out what their lives were like. They noted that the 3% that had written their goals for a specific plan seemed to be happier and more well-adjusted than the others. They also found that the 3% group was worth more in financial terms than the other 97% who did not have clear goals.

I believe most of us have goals, and most of our goals are not that inspiring – inspiring enough for us to jump out of bed each morning. When people ask me what I do for a “job”, I tell them for me it’s not a job. It’s so much bigger than that. For me, there is genuine meaning and fulfillment. I like to think of these as meaningful goals. Goals that inspire me to do even more.

The Game Plan

Here’s what worked for me:

1. I Wrote Them Down

Sounds like a waste of time doesn’t it? Believe me, there’s nothing more important. There’s also something about writing down your goals. Studies have shown you are not only acknowledging to your conscious mind that you’re dissatisfied with where you are right now, but also your subconscious mind.

People generally take action when they reach a threshold. When you’re comfortable with where you are right now, it’s unlikely you’ll take action.

2. I Got Clear on my ‘Why’

Have you ever opened the fridge and last night’s birthday party cake was starring you in the face? The more we tell ourselves we don’t want the cake, the more our mind tells us to go and eat the cake. If your why is to simply ‘lose weight’, it may not be enough. But if your why is to stay fit and healthy to be able to see your grandchildren grow up, all of a sudden your why has so much more meaning, is so much more powerful, and is more likely to stop you from eating the cake.

By getting clear on your why, you will find your purpose. And what you’ll find is that your purpose is far stronger than the outcome. The purpose of your goal is not the result. It’s what the end result will give you. Knowing this will help you through the toughest times.

For me, it was about my children. It was about creating a life for them that I never had. It was about creating options and flexibility. It was about creating a legacy.

3. I Took Action

Someone once told me that ideas suck, and that action and execution is key. I found myself always looking for excuses. It’s not the right time. I’ll do it next quarter. I’ll do it when the kids are older. There was always an excuse. Something magical happened however, when you know what you want to achieve, and more importantly, why you want to achieve it, it creates an unstoppable force that enables you to take action. Knowing full well that the status quo was not something I was going to resort to.

I was a perfectionist. It stopped me from getting things done. I’ve learnt however, that perfection is the enemy of execution. As long as I get things 80% right, I’m happy to drive forward and work on the rest of the 20% as we go.

You need to work hard for what you want, engaging someone else to help you doesn’t mean you relinquish all responsibility for action. Other people can help guide us, hold us accountable, and even push us when we need them to. Getting what we want isn’t easy – if it was, we’d all be happy and fulfilled. It takes time, clarity, purpose and commitment. Blaming others is the easy way out. Blaming ourselves is the most difficult.

Take a step back and find out what’s not working for you and take action.

Property Prices Doubling Every 10 Years is a Myth, Here’s Why

There’s an old saying in Australia, property prices double every 10 years.

How true is this old saying? I was recently presenting financial analysis we had undertaken for a property portfolio. As we presented our findings, our assumed rates of return were questioned – why would you use such a low rate of return – historically property prices have double every 10 years?

Let’s jump down this rabbit hole.

We Aussie’s have an obsession over property. I get it, I love my property too and have also been lucky enough to be a beneficiary of this market. I will however be the first person to admit that it was through no skill whatsoever, nor did I anticipate to what extent this market would rise when I initially invested in property. My decisions are driven with specific objectives – a roof over my family’s head, investment properties in specific locations for income and future development potential to help my kids in the future, a beach house to get away from the hustle and bustle and spend time with my family. What I do with any of my properties are unlikely to be be influenced by what the market is doing, nor by what the market believes my property is worth. In fact I couldn’t care less.

Yet so many people have the equation so wrong – speculating on the price of land on the basis that property doubles every 10 years. Allow me to let you in on a little secret – the concept of property values doubling every 10 years is completely misleading. Don’t believe me? I’ve crunched the numbers, and here’s what I think.

