Monday, February 18, 2008

Why Keeping An Open Mind - Could Make You Millions

The one thing that i love about Robert Kiyosaki's book Rich Dad Poor Dad is that he teaches some fundamental ways in which to build wealth in the future. He distinguishes between good and bad debt and shows you how you can really leverage your money. Despite this he receives a lot of criticism for his work which at times i find upsetting.

I think that while we are growing up we are taught so many things about being able to control our financial future that don't serve us at all. All it does it put us back into the pack of about 90% of people who will retire on the pension. This is especially evident in Australia.

It is here that dreams are given up, expectations of a full an rich life are downgraded, because someone wasn't prepared to set outside their comfort zone and search for something better. What upsets me the most however is those that have a closed mind to new ideas and concepts. If there is any way of killing success, its to think that you know it all ...

In this blog post by the Simple Dollar

The author gives a new perspective on the teaching of Robert Kiyosaki. This wasn't necessarily positive. He did call it a bad book but shared that he actually did learn a lot from it. He also receive a number of negative comments on that post in regards to his teaching as well. Many of them called Kiyosaki a fraud, made all his money through his seminars rather than through property and that he has no real value to add.

In my response to what has been said, i uncover why ... it is that .. opening your mind could fill your life with abundance rather than lack.

The fact of the matter is that Rich Dad Poor Dad has probably created a lot of wealthy people out there. People who lives have been transformed because they have been able to keep and open mind and implement some new strategies that may have been out of their comfort zone.

Thats the thing with investing. You have to be able to keep an open mind to what is available out there. Ok thats fine if you don’t entirely agree with one author. Fine don’t use his strategies. But if you are finding that every book you read you have a negative view on .. then maybe there is something internal like (mindset) that may be holding you back.

I think one of the things that will hold anyone down is a closed mind. I even thing that its better to have an open mind, to try certain things out .. and hey if it doesn’t work out then as least you learned something from it … But if you didn’t do anything at all .. well you will just be in the same financial position in 20 years time ….

Young Investor

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Thursday, February 14, 2008

What Do I Need To Know About Investing? - Getting The Right Education

The Simple Dollar is a blog that I love! I came across it recently and have found it very fun, interesting and enlightening to read in regards to basic investing and mindset. I would definitely regard it as one of my inspirations for this blog. Their latest posts called

Investing In Yourself - Education and Cultural Literacy

Got me thinking. As the name suggests "Investing In Yourself" is a term that not everyone is familiar with. Yet I believe it be one of the most important things in your journey to wealth. A lot of people are willing to invest in a car, in a house, in something tangible, but rarely do they place as much value on investing the time and money on themselves.

One of the points covered in this post was Education. I wanted to expand further on that. To me there are two types of main education that one would need to start creating some serious wealth and to start taking control of their financial future.

Education For Your Mindset

Our thoughts and beliefs on money, time and investing will influence our financial incomes dramatically. Limiting beliefs have enormous power in what we believe we can achieve and whether or we think that we are worthy of abundance. A lot of people will be stuck in a certain financial place because there are certain things that are holding them back. Some of these limiting beliefs can go as deeply as " If I have money then i will not be loved" or "Money is for the rich and selfish" or "I am undeserving of money".

Becoming aware of what these beliefs are can be incredibly powerful and sometimes the one key you need to take you to the next level. The only reason why people are in the financial situation they are today is because their past thoughts have lead them to where they are now. Changing those thoughts, leads to a change in actions, leads to a change in habits which leads to a change in their financial destiny.

So to change these limiting beliefs one must first invest in themselves by reading books and attending seminars. There are a number of courses that are designed to uncover these beliefs and help you gain new attitudes and insights. In my post Before you start investing you have to read this, I cover some of the books that really help you set up an abundance mentality. The ironic thing is that some of these invaluable books are free!!! So heres the thing, you already have the tools to help you get started to investing better. Now you need to focus on keeping an open mind and absorbing all these new concepts and techniques that could help you out in the future and not only investing the money ... but also the time.

Education For Investing
Once you have been able to change your limiting beliefs about money and you are ready to start accepting it into your life then you can look at seminars and course and books that will give you strategies to achieve your overall game plan. You need to discover which tactics you want to use to get to where you want to go. There are number of course and organizations that are out there that can help you in this area. Some of them will not be cheap. Some may cost up to $10000 plus.

But you see if you attend these course and implement some of the techniques that they may teach you could save yourself hundreds of thousands of dollar by investing in the right vehicles in the right place. Or they could teach you something that could save you that amount of TIME and MONEY in the future. People who go to these seminars are very smart. In that they recognize that there is still things out there that they need to learn instead of assuming that they know everything.

Another part in getting education for investing is to find the right organizations and mentors to partner with. There are people that really take you by the hand, that guide you the right place to go and that give you the inspiration to keep pushing forward. It’s always best to remember however to get advice from the right places, from people that you feel are qualified to offer you advice. Not in the sense in that they have the paper qualifications, in a sense that is important too, but more in the sense that have the financial stability that you are looking for.

