The Greatest Numbers You’ll Ever See

‘The graveyard is the richest place on earth, because it is here that you will find all the hopes and dreams that were never fulfilled… because someone was too afraid to take that first step… or [wasn’t] determined [enough] to carry out their dream’ – Les Brown.

Might be a bit dramatic, but a powerful quote nonetheless. I recall an interaction I had with my grandad before I bought my first property in 2012 in which he did everything but tie me to a chair to stop me from claiming my slice of the Australian dream; ‘Who’d pay that price 35 kilometres from the city!’ he said, and, for a moment, he had me rethinking my choice.

Luckily, I didn’t heed the advice. In the four years since that date, the value of my property more than doubled. Although I’d like to claim it as a stroke of genius, the result was more a combination of research, timing and, as much as it pains me to admit, luck (only the smallest of contributions, of course). Had the property performed at one third the rate, I still would’ve achieved a growth rate significantly higher than I would’ve had I thrown my money into an index fund.

Opportunity Cost

Hindsight, unfortunately, provides no consolation for opportunities lost by inaction. The table below shows the growth in the average priced home in our capital cities over the last decade. The difference in value – the price of procrastination if you will, is the figure in the row second from the bottom:

  Sydney Melbourne Brisbane Perth Darwin Hobart  Adelaide Canberra
2005 $485k $312k $314k $340k $320k $252k $280k $387k
2015 $930k $625k $500k $539k $580k $370k $445k $625k
Price Increase $445k $313k $186k $199k $260k $118k $165k $238k
Annual Return on 10% Deposit 25% 26% 20% 19% 24% 17% 19% 21%

Had a fund manager achieved gross returns like these, nothing less than a cult like following would result. The famed Magellan fund achieved average returns of 8.5% per annum between 1990 and 2016. That’s pretty much half the ROI had you invested in the worst performing market and just over a third the ROI on a property in the best performing markets.

Reflecting on my grandad’s words, I can’t help but consider those that, on the cusp of taking action, had an ill-informed conversation, read a sensationalist headline or otherwise got sucked into the vortex of fear induced procrastination. Next time you read a headline that insists you retreat to the safety of a bunker until the uncertainty subsides, know that procrastination doesn’t only rob you of opportunity it also costs you money.

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