Everyone knows that mostly all wealthy people have one thing in common... They all invest. We all want to be like the all time great Warren Buffet, who makes millions at a time investing in stocks; it sounds great and it looks fun! But when you're ready to start investing in the stock market is it okay to just put your money in and cross your fingers? The answer seems obvious, but it is incredible how many people do just that when they get started in the investment game. There are many factors that people like Warren Buffet consider when they invest in a stock... Why not use the same principles when we invest? Here are some things to consider when choosing which stock to invest in.
1) Is it a Commodity Based Company or a Monopoly?
You're driving your car down the street one Saturday afternoon, and your car needs some gas. You see two gas stations next to each other, and you pick Shell over Mobil. Why did you make this decision....? If I had to guess, I would say it was the price. There are many other examples than just gas, but the company you invest in CANNOT get it's competitive advantage from the price that they offer their customers. If company A lowers their price, company B will lower their price too. Sooner or later, both companies will be shrinking their profits and potentially run out of business! Let's look at Coca- Cola for a quick moment. You look at a coke bottle and sitting right next to it, there's an off brand soda that's selling for slightly less. Which product do you think the majority of customers are going to choose. Of course.... It's the Coke bottle! It doesn't matter what price Coke's competitors are going for; Coca- Cola is a monopoly, and customers are going to be drink Coke until the day they die. I can use the same example with Frito Lays, Pepsi, and so on and so forth. Next time you choose a stock, make sure it's a monopoly!
2) Does the Company Have to Spend a lot of Money to Reproduce Their Merchandise?
Warren Buffet not only likes to invest in Monopolies, he likes to invest in companies that don't have to spend a fortune to sell their product. When choosing a stock, does that company have to pay an astronomical amount of money to stay in business? Let's look at General Motors for example... General Motors has had a reputation over the last couple of decades to disappoint a lot of their investors (However they have made other investors a lot of money). But General Motors is a great company you say! Let's dive into why this might be the case... When business is not going well for GM (Let's say the market crashes), they may find themselves struggling to produce profits. When profits are low, they need to sell more product, and when they need to sell more product, they need to produce more product. Here's the problem.... When needing to produce product, profits can go down significantly if the economy is doing poorly and no one can afford to give GM business. As a result, profits go down, the company is not happy, and the investors are not happy. On the other hand, do you think Coca- Cola needs to spend a ton of money in order to sell their Coke bottles and cans? Of course not! Buffet sees this as a huge advantage to the company, and you should to. Next time you choose to invest in a company, check out what it is they are selling!
3) Does the Company Have Good Management?
This one is absolutely crucial. Good management can be one of the single most important factors in choosing an investment. Warren Buffet wakes up every morning, and reads the annual reports of each company he is interested in to see if the management for that company is up to his standards. If the management isn't good, it doesn't matter how profitable the company is, the management can mess it all up. The key here is to really UNDERSTAND what it is you are getting yourself into, and to know what the company plans on doing with your money. What are there plans for the next few years? How has the companies decisions affected their investors in the past? Does the company take some of their profits and buy back some of their own shares? (This can be extremely beneficial for investors... Buffet loves it when companies do this).
4) Does the Company Pay Dividends? (Might Not Be What You Expect!)
How many of you watch Shark Tank? Kevin O'Leary, who happens to be one of my favorite sharks, swears on the fact that you should NEVER invest in a stock if the company doesn't pay dividends. While many extremely wealthy investors agree with this principle, Warren Buffet strongly disagrees. While it is true that receiving a dividend every quarter translates into more money in your pocket, the fact of the matter is that you have to pay income tax every single time you receive this dividend. In addition, when one receives this dividend, one would be smart to reinvest this money into another stock to receive "compound interest." But what if we did our research, and the company has extremely good management? What if instead of paying you this dividend, the company took the money and reinvested it back into their business; or bought back their shares, thus increasing your profits as an investor? Now, the investor doesn't have to pay any income taxes on these gains, and the management is ran so well, (And the company is a Monopoly) that the return they would get by reinvesting their funds into the business, is far greater than the return you would receive by investing this money into a different stock. Think about it... If you are taxed 15-20% every time you receive your dividend, AND THEN reinvest that money, wouldn't it be far better to get taxed 0% and let a great management team use that money to increase your profits even more? This my friends, is the beauty of compound interest and good management.