In other words if you want to find a mentor then, find someone who has accumulated the amount of asset and wealth base that you are looking to accumulate or more ....

Young Investor

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Wednesday, February 13, 2008

One Thing That You Can Do NOW - To Improve Your Financial Future

When it comes to investing heaps of people get scared. Especially the ones that have never done anything like this before. In many ways you have to step outside your comfort zone. N well we all know that this is a little ... uncomfortable.

Investing has a lot to do with discipline, mindset and with patience. There should be very little emotion involved when investing. Heres the thing, investing is a boring thing! It’s about building your wealth over a period of time. It’s about buying investment properties and being able to sit on them for the next 20 plus years so that you can enjoy the benefits later. It’s all about delayed gratification.

Now since I'm young, I don't know about certain concepts in depth, but I do understand the how the basic and fundamental principles work. I have talked to the people, gone to the seminars and read the books. And when you start hearing the same things over and over again, well then I think there is some value in what they all have to say.

One thing that I have heard over and over again is that time is your friend. So you should use it. I am lucky that I am young and have plenty of time to get started with investing and also to make plenty of mistakes. But everyone has plenty of time relatively speaking. Meaning to say that you would be in a better position today had you started investing 2 years beforehand. Just like in two years from now you will be in a better position if you start investing today. It’s never too late! Lets not forgot the good old Kernel Sanders who started his empire at the ripe age of 65!

One of the seminars that I have attended recently the speaker asked, when is it a good day to invest?? And his answer was YESTERDAY! So technically doesn't that mean that you are already behind? What I'm trying to say that its best to get started TODAY, right now! Because essentially the money you are investing today will be worth hundreds of thousands in the future ...

Young Investor

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Tuesday, February 12, 2008

How You Can Beat 97% Of The Pack - Goal Setting

Goal Setting is the first step in getting ready you ready to invest. Its not only good to know where you are headed but also where your current position is. That way you know what your starting point is and can stay on track.

Its best to have short, medium and long term goals with where you see yourself in a year's time, in 5 years time and in 10 years plus. Some of the shorter term goals, could be to accumulate a certain amount of money to out down for a deposit, while in the medium term, it could be investing that lump sum of money into a 5 year managed fund and a long term goal could be to obtain a certain number of properties within a given amount of time.

Writing down your goals and really clarifying what you wants, makes the process much easier to work back from and also increases your chances of you obtaining that goal significantly. Having goals keeps you on track and helps you overcome obstacles. This is true because you can focus more on the outcome rather than the process when things get tough.

The importance of goal setting is often demonstrated in the study done at Yale University which placed goal setters firmly in the successful category when compared to non-goal-setters. The 3% of the participants who had written their goals with a plan and took consistent action were happier, more confident and better adjusted. They also earned more money over that 20-year period than the 97% of the other participants.

So with that said, understand the power of goal setting it and make it the first step in your journey to wealth.


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Monday, February 11, 2008

THE TOP 10 MISTAKES THAT EVERY First Time Investor Should Avoid Like The Plague - Part Two

Acting Too Fast And Acting Too Slow
Some people make quick decisions and change their minds frequently. Some people make slow decisions and stick with it. I think the best thing to do in this situation is to have a balance between the two. Some people make the mistake of getting so excited about a concept after they have attended a property investment seminar and go out there with very little research and attempt to implement what they have learnt. They either end up paying too much of select the wrong structure for investment.The ones that are too slow however, are so scared of making a mistake and of moving out over their comfort zone that they are paralyzed and miss out on all the great opportunities in front of them.

One important thing to remember is that investing is something that you may not be 100% comfortable with. Because you are going outside your comfort zone and attempting to do something that you haven't done before. There is always something a little unnerving about that. But you need to balance this fear by taking the necessary measures to do your research and cover all things that you are unsure of. That way you are able to move forward, but with caution. There is no point in making rash decisions and sometimes there is no point in standing still and doing nothing.

Over Estimating Income And Underestimating Expenses
It’s important to have some sort of a safety net when you are looking at investing. Most people either stretch themselves too thin when it comes to buying their property, or over estimate their current income and the rental income they will receive. You need to be able to take into account rental vacancies and other expenses that may unexpectedly pop up. Its best to do some research on rental income around the area, instead of just sticking to general rules and principles.
If you do feel like sticking to a rule, then the best one to stick to is to under-estimate income and over estimate expenses by around 10%.

Looking Short Term Instead of Long Term
Investing property is usually a long term thing. So its not a good thing to go into it thinking that you can make a quick buck and then leave a richer man. Most things in life don’t work that way. This usually will lead you into get rich quick schemes and deals that seem too good to be true. Because hey they usually are. The key here is to be able to hold a property for at least 10 years by which time it would have doubled. Its about reinvesting your capital and putting that into other property that will grow, which helps to create a solid asset base. A good quote to remember is “ Let time be your ally and patience be your friend”

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Wednesday, February 6, 2008

THE TOP 10 MISTAKES EVERY First Time Investor Should Avoid Like The Plague!! Part One

There are a number of things that a first time investor can miss when they are looking to buy their first property. Here are a few tips, that gives you a general guideline as to what to look out for when you start investing.

