We all want to invest wisely. If done correctly then significant money could be made and financial security could be realized. However many people year after year loose money by investing in the stock market. They either pick the wrong companies or outside circumstances cause their investments to take a downward spiral. It is possible to make money by value investing but you need to know what you’re doing.
In this article we will look at some tips to help choose the right companies to invest in to hopefully turn a profit for you.When looking where to invest your money, you should look beyond the price of the stocks. You should look at the cost of the entire company. The market cap the price of all outstanding shares multiplied by the current share price. Thin information is useful because it can prevent you for paying too much for the stock prices.
Getting the right price for stock is essential to good value investing.When choosing a company to invest in, try to find out if they are buying back shares. If they are buying back shares they are increasing the overall value of each individual share make making fewer shares available. Is like dividing a circle.
Two circles could be the same size, but if you could only pick one piece from one of the circles, you would likely choose the piece from the circle divided in to four pieces rather than the one divided into 6.Finally, you should ask yourself how long you want to own the stocks for. If you’re looking to make quick money then value investing may not be the way you want to go. Financial genius’s frequently loose money trying to make it fast so don’t think your going to outsmart the stock market. The best thing to do is to find a good company, get the best price possible and reinvest the dividends. Keep your money in there for 10 or more years and your chances of making a profit are much greater.
Friday, June 15, 2007
TIPS FOR GOODVALUE INVESTING
We all want to invest wisely. If done correctly then significant money could be made and financial security could be realized. However many people year after year loose money by investing in the stock market. They either pick the wrong companies or outside circumstances cause their investments to take a downward spiral. It is possible to make money by value investing but you need to know what you’re doing.
In this article we will look at some tips to help choose the right companies to invest in to hopefully turn a profit for you.When looking where to invest your money, you should look beyond the price of the stocks. You should look at the cost of the entire company. The market cap the price of all outstanding shares multiplied by the current share price. Thin information is useful because it can prevent you for paying too much for the stock prices.
Getting the right price for stock is essential to good value investing.When choosing a company to invest in, try to find out if they are buying back shares. If they are buying back shares they are increasing the overall value of each individual share make making fewer shares available. Is like dividing a circle.
Two circles could be the same size, but if you could only pick one piece from one of the circles, you would likely choose the piece from the circle divided in to four pieces rather than the one divided into 6.Finally, you should ask yourself how long you want to own the stocks for. If you’re looking to make quick money then value investing may not be the way you want to go. Financial genius’s frequently loose money trying to make it fast so don’t think your going to outsmart the stock market. The best thing to do is to find a good company, get the best price possible and reinvest the dividends. Keep your money in there for 10 or more years and your chances of making a profit are much greater.
In this article we will look at some tips to help choose the right companies to invest in to hopefully turn a profit for you.When looking where to invest your money, you should look beyond the price of the stocks. You should look at the cost of the entire company. The market cap the price of all outstanding shares multiplied by the current share price. Thin information is useful because it can prevent you for paying too much for the stock prices.
Getting the right price for stock is essential to good value investing.When choosing a company to invest in, try to find out if they are buying back shares. If they are buying back shares they are increasing the overall value of each individual share make making fewer shares available. Is like dividing a circle.
Two circles could be the same size, but if you could only pick one piece from one of the circles, you would likely choose the piece from the circle divided in to four pieces rather than the one divided into 6.Finally, you should ask yourself how long you want to own the stocks for. If you’re looking to make quick money then value investing may not be the way you want to go. Financial genius’s frequently loose money trying to make it fast so don’t think your going to outsmart the stock market. The best thing to do is to find a good company, get the best price possible and reinvest the dividends. Keep your money in there for 10 or more years and your chances of making a profit are much greater.
Monday, June 11, 2007
HOW TO START YOUR OWN BUSINESS
Having the idea to start your own business is more than most people have, so you are already one step ahead of those people. When you are considering a small business start up then your mind is probably filled with questions about your business ideas, start up costs, and start up funding.
Still the biggest concern at this point is whether or not you have what it takes to successfully start and run your own business.
There are a keys that will actually help you determine whether or not you are cut out for such a hands on job. A key ingredient for small business success if truly having a passion for your business niche. It is a fact that you are able to learn more about business fundamentals and acquire a more in depth knowledge about the field of choice if you have a passion or at the very least a deep interest. It is much easier to convince customers if you are convinced your self. It is hard to sell something that you don't believe in or have an interest in.
