JJ, now 80, retired 32 years ago, yet unlike so many of his friends, he is financially secure. “I sometimes joke with my friends that I am very worried that I have nothing to worry about,” laughs JJ who has spent his retirement years travelling the world.
“It is only the last few years I have had to stop travelling for my health. I still only live on about half of the income I receive from my investments,” says JJ who has now been retired for longer than he earned an income.
“His investments in the early 1970’s grew to such a sizable amount that in his late 40’s he was able to retire on the income that the capital had grown to. He is living proof that investing in yourself, and delaying instantaneous gratification, will ensure a carefree life in the future,” says JJ’s financial adviser at Liberty, Philip Kassel.
The secret to JJ’s success is no secret at all – he just followed three basic financial rules – live within your means, avoid credit and start saving at an early age.
“I learnt this from my parents who grew up in the Great Depression. I was from a poor family and I started working on weekends and school holidays from the age of 12. By the time I finished school I had saved up £100, which was a lot of money in those days,” says JJ.
Pay yourself first
From his first pay cheque Ackerman put away at least 25% of his take home pay each month, mostly into retirement annuities.
“People forget how strenuous tax was in the 1970s. Even on my salary I was paying 50% in tax as a bachelor. I was allowed to put money into retirement annuities tax-free and I used that to the full. That means that 50% of the money I put away came from the government’s pocket,” says JJ.
Don’t give the bank your money
JJ always paid with cash, he never bought anything on credit except for his house which he made sure he paid off as quickly as possible..
“I have always lived on cash. I believe you should earn interest not pay it. Most people do not even own their possessions. Their house and car belong to the bank and the furniture belongs to the retailers. By buying on credit you pay double for everything,” says JJ who adds that he has recently taken out his first credit card to cover hospital bills. “If you go to hospital for an emergency they want the money upfront. You don’t have time to transfer the money so I keep a credit card for that reason, but I always pay it off in full, otherwise it is costing me 20% interest.”
Live within your means
JJ believes the secret to happiness is in your peace of mind. “People believe that the goal is to acquire possessions, but you can’t take anything with you when you leave this world. The only thing that matters is good health and a clear conscience – without that your life is hell,” says JJ, whose rule of thumb is that your fixed expenses should not be more than 50% of your take-home pay. “If it is more then you are poor. You can be far happier in a modest suburb in a modest house rather than living beyond your means and worrying about money. Your aim should be to get your money to work for you not for you to work for money.”
Avoid instant gratification
By avoiding credit and saving for what he wanted, JJ discovered that often what he thought he wanted was not really what he wanted at all. “I often found in my life that when I saw something I wanted and started saving for it, by the time I had the money I didn’t want it anymore,” he says.
When people buy on credit they discover that the bills last a lot longer than the enjoyment of the purchase. Time has a way of showing us what is really important to us.
Still enjoy life
Although JJ stuck to his philosophy of putting money away and avoiding credit he has still lived a very full life, which involved travel from a young age. Having a passion for travel helped keep him motivated around his financial goals, which allowed him the financial freedom to travel.
“I started travelling when I was 24 years old. I canoed the Amazon at the age of 25. The mistake people make is to put off their dreams until retirement – after they have studied, got married and raised a family. But by then you may not have the energy and everything costs ten times more. You need to live for today.”
|