Having No Strategy
People often don't give the time and the effort that investing requires. They dive into deals that seem to look good without doing the necessary research and evaluation. People need to understand the certain strategies that can be placed with property. Whether they are going for a buy and hold strategy or a buy and sell one. They need to know what balance they need to find between growth and stability. Whether its best for them to positive, negative gear or neutrally gear. All of this of course depends on your current situation and is the reason why its best to know what strategy will best suit you. The thing is that most people neglect this part and then wonder why they end up in a worse position then when they started. By setting up a strategy you don't fall into the trap of painting yourself into a corner or only having one plan of attack. You are more able to prepare for when something doesn't go to plan.

Being Emotional Rather Than Analytical
Investing especially with property can be an emotional process for people and this gets them to make bad and irrational investment decisions. If you want to be emotional, then be emotional about the deal and not so much the house. Being too emotional can lead to paying too much for a property, selecting the wrong one and over capitalizing in renovations. To counter this its always best to know what you are looking for, have a walk away price and stick to it!

Not Taking Investing Seriously
If you are a guy,let me ask you how long you would spend looking for a $40 000 car? How much research would you do? I would say at least 2 weeks right?N girls, let me ask you. How much time would you spend looking for a $1000 dress? I reckon at least a couple of weekends right?!Now let me ask you this questions on average how long does a person spend researching an investment property worth at least $400 000.Well if we were speaking relatively, it would be 10 times longer than the amount of time looking for a car right?Who do you know that spends a minimum of 20 weeks researching on their investment property? Well if you want the good news now, then don't need 20 weeks of research to make a good investment decision. But you should apply the same amount of importance and research on your investment property as you would a car or a dress at least.

Attempting To Do Everything Yourself
For some reason people assume that investing will involve you having to do everything yourself. With property its all about building relationships with the right people. In terms of getting a good deal its good to build strong relationships with the real estate agents, home inspectors, lenders and appraisers. In terms of re-modeling and maintenance you want to get to know the contractors, roofers and electricians well. Its also a good thing to know how to outsource. There is always a balance between your time and the money being spent. Sometimes your time is better spend managing other people rather than doing something yourself.

More tips coming in the next couple of days

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Tuesday, February 5, 2008

WHAT IS WEALTH BUILDING? - Turning $10 000 into $2,000,000 - Making Money Work For You!

Wealth building is a large part of creating financial independence in the future. It can be sometime mis understood by a lot of people, yet something very essential.

The first thing that we will clarify is the difference between real income and wealth. A lot of people confuse the two. Most people believe that if you are earning high income in a well paying job that you are rich, you've made it and you are going to live happily ever after. However this is not true because at the end of the day once they stop working they have nothing left to sustain their lifestyle. Yes they may have the BMW's, the multi million dollar houses but at the end of the day if they aren't investing their money, when they stop working they will have very little left.

Wealth on the other hand is all about creating assets, which give you capital growth and passive income. The power of compounding is very important here. The example below will illustrate this.

Example: Person A chooses to put aside $10 000 each year for and enjoy the benefits of it in 40 years time. At year 4 their money is at $40 000, year 14 $140 000 and by year 24 $240 000. At the end of the 40 years he would have only accumulated $400 000!!

Example: Person B invests $10 000 at 15% for 40 years. This is a once off investment and he doesn't take any of the money out. Now at year 4 their money has grown to $17,490.06. By year 14 it has grown to $70,757.06 and by year 24 it has grown to $286,251.76!! As you can begin to see the growth is exponential. Do you want to know how much his money is worth by year 40? Well ill tell you. At the end of 40 years after initially putting in $10 000 dollars and not adding a single cent to it, his money is now worth $2,678,635.46!! Who would jump at the idea that if they had 40 years and $10 000 that they could be a millionaire?!

Know can you imagine that scenario with a bigger initial deposit or more time? If person B continued for another 5 years that amount would have grown to $5,387,692.69!! Who wants to make $2,709,057 in 5 years sitting on their butt all day? Because thats essentially what you just did!

So one the keys to compounding is to get started and get started now! Because you get your money to work for you and not the other way around!

Now compounding with real estate also works very effectively. Essentially the key is to continually re-invest your earnings and from that duplicate the process.

The best way to start is to buy an investment property, watch it grow in value and then access your increased equity - you then use that to purchase another investment property. If you keep buying wisely, structure your finances right, you can then duplicate this process again and again.

The beauty of duplication is compound growth. Invest the capital growth on one property - and start getting capital growth on two properties. Use the growth on two properties to buy two more. And so on... The growth is exponential.

So just to recap quickly. The difference between income and wealth is that wealth is about investing your money, making it work for you and accumulating assets that can provide for you in the future. Income is a nice car, a nice apartment and a nice pension from the government of about $300 a fortnight when you can no longer afford to work. Which one would you choose?


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