Tag Archive for 'Many'

As a serial entrepreneur, I have discovered that many of the entrepreneurs out there are great at making money, but they don’t know how to invest their money once they make it, thus I think that it is very important that we go ahead and blow-up some of the most common investment strategies that are out there.

1) Diversify your savings into an IRA by paying $150.00 per month until you tour 65. Then one day when you’re in your 60s (if you live that long) you will have $3,000,000. I take issue with this idea for a variety of reasons, but here are my biggest issues with this investment theory. One, you might not live that long. We could all get hit by a bus tommorrow. Two, you will need that $150.00 that you are investing per month to build your own business. Three, if you would rather invest in a business that you have no ability to control, what does that say about your faith in your own abilities? Four, I have never met a millionaire (and I have worked with many millionaires) who told me that their financial fortunes were built through diversification in mutual funds. FIve, inflation will eat the value your dollar. You could by a new house in the 70s for $50,000.00 and now that same house will cost you $200,000 today. What will $3,000,0000 be worth when you are 65?

2) Buy a stock, hold it and pray over it daily. This whole idea is based on insanity. This whole concept is based on gambling. Investing is not gambling. If your game plan is to sincerely look for a good stock and then bet everything you own on its success or failure, you are dilusional (unless you are the CEO of that company). This form of investing will leave living in fear of the next crash. The truly wealthy people in our country make money in boom or bust cycles. Rockefeller grew his influence, his land holds and the size of his business exponentially during times of great economic turmoil. Friend, cash is king. When people get tight on cash, they will sell you their $6,000 entertainment center, TV and couch for $500.00. When people are running low on cash they will sell you their house for what they owe, not for what their home appraises for.

3) Invest in this one guy I know. I hear he buys houses. This idea is insane too, but their are people using this strategy daily to invest their hard earned dollars. My friends do not invest in a guy you know, who might or might not be legit. If this guy has corn-rows and drives a beamer, the chances are that he is not legit. If this guy does not have business cards, the chances are that he is not legit. If this guy uses a gmail account as his primary investment email address, the chances are that he is not legit. If this guy does not have an investmentment company, the chances are he is not legit. I don’t care if you have gone to church with him for 30 years or if someone that you know said that they knew someone who knows him through and investment that someone might have made with him back in day. Do not invest in people that do not have verifiable financial statements that can and will openly show you.

As we begin to delve into this course with a little more intensity, I want to give you a quick real estate investing tip: If you want to build profound levels of wealth, just ask everyone that you know what they are doing and then do exactly the opposite of what they tell you. Most people will never become rich because they have become completely convinced that their way of thinking is the best (and it does not work). Most average people will sit around thinking that they should find ways to play it safer and safer so that they do not lose their wealth, the rich continue to think about how they can continue to earn and learn more and more skills that will pay the bills. The rich know that skills pay the bills and that the more skills they have the more money they will earn. The rich are constantly looking for more and more ways to earn more and more money so that they can have more and more money to invest.

Rich people have much for dynamic and flexible thinking about the economy. When the economy struggles the rich begin to salivate as they think about all of the deeply discounted assets they can buy. How low did Bank of America’s stocks fall? How much money was made on the rebound by America’s wealthy. As the average investor was pulling his money out and running for the hills as the Dow Jones Average dipped lower and lower, the rich were waiting for the economy to bottom out so that they could begin to make their big buys.

Are you aware of Warren Buffetts investment philosophy? Warren has said and will continue to say to anyone that will listen, “Be fearful when the market is greedy. Be greedy when the market is fearful.”

Why is that? Why would Warren say that? Warren says that because Warren is a billionaire investor. Before Warren was a billionaire he was a self-made millionaire. Before he was a self-made millionaire, he was the college kid who was aggressively spending his time trying to learn as many investment skills as he could possibly acquire. Before he was the college kid trying to learn investment skills, he was the high school kid that owned land that he leased out to a farmer who paid him a monthly amount to use his land.

Think about that. In high school, as a pimple-faced high-schooler Warren Buffett new more about investing than the 50 year-old farmer who was leasing the land from him. Warren was letting the Farmer work hard to earn his money. Each month as the Farmer mailed in his lease payment, he was paying Warren’s mortgage.

