Lessons From My Mentor: Peter Thornhill’s Guide to Long-Term Investing  

As a young financial advisor attending my first industry conference in early 2001, I was fortunate to meet someone who would profoundly shape my investment philosophy: Peter Thornhill. His guidance not only gave me clarity on where to invest for the rest of my life but also provided a framework I’ve shared with my clients ever since. 

Peter’s message is simple, yet powerful: invest in businesses, particularly industrial businesses, and avoid the distractions of fleeting market fads. His data-driven insights and commonsense approach have helped thousands of Australians understand the why and how of successful long-term investing. 

Why Industrial Businesses Outperform 

Peter Thornhill’s preferred investment strategy focuses on industrial businesses—the companies that produce goods and services people use daily. He contrasts this with resource companies, which what I now call “price takers.” 

Resource companies are at the mercy of commodity prices, and their profitability is dictated by factors outside their control. Over time, the All Industrials Index has vastly outperformed the All Resources Index, showing the value of focusing on businesses that consistently grow their revenue, reinvest profits, and deliver long-term returns. 

Cash, Property and Shares: A Data-Driven Comparison 

Peter’s presentations compare term deposits, listed property trusts (REITs), and industrial shares. While term deposits and REITs can provide stability, they often fall short of the long-term growth achieved by industrial businesses. 

Here’s why: 

• Reinvestment of Profits: Businesses reinvest retained profits into improving products and services, driving revenue growth and increasing profitability. Over time, this results in rising dividends and share prices. 

• Property as a Supporting Role: Peter highlights how companies like Westfield Holdings built wealth by managing properties, not owning them. Woolworths, Coles, and Bunnings have followed this model by separating property assets from their core businesses. 

This principle is one reason I’ve chosen to invest in industrial businesses globally, while avoiding resource companies and property ownership for my practice and personal investments. 

The Psychology of Retirement: A New Hobby 

Peter’s insights aren’t limited to investments. He’s also ahead of his time when it comes to the psychology of retirement. One quote that has stayed with me is this: 

“A retiree’s hobby shouldn’t be checking their portfolio every day—it should be checking in on their loved ones.” 

Retirement wealth is meant to be enjoyed, creating memories and experiences. Money shouldn’t become a source of stress or obsession. 

Learn More About Peter Thornhill 

For anyone inspired by Peter’s wisdom, I highly recommend: 

• His book: Motivated Money 

• YouTube videos: Search “Peter Thornhill” for presentations packed with insights and humor. 

His decades of experience and straightforward advice provide a clear direction on where to invest and why, helping you avoid the noise of fleeting trends and focus on what truly builds wealth. 

Final Thoughts 

Peter Thornhill’s guidance has been instrumental in shaping my approach to investing and financial advising. His focus on industrial businesses, long-term growth, and the importance of enjoying life’s journey is a philosophy I’m proud to pass on to my clients. 

If you’re looking for clarity in your investment journey, take a page from Peter’s playbook. Avoid the distractions, stick to the fundamentals, and invest in businesses that stand the test of time. 

The information provided in this article is general in nature only and does not constitute personal financial advice.