Will you follow their advice?

Kia Ora,

Well this will be my last blog on financial education as next week a new law comes into effect here in NZ & these blogs could be in breach of that law.

The new law requires financial advisors to have completed a certain amount of training. But will you follow their advice?

More importantly will that advice be any good?

One commentator has outlined that basically by giving advice you are giving opinions & that is what a blog is, an opinion.

But what is this law really going to do?

That is an easy answer. The laws being implimented will mean that no one really gets true financial advice from most as they are generally only sales people, nothing more.

The reason we have financial advisors are generally most people are  too lazy to do the homework required to ensure that their own financial wellbeing.

The true advisor will be always looking outside the mainstream at investments that most see as too risky. But they are only risky because of a lack of financial education.

So when you look overseas you see that what has about to happen is about to happen here & is being pushed in other industries. By requiring people to 'fit; in by completing required courses it will channel their thinking to where those manipulating  wish people to put their money so they can use it.

 Then you get people like the 'angry man' saying you can not comment if you do not have the formal qualifications.

All that shows is we have someone who has brought into the new slavery, but the world is changing & a lot of people are starting to question the relevance of all these degrees & formal qualifications.

Experience is more relevant, like how many mistakes have you made, have you tried this & what lessons did you learn?

But for now that is to be surpressed here in NZ, so it is more important than ever that people do their own homework & cut aside the flim flam out there as to what is a good investment.

Who designates what an investor is?

Kia Ora,

Well the 'Angry Man' has given me a bit more to write about as I go through his emails of complaints.

On going back to see what else the complaint email contained was the claim that I was not an investor.


Who designates what an investor is? Ideally an investor say in property is in it for the long term, but as I study more & more I find in different areas you can be an investor & the time considered long term can be very short.

So have I been an investor & can I comment on the type of things I have been?

I would say yes just not so far a successful one, but then that is how you learn, making mistakes.

Originally on working in Iraq I knew for my plans to work I needed to be in property, first big mistake was not getting the right advice ( & a better accountant), but probably most of all was not reading this book I had heard about. Rich Dad Poor Dad. Things would be certainly going a lot better right now if I had.

So as much as giving education these blogs as I think I have said before are about showing my mistakes, why make them when you can learn from someone elses.

To make things work though I have looked at trading options to give me a cash flow, a couple of MLM (multi level marketing) ideas, continuing on with my businesses, of course property investment (hardest part here is finding the financiers who understand what you are on about, it doesn't fit the modern banking model & why the world is in trouble) & more lately investment in gold & silver along with using the internet including writing my blogs to create cash flow.

So am I an investor. Yes. Have I been successful at it? Not yet.
But then there is the one way to get rich fast as often quoted by Robert Kiyosaki; "Fail faster!"

But then as 'Mr Angry' seems to be, someone who is fixed on the requirement to have a formal qualification, failure is not an option.

Luckily Thomas Edison was asked to leave school as he could not be taught & then failed 10,000 times in his bid to invent the light bulb.

In the real world we fail, in the unreal academic world failure is not acceptable. That seems to part of the problem with young people these days as the education system now seems to teach that no one is a failure.

Will I succeed? I don't know, but if just one person learns something from my blogs to allow them to make a difference in the world then surely it is worth it.

What also seems to be missed in the complaints is if something is been said that challanges the norm, then do your own research.

All the people I have followed in the course of my personal financial education have said the same. They will show you, but do your own homework. Never believe anybody.

The other point is even in your own mistakes, there are always lessons to be learnt.

Working on your own financial education is always going to be a challenge. Some will find it easy, others of us will start great then crash to pull yourself up & try again.

Who is right in Financial Education?

Kia Ora,

Have been meaning to get back into this blog recently as grappled with things, but finally stirred on by a number of anonymous emails I have received regarding my security blog,but which also question my right to comment on security, health & safety & financial issues.

The security, Health & Safety issues have being dealt with through my security blog.

So who has the right to talk about financial education?

The emails basically say that since I have no formal qualifications I can not comment on any of the above.

Funny thing is if you financially educate yourself, you find that those formal qualifications are all part of the big con.

What he should be asking is "so why are you commenting on financial areas such as financial education & the financial crisis when you have not made it yourself?"

I haven't & that has been a struggle to carryon with this blog because of that. But his comments reminded me why I started the blog.


My information comes from those who have made & are generally in the know. One thing that comes through when you go down the road of financial education & again why I started the blog is best way forward is to help others understand & put them on the path of financial education.

