The Peter Thornhill book Motivated Money is an Aussie finance classic. It is short and sharp and it provides Thornhill’s simple rules to build wealth and achieve financial freedom. And the good news is, anyone can learn the lessons Thornhill lays out.
In this blog post, we dive into the core principles that built Thornhill’s wealth. And we discover why these simple lessons are so important for any investor. All found in the Peter Thornhill book Motivated Money.
And as a bonus, we add extra insights from Thornhill’s Motivated Money Seminar. This is where Thornhill spends over 7 hours going deeper into his book and his financial concepts. And we review the seminar and why we Highly recommend you attend.
Motivated Money Review: The Verdict
Motivated Money is a classic. It is one of those books that get better, as you progress into your journey to financial freedom over time. Thornhill and his book provide financial insights that have changed thousands of peoples lives. It is a MUST READ and worthy of your time and money.
The lessons are simple. And multiple re-reads are always beneficial. But nothing hammers home Thornhill’s message like his Motivated Money Seminar. Which I will cover further down in this post.
Motivated Money – Three Key Takeaways
- Start with the Two Golden Rules to Build Wealth
- Anyone can become successful like Peter Thornhill, you just need to Spend less than you earn and Borrow less than you can afford. This is more difficult then it sounds.
- Invest in Industrials and Ignore the Financial Media.
- Investing in Industrial LICs and re-investing those returns will compound your investment growth over time. Industrials have performed the best over time. And don’t watch the financial news to interrupt the investing process.
- Property is NOT the best investment in Australia
- Investing in property doesn’t guarantee wealth, and it costs you money to own. And property will never return 95X your money like Industrial LICs have.
Motivated Money Summary and Insights:
The Key insights below are from the Peter Thornhill book Motivated Money. Some extra details have been sprinkled in, which I wrote down while attending the Motivated Money Seminar. These extra insights give more detail to the original text, and they are more valuable for that reason.
Let’s take a look at the Big Hits.
1. Start with the Two Golden Rules of Wealth Creation
Peter Thornhill has two golden rules for wealth creation. These two rules are simple but foundational in applying Thornhill’s wealth creation strategy.
- Spend less than you earn
- Borrow Less than you can afford
Peter will defer to these rules constantly as they are the guiding light for any wealth building strategy. These rules are so simple, but for most people they are difficult to achieve.
The modern buy now, pay later culture goes against Thornhill’s less is more approach. Having less and spending less. But if you follow these rules, you are already on the road to financial success.
These simple rules are the foundations that made Thornhill a multi-millionaire. He will tell you, what he achieved isn’t special, anyone can do it but most don’t. And the key here is that he built this wealth over a lifetime.
The golden rules are GOLDEN for a reason. If you can live by those rules, you will can achieve financial success.
2. Ignore the Media or Perceptions of the Market
Peter loves a good news headline about financial doom and gloom. The media will never report a front page news story about the stock market doing average or just ok. The media sell fear and on many occasions, the news is often conflicting and incorrect. This drives our perception of the markets.
As Peter says “Despite the short term volatility, the future direction of the share market is upward.”
What this means is we shouldn’t worry too much about financial news, or daily share prices. History is our friend, and we know the trend. And when markets become exuberant and correct (crash), it’s an opportunity to deploy some spare cash and capitalize on irrational investors.
Peter makes two distinctions on the people that follow markets closely.
- Speculators: Buy and sell, follow markets and worry about the share price
- Investors: Buy and hold for the long term, knowing that markets generally go up and down, and pay a dividend every year.
Forget the media and their news cycles. Just invest your money, forget the share price and wait for those juicy dividends to roll in. You can focus on your family, and spend your mental bandwidth elsewhere. Ignore the Media and it’s financial reporting for a better life.
3. Invest in Industrials for the Best Return
This one really hit home during the Thornhill seminar. The Industrials Index is where Peter believes you need to invest your money. Industrials provide goods and services that make our lives livable, such as food companies, banks and manufacturers. Peter has some fantastic data that shows Industrials perform better than any sector on the Australian stock exchange.