I’ve summarised the return of the Melbourne property market for every decade beginning 1980 in the table below (median price). For example, for ten years ending 1990, the growth in the median price of Melbourne property was 237.93% – ridiculous, right!?

Table 1: Nominal 10 Year Return

Source: REIA, Core Logic

Based on the above table, I can understand why you may have been told (and believed) that property prices double every ten years – both the average and median percentage return for price rises have been over 100% since 1980.

Let’s take a look at what happens when you take into account inflation. The table below is the same as above, and I have calculated the Real Rate of Return in the third column. Take a look at the example we looked at earlier. The nominal (before inflation) return from 1980 to 1990 was 237%. When you take into account inflation, or the real return for the same period, was 55.06%. Although this is still a solid return, its certainly a far cry from 237%.

Table 2: Nominal & Real 10 Year Return

Source: REIA, Core Logic

Once you take inflation into account, the average and median ten year real return is 50.24% and 44.14% respectively.

Even though in Table 1 the average and median price rises are in excess of 100%, prices only increased more than 100%, 55% of the time – 45% of the time, prices did not double. Once you take inflation into account, since 1980, Melbourne median property prices have not double. Ever. During the decade ending 2005 they came close, returning 92.58%.

Now that we have established that real property prices don’t double every ten years (although my guess is that there will still be those who don’t believe me, and if this is you, reach out to me – we can chat further), I decided to analyse Melbourne’s rolling ten year real returns per annum. In other words, what was the real rate of return each year for every decade since 1940. For example, let’s say you purchased a Melbourne property in 1940 and held it for ten years, your actual real rate of return was about 9% pa. If you held property for ten years ending 1960, your annual return was a bit over 10% pa. If you held property for ten years ending 1987, your annual real return was 0% – yes, property can not grow in real terms.

The average annual real (after inflation) return for those holding property for ten years was about 4% pa since 1940 (ending 1950).

Here’s the chart. The blue line represents the return, the green dotted line is that average annual return, and the red dotted lines represent +/-1 and +/-2 standard deviation from the average.

Table 3 – Real Melbourne 10 year Rolling Growth (pa)

Source: Stapledon, ABS

What we can also see from the above chart, is that property goes through cycles – who would have thought!? Periods of high growth are followed by periods of low growth, and periods of low growth are followed by periods of high growth.

Where does this leave housing as an investment?

This is probably one of my favourite charts. It’s put together by Shane Oliver of AMP Capital and compares the long-term return of Australian residential property, Australian shares, Australian bonds, and Australian cash.

Source: AMP Capital

Since 1926 residential property has provided investors with a similar return to Australian shares – 11.1% pa to 11.5% pa.

As you can see from the above chart is that although Australian shares have performed slightly better, they have come with higher volatility. They are more liquid and easier to diversify, whereas property has been less volatile (partly because it’s not valued every single second of the day – unlike the share market), it is less liquid and harder to diversify.

Both shares and property have rewarded long term investors. In fact, shares and property tend to have low correlations with each other, meaning they typically don’t go up and down at the same time and at the same magnitude. Therefore, from a diversification point of view, there is a very strong case to hold both in your portfolio for the long-term.

I guess anyone can fudge the numbers to support whatever narrative they’re peddling. At the end of the day, the facts are the facts. You deserve to know the truth, it helps you manage your own expectations and make better investment decisions. Just because property prices haven’t doubled every ten years, doesn’t mean they won’t.


Today’s The Day – Half a Billion Dollars, 16 Years in The Making

They say dreams are born during childhood and suffocate during adulthood.

It was July 20, 1985, at 1:05 pm, the marine radio crackled to life in Mel Fisher’s Florida Keys office, “Unit 1, this is Unit 11. Put away the chart’s, we’ve got the Mother Lode!”

Sunken treasure. Pirate gold. Long John Silver. Fifteen men on the dead man’s chest — Yo-ho-ho, and a bottle of rum! Mel Fisher was a treasure hunter. Inspired after having read Robert Louis Stevenson‘s Treasure Island as a boy, his heart was eventually set on the search of the Spanish galleon Nuestra Señora de Atocha – a royal galleon with 40 tons of gold and silver aboard which sank in a devastating hurricane in 1622 and was never found.