The more you help others, the more you see yourself. You see your mistakes & where you can take the next step.

The email writer says I am not an accountant, No, but you do need them. Economist? No, & they are primarily responsible for the mess the world is currently in & digging itself deeper into if they are of the Keynesian variety.

How do people know this? Because you only have to look at history & each time the similar actions have been taken it has ended with a similar result.

When you are discussing racism the most common statement is "I am not racist but..." when you discuss the financial world there is a similar statement "this time it is different". Yet each time through out history despite mans best efforts it has ended the same.

The first time there was an economic crisis that was recorded was 300AD in the Roman Empire, that took about 300 years to happen. It is believed though it happened as far back as Babylon.

Ever since the amounts involved have got bigger & the time it takes has got faster once the tipping point is reached.

So again who is right in financial education?

Yes, I haven't made it but the information I am passing on comes from those who have & who are encouraging people to pass it on.

Or those who have a bit of paper, generally following one line of smoke & mirrors.

Always remember the Golden rule "he who has the gold makes the rules!" so those who have made it will know the rules.

So do you sit back & wait for those with the bit of paper to get it right or do you go & look for yourself. As they say you have to choose your own path to wealth & have the reason for wealth, don't believe anything anybody says, no matter how successful, but research yourself.

My path? Well still working on it as looking to create cash flow to take the first steps back into the investing I would like to do & at the same time grow my businesses.

My reason initially is to make our communities safer, but also provide a place of work mainly for those leaving the military as they adjust to the world outside, which recognizes their skills.

The second part of my reason is to establish sustainable communities (both economically & environmentally) as a base to allow the world to grow.

In Other words to "Make a Difference!"


So with the knowledge I have acquired & the desire to have as many people to know as possible so they can prepare for the time of opportunity I think I have the right to comment on financial matters the same as anyone else.

Fighting Yourself & Your Mindset.

Kia Ora,

Have neglected this blog for a while as being battling with myself. According to those teaching this type of education that I am using, I have the knowledge to succeed, but there is something just holding me back. Me.

It doesn't help that my flatmate's answer to getting things of the ground is to get a job.

That is besides the fact we have played cash flow 101 several times he still does not get it. It is hard enough convincing myself at times that I am on the right track without that coming from a mate.

It comes back to the crab story one of Robert Kiyosaki's advisors talks off. Where she grew up there was a type of crab & once they had two crabs they put them in a box which the crabs could easily climb out of. Why they ensured they had at least two crabs was as soon as one tried to climb out, all the others in the box would pull them back in.

They liken this to your friends & family when you are looking to launch your business or go through investing. You are going through the change in mindset needed but they are afraid of your change & therefore they suggest what is comfortable for them, usually get a job.

News flash, there are not a lot of jobs out there at present. I have carried out temp labouring to help keep my business dreams alive but even that has dried up over the last year or so.

So we have to think of other ways of creating that cash flow.

Recently I went to a seminar & yes thanks for the comment Helen, Kieran Trass was speaking at that seminar. He did have a couple of his games with him.

That seminar gave me some ideas to work on, but in the meantime I have being working on creating cash flow from the internet. Not successful as yet, but starting to get an idea of how this social media can really be useful. Working to a plan that will bring in cash flow from the social media but also advertise my businesses.

One I saw was great. I was on an internet dating site that is totally free & right now for the life of me I can't remember what it was.

Anyway when these sites start up they have to find ways to build members or create cash flow. This one had added adverts & adsense adverts as well. Then I noticed what the adsense adverts were. They were all this sites competitors who had paid for advertising.

So the people who had set up the site were making cash flow that their competitors were paying for & this allowed them to survive as they grew their membership.

It is that type of thinking that inspires me when things are tough. As I work through this social media stuff it starts to dawn on you the ways in which you can use it, which is not in everyones face. True it has taken me about three weeks to learn what some kid could probably get set up for me in five minutes, but I am perservering. Might even get some kid in to make it all work in a better fashion.

All this just shows that maybe those coming through have already learnt the lessons of the rich. Make money out of nothing, by seeing an opportunity.

You just look at Twitter & then you see all the applications that have being develped to make it better.

The comment was made that websites are basically obsolete or just on line brochures now. Set one up cheap, which if you do right will bring you a cash flow as well then link it to your Blog & to your Twitter & Facebook page. Set up a seperate Facebook page for your business & have it open to the public.