So before we begin, I want to ask you this question. Do you want to be average or do you want to be profoundly successful? Do you want to work at a job you don’t like for the rest of your life while diversifying so that you can retire on a tight budget or do you want to live a life of abundance? Do you want to pay off the mortgages of people like Warren Buffet? Or do you want to have someone else pay off your mortgage like Warren Buffett did in high school? Are you ready to get after it and begin doing the uncommon things you have to do to become successful in your investments? Do you want to travel when you want and work when you want, or would you like to work for the weekend for the rest of your life? If you don’t have the strong desire to succeed then stop reading this. If you are ready to grow to next level, then read on. However, quick word of caution. Their are growing pains ahead.

I have a strong desire to invest, but what should I invest in?

If you have a strong desire to invest, but you don’t know what to invest in, you are not alone. Their are millions of Americans in the same boat. It’s ok, just don’t stay in this boat.

If you are like many new investors you might find yourself wanting to invest in this great IPOs that you have heard about. Or you might want to invest in an office building. However, there is a problem here. For most of you reading this, you can’t.

The government will not allow you to invest in many of the best investment deals that are out there. Most people are not aware of this, but if you are not an accredited investor the government will not even allow you to invest in some of the very best deals. Why? The government believes that you will not have the ability to know what is a good or bad investment unless you are an accredited investor. If you would like more information on this, I highly recommend that you google the Exemptions from the Securities Act of 1933. Basically here is a rough run-down of what that act says (mind you, the government changes their mind alot):

1) You are an accredited investor if you have a net worht of $1,000,000 or more.
2) You are an accredited investor if you have earned $200,000 or more in each of the most recent years (or $300,000 jointly with a spouse) and have a reasonable expectation of reaching the same income level in the current year.

My friends, most of the great investments that are available to accredited investors require minimum investments of $50,000 or more. Thus, as I said earlier most people reading this will not be able to invest in the office building or the next big IPO. However, I think that we should not focus on the financial qualifications needed to become an accredited investor. We really need to focus on the mental qualifications needed to become build enough wealth to become an accredited investor.  To become an accredited investor, you will need the following assets / personal tools:

1) Practical Education – Skills pay the bills. What can you do that people are willing to pay for? “Knowledge without application is meaningless.” – Thomas Edison

2) Experience – You have to know the financial terms. You have to know how to negotiate. You have to know how to work with a bank. You have to know how to find the good deals. You must have experience.

3) More Cash Than You Need – You must have more cash than you need to live on to invest. If you make just enough money to afford your Lexus payment, your huge house payment and your wife’s manicures then you are never going to have enough cash to invest later. (see www.daveramsey.com)

So how to you go about acquiring these assets and personal tools?

If you want to gain practical education, you must work in a hands-on mentorship or intern environment. Find a wealthly investor and go to work for them, even if that means working without pay. How much are most people willing to spend on a college education today? $40,000? $50,000? $100,000? $20,000? Really? So people are willing to pay $20,000 for school, but they aren’t willing to work for free for America’s wealthiest people?  That is true. How did Rockefeller get his start? He went to work for free as a bookkeeper in Cleveland. This employers’s promised to pay him after his first month of work, IF HE DID A GOOD JOB. How did Andrew Carnegie get started? He started out working for FREE at his dad’s factory. How did he learn to use the telegraph machine? He worked for free. How did P. Diddy, Sean Combs, Puff Daddy (whatever you want to call him) get his big break. He went to work for FREE as an intern? My friends you have to work to learn, not just to earn. Your priority should be to LEARN, not just to EARN.

If you want to gain experience you must actually invest in a property. Do I mean that you to invest in something that might not work? Yes. Do I mean that you have to actually take action? Yes. My friend, to quote the great John Wooden, (see more at www.johnwooden.com) “Nothing works unless you do.” You must gain experience. You have to get street smart, and the best learning lessons you will ever have usually follow the biggest failures that you will ever experience. Gaining experience is critcal.

If you want ever have more cash then you need, you must have a total liquidation. You must get rid of those car payments. Rich people do not have car payments. You have to cut nearly all of your unnessary expenses to get in the game. If you have cable that you don’t watch, cancel it. If you buy a $2.00 coffee before work every day, you have to stop that habit. You will need that cash very soon. If you don’t have any cash you cannot win. To paraphrase the success author Brian Tracy, if you do not have the self-discipline to save money then the seeds of greatness are not within you (see more at www.briantracy.com)