This passion is also important in other aspects in your business as well. Without this drive to succeed you will have a much harder time overcoming any challenges that come your way. You must accept the fact that no business ever starts up smoothly without any bumps in the road.
Regardless of the amount of time you spent planning there will always be something that is out of your control. Possibly the most important ingredient of all is the desire and ability to work for your self. Everyone dreams of the day they won't have to deal with a schedule or a strict boss looking over your shoulders. However not everyone has the ability to successfully work for themselves. Many people get too lazy and need someone there to get them back o
Still the biggest concern at this point is whether or not you have what it takes to successfully start and run your own business.
There are a keys that will actually help you determine whether or not you are cut out for such a hands on job. A key ingredient for small business success if truly having a passion for your business niche. It is a fact that you are able to learn more about business fundamentals and acquire a more in depth knowledge about the field of choice if you have a passion or at the very least a deep interest. It is much easier to convince customers if you are convinced your self. It is hard to sell something that you don't believe in or have an interest in.
This passion is also important in other aspects in your business as well. Without this drive to succeed you will have a much harder time overcoming any challenges that come your way. You must accept the fact that no business ever starts up smoothly without any bumps in the road.
Regardless of the amount of time you spent planning there will always be something that is out of your control. Possibly the most important ingredient of all is the desire and ability to work for your self. Everyone dreams of the day they won't have to deal with a schedule or a strict boss looking over your shoulders. However not everyone has the ability to successfully work for themselves. Many people get too lazy and need someone there to get them back o
Thursday, May 17, 2007
SHOW ME THE MONEY
As the stock market was experiencing its biggest one day drop ever last week, and as many investors watched their portfolios shrivel, I realized two very important things. One, there's nothing sadder than a shriveling portfolio, and two, the stock market could crash like a circus fat lady falling over a lawn chair and it wouldn't affect me in the least. I own no stocks. All my money's tied up in bills. You know, electric bill, phone bill, Visa bill, etc. I know, I know, I should be investing in long term growth stocks and no load mutual funds and high return commodity contracts.
I should be planning for my financial future, saving for a rainy day, gathering nuts for the winter, yada, yada, yada. The truth is, I gave up trying to save for retirement years ago when I realized it was a lost cause. I'm 37 years old. In order to have enough money to live comfortably by the time I'm 65 I would have to wisely invest $20,000 a year for the next 28 years. Now, I'm not about to divulge my salary (I don't need your pity), but if I had an extra twenty grand a year to invest I don't think I'd be sitting around worrying about retirement. I'd be having too much fun spending all that extra cash! Maybe I'd take investing a little more seriously if I knew how the stock market really worked. As it is, I don't know my NASDAQ from a hole in the ground.
All I know is what I see on the news. You have a crowd of angry men in a trading pit, shouting and cussing, pushing and shoving, gritting their teeth and elbowing each other in the ribs. This reminds me too much of the buffet line at Grandma's funeral. I'm not gonna trust these guys with my money. I'm not too worried about living out my twilight years in poverty, though, because I do have a plan. There's an ancient Chinese proverb that goes, "Invest in your children and your returns will be many." A beautiful thought, huh. The moment I cracked open that takeout fortune cookie and found those words on the little slip of paper I knew I had struck gold. Here's the Knox translation: Be nice to your kids when they're young and they'll take care of you when you're old. And don't worry, if being nice to them doesn't work, there's always guilt. If you're a little hesitant about sponging off your kids, think about this. Statistics show that raising a child from birth to age 18 costs approximately $300,000! And that's just for funny haircuts and Air Jordans. I think a little payback is in order here, don't you? If it makes you feel any better we'll put a time limit on it. Since we as parents are legally responsible for the little darlings until they are 18 years old, we'll use 18 as the benchmark. Using myself as an example, here's how it would work. Let's say I retire at age 65. Upon retirement, my kids would become legally responsible for me. They have to clothe me, feed me, give me a nice place to live, pay for expensive piano lessons I'll never take, let me borrow the car whenever I want, and listen without comment
when I play my music too loud. Add 18 years to my 65 and that gets me to age 83. With the life expectancy of the average American, white male being 75, I'll be dead long before they can legally kick me out! A brilliant plan, really, except for the part where I die. So let those with disposable income throw their money into the stock market. I'll be investing in disposable diapers. Gotta keep those kids happy, you know. I'm counting on them
I should be planning for my financial future, saving for a rainy day, gathering nuts for the winter, yada, yada, yada. The truth is, I gave up trying to save for retirement years ago when I realized it was a lost cause. I'm 37 years old. In order to have enough money to live comfortably by the time I'm 65 I would have to wisely invest $20,000 a year for the next 28 years. Now, I'm not about to divulge my salary (I don't need your pity), but if I had an extra twenty grand a year to invest I don't think I'd be sitting around worrying about retirement. I'd be having too much fun spending all that extra cash! Maybe I'd take investing a little more seriously if I knew how the stock market really worked. As it is, I don't know my NASDAQ from a hole in the ground.