Warren Buffet is the 2nd wealthiest man in America, and it is actually incredible how "simple" his actions were to receive this fortune. Buffet's company, Berkshire Hathaway, began a progressive strategy of diverting cash flows from the core business into other investments. That's all! They invest and invest some more. It's no secret here that Buffet knows a thing or two about investing, and it's also no secret that anyone else who wants to be financially free should be investing as well... The Buffet way. Buffet makes sure to analyze every single deal carefully and analytically. Rather than blindly investing and trusting others with his money, he studies the market, makes sure that his investments are in the hands of good management, and buys to never sell! Next time you make an investment in the stock market, analyze the Buffet way. Make sure you are fully understanding the company and what you are investing in, rather than just looking at the market trends.You'll be pleasantly surprised that you really don't need a home run to become financially free... Just a few base hits here and there. Thank you all for reading, and feel free to comment your thoughts and opinions. Many more to come!
Friday, February 16, 2018
Friday, February 9, 2018
Ready to Buy a House? 3 Things To Consider Before You Buy One
You've been working diligently for a long time, you've been saving your money for years, you have a good job, and the time has finally come... You are ready to buy yourself a house! What an exciting time this can be. It's the American dream isn't it? For some yes, but for others, it can be the worst financial mistake that they ever make in their lives. For some, this one transaction forever ruins their chances of becoming financially independent. So what can we do to make sure that it's a good decision? I'm glad you asked...
1) Your Home is NOT an Asset, It is a Liability
I have discussed this in previous blogs, but for those who didn't get the chance to read it, I would like to emphasize this point. If you have an option between an expensive house and a cheap house, your CPA will likely tell you to get the more expensive house due to the tax benefits and due to the fact that it can be a great investment. Don't fall for this trap! While it is true that there are tax benefits to having a nice house, what the CPA forgot to mention is that the more expensive the house is, the more expensive your interest payments are going to be! Getting a house that you can't afford can hold you back from financial freedom for a VERY long time. Take this into account, In the year 2017, homeowners in San Francisco spent 42% of their income on their mortgage payment. FORTY- TWO PERCENT. If you are losing 42% of your income every single year to mortgage payments and interest, how would you be able to manage your money, make investments, and ultimately become financially free? In "Rich Dad Poor Dad" by Robert Kiyosaki, Kiyosaki explains how the wealthy define an asset and a liability. An asset makes money, and a liability takes away money. Having a mortgage payment every month (especially one this high) not only puts you in debt for the next 15 to 30 years, but if you end up not being able to make your payments, you're house will be foreclosed, and your credit will be severely hurt! I'm not saying that buying a nice house is bad thing... What I am saying is make sure that are financially free BEFORE you want to enjoy the luxury of having a nice house. So remember.... Next time (Or the first time) you're going to make this big purchase, you are purchasing a liability!
2) You Have Better Financial Options Than Buying a House
For most people in America, buying a house is the single biggest investment that the average person makes in their entire lives... Is this a mistake? Many wealthy people think so. Putting a lot of money into your house can limit your ability to make future investments, so what is your other option?..... Living for free. You read that right! Let's say that you're looking to make your first home purchase. You find a house for $200,000, which means that you need to come up with around $40,000 for a down payment. This will give you roughly $6,500 a year in interest payments, and roughly $5,500 in principle payments, for a total of $12,000 a year towards your house (Ouch!). Now what if instead, we took the same $40,000 and bought a duplex for $200,000... We rent one side to a tenant, and you live in the other side. Let's say you charge this person $900 a month for the comfortable 2 bed 1 bath that he is living in, and from that you profit about $500 a month, or $6,000 a year. Congratulations, you have just cut your expenses in half! What if you did that with a quadplex; think you might be able to live for free if you budget correctly? This my friends, is the beauty of real estate.