Suddenly you have the ability to create cash flow not just from your immediate community but from hundreds of millions who might never use your core service.

One person had 94,000 followers on twitter. Now if one of your tweets caught her eye then she retweeted it a good number of those followers would then retweet it, but also go & look at what it was that she liked.

Beats knocking on doors. So it is limited by our imagination & ability to keep going despite all the issues trying to drag us back.

Your Education Never stops.

Kia Ora,

Well for the last few weeks have being continuing my own financial education & the following points jumped out during the training.

First you have to decide where you want to be. Secure, Comfortable or Rich!

Then it is how you are going to reach the chosen level & the plans will alter for each level.

For example to reach the secure level, where an investment covers all your outgoings (or you are out of the rat race) your plan might be to purchase cash flow positive properties.

Then for the next level you might want to build your business & for the final level you might look at using paper/commodities or paper in the form of an IPO (Initial Public Offering- initial shares when a company goes public).

So different plans for different asset classes.

During this time I also attended an investment property seminar. One of the strategies involved buying properties without any money.

Now that one people always talk about & how risky it is, but all it needs is a mindset change. When you look at the current economic situation, it is not if someone will accept them, but how many.

Just yesterday in the paper there was an advert for a property to buy (not in the real estate section) for around $275, 000 with a valuation of around $795,000.

Part of the strategy mentioned above involved the first offer being half of the value of the property, which people tell me no one will accept, yet here is one on offer.

They are always out there, but having the knowledge & confidence of how to take advantage off them is what is needed.

It might be that all you need is the lawyers costs to ensure you can tie this deal up is all that is holding you back.

It is also being able to spot the opportunity. This one was in the financial pages.

Other areas to look for opportunities are the public notices & some even look in the death notices or hear about couples getting a divorce.

It is what you feel comfortable with.

Learning from Mistakes.

Kia Ora,

I thought I would get back to this week the reasons why I found the Rich Dad Poor Dad series suited me.

Early on he states that you learn in life by making mistakes yet the education system is set up for 'A' students & a system where it is wrong to make mistakes.

Because we all go through the school system we pick up on this & go through life trying to avoid making mistakes.

Personally I always claimed to have learnt more in the army than anyone else as I made more mistakes & the military actually encourage mistakes in training. That is why you train. Better to make most mistakes in training, than when the bullets are flying.

To that end Robert Kiyosaki designed a game called Cashflow 101 then 202 so you can make more mistakes when playing than having to use your real money.

Since then other groups or people involved in wealth creation have taken that on board & there are now a few games that do the same.

It all fits with the 'Cone of learning' where we learn most by doing the actual task, next by simulating (in the military we called this BHL/BHE-Battle Handling Lessons followed by Battle Handling Exercises, then exercises proper) the real life situation.

The next level is by playing games.

Funnily enough the ways most people learn the least is by reading or lectures.

It is probably why I made so many mistakes in the army. I am essentially an 'A' student in that I do learn most by reading, but choose a profession where it required me to perform at a practical level.

But it does open you up to opportunities. The next step is how to take advantage of them.

Currently besides writing my blogs on the subjects I am passionate about, it is supposed to be a way to create cash flow, but it is a slow process.

Virtually everytime I am on I see something I have being doing wrong so fix to see how that makes a difference.

On the big picture I can see how they all connect ( I will get my twitter up & running soon, someday), but the nuts & bolts are a bit different.

As they say it is the same with investing. Most people make a mistake doing it & give up, saying it was too risky instead of trying to learn the lessons it presented. It is hard at times to see those lessons because you are upset at the latest person to have ripped you off or misled you.

Even those that are successful may still have a lot of lessons to learn if they are to hold on to it.

Many people suddenly come into a great amount of money through lotto or good jobs, but it is not how much you make or have that measures your wealth but how much you keep.

It is also about learning the laws applicable as there is a lot you can do, that most people will say you "can't do that here". It just takes some knowledge to find out how you can do that here or more importanly a change in mindset.

Many people get upset with what others are doing to keep their lifestyle going. Calling them crooks, but it is more a lack of knowledge on one parties part, than anything criminal in nature.

Continuing your Education

Kia Ora,

I was going to follow on from the last blog with several other reasons that Rich Dad Poor Dad made an impression on me. But that will have to wait.

With financial education it never ends.

In amongst a busy work period I was able to take time out to attend a property investment seminar at the cost of NZ$47. That $47 may end up being the best investment I have ever made.