All I know is what I see on the news. You have a crowd of angry men in a trading pit, shouting and cussing, pushing and shoving, gritting their teeth and elbowing each other in the ribs. This reminds me too much of the buffet line at Grandma's funeral. I'm not gonna trust these guys with my money. I'm not too worried about living out my twilight years in poverty, though, because I do have a plan. There's an ancient Chinese proverb that goes, "Invest in your children and your returns will be many." A beautiful thought, huh. The moment I cracked open that takeout fortune cookie and found those words on the little slip of paper I knew I had struck gold. Here's the Knox translation: Be nice to your kids when they're young and they'll take care of you when you're old. And don't worry, if being nice to them doesn't work, there's always guilt. If you're a little hesitant about sponging off your kids, think about this. Statistics show that raising a child from birth to age 18 costs approximately $300,000! And that's just for funny haircuts and Air Jordans. I think a little payback is in order here, don't you? If it makes you feel any better we'll put a time limit on it. Since we as parents are legally responsible for the little darlings until they are 18 years old, we'll use 18 as the benchmark. Using myself as an example, here's how it would work. Let's say I retire at age 65. Upon retirement, my kids would become legally responsible for me. They have to clothe me, feed me, give me a nice place to live, pay for expensive piano lessons I'll never take, let me borrow the car whenever I want, and listen without comment
when I play my music too loud. Add 18 years to my 65 and that gets me to age 83. With the life expectancy of the average American, white male being 75, I'll be dead long before they can legally kick me out! A brilliant plan, really, except for the part where I die. So let those with disposable income throw their money into the stock market. I'll be investing in disposable diapers. Gotta keep those kids happy, you know. I'm counting on them
Friday, April 27, 2007
HOW TO MAKE MONEY
In order to make money, you also need money to make one. But you don’t have to invest a lot of money to make more money. You just need a few dollars and some cunning to earn a lot.Below are some of the ways that you can earn money from the little that you have.Invest in stocksIt can be really frightening but to those who love to take risks, the rewards of the stock market to can skyrocket when you get lucky.
Even a small amounts of money can yield more than you can imagine if you play the market right.There are actually stocks that are valued in less than a cent. This, you can buy in bulk and see if they go up. When they do, sell the stocks and then buy again. This method of buying and selling can give you a lot of earnings but it can also make you lose a lot.If you, however, have a few thousands kept, you can always buy blue chips that you can keep in the long run. Blue chip stocks refer to the stocks of big companies that are valued high.
These stocks do not often go down in value.Invest in mutual fundsAnother way to make more is to invest in mutual funds. Mutual fund managers pool together the money of a lot of people and then invest them in properties, in the stock market, in government bonds and in other high-yielding investments.Because the money pooled together is high, one can expect to also get a higher yield compared to when you are investing just for yourself.It is important though that you study and carefully select the mutual fund company where you will be investing your money in. Make sure that they are credible and have good track records.Put up a small businessWhen you have excess money, nothing can yield a higher reward than your own business. Use some of your savings to finance the business. Who knows, your business may become successful! You don’t have to start really big. In fact, you can even start off your operations inside your home. Start small and then little by little expand.