3) There Are a lot More Out of Pocket Costs Than You Think When Purchasing a Home
When you buy a $300,000 you're only paying $300,000 plus interest right? WRONG. Let's take a real life example from Nomad Capitalist and think about this for a second... So the average price of a home in the United States is about $355,000, which means you would need $71,000 to purchase this home. This gives you a loan balance of $284,000, and we'll assume a 3.5% interest rate (by the time you buy a home this interest rate may be 8%). This gives you a monthly payment of roughly $1,700, and a total principle and interest payment of $612,000 by the end of the mortgage (which is $257,000 more than the original amount). If you have an average property tax of 1.15%, you will spend an additional $122,500 over 30 years. Lastly, let's include the upkeep, maintenance, and repairs at 1% per year, which is $106,500 over 30 years. This is a total of $841,000 over 30 years (Ouch!)! "But James, I now own this house in 30 years and my net worth has gone up due to appreciation, right?" While this is true, You have also lost a tremendous amount of money during this time, and if net worth is your concern, there are MUCH better investments that one could make to increase their net worth. Next time you're thinking about purchasing a home, realize that you're buying more than just the house itself; you're buying the expenses that come with the house as well.
The point of this post was not to discourage the thought of purchasing a home altogether, but rather, to inform home buyers what they are getting themselves into once the purchase is made. Yes, purchasing a home does have it's benefits... For one, you get a place to call your own, but there is one HUGE benefit in owning a home. If you or someone you know owns a house for 2 years or more, they are entitled to a $250,000 tax exemption when they sell the property ($500,000 if you're married)! You can thank Trump's new tax plan for keeping this law. Don't let Uncle Sam take money away from you that is rightfully yours! If you are going to buy a house, know what you are entitled to, and don't forget to always live below your means. If you can't afford it, you can't afford it. Money is a lot easier to make when your expenses are low, and if you purchase your home with all of the information contained in this post, you will be one step further on your journey to financial freedom. Thanks again for reading, many more to come.
1) Your Home is NOT an Asset, It is a Liability
I have discussed this in previous blogs, but for those who didn't get the chance to read it, I would like to emphasize this point. If you have an option between an expensive house and a cheap house, your CPA will likely tell you to get the more expensive house due to the tax benefits and due to the fact that it can be a great investment. Don't fall for this trap! While it is true that there are tax benefits to having a nice house, what the CPA forgot to mention is that the more expensive the house is, the more expensive your interest payments are going to be! Getting a house that you can't afford can hold you back from financial freedom for a VERY long time. Take this into account, In the year 2017, homeowners in San Francisco spent 42% of their income on their mortgage payment. FORTY- TWO PERCENT. If you are losing 42% of your income every single year to mortgage payments and interest, how would you be able to manage your money, make investments, and ultimately become financially free? In "Rich Dad Poor Dad" by Robert Kiyosaki, Kiyosaki explains how the wealthy define an asset and a liability. An asset makes money, and a liability takes away money. Having a mortgage payment every month (especially one this high) not only puts you in debt for the next 15 to 30 years, but if you end up not being able to make your payments, you're house will be foreclosed, and your credit will be severely hurt! I'm not saying that buying a nice house is bad thing... What I am saying is make sure that are financially free BEFORE you want to enjoy the luxury of having a nice house. So remember.... Next time (Or the first time) you're going to make this big purchase, you are purchasing a liability!
