The Difference Between a Rich Mindset and a Poor Mindset: A Lesson from Buying Land in Indonesia
By Jamie McIntyre
Chief Editor, Australian National Review
Property Investor & Developer, LUX Property Group
One of the fascinating things about property development, particularly in emerging markets such as Indonesia, is that you are often creating wealth where very little existed before.
When we purchase land, we’re frequently buying directly from farming families or long-time landholders. In many cases, a single land sale can completely transform a family’s financial position.
It can effectively create instant millionaires.
Ironically, in some respects it can actually be easier to become wealthy in countries like Indonesia than in many developed nations. Why? Because a significant number of families still own land, often passed down through generations.
The land itself may have relatively little value in its raw state. It may be agricultural land, swamp land or inaccessible land.
That is where developers create value.
A developer might purchase land, secure road access, undertake earthworks, raise flood-prone areas, obtain permits, complete rezoning where applicable, install infrastructure and utilities, and transform what was once inexpensive rural land into highly desirable residential, tourism or commercial property.
That process doesn’t simply increase the value of the developer’s investment. It also injects enormous wealth into local communities.
I’ve often reflected on one particular experience that perfectly illustrates the difference between what I consider a rich mindset and a poor mindset.
Our group had already purchased several parcels of land from one family.
The proceeds from those sales represented life-changing wealth.
However, some time later they approached us again.
They explained they urgently needed more money because they wanted to fund a family wedding.
When I learned what they intended to spend, I was stunned.
The amount was roughly equivalent to an Australian spending around AUD $700,000 on a wedding.
For most wealthy Australians, that would be considered an extraordinary amount of money.
Yet this family, despite having received substantial wealth from previous land sales, had already exhausted much of it and now needed to sell more land simply to finance another celebration.
Rather than simply offering cash, I proposed what I believed was the far better long-term option.
I offered them completed, fully furnished income-producing property worth substantially more than the cash they were requesting.
The property would be professionally managed and could generate rental income for many years, potentially providing financial security not only for them but for future generations.
Or they could simply take the cash.
To me, the better choice seemed obvious.
Income-producing assets create wealth.
Cash is only temporarily wealth unless it is invested wisely.
That doesn’t mean everyone who chooses cash has a poor mindset.
Nor does it mean everyone who owns assets automatically has a rich mindset.
Many people manage money exceptionally well.
Others receive an inheritance, sell property or win money and invest it intelligently to build even greater wealth.
But over many years of investing, I have noticed certain patterns.
People with a wealth-building mindset generally ask:
“How can this asset keep paying me for the rest of my life?”
People focused only on immediate gratification often ask:
“How much cash can I get today?”
One mindset compounds.
The other consumes.
Many genuinely wealthy people actually have relatively little spare cash sitting in the bank.
Their capital is continually invested in businesses, property, shares and other productive assets that generate ongoing income and appreciate over time.
Their wealth works while they sleep.
By contrast, many people who suddenly come into money often spend it surprisingly quickly because the focus is on consumption rather than production.
Money disappears.
Assets remain.
Assets can continue paying you year after year.
That is one of the greatest lessons property investing has taught me over the past 25 years.
Cash is useful.
Income-producing assets are transformational.
Whenever possible, I encourage people to think beyond today’s cheque and instead ask a much more powerful question:
“Will this decision make me richer five, ten or twenty years from now?”
The answer to that question often determines whether wealth lasts for a lifetime or disappears far sooner than anyone ever expected.