The first point picked up was on a way to purchase property with no money. Yes with no money. Now people such as Robert Kiyosaki say this all the time that "you don't need money to get rich", but it takes a mindset change to be able to see it even when it is presented to you.

Next point was pick a strategy & stick with it. With this extra knowledge I can now look again at my original strategy with renewed confidence, but they also pointed out be prepared to change strategy when required.

To that end another strategy that doesn't even involve being in NZ was on show. It just needed a good initial outlay to get into.

But it is one that can be used later & for cash flow aloan it is a great strategy, never mind the potential upside.

One of the presenters though also was able to assist in how to make cash flow on line. What online business at a property investment seminar?

Actually he was acting as MC & helped put the seminar together. This person is extremely good at his business & many would say extremely wealthy at only 25, but he has needed to learn what to do with his money & so hence I have now seen him at two seminars.

But what I have learnt from him now means I am looking to gain cash flow from several sources to give me financial freedom, help others & invest.

Whats more with the power of the internet all could be going well within a very short time.

There is always a but though. My but, & something several of the presenters made a point of, was dealing with the issues you have (& may not realize) that are likely to be holding you back.

All this points to never stop learning about anything including yourself. You never know when that light bulb will go on.

Business & Investing are Team sports!

Kia  Ora,

In the last blog I commented about being negative. There is one other time when I am negative as are most people when you have set backs.

This is where one comment by Robert Kiyosaki hit me. In the school system if you co-operate it is called cheating, where as to survive in business & investing you need to build a team of people you can trust.

Now for my security business I know I can get the right people on the operational & even much of the administration side of things as they come from the military & understand team work.

One of the things those of who have being in the military struggle with when leaving is the actual lack of teamwork in the civilian workplace.

It is the other parts of my team that I struggle with. Like accountants, lawyers, investors & any other add ons. Trying to find those that one you can trust, two understand where you want to go with your business, three are prepared to educate you & lastly know more than you in what you are looking at.

Another quote from Robert is if you are the smartest person in the room then you are in trouble & I have being the smartest person in the room with so called professionals.

But what my study has found as I go through this financial education process is the most important team member is your partner in life. Something I am sadly lacking at present.

It is that person to lean on & listen  when things go wrong as it does.

When you go back in history you see it & though most of the examples are American, you can see it anywhere.

Henry Ford was encouraged by his wife through out, Thomas Edison found each night he came in, no matter what time, his wife was waiting for him to hear about his day. Good & bad. Everyone tends to forget when they turn on their lights that he failed 10,000 times before he got it right. He needed some support somewhere.

Those examples though tend to follow the saying "behind every good man there is a good woman". But it works the other way too.

Today it tends to be more equals, where maybe early one one realises their dreams then they shift to realise the others dream.

Or the one I like is Robert & Kim Kiyosaki where they have set up their own businesses as well as being in business together, so they are not reliant on each other. It has made them closer from all accounts.

The biggest point though for your partner seems to be they must understand your mindset, dreams & goals.

You can have a relationship with different mindsets, but it makes it harder & during the hard times each will revert to their type, causing friction.

Opportunities or Negativity?

Kia Ora,

I have being chatting to someone who is looking to move to NZ. They are saying I am negative on how it is here & yes it can come across as that. When I look at it I see two things that I am doing.

The first is being a realist. Too many people arrive in NZ with a starry eyed view to suddenly be confronted by the realities.

The second can be taken as negativity, but in fact in a ham fisted way I am trying to get across to them what the rich do.

The rich look for problems then aim to find solutions. Because if there is a problem you can bet most people are staying away from it. But a problem will lower the price of something & you make your profit when you buy, not when you sell.

So for example in a recent blog I talked about some rooms in a complex up for mortgagee sale. Eight in one day & there has being a steady stream of them lately.
Having looked at a property here before I know there is a problem. If I had the cash I would be buying those for no more than fair value, which is well below the valueation.

I noted that their occupancy was not great either, so if, with all that is going on over these I could own a large majority I would change things & use these good quality rooms for those on a benefit. Means certain occupation & any issues you get the rent paid straight from WINZ.

Also means with expected issues to come with this set up, my company that owned the rooms would engage my security company to provide guards around the clock.

Although you have to be careful in the set up of the contracts there.