From 1979, the S&P/ASX200 Industrials Index share price has returned 17 times your money. If you re-invested your dividends in that period, it would return 95 times your money. This was always impressive, but when you look at the chart below you will see that S&P/ASX200 All Ordinaries line languishing in the middle.
Simply, if you invested $100,000 into an Industrials Index in 1979 and re-invested the dividends, in 2023 that $100,000 would have transformed into $17.5 Million. This is an Incredible amount.
That All Ords chart has Industrials (performs well) and Resources (not so well). The All Ords is dragged down by Resources and Non-Industrials. And as Petter says, it is like having “lead in your saddle bag”.
This could also be likened to an ASX200 ETF, where you get everything, compared to an Industrials LIC like Argo. The catch everything bucket of shares approach will impact your share return. And the stellar performance of Industrials cannot be argued with. And Peter’s famous bag of LICs is what you can use to capture these returns.
Why Diversification can hurt your Returns
Thornhill will ask why would you diversify into other products (bonds, cash) or sectors (resources), that don’t perform well historically. Diversification is used to smooth out any dips in the market if you look at, or worry about the share price. If we listen to Thornhill and ignore the media, we don’t need to diversify. We shouldn’t worry about the share price anyway.
This smoothing reduces your gains. So an 80/20 split sounds great to smooth out the market volatility. But that volatility exists if you follow the market and rely on the capital gains.
Thornhill suggests that we invest in the best performing stock or sector (Industrials) and ride the ups and down of the market. If you select the right stocks that provide a consistent dividend as Peter has, you have no worries. All you need to do worry about that next dividend cheque hitting your bank account. And to maximise your wealth, re-invest that dividend to allow compounding to do the heavy lifting for you.
4. Don’t Invest in Property to Build Wealth
Property is drummed into Australian’s as the way to build wealth. In Australia, it is almost a religion where everyday people get in debt up to their eyeballs, chasing the great Australian dream. All chasing the capital gain, despite the costs to manage and maintain an investment property.
Thornhill calls it a genetic defect. The common belief is that property goes up, and it doubles every ten years. This is not so, and Peter believes that the share market (industrials specifically) is a better investment. Three main reasons for this are:
- Once you buy a share, there is zero additional cost. No maintenance, no work, no phantom costs.
- With all of your costs factored in, your home will not return 17 times your money back (or 95 times if re-invested and compounded) like an Industrials Index.
- Your property will not give you a tax credit every year (franking credits)
Of course, there is value in owning a modest home. And if you can pay that off in record time (using a debt recycling strategy), that is a perfect scenario. But when Governments orchestrate growth, property prices and investments display “growth”. And when you look at property as an asset, it is never really evaluated with an honest number.
For example, my investment property doubled in price in ten years. I made a 50% gain on paper, but I did have various costs (interest rates, maintenance, repairs, body corporate, special levies, land tax, utilities). Not to mention the lost rent, damage, insurance increases and ongoing costs that keep rising every year. My plan was always to buy and hold forever, but Thornhill’s contrarian take does make sense.
Big Business Doesn’t Own Property
Thornhill made a fantastic point during the seminar. If property is such a great investment, why do the biggest and best businesses not own any? Westfield, the retail giant does NOT own any property. Most businesses will lease their land and not own it. The money tied up to own that property can be deployed more meaningfully elsewhere.
So if the big businesses and big money don’t own property, why do we, the little guys fight so hard to own it? I do believe that owning property is essential. Not a McMansion, but a “modest” home as Thornhill describes it is ideal. And this investment can unlock some equity for future investments.
The idea of building a property portfolio sounds fantastic. But the reality for an everyday investor may not be so great. Thornhill believes that investing in Industrials is a simpler and smarter way to build wealth. And no property will compound and return 95 times your money like investing in an Industrial index.
5. Invest in the Peter Thornhill LIC Portfolio to Build Wealth
Thornhill has owned many stocks over his time, but he is currently simplifying his approach to just a handful of stocks. He recommends LICs or stocks that are like LICs. These ASX traded companies hold and manage shares in other listed companies.