2) You Have Better Financial Options Than Buying a House
For most people in America, buying a house is the single biggest investment that the average person makes in their entire lives... Is this a mistake? Many wealthy people think so. Putting a lot of money into your house can limit your ability to make future investments, so what is your other option?..... Living for free. You read that right! Let's say that you're looking to make your first home purchase. You find a house for $200,000, which means that you need to come up with around $40,000 for a down payment. This will give you roughly $6,500 a year in interest payments, and roughly $5,500 in principle payments, for a total of $12,000 a year towards your house (Ouch!). Now what if instead, we took the same $40,000 and bought a duplex for $200,000... We rent one side to a tenant, and you live in the other side. Let's say you charge this person $900 a month for the comfortable 2 bed 1 bath that he is living in, and from that you profit about $500 a month, or $6,000 a year. Congratulations, you have just cut your expenses in half! What if you did that with a quadplex; think you might be able to live for free if you budget correctly? This my friends, is the beauty of real estate.
3) There Are a lot More Out of Pocket Costs Than You Think When Purchasing a Home
When you buy a $300,000 you're only paying $300,000 plus interest right? WRONG. Let's take a real life example from Nomad Capitalist and think about this for a second... So the average price of a home in the United States is about $355,000, which means you would need $71,000 to purchase this home. This gives you a loan balance of $284,000, and we'll assume a 3.5% interest rate (by the time you buy a home this interest rate may be 8%). This gives you a monthly payment of roughly $1,700, and a total principle and interest payment of $612,000 by the end of the mortgage (which is $257,000 more than the original amount). If you have an average property tax of 1.15%, you will spend an additional $122,500 over 30 years. Lastly, let's include the upkeep, maintenance, and repairs at 1% per year, which is $106,500 over 30 years. This is a total of $841,000 over 30 years (Ouch!)! "But James, I now own this house in 30 years and my net worth has gone up due to appreciation, right?" While this is true, You have also lost a tremendous amount of money during this time, and if net worth is your concern, there are MUCH better investments that one could make to increase their net worth. Next time you're thinking about purchasing a home, realize that you're buying more than just the house itself; you're buying the expenses that come with the house as well.
The point of this post was not to discourage the thought of purchasing a home altogether, but rather, to inform home buyers what they are getting themselves into once the purchase is made. Yes, purchasing a home does have it's benefits... For one, you get a place to call your own, but there is one HUGE benefit in owning a home. If you or someone you know owns a house for 2 years or more, they are entitled to a $250,000 tax exemption when they sell the property ($500,000 if you're married)! You can thank Trump's new tax plan for keeping this law. Don't let Uncle Sam take money away from you that is rightfully yours! If you are going to buy a house, know what you are entitled to, and don't forget to always live below your means. If you can't afford it, you can't afford it. Money is a lot easier to make when your expenses are low, and if you purchase your home with all of the information contained in this post, you will be one step further on your journey to financial freedom. Thanks again for reading, many more to come.
Friday, February 2, 2018
3 Reasons Why Investing in Your 401k Might Not be a Good Idea
There's no way you read the title right... Is this guy crazy? Everyone knows that investing in a 401k is the secret to obtaining wealth. I mean come on... There's tax benefits, there's the company match, and there's many other benefits! But reading this simple blog may change your perspective a little bit. Now keep in mind that this post isn't for everyone. If you're okay with living a slightly above average life, then investing in a 401k might be a great idea (in fact investing in a 401k puts you ahead of the majority)... But if your goal is financial freedom, put your reading glasses on!
So why might investing in a 401k not be your best option?
1) YOU ARE TRUSTING AVERAGE PEOPLE WITH YOUR MONEY
There's a saying that basically says, "The only place where people trust those with less money than them is Wall Street." Put this into perspective... The average financial adviser makes roughly $60,000 per year. If he was that intelligent financially, don't you think he/she would be making some great investments himself? Wouldn't he be making a little more than just $60,000 per year? Of course he would! There is absolutely no reason to trust someone across the country in suit and tie with your money.. In fact, in trusting this financial adviser, you may very well lose your money during a market crash or even a bad decision on his part! If your 401k is being invested through a mutual fund, think again. It may be far riskier than you think, and you might end up retiring like most of America... Broke!!
