Scott Pape - The Barefoot Investor

1 Cover

2 Title Page

3 Copyright This edition first published in 2022 by John Wiley & Sons Australia, Ltd 42 McDougall St, Milton Qld 4064 Office also in Melbourne First edition originally published in 2017 © Scott Pape and related entities 2022 Illustrations © Jeffrey D Phillips The moral rights of the author have been asserted ISBN: 978-0-730-397533 All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above. Cover design by Hyungtak Jun Cover image by Isamu Sawa The author and publisher would like to thank the following copyright holders, organisations and individuals for their permission to reproduce copyright material in this book: © ING Bank: p.18 ; © Australian Securities and Investments Commission: p.27 ; © Rob Hill / Getty Images Australia: p.51 ; © piranka / Getty Images: p.51 ; © Pacific Brands: p.55 & p.56 ; © champja / Getty Images: p.62 ; © Michael Tran Archive / Getty Images: p.82 ; © AAP Image/Dan Peled: p.144 ; © Australian Foundation Investment Company Limited: p.182 ; © Pacific International Music / Lyrics by Garry Koehler: p.250 . Disclaimer The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication. The author is not affiliated with and does not endorse any of the corporate entities mentioned in or involved in the distribution of this work, or any third party entities whose trademarks and logos may appear on this work.

4 Dedication For Liz. Home is wherever I'm with you

5 Read this first Read this first When I first sat down to write this book, I expected to sell a few thousand copies at best. (After all, who reads books these days?) So, I decided to write it the same way I'd talk to a mate if we were at a pub: I sketched out my simple ‘bucket’ strategy … the exact bank accounts I used … even the pillow I bought that I couldn't shut up about! Little did I know that what I was writing would become the bestselling Australian book of all time. In fact, The Barefoot Investor has been described as ‘the biggest finance cult in Australia’. You know what that means? It means that millions of people across the country have been going on date nights, and paying down shedloads of debt, saving for emergencies and nailing their retirements, and buying Dunlopillo pillows … For a guy living on a farm, it's all a little strange. So, in the ‘barstool chat’ spirit of the original book, in this classic edition I've decided to keep those references to many of the products I used myself, back in 2016. Yet the truth is, there are now much better deals on offer than the ones I mention. How do I know this? Because readers write to me and tell me about new products, all the time. Case in point: there are now several index fund offerings in super that are just as cheap as (or cheaper than) the fund I talk about in this book (and better bank accounts too). How do you find them? Google! So, focus on the Barefoot Steps, and always do a quick google to find the best deals on the market right now. Tread Your Own Path! Scott Pape Family Farm

6 Prelude: Living Barefoot Plant, Grow, Harvest Plant, Grow, Harvest After the fire, we looked at the devastation that surrounded us, and were totally overwhelmed. The smell gets into your lungs … into your brain. The day before, we had a ‘to do’ list. Now we had a phone book. With a million things to do, where would we even start? Well, we chose to … plant a tree. An apple tree. It wasn't a short-term fix, obviously. After all, you don't plant an apple tree on a Saturday and then come back on Sunday and stand with your hands on your hips and scowl: ‘Where are my freaking apples?’ No, you don't do that. You don't pull out the sapling a week later and replant it on the other side of the yard where you think it's (maybe) sunnier. You don't stay up at night worrying that your golden retriever is threatening to lift its leg on the trunk. You don't nervously watch the weather on the nightly news and think to yourself, ‘There's no rain on the five-day forecast! El Niño will wipe out everything. This is a disaster!’ You don't get desperate and google ‘How to grow a thousand apples a day, with one tree’. No, you just plant the bloody tree. And then you wait. A year or so later it bears some apples (mostly hard, small and sour). Its branches are still young, so the weight of the apples makes it droopy. (It looks like a tree version of a fashion model.) And then you basically forget about it, and get on with your life. You trust that the tree will grow, and that it will get all it needs from the rain, the sun and the nutrients in the soil. The exact same way trees have been growing since Adam and Eve shacked up and did the wild thing. And a few more years go by, and then one day you walk past the tree and notice it's now a few metres tall and there are a few really juicy, ripe apples just waiting to be picked. And then 30 years go by, and that little sapling has transformed into a big, beautiful tree with thick, strong branches that you attach a rope to as a swing for your grandkids to play on. And the apples feed your entire family. And when you're long gone, your grandkids' kids still play under that magnificent old tree. Nature has an easy-to-understand pattern: plant, grow and harvest. It's the same with your money. In this book, we're going to follow the same natural pattern. We'll plant the seeds of wealth. We'll watch them grow. And then, we'll enjoy a life-changing harvest. Let's begin.

7 The alpaca attitude Put your foot down Be financially fireproof The secret is … Introducing the Barefoot Steps

8 Part 1: PLANT STEP 1: SCHEDULE A MONTHLY BAREFOOT DATE NIGHT Money talk is better with garlic bread and wine Barefoot banking The world's cheapest super funds Your insurance sorted in one beer How to live like a multimillionaire right now STEP 2: SET UP YOUR BUCKETS The Serviette Strategy STEP 3: DOMINO YOUR DEBTS Removing the brainwashing Domino your debts (except your HECS-HELP and your home) Recap of Part 1: Plant

9 Part 2: GROW How to double your income STEP 4: BUY YOUR HOME How to buy your home in 20 months STEP 5: INCREASE YOUR SUPER TO 15 PER CENT Your Golden Ticket — becoming an investor The automatic millionaire — how to put your investing on autopilot Should I buy an investment property? How to be a hero —investing for your kids (or grandkids) STEP 6: BOOST YOUR MOJO TO THREE MONTHS The power of Mojo — never worry about money again Recap of Part 2: Grow

10 Part 3: HARVEST STEP 7: GET THE BANKER OFF YOUR BACK The curious case of the postcode povvos How to save $77 641 and wipe almost seven years off your mortgage STEP 8: NAIL YOUR RETIREMENT NUMBER The Donald Bradman Retirement Strategy — why you don't need $1 million to retire Finding your financial advisor on Tinder It's not about you — a gift for your family STEP 9: LEAVE A LEGACY Building your legacy — a very special Barefoot Date Night Recap of Part 3: Harvest