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Sir John Templeton 5 Ways To Build Wealth
Sir John Templeton 5 Ways To Build Wealth
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Economic growth? "I see no interruption in our standard of living, which could be 100 times
better by the end of this century."
The only concern he expressed was about "creeping socialism" and government regulation of business
around the world.
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He always works hard, putting in 60 hours a week. He would agree with J. Paul Getty
(http://www.investmentu.com/aboutiu/markskousenrecbooks.html), whose motto was, "Make your
money first then think about spending it."
Strategy # 3: Shop for Value Investments. Templeton followed the fundamental "bargain-hunting"
approach to investing. "The long-range view requires patience." His Templeton Growth Fund, which
he ran for 50 years before turning it over to the Franklin Group, held stocks for an average six to seven
years. He always searched for companies around the world that offered low prices and an excellent
long-term outlook. "It's not easy," he stated, "but if you're going to buy the best bargains, look in more
than one industry, and look in more than one nation."
Under Templeton's managing skills, the Templeton Growth Fund averaged a 14% annualized return
over 50 years, far outperforming the stock market indexes.
Templeton rejected the "technical (http://www.investmentu.com/?p=520)" method of trading stocks.
"You must be a fundamentalist to be really successful in the market," he said. I agree. The best
technicians make the most profitable trades in companies with sound fundamentals in sales and
earnings.
Strategy # 4: Take advantage of international free markets. Templeton believes a "free enterprise"
approach is mandatory when investing overseas. "Avoid investing in those countries with a high level
of socialism or government regulation of business," he said. "Business growth depends on a strong
free-enterprise system." He told me that he is a follower of free-market economists Ludwig von Mises,
Friedrich Hayek and Milton Friedman. "Governments should stop interfering with what people want to
do."
Templeton took a 'round-the-world tour in 1936, and he was stuck by the poverty in India and Hong
Kong. When he returned 40 years later, he noted a sharp contrast. "The standard of living in Hong
Kong has multiplied more than tenfold in 40 years," he said, "while the standard of living in Calcutta
has improved hardly at all. The major difference is between free enterprise and socialism. The Indian
government regulates nearly everything, so there's very little progress; whereas in Hong Kong, the
government keeps its hands off."
Note: Since Templeton wrote this in 1976, things are changing rapidly. India is finally pursuing
market-friendly policies; consequently, those investing in India (http://www.investmentu.com/?
p=700) are seeing one of the hottest stock markets around these days.
Strategy # 5: Minimize your taxes. In the 1960s, John Templeton made a controversial decision. He
decided to renounce his U.S. citizenship and move to the Bahamas, where there is no income tax or
investment tax. He became a British citizen, and now a Bahamian citizen, and lives tax-free (the
Bahamas gets its revenue from high import duties and corporate/trust fees).
Interestingly, his investment record improved markedly after he stopped worrying about the tax
consequences of his investment decisions. As a result of tax-free compounding, Sir John Templeton
was worth several billion dollars when he passed.
However, Templeton didn't recommend that American investors follow his lead and switch allegiance
to a tax haven such as the Bahamas (it's almost impossible for an American to become a Bahamian
citizen today). But, Templeton strongly recommended that you should take full advantage of taxdeferral vehicles such as a corporate pension plan or an IRA, and incorporate your business.
Good trading, AEIOU,
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