2) THERE ARE BETTER INVESTMENTS OUT THERE FOR YOU
Do you see Warren Buffet, Richard Branson, Mark Cuban, Dean Graziosi, or any other successful individuals investing in a 401k or a mutual fund? You don't.... And that's because they see that there are far better investment opportunities out there for them. I'm a firm believer that putting your complete focus on one investment niche is far better than diversifying. Mark Cuban quotes during an interview with Alan Murray that "Diversification is for idiots." How can you really know what's going on with your 401k? Is there any possible way for you to keep track of the hundreds (or even thousands) of stocks that your mutual fund is invested in? Not a chance... Not to mention the fact that countless baby boomers have come to there retirement days without a dime to there name. They had no idea what was going on with their 401k, and when the time came to take their money out, there was nothing there. If you want to truly become financially free, take the Warren Buffet approach. Buffet has gone full years without investing in a single stock, and he has gone through the majority of his career only investing in a few stocks that he understands.... Today the man is worth 86 BILLION dollars. Do you think he knows what he's doing?
3) YOU HAVE NO CONTROL OF YOUR FINANCIAL FUTURE
The main reason why so many people want money (lots of money) is to be in control of there life, or "free." There are several problems with a 401k if you want to be in control of your financial future, however. Firstly, if you want to take any money out of your 401k before you are 59.5 years old, there is a 10% deduction... Secondly, if your only investment is in your 401k, you have absolutely no control over how much money you're going to gain or lose 30 years from now (or even one year from now!). On the other hand, if you analyze every single investment you go into, YOU are in control of where your money goes, and YOU are in control of your future. Whenever I go into a real estate deal I analyze the location, the price, the taxes, cost of insurance, the building material, and countless other factors before I go into a deal. I know for a 100% fact that I'm going to make money going into the investment. With a 401k this simply isn't possible. Warren Buffet thinks the exact same way going into a stock. For example, in "Buffettology" by Mary Buffet, Buffet constantly talks about how he would rather invest in 5 stocks that he can truly understand and analyze, than to blindly invest in a stock that everyone else is investing in. Everyone is investing in Bitcoin right now.... Buffet is not. One of his favorite sayings is, "If a taxi driver tells you to invest in it, it's probably time to sell your investment." Don't follow the crowd, take control of your financial future!
Like I said in the beginning of this blog... Investing in a 401k CAN be beneficial. Many financial experts advise people to stay away from it, and many others say it's a great financial option. It all comes down to this: If you know how to analyze an investment and make a calculated decision, then that is likely your best option (I say likely because if there is a company match, it may be a good idea to eventually put all of your funds in an IRA, and then transfer to the investment vehicle of your choice). If you are uncomfortable with investing on your own, and would like someone else to do it for you, then maybe a 401k is best for you. That being said, whether we like it or not, we live in an economic world. Almost every decision we make in life has to do with money one way or another, and if you don't know what you're doing financially, the world is going to crush you. If you don't know what to do with your money, someone else will, and it might be at your expense. Take control of your own financial destiny, and don't go into things that you don't truly understand. Take the time to read about finances, learn the pros and cons of your investment decisions, and become totally fulfilled knowing that you have control of every decision in your life!
Thank you to all for reading, many more to come.
So why might investing in a 401k not be your best option?
1) YOU ARE TRUSTING AVERAGE PEOPLE WITH YOUR MONEY
There's a saying that basically says, "The only place where people trust those with less money than them is Wall Street." Put this into perspective... The average financial adviser makes roughly $60,000 per year. If he was that intelligent financially, don't you think he/she would be making some great investments himself? Wouldn't he be making a little more than just $60,000 per year? Of course he would! There is absolutely no reason to trust someone across the country in suit and tie with your money.. In fact, in trusting this financial adviser, you may very well lose your money during a market crash or even a bad decision on his part! If your 401k is being invested through a mutual fund, think again. It may be far riskier than you think, and you might end up retiring like most of America... Broke!!