But that is a simple way of looking at problems. Look for a problem & come up with a solution. I have seen a real problem in the security industry for a long time & have being working on a way to fill that gap. True there have being set backs & haven't quite made it.

So whilst I have being voicing my concerns, I have also being working at ways after each set back to plug that gap.

You just have to open your mind to the opportunities out there & then find a way to deliver. Once you do there are so many opportunities daily it is just frustrating that when you are unable to take advantage of them

Coming from a family with roots in an isolated area,we are good at seeing opportunites, not so good at converting them.

At one security company I was asked to come to a meeting with opportunities I could see. One mate came with none, one with two, the boss with one & I showed up with 26.

So to convert them it is obvious I need to team up with others who have strengths in those areas.

What the Eye can't see!

Kia Ora,

As I am going through the Rich Dad Coaching program it is bringing up issues that I think are holding me back, despite all this knowledge. Much of it has to do with the way we think & what is imprinted on our sub conscious from an early age & how hard that can be to change.

The more you educate yourself in the real financial world, the more you see, but not with your eyes.

For example at present the PIIGS (Portugal, Ireland, Italy, Greece & Spain) are in trouble. In particular Greece & plans are beiong hatched to bail them out. As this is happening there has being a move towards buying the 'safe' haven investments of the US dollar & US bonds. But the longer term bonds are struggling to sell, so the US buys them by printing more money.

This causes the US dollar to actually loose value even though it might not appear to for now.

Now with European policy on money until now likely to cause a deflationary depression, more money will move to the US transferring wealth. This has actually happened in Greece over the last few weeks as an estimated US$10 billion has being transferred out of the country by wealthy investors & I get the impression the same is happening in Dubai.

So as this all flows to the US or UK who have 'saved' their economies by printing money the time is right for something else to kick in.

At some stage all that printed money will result, going on history, in inflation & maybe even hyper inflation.

In the meantime the Chinese, who people thought were creating a bubble of their own, are now in the situation where they maybe about to sell their US bonds & US dollar reserves to punish the US for supplying weapons to Taiwan. Or that is what they want you to think, but it is more likely that as US demand for Chinese goods wanes, the Chinese by ridding themselves of the US dollar & bonds will cause the Yuan to become stronger, therefore allowing their people to buy goods they produce (which they can't for now) & therefore keep the factories producing & therefore creating inflation. For the Chinese are students of a long history & their people are more of a threat than the US.

Inflation in the US will in the end make all that money that is rushing there at moment worthless.

What I can see is this is all manipulation lead by the privately owned central banks to transfer more wealth to those behind those banks & by having people rush their currency to the 'safe' havens are transferring more wealth to them.

Then it all looses value. In the meantime the other safe haven of gold & silver price drops as the US dollar strengthens for a while, & so people get out of it saying it won't go any higher, whilst those that have the education are now waiting to buy.

New Property tax laws

Kia Ora,

Being a few days as issues with the internet & being able to log on have got in the way.

In the mean time I have being carrying on with my study on a Rich Dad coaching course to see where I am personally being held back. It has meant re reading books I have already read & suddenly you see new information.

One part that stood out was a small section on tax law changes in the US in 1986. Now with NZ Government is now proposing the same here in NZ.

What happened in the US was those who had relied on the tax breaks & were negatively geared (or cash flow positive) came out very badly. It caused prices of properties to drop & those in the know were able to benefit greatly by buying properties that had reduced in price & were cash flow positive (or positively geared).

Will the same happen in NZ. No one knows but I wouldn't be surprised. So much that has being carried out by NZ governments in last few years to 'benefit' the people or 'tax' the rich has actually followed the US pattern of only benefitting those in the know.

So right now I am trying to find ways of being able to finance my way into property deals with little or no cash in from me, so I can take advantage when this likely happens.

That is why even though at times it is a struggle, I continue with my financial education & that means usually thinking or doing things that do not fit with the majority. Then I have never being someone who does what everyone else does just for the hell of it.

One of the reasons people don't succeed in becoming rich & helping where they want to in a real & meaningful way is they just want to conform. They have an idea, but when it gets hard listen to what everybody else says who have never made it themselves.  I have being getting that of late.

My answer to one person in particular who says people I am quoting are wrong. "They are Billionaires. What are you?" If you are going to have any chance of succeeding then listen to those who have made it, not someone who is more focussed on a job.

That is their reality.

It is even harder when you are trying to move your mindset to the right side of the cash flow quadrant & everything is going wrong, then people who are scared of you succeeding, because what you are doing scares them are in your ear. It's nto working, get a job. You are aiming too high.