For 16 years, Mel Fisher searched the sea bed for the lost galleon. In the process, he lost a son and daughter-in-law, when the boat they were on capsized in 1975.

This man went out on search every single day for 16 years. Can you imagine coming home to your wife each day, who asks you, did you find anything today dear? To which you reply, not today honey. For 1 month, 3 months, 6 months, 12 months, every day, for 16 years! Can you imagine if he stopped searching after 12 months, 18 months, or 2 years!?

Why didn’t Mel stop searching? I mean, so many people set goals but never quite achieve them. Setting goals are easy. Just think back to how many time you set yourself new goals each new year’s day? How long did it last? Maybe your goal wasn’t compelling or inspiring enough? Maybe the goal you set for yourself wasn’t even exciting enough for you?

What made Mel chase his goal for 16 years without any bit of evidence he was anywhere near achieving it along the way? It’s that leap out of bed in the morning feeling. It’s when you don’t think about work as being work. Anyone that’s working towards something knows what I’m talking about. The vision, the excitement, the growth, absolutely loving the journey.

Do you think Mel Fisher would have given up on his dream if he didn’t find the Atocha after 16 years? What about after 17 years? 18 years? I’m a massive believer in purpose – why do you want what you want? What will it bring you? Once you know why you’re doing what you’re doing, you’ll always find ways to make it happen. Reasons come first, the answers follow.

The Atocha was added to the Guinness Book of World Records for being the most valuable shipwreck to be recovered (estimated at $400,000,000). Mel Fisher’s mantra each and every day during the years-long search for the Atocha, “Today’s the day.”

Apple Could Have Made You Rich, But You Couldn’t Handle it

Last week, Apple marked yet another milestone, becoming the first publicly traded US company to hit a US$1 trillion valuation – making headlines all over the world.

Since topping US$1 trillion, the world wide web has been inundated with analysis, research, and commentary on the company, and my favourite, here’s how much you would have made if you invested US$1,000 following Apple’s listing. To cure your curiosity, I’ve crunched the numbers for you.

The company (AAPL) listed on the NASDAQ market at $22 per share. After taking into account stock splits and dividends, the company’s share price closed at US$0.02 following a successful listing on 12 December 1980 (according to Yahoo). Most recently, the stock closed at US$207.99 (see below chart).

Source: Thomson Reuters

If you had invested US$1,000 in Apple when it first listed, and you didn’t sell the stock (more on this later), your small investment (which is around US$3,058 today) would be worth about US$8,937,886 – an 893,789% return.

The entire problem with this analysis is that most people would not have been able to sit in their seat for the ride Apple took investors during the last 38 years. Here why:

  • In 1983 the stock fell 69%
  • In 1987 the stock fell 50%
  • In 1991 the stock fell 37%
  • In 2000 the stock fell 78%
  • In 2003 the stock fell 44%
  • In 2006 the stock fell 40%
  • In 2008 the stock fell 40% and 59%
  • In 2012 the stock fell 17% and 45%
  • In 2015 the stock fell 32%

These numbers are staggering. A stock with this much volatility would see more than just a few investors jumping for the life boats.

Investors as a group are a funny bunch. Constantly talking about the great winners with the benefit of complete hindsight, encouraging more and more investors to simply pick the handful of winners and voalá, you’re rich.

Unfortunately it’s not that simple (according to Longboard Asset Management).

  • 18.5% of stocks lose at least 75% of their value
  • 39% of stocks lose money
  • 64% of stocks underperform the index
  • Only 25% of stocks are responsible for all the market’s gains

Not only are the odds significantly stacked up against you, the ride these suckers will take you on are rough enough to scare the pants off even the most seasoned investor.

Unfortunately, it’s the winners that write the history books, yet few know what it took to get there.