2) THERE ARE BETTER INVESTMENTS OUT THERE FOR YOU
Do you see Warren Buffet, Richard Branson, Mark Cuban, Dean Graziosi, or any other successful individuals investing in a 401k or a mutual fund? You don't.... And that's because they see that there are far better investment opportunities out there for them. I'm a firm believer that putting your complete focus on one investment niche is far better than diversifying. Mark Cuban quotes during an interview with Alan Murray that "Diversification is for idiots." How can you really know what's going on with your 401k? Is there any possible way for you to keep track of the hundreds (or even thousands) of stocks that your mutual fund is invested in? Not a chance... Not to mention the fact that countless baby boomers have come to there retirement days without a dime to there name. They had no idea what was going on with their 401k, and when the time came to take their money out, there was nothing there. If you want to truly become financially free, take the Warren Buffet approach. Buffet has gone full years without investing in a single stock, and he has gone through the majority of his career only investing in a few stocks that he understands.... Today the man is worth 86 BILLION dollars. Do you think he knows what he's doing?
3) YOU HAVE NO CONTROL OF YOUR FINANCIAL FUTURE
The main reason why so many people want money (lots of money) is to be in control of there life, or "free." There are several problems with a 401k if you want to be in control of your financial future, however. Firstly, if you want to take any money out of your 401k before you are 59.5 years old, there is a 10% deduction... Secondly, if your only investment is in your 401k, you have absolutely no control over how much money you're going to gain or lose 30 years from now (or even one year from now!). On the other hand, if you analyze every single investment you go into, YOU are in control of where your money goes, and YOU are in control of your future. Whenever I go into a real estate deal I analyze the location, the price, the taxes, cost of insurance, the building material, and countless other factors before I go into a deal. I know for a 100% fact that I'm going to make money going into the investment. With a 401k this simply isn't possible. Warren Buffet thinks the exact same way going into a stock. For example, in "Buffettology" by Mary Buffet, Buffet constantly talks about how he would rather invest in 5 stocks that he can truly understand and analyze, than to blindly invest in a stock that everyone else is investing in. Everyone is investing in Bitcoin right now.... Buffet is not. One of his favorite sayings is, "If a taxi driver tells you to invest in it, it's probably time to sell your investment." Don't follow the crowd, take control of your financial future!
Like I said in the beginning of this blog... Investing in a 401k CAN be beneficial. Many financial experts advise people to stay away from it, and many others say it's a great financial option. It all comes down to this: If you know how to analyze an investment and make a calculated decision, then that is likely your best option (I say likely because if there is a company match, it may be a good idea to eventually put all of your funds in an IRA, and then transfer to the investment vehicle of your choice). If you are uncomfortable with investing on your own, and would like someone else to do it for you, then maybe a 401k is best for you. That being said, whether we like it or not, we live in an economic world. Almost every decision we make in life has to do with money one way or another, and if you don't know what you're doing financially, the world is going to crush you. If you don't know what to do with your money, someone else will, and it might be at your expense. Take control of your own financial destiny, and don't go into things that you don't truly understand. Take the time to read about finances, learn the pros and cons of your investment decisions, and become totally fulfilled knowing that you have control of every decision in your life!
Thank you to all for reading, many more to come.
Friday, January 26, 2018
5 Reasons You're Not Financially Free
Let's be realistic with each other for the next five minutes... The majority of people in America have a HUGE problem with their finances. Over 50% of America is in debt (bad debt), the number one cause for divorce in America is fiances, and the leading cause of stress in America is money, yet it seems as though people go about their days thinking that the money is going to just come to them, I know I've thought this way! But there are plenty of reasons why the average American stays in debt. Successful people all over the country have had similar habits for years, and they all follow pretty much the same pattern, yet so many people just don't understand a thing about money. Well, it is my hope that through this post, we can all take the necessary steps to financial freedom! So why aren't you financially free?