You will just notice that one day you have a thriving business.You can start with buying and then selling or perhaps start producing small stuffs that you can easily sell to other people. Think of something that you can design or produce; then sell them off to others. It is good to think of a business that is based on your interests. Consider art or crafts if you are fond of these pastimes.Time depositsAlthough the yield in time deposits is not so high compared to other forms of investments, the risk is small.
This is ideal for people who cannot afford to lose their money in various investments. Time deposits are similar to bank accounts except that the initial deposit that they require is larger and you cannot touch your money for a specific period of time.Some time deposits can last for as short as a month while others can continue for more than 3 years. The longer the period of the time deposit, the higher should the interest be.
Even a small amounts of money can yield more than you can imagine if you play the market right.There are actually stocks that are valued in less than a cent. This, you can buy in bulk and see if they go up. When they do, sell the stocks and then buy again. This method of buying and selling can give you a lot of earnings but it can also make you lose a lot.If you, however, have a few thousands kept, you can always buy blue chips that you can keep in the long run. Blue chip stocks refer to the stocks of big companies that are valued high.
These stocks do not often go down in value.Invest in mutual fundsAnother way to make more is to invest in mutual funds. Mutual fund managers pool together the money of a lot of people and then invest them in properties, in the stock market, in government bonds and in other high-yielding investments.Because the money pooled together is high, one can expect to also get a higher yield compared to when you are investing just for yourself.It is important though that you study and carefully select the mutual fund company where you will be investing your money in. Make sure that they are credible and have good track records.Put up a small businessWhen you have excess money, nothing can yield a higher reward than your own business. Use some of your savings to finance the business. Who knows, your business may become successful! You don’t have to start really big. In fact, you can even start off your operations inside your home. Start small and then little by little expand.
You will just notice that one day you have a thriving business.You can start with buying and then selling or perhaps start producing small stuffs that you can easily sell to other people. Think of something that you can design or produce; then sell them off to others. It is good to think of a business that is based on your interests. Consider art or crafts if you are fond of these pastimes.Time depositsAlthough the yield in time deposits is not so high compared to other forms of investments, the risk is small.
This is ideal for people who cannot afford to lose their money in various investments. Time deposits are similar to bank accounts except that the initial deposit that they require is larger and you cannot touch your money for a specific period of time.Some time deposits can last for as short as a month while others can continue for more than 3 years. The longer the period of the time deposit, the higher should the interest be.
Wednesday, April 18, 2007
INVESTMENT NEWS GOODOR BAD
As I become more and more involved with the world of investing, I have noticed one thing that causes me to get a little annoyed. That one thing is how financial news is reported. In a world that has everyone connected and up-to-date with so much information; I have begun to wonder how much that impacts the stock market.In my opinion, too much news has played upon the fears of many investors.
This has turned an already risky game into an extremely volatile game. This is because to many investors simply react out of emotion instead of finding the facts out for themselves. I also think some of the professional investors on Wall Street play on the emotions of the small investors.So
I do pose the question as to whether the markets may become too volatile in the future as people are connected 24 hours a day through so many new technologies. Will this constant access to information make it better or worse for the average investor? In the old days before the internet and 24 hour news channels; I would think less irrational selling of stocks based on news and information would have occurred. Today anyone who invests in stocks online is slammed with news good and bad.
Some may say that all this information is a good thing, and investors need to do their own research before putting money in or taking money out of the stock market. I do agree that every investor is responsible for their own actions. However, I think there is increasing number of new investors who will fall victim to their emotions based on too much information.I realize financial news stories and the technologies that distribute them can not be stopped. However, I do feel that media outlets need to put greater care into what they publish. Comments that may make a stock price go up or down quickly that are not based on realities, or may be over-exaggerated could be playing on the emotions of many investors
This has turned an already risky game into an extremely volatile game. This is because to many investors simply react out of emotion instead of finding the facts out for themselves. I also think some of the professional investors on Wall Street play on the emotions of the small investors.So
I do pose the question as to whether the markets may become too volatile in the future as people are connected 24 hours a day through so many new technologies. Will this constant access to information make it better or worse for the average investor? In the old days before the internet and 24 hour news channels; I would think less irrational selling of stocks based on news and information would have occurred. Today anyone who invests in stocks online is slammed with news good and bad.