Well if you are going to dream, dream big.

Words & Assumptions

Kia Ora,

I have had an interesting couple of days studying & at the same time there has being more developments in the worlds economy with contradictory comments.

One thing that keeps coming up is the correct use of words can make a huge difference to your thinking.

Some examples are: LUCK (oh they are lucky)- Labouring Under Correct Knowledge- it takes a bit of study/work to get lucky;.
FEAR -False Evidence Appearing Real - If we think one way the evidence will appear to support us & keep us from getting ahead;
FEAR (a second meaning) - Fail Early And Responsibly - people don't like to fail or are scared of making mistakes, but to really get ahead you are best off making a lot of small mistakes early & learning from them.

The other thing that most people do is think that work & hard work will help you get ahead. But by the time you maybe get ahead you are worn out. You need to work smarter, not harder.

But most people think that the only way ahead is to work harder without thinking.

Henry Ford is noted for saying this "Thinking is the hardest work there is".

 Einstein put it differently "Imagination is more important than Knowledge".

When talking about a windfall such as a lotto win in a previous blog it was pointed out that most people end up the same or worse off within five years.

Why? Because they buy on the false assumption of buying liabilities which they think are assets such as a new house,car or boat where as the truly rich would buy assets which will buy them that new house,car or boat. In other words buy assets which then buy your liablilities.

Words & understanding them can stop you from making the false assumptions.

As an Advisory Trustee for a Maori land block I advised on a certain investment. The reply from the trustee was the Act did not allow for speculation. He was using the language of the poor in the Act & his own poor thinking to stop us looking at a way to help my Whanui (wider family grouping-relations) from benefitting. In fact that is why the Maori Trustee was supposedly set up to allow the use of the land to assist Maori to get ahead.

But the language used in the Act is being used to hold people back. Now a rich person thinking would do the research & then use some of the cash available to 'hedge' against inflation by purchasing some of that investment.

In fact what the government of the day has done here is what happens all the time. Smoke & mirrors. For example at present there is a lot of noise about changing the tax laws in NZ to tax property owners.

That will look good to the majority of people, but it will only effect those at the bottom end because there will be an out that still allows those who know to make the best use of their assets.

It is actually how taxes were introduced in particular in the US & I understand Britain. The Governments of the day sold the change to the people, so they would support it as a way for the rich to pay more towards helping fund the governments needs. What people didn't realize was they had just voted themselves a tax, which I understand people in the US still fight as being illegal. But it is sold to the masses as being un American not to pay your taxes. Again a false asumption as America was formed by a protest (The Boston Tea Party) against a tax which lead to the revolution.

We might be in NZ, but the same thing goes on here, the only thing is if people hear about the outs, they have to know how to use it properly. A property can still make a loss on paper because of depreciation, but be cash flow positive.

What has being happening in NZ is people have had properties cash flow negative & depreciation which worked good when the economy was good, but doesn't work well when things go wrong.

Apples versus Oranges.

Kia Ora,

It is the same old story. People are not comparing apples with oranges often especially the sales people  or brokers (one I heard from Robert Kiyosaki is they are only called brokers because they are broker than you).
Or as someone said (I believe it may of being Warren Buffett) Wall street is the only place that people go to in a Rolls Royce to get advice from someone who gets there on the subway.

Anyway back to subject at hand. Comparing apples with Oranges.

In the last blog I talked bout my hotel room. Now this was a good starting investment & therefore I was looking for more of the same to give me a passive income to allow me to concentrate on getting the security business moving.

Now when I looked at these properties that are similar in set up though not a hotel they were not as good as the one I had by a long way.

They were grossly overvalued, claimed a return that on the face of it was about the same of the one I had. But there was a huge difference. Where as the one I had was set up to pay the rates, body corporate & insurance all from the hotel operations, this new one only paid the insurance (because you cannot insure then individually & the hotel/entity cannot raise a loan against them as they are essentialy like Maori land, a lot of owners) & that changed the return quite markedly. Then the bodycorp fees were way out of proportion compared to the one I had.

There was also an expense that seemed to be at the point of legal dispute.

This all though points to being able to buy them at a greatly reduced price. The one I talked about in the previous blog finally was sold for $44,000 I believe down from the $192,000 they originally paid for.

Best thing that could happen for this entity would be one buyer of all units with a plan that ensures they are all occupied.

