If the ancient Greeks were alive today, they would recognise the parallels with cryptocurrency and Icarus – the participants simply became arrogant and flew too close to the sun – and everything came crashing down.

The year behind us has seen many investors burned by the promotion of get-rich quick schemes, usually by social media influencers (or ‘fin-fluencers’ as they’ve been dubbed).

I’m reminded that a little over a year ago I met with a young man aged 29, engaged to be married and who, having just finished his PhD, had received a permanent academic appointment. He sheepishly disclosed he had been ‘early to the Crypto party’ having bought $10,000 worth of coin – which at the time was worth a staggering $900,000.

He asked me what he should do.

My advice was that he should redeem his cryptocurrency holdings and use the proceeds to buy a house in the Melbourne suburb of Ringwood, close to his parents. He countered with “but what if it goes higher – what if it doubles like my friends say it will?”

In January 2023, despite the 2022 cryptocurrency crash, this young man has a nice deposit of $300,000 worth of Bitcoin for a home near his parents.

Not too dissimilar to the crypto-bubble is the real estate boom (and bust) of 2022.

As investors, we need to step back from irrational exuberance and consider history – my hope is that 2023 is going to be a little like 1983, when inflation in both retail and primary markets was unusually low, particularly in light of the sharp price increases recorded in most recent years.

Paul Volcker was an American economist who served as the 12th chairman of the Federal Reserve from 1979 to 1987 and was widely credited with having ended the high levels of inflation seen in the United States throughout the 1970s and early 1980s). He recognised that the only way to stop the rampaging inflation dragon was to step on its neck and to wait for it to die; there is no quick solution. Unfortunately, as it thrashed around, many good people would be injured financially.

I believe that in order to take the steam out of the markets and slow post-pandemic overspending we are facing another “recession we had to have”. From 2020, wealthy investors around the globe have hoarded cash, and after the lockdowns they want to make up for the hard times we have all experienced.

Nobody has a crystal ball, including me, but as an (undergraduate) economist with almost 40 years’ experience mostly in financial services, to achieve the creation of long-term wealth, there are a few simple messages to consider to avoid flying too close to the sun:

- Being conservative is the most important. Get rich quick schemes work 100% of the time… for the promoter, not the investor.

- Engage with a financial adviser and make a financial plan.

- Aim to buy a home of your own.

- Maximise your superannuation. When you get a pay rise, split it 50/50 between an increased super contribution (up to the $27,500 pa Concessional Contribution threshold) and remember this includes employer SG contributions. If you don’t have the extra cash in your wallet, you never miss it.

- If you get a bonus, make a Non-Concessional Contribution – and go on a nice holiday with what’s left. You probably deserve it.

- Pay your credit cards monthly in full.

- Look at protecting your lifestyles with insurances – and get a Will.

None of the above is rocket science. It is simply good, general life advice.

Where you can find the magic which will help your wealth creation regime fly is in compound interest and using the tax and superannuation laws to your advantage later in life, when it comes to set up your retirement. This is when you will get to spend all the money, rather than when you were working for it.

I have always lived by journalist Edna Carew’s maxim; ‘Get rich slowly, and stay rich’.

And the old truisms exist because so often they are exactly what they say on the box – “If something sounds too good to be true, it probably is”.



The information in these articles is general information only. It is not intended as financial advice and should not be relied upon as such. The information is not, nor is intended to be comprehensive or a substitute for professional advice on specific circumstances. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional on whether the information is appropriate for your particular needs, financial situation and investment objectives.

The information provided is correct at the time of its creation and may not be up to date; please contact Marinis Financial Group for the most up to date information.