Some may say that all this information is a good thing, and investors need to do their own research before putting money in or taking money out of the stock market. I do agree that every investor is responsible for their own actions. However, I think there is increasing number of new investors who will fall victim to their emotions based on too much information.I realize financial news stories and the technologies that distribute them can not be stopped. However, I do feel that media outlets need to put greater care into what they publish. Comments that may make a stock price go up or down quickly that are not based on realities, or may be over-exaggerated could be playing on the emotions of many investors
Friday, April 13, 2007
101TIPS TO BECOME RICH
Building Wealth – Millions of people all over the world seek the key to building wealth, yet it remains an ever elusive achievement to even those that have more resources than the average Joe and Jane. In fact, it doesn’t matter if your black, white, Latino, Asian, Christian, Buddhist, Muslim, Brazilian, Japanese, Kuwaiti, British, German, Spanish, Italian, Cuban, Chilean, American, or Canadian, the key to building wealth is the same no matter your nationality, ethnicity, race, or religion.
Yet so many people seek so many different solutions such as skipping from Merrill Lynch to Goldman Sachs to J.P. Morgan, to seeking out independent financial consultants, to speculating in assets they don’t understand, to buying investment newsletters to do their research for them. And the great majority of people that have been searching in this manner to build wealth are still searching today. Why?The answer is quite simple. All of these investors have a common denominator of failure and one lacking common denominator that is highly predictive of success. Their common denominator
of failure that binds them together is the fact that all of their searches to build wealth were motivated by the desire to find the easy way out to build wealth. The placement of their money in someone else’s hands to manage, the purchase of newsletters to provide their stock picks for them, and the greed driven behavior of gambling in speculative assets. Their common missing ingredient and their reason for lack of success, is their refusal to seize personal responsibility for learning how to manage their own money.So the million dollar question is literally this: What is the fastest way to build wealth?The Answer: Take the time to learn a proper investing system, seize responsibility for your financial future, and manage your own money. Unfortunately there are truly not any viable alternatives to this answer.
We’re here to show you why. Below we provide 101 Reasons Why Managing Your Own Money is the Quickest Way to Build Wealth(1) No financial consultant or investment firm will ever care more about the performance of your portfolio than you. Reasons (2) and (3) are quite lengthy because they help clarify reason (1).(2) This is perhaps the second most important reason. Most people realize that most financial consultants are nothing more than glorified salesmen and saleswomen, even if they do work for a prestigious investment firm. I’m not sure what the statistics regarding this are, but the next time you speak to the branch manager of your brokerage house, ask him to see the annual returns of the top five best-paid financial consultants in his office for the last five years.
Then ask him which financial consultants in the office have earned the best returns for their clients over the last five years and ask to see these returns. Don’t let the branch manager answer your questions by giving you the annual returns of the best five internal or external money managers that the investment firm utilizes. This response does not answer your question. First of all, it is highly unlikely that the top producers hire the top five best performing money managers year after year as any major global investment firm utilizes hundreds of money managers. By this, I mean that most financial consultants make zero decisions about what stocks are purchased with the money that you give them. They hire either internal or external money managers to do this for you. You want to find out what returns the top five best-paid producers in your office earn annually for their clients based upon the mix of money managers they hire for their clients.
If a branch manager refuses to divulge this information, you have to wonder why? If they tell you they do not know, why would it be of so little significance to the firm what kinds of returns the top producers earn for their clients that they don’t even track this information? And if they know, but won’t tell you, why would they not release this information? Shouldn’t the best paid financial consultants in any office be earning their clients the best returns year after year after year over any other financial consultant by a very wide margin. And if not, why are they being compensated so highly? The answers to these questions, if you receive honest answers, should reveal that great salesmen are compensated very handsomely by their firms while almost zero premium is put on the ability of a financial consultant to earn great returns for their clients.(3) Building on point (2), many investors will then say, OK. I’ll find myself the financial consultant, the one that falls in the top 0.5% of all consultants that really know what they are doing, and I’ll hire him or her. Here is why they are wrong again.