1. You Don't Live Below Your Means.
Let's face it, getting that new car, that new watch, those new shoes, and that extra drink at the bar feels great.... For a moment. In "The Millionaire Next Door" by Thomas J. Stanley (Which I recommend to everyone starting this journey) the author interviews various millionaires and compares them to those who didn't quite make it financially. What was common between the millionaires? They all had a very average car, they hardly spent over $100 on shoes, they mostly preferred a sandwich over caviar, and they could live without the fancy suits and unnecessary luxuries in life (Oh, and their wife was better at saving money then they were). Next time you make a big purchase, what's more important to you? Temporary pleasure? Or financial freedom.
2. You Have Poor Financial Management Habits
In "The Richest Man in Babylon" by George S. Clason, the central message throughout the book was to give yourself 10% of your paycheck no matter what. This means pay yourself first! It doesn't matter if you work at McDonald's, or if you're the CEO of Google, paying yourself before paying any of your bills is essential to becoming financially free. It's not surprising to me anymore when I hear about an NBA player, or lottery winner who becomes bankrupt (because I hear about it all the time!). It's not about what you make, it's about what you keep. Robert Kiyosaki (Founder of the Rich Dad series) is huge on this. He says even before he pays his taxes, he pays himself first. For him this is a way to motivate himself to work harder, because he knows that the taxes have to be paid. So do what the wealthy do.... Pay yourself first, then worry about everything else.
3.You Don't Know How the Rich Distinguish Between a Liability and an Asset
You think your house is an asset right? Many wealthy individuals would strongly disagree with you. The rich have quite a different definition than what you might find in the dictionary... They define it like this: An asset makes you money, a liability takes money away from you. So is that mortgage on your house giving you money or taking money away from you every month? Is that car payment giving you money or taking money away from you every month? Taking away money! Now, on the other hand, is the dividend on that stock giving or taking away? Is the rent your receiving every month from your real estate investment giving or taking away? I think you get the point. This simple understanding my friends, is why the rich get richer, and the poor become poorer. Own assets, not liabilities!
4. You Invest in What You Don't Understand
If I came up to you and told you to give me your money, because I was going to invest in 10 random stocks with your money to see what happens, would you give me your money? Of course not! One of Warren Buffet's #1 rules to investing is to make sure you understand something before you invest in it. When you are putting your money in a mutual fund, do you know every single stock that your money is going towards? Are you investing in crypto because everyone else is, or because you truly understand what you are doing with your money? Putting your money into something you don't understand is just asking for it... If you don't understand it, don't do it!
5. You Save Your Money
Wait what? I'm not financially free because I save my money? That's right! Grant Cardone, author of "The 10X Rule" and "The Millionaire Booklet," talks about this all the time. He says that what Wall Street doesn't tell you, is that money gets bored... Very quickly. If you have your money in the bank it is so much easier to get bored and blow it on a vacation, or on any consumer item! Getting rid of you money as soon as you get it is one of the single most important laws of money. The goal here is get your money to work hard for you, not for you to work hard for your money. Whether it is the stock market, real estate, a bond, crypto, or mutual funds (make sure you understand it!), putting your money to work immediately rather than keeping it underneath your bed is one of the key ingredients to creating wealth.
I truly believe that working on your financial health is one of the single best ways to create freedom, control and fulfillment in your life. Don't sit back and be average, go out there and make a difference! If you want to change the world in anyway, it's going to take money, and if you're not willing to take the necessary steps to manage your finances, you're going to end up like the rest of America.... Broke! Take care of your money so you can spend time with your wife and kids, make it to Johnny's soccer game, and ultimately, make the world a better place.
Thanks for reading. Many more to come.
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