The Peter Thornhill LIC Portfolio has the following stocks: Argo (ARG), BKI Investment (BKI), Whitefield: (WHF). Thornhill also recommends Washington H Soul Pattinson (SOL).
Why LICs are Superior to ETFs
Peter prefers LICs to ETFs because the LIC is a company. They don’t have to distribute 100% of the returns like an ETF. LICs can control their dividend distribution, so that during years where the market is down, they can still pay a full dividend. Which means that payments are consistent, despite market conditions.
These LICs have been listed for over 50 years. And Soul Pattinson has increased it’s dividend every year for 24 consecutive years. When it hits 25 years in 2025, Soul Pattinson will be considered a “dividend aristocrat”. A title given to a company that has raised and paid their dividends for at least 25 consecutive years. Which is an amazing achievement for any company. This achievement would make SOL a premium stock to potentially buy and hold forever.
Although LICs are not as popular as ETFs are amongst the everyday investor, Thornhill won’t touch them. All the kids are into ETFs, and the prevailing advice from most financial podcasts and programs suggests ETFs are the way to go. Mostly for their low cost and their ability to pay out all funds.
Some financial contrarians like David Hunter have started to discuss the risks of ETF Index investing. And ETF investing specifically, has had a few interesting takes of late. But regardless of that, Thornhill has famously stated that he “wouldn’t touch an ETF with a barge pole”.
New investors can’t go wrong with Thornhill’s selection of LICs. While others may select ETFs, they are generally fine too. But remember, the LICs selected are focused on industrials. Thornhill’s charts display the historic returns of Industrials. And they are a key part of Thornhill’s investment strategy.
The Peter Thornhill Seminar Review
Peter Thornhill’s motivated money seminar is a fantastic addition to an already life changing book. Thornhill and his son Oliver, spend an entire day to go through the key points of Motivated Money. The book is concise, but Thornhill spends time to go into detail and he extrapolates that information.
I will be honest. When I went into the seminar I was skeptical. I have read Thornhill’s book multiple times and I am very familiar with all of his articles. And I have written blog posts and studied his Motivated Money strategy. I did wonder, “what can I learn that I don’t already know?”.
I am thankful that I attended, because I was blown away with the seminar. And I wasn’t the only one. All the attendees I spoke with felt the same way.
After reading the Motivated Money book so many times over the years, Thornhill really drove the strategy home into my skull. Delivered in his typical style (which I love), he delivers the message with a dose of “toughen up princess”. There is plenty of NQR humor (which I also love).
I had a serious AHA moment and I walked out of that seminar with a revised financial strategy.
There was so much more information, and some parts of the book really leapt out and clicked. And Oliver Thornhill, a financial planner himself, delivered insights from his vast experience. Peter with his son, shared a wealth of knowledge and it was fantastic to learn from the best.
It was also really great to meet so many people at the seminar. During breaks, we all shared our financial journeys and we had some interesting discussions. Those moments were great to learn from each other as we had a few laughs too.
Peter Thornhill Seminar Verdict
The seminar was worth every penny, and really, it was great to shake Peter Thornhill’s hand. I told him that I’m a huge fan, and I told him how much I appreciate his work. It was such a great moment, and it was fantastic to spend a day with Peter and his son.
The Peter Thornhill Seminar is worth every dollar. Highly Recommended. A+++
Check out a Peter Thornhill: Motivated Money Ultimate Guide to Wealth. This Super Post covers a deep dive into Thornhill’s strategies and approach to life and investing based on his numerous podcast discussions.
Final Thoughts
Peter Thornhill is the OG of the Australian Fire movement. He has inspired a generation of investors to live within their means, invest and enjoy their family and lives. Motivated Money is a fantastic book, but seeing Peter deliver the key points, and explain the financial concepts with his trademark style, is even better.
Thornhill is a financial legend for a reason. He is a financial contrarian and living proof that anyone can achieve financial freedom. Read his book, see him speak, follow his articles and updates. He is the best.
Follow Peter’s latest on the First Links Website, sign up for his newsletter on his Motivated Money Website and attend his seminar, it is worth your time and money.
M. Moneyman