Because most people never take the time to properly learn how to invest themselves, they never can understand the investment strategies of those that truly know what they are doing. This lack of understanding, despite any efforts on behalf of the consultant to educate the client, inevitably leads to incessant questioning of this consultant’s actions, strategies, etc. which can grow very tiresome very quickly. I have dropped large accounts in the past because of such meddling, sophomoric behavior from clients that had a lot of money. Consultants that truly know what they are doing, despite their efforts, can not educate you fully in 3-4 hours time if you have been conditioned for years to believe the nonsense that global investment firms have taught you. Furthermore, because great consultants realize that so many widely believed concepts about investing are nonsense, and have achieved their great performance by realizing this, they will constantly be fighting an uphill battle against clients that believe this nonsense.
Therefore the chances that they would keep these clients in the long run are slim to none.Even if one finds the rare consultant that truly knows what he or she is doing, and truly has outperformed the markets significantly year in and year out, because these types of consultants invest so differently than the status quo, any lack of exposure to such intelligent investment strategies will undoubtedly cause fear. It is human nature that ignorance leads to fear. In turn, fear causes incessant badgering and questioning, a behavior that 100% of the time will cause a great financial consultant to terminate a relationship with a client. Because great consultants achieve their outperformance by making decisions that go against the grain of what 99% of other financial consultants do, a great level of understanding of how to invest properly is necessary for one to even to maintain a relationship with a great consultant. In the end, even if one doesn’t wish to manage his or her own money AND even if one is able to find that rare 1 in 1,000 financial consultant that really knows what he or she is doing, one still needs to learn a comprehensive investment system just to maintain a healthy relationship with their knowledgeable consultant. Ultimately, this is why you should learn to manage your own money!(4) Global investment firms always tout a message of trust in their commercials. But where is the historical performance that merits that trust? 6% to 10% a year?(5) 6% to 10% will never help you build wealth. You must learn to at least earn 15% to 25% or more every year. At 8% a year, it will take you 9 years to grow $250,000 to $500,000 and 18 years to grow $250,000 to $1,000,000 in a non-taxable account, not considering the erosion in purchasing power due to inflation. At 25% a year, it will take you less than 7 years to grow $250,000 into a $1,000,000 in a non-taxable account. That’s the difference between building wealth and preserving wealth. 6% to 10% a year helps you preserve wealth, not build it.(6) Major global firms will NEVER find the best stocks in the global market and hold them in your portfolio. (7) Reason (4) is true because major firms coverage of small and micro cap stocks are appallingly light. Firms must provide extensive coverage of large cap stocks , the Genentechs, the IBMs, the McDonalds, the General Electrics of the world to appease their clients. However, the Microsofts of the future are small and micro cap stocks now. You can’t build wealth buying and holding the IBMS of the global stock world.(8) Information technology and the flattening of the information world now makes it easier for you to be much more knowledgeable than any financial consultant employed by any of the major investment firms.(9) Financial consultants, because of the payout grid that dictates their salaries, are often motivated by selling you the highest commission based products, not necessarily what is in your best interest.(10) Investors that have actually built wealth through investing like Warren Buffet, George Soros, even Mark Cuban, have all managed their own money. Investors that have already amassed great wealth employ money managers. That should tell you something about what’s necessary to build wealth. (11) Even large global investment houses only have the resources to track about 1,500 stocks.
There are estimated to be over 75,000 stocks that trade globally. Investors want coverage of the most popular stocks in their country which means that the great majority of stocks that firms’ analysts cover are large cap domestic stocks. When I worked for a large Wall Street investment house, many times stocks I wanted to buy that were traded in China, stocks that returned triple digit returns in less than a year, had zero coverage at this firm. You want to own the best stocks in the world, you have to manage your own money. Give your money to someone else to manage, and chances are very very high that you will never own the best stocks and opportunities in the world.(12) There is a reason why you consistently hear statistics like 3% of individuals own 95% of the wealth, no matter what country you visit. The reason is that these 3% of people took the time to learn how to manage their money themselves and thus have truly built wealth. If you don’t believe that your returns should be limited to the knowledge of your financial consultant, then manage your own money.
For example, how many times have you asked your financial consultant, I’d like to invest in gold, or I’d like to invest in dollar declining funds, or I’d like to invest in Chinese markets, only to have your financial consultant stare at you blankly and say, “the safest way to invest is what I’m doing for you now.” I once heard this anecdotal story. A wealthy individual asked his financial consultant, one of the top producers at his firm, why he didn’t own any stocks in the Chinese stock market. The consultant said just give me some time and I’ll get you a list of stocks that we can buy. When he produced the list, the list contained the American-based Chinese restaurant chain P.F. Changs stock. If this is the kind of advice a top producer gives, you may think how can he be a top producer? Just read this entire list, and you’ll realize how easy it is for these types of situations to exist at top investment firms.Although this list contains 101 reasons, for the sake of space, we cannot list all 101 reasons here. To read the rest of this "101 Reasons" list, please follow the link below
Yet so many people seek so many different solutions such as skipping from Merrill Lynch to Goldman Sachs to J.P. Morgan, to seeking out independent financial consultants, to speculating in assets they don’t understand, to buying investment newsletters to do their research for them. And the great majority of people that have been searching in this manner to build wealth are still searching today. Why?The answer is quite simple. All of these investors have a common denominator of failure and one lacking common denominator that is highly predictive of success. Their common denominator
of failure that binds them together is the fact that all of their searches to build wealth were motivated by the desire to find the easy way out to build wealth. The placement of their money in someone else’s hands to manage, the purchase of newsletters to provide their stock picks for them, and the greed driven behavior of gambling in speculative assets. Their common missing ingredient and their reason for lack of success, is their refusal to seize personal responsibility for learning how to manage their own money.So the million dollar question is literally this: What is the fastest way to build wealth?The Answer: Take the time to learn a proper investing system, seize responsibility for your financial future, and manage your own money. Unfortunately there are truly not any viable alternatives to this answer.
We’re here to show you why. Below we provide 101 Reasons Why Managing Your Own Money is the Quickest Way to Build Wealth(1) No financial consultant or investment firm will ever care more about the performance of your portfolio than you. Reasons (2) and (3) are quite lengthy because they help clarify reason (1).(2) This is perhaps the second most important reason. Most people realize that most financial consultants are nothing more than glorified salesmen and saleswomen, even if they do work for a prestigious investment firm. I’m not sure what the statistics regarding this are, but the next time you speak to the branch manager of your brokerage house, ask him to see the annual returns of the top five best-paid financial consultants in his office for the last five years.
Then ask him which financial consultants in the office have earned the best returns for their clients over the last five years and ask to see these returns. Don’t let the branch manager answer your questions by giving you the annual returns of the best five internal or external money managers that the investment firm utilizes. This response does not answer your question. First of all, it is highly unlikely that the top producers hire the top five best performing money managers year after year as any major global investment firm utilizes hundreds of money managers. By this, I mean that most financial consultants make zero decisions about what stocks are purchased with the money that you give them. They hire either internal or external money managers to do this for you. You want to find out what returns the top five best-paid producers in your office earn annually for their clients based upon the mix of money managers they hire for their clients.
If a branch manager refuses to divulge this information, you have to wonder why? If they tell you they do not know, why would it be of so little significance to the firm what kinds of returns the top producers earn for their clients that they don’t even track this information? And if they know, but won’t tell you, why would they not release this information? Shouldn’t the best paid financial consultants in any office be earning their clients the best returns year after year after year over any other financial consultant by a very wide margin. And if not, why are they being compensated so highly? The answers to these questions, if you receive honest answers, should reveal that great salesmen are compensated very handsomely by their firms while almost zero premium is put on the ability of a financial consultant to earn great returns for their clients.(3) Building on point (2), many investors will then say, OK. I’ll find myself the financial consultant, the one that falls in the top 0.5% of all consultants that really know what they are doing, and I’ll hire him or her. Here is why they are wrong again.
Because most people never take the time to properly learn how to invest themselves, they never can understand the investment strategies of those that truly know what they are doing. This lack of understanding, despite any efforts on behalf of the consultant to educate the client, inevitably leads to incessant questioning of this consultant’s actions, strategies, etc. which can grow very tiresome very quickly. I have dropped large accounts in the past because of such meddling, sophomoric behavior from clients that had a lot of money. Consultants that truly know what they are doing, despite their efforts, can not educate you fully in 3-4 hours time if you have been conditioned for years to believe the nonsense that global investment firms have taught you. Furthermore, because great consultants realize that so many widely believed concepts about investing are nonsense, and have achieved their great performance by realizing this, they will constantly be fighting an uphill battle against clients that believe this nonsense.
Therefore the chances that they would keep these clients in the long run are slim to none.Even if one finds the rare consultant that truly knows what he or she is doing, and truly has outperformed the markets significantly year in and year out, because these types of consultants invest so differently than the status quo, any lack of exposure to such intelligent investment strategies will undoubtedly cause fear. It is human nature that ignorance leads to fear. In turn, fear causes incessant badgering and questioning, a behavior that 100% of the time will cause a great financial consultant to terminate a relationship with a client. Because great consultants achieve their outperformance by making decisions that go against the grain of what 99% of other financial consultants do, a great level of understanding of how to invest properly is necessary for one to even to maintain a relationship with a great consultant. In the end, even if one doesn’t wish to manage his or her own money AND even if one is able to find that rare 1 in 1,000 financial consultant that really knows what he or she is doing, one still needs to learn a comprehensive investment system just to maintain a healthy relationship with their knowledgeable consultant. Ultimately, this is why you should learn to manage your own money!(4) Global investment firms always tout a message of trust in their commercials. But where is the historical performance that merits that trust? 6% to 10% a year?(5) 6% to 10% will never help you build wealth. You must learn to at least earn 15% to 25% or more every year. At 8% a year, it will take you 9 years to grow $250,000 to $500,000 and 18 years to grow $250,000 to $1,000,000 in a non-taxable account, not considering the erosion in purchasing power due to inflation. At 25% a year, it will take you less than 7 years to grow $250,000 into a $1,000,000 in a non-taxable account. That’s the difference between building wealth and preserving wealth. 6% to 10% a year helps you preserve wealth, not build it.(6) Major global firms will NEVER find the best stocks in the global market and hold them in your portfolio. (7) Reason (4) is true because major firms coverage of small and micro cap stocks are appallingly light. Firms must provide extensive coverage of large cap stocks , the Genentechs, the IBMs, the McDonalds, the General Electrics of the world to appease their clients. However, the Microsofts of the future are small and micro cap stocks now. You can’t build wealth buying and holding the IBMS of the global stock world.(8) Information technology and the flattening of the information world now makes it easier for you to be much more knowledgeable than any financial consultant employed by any of the major investment firms.(9) Financial consultants, because of the payout grid that dictates their salaries, are often motivated by selling you the highest commission based products, not necessarily what is in your best interest.(10) Investors that have actually built wealth through investing like Warren Buffet, George Soros, even Mark Cuban, have all managed their own money. Investors that have already amassed great wealth employ money managers. That should tell you something about what’s necessary to build wealth. (11) Even large global investment houses only have the resources to track about 1,500 stocks.
There are estimated to be over 75,000 stocks that trade globally. Investors want coverage of the most popular stocks in their country which means that the great majority of stocks that firms’ analysts cover are large cap domestic stocks. When I worked for a large Wall Street investment house, many times stocks I wanted to buy that were traded in China, stocks that returned triple digit returns in less than a year, had zero coverage at this firm. You want to own the best stocks in the world, you have to manage your own money. Give your money to someone else to manage, and chances are very very high that you will never own the best stocks and opportunities in the world.(12) There is a reason why you consistently hear statistics like 3% of individuals own 95% of the wealth, no matter what country you visit. The reason is that these 3% of people took the time to learn how to manage their money themselves and thus have truly built wealth. If you don’t believe that your returns should be limited to the knowledge of your financial consultant, then manage your own money.
For example, how many times have you asked your financial consultant, I’d like to invest in gold, or I’d like to invest in dollar declining funds, or I’d like to invest in Chinese markets, only to have your financial consultant stare at you blankly and say, “the safest way to invest is what I’m doing for you now.” I once heard this anecdotal story. A wealthy individual asked his financial consultant, one of the top producers at his firm, why he didn’t own any stocks in the Chinese stock market. The consultant said just give me some time and I’ll get you a list of stocks that we can buy. When he produced the list, the list contained the American-based Chinese restaurant chain P.F. Changs stock. If this is the kind of advice a top producer gives, you may think how can he be a top producer? Just read this entire list, and you’ll realize how easy it is for these types of situations to exist at top investment firms.Although this list contains 101 reasons, for the sake of space, we cannot list all 101 reasons here. To read the rest of this "101 Reasons" list, please follow the link below
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