You get the same situation with anything. For example when I first bought silver within a month the value had jumped nearly $9,000 as the price had gone up US$2.50 plus but the exchange rate had not moved. Since then though at times though there has being large movements in gold & silver the exchange rate has also moved, resulting in a loss if you had to cash it in.

So that price you buy might not be the same as someone who buys higher as the exchange rate may make their purchase less.

Now that situation will remain as the US dollar will continue to loose value thanks to all the printing of money, with occassional rises in that value. So with all that how in the long run are we planning to gain with gold & silver.

Well it has being estimeted that when the exchange rate hits .85 if it remains there for any length of time then NZ businesses will start falling over as it affects our exports.

Therefore we know that the NZ Government is going to have to step in to lower value of NZ dollar to keep economy moving in some fashion.

You look at the world environment & you see China doing something similar by buying resources & commodities as it's greatest threat is from its people. 

As the worlds economies are struggling civil unrest & feeding people are going to be issues.

So back to the gold & silver once the government steps in to assist our exporters, you are going to benefit & know that once it has hit that magic .85 any further rises of the metal prices you will benefit. In the meantime it makes it cheaper to buy with high exchange rate.

What could you do with $63,000?

Kia Ora,

So what are the options if you get that $63,000.

Well you could use it as equity  to buy a business. Thats a business, not a job. True for that amount it is likely to be a job to start with, but buy one where you have the passion & vision to take it further.

You want your life to be getting easier & making a difference by creating jobs for others.

You could invest in real estate using that money again as equity for a cash flow positive property.

Now at present getting a loan for the above two could be difficult. There are an increasing amount of mortgagee sales & you could benefit there. $63,000 wouldn't be enough! Who said?

At the end of 2008 after all my trials & tribulations I had ended up with a freehold commercial property. A hotel room & some cash. only thing due to what I was learning I didn't want a freehold property, but a cash flow positive property.

So I approached the bank about getting a loan against it to either invest in my security company or in another of these properties as values were dropping. No go due to the amount I earned. Also being in debt meant I was taking advantage of the tax laws & so I effectively earned nothing.

What to do? Seen a similar property for sale by mortgagee auction. The property was valued at $192,000 but using what I have learnt when I looked at figures it wasn't worth more than $35,000 & there were issues (which is good).

In the end it didn't sell, but I was contacted to see if I would buy it for $30,000. They wouldn't accept my conditions & I put that cash into Silver.

In the last week there has being about 8 mortgagee sales advertised in that complex & there is at least one a week.

That means if I had the cash I would be in buying. With both the Auckland & Christchurch complexes of this set up there is an issue. Which is good if you could be in a position to buy.  It is conceivable that you could get at least three of these properties for that $63,000 or as things get worse maybe even six. One of the secrets of the rich is to look for a problem then find a solution. It also means you can buy cheaper. It is when you buy that you make your profit & having a plan of how to make it work.

With the issue of no loans I then looked at how I could achieve my goals if no one would loan me the money.

In June of 2009 I went to a Robert Kiyosaki seminar. During that seminar Mike Maloney talked about gold & silver which are part of the commodities market.

So after returning to Christchurch I put that property on the market as though it was cash flow positive it wasn't going to help me.

From there invested more in the commodities market & more in my business to get the cash flow I needed to achieve my goals & dreams.

Now with your $63,000 you could get at present about 14 ounces of gold for $23,000 which could if projections are correct based on history return of US $210,000 & $40,000 in silver which could return between US$2.070 & US$20.70 million on current projections.

They are way out figures but if you study the financial history it has happened before. Don't listen to people who say gold is the highest it has ever being, they are incorrect. It is the highest it has being in the current cycle, but not when adjusted for inflation. It still has another US$1000 plus to just get to even pass that.

Again it is the information from doing your study.

The last asset class is of course paper. Now this is expected to not do so well over the next 10 years & although they may rise, what will the true value be. In saying that there are some that will do very well. Again you have to do your homework,

Shares in some gold companies are expected to rise,but buying ETF's especially if this court case in the US exposes them for not having the assets (gold & silver in partiuclar) could be good for a short time then very very bad. But it will mean a jump in price of real gold & silver.

So $63,000 invested in the right companies could do very well.

You could also invest some of that $63,000 in the most precious thing of all. Your financial education. You might not of done well at school but in the world of investing school smarts doesn't figure strongly. It can help in areas, but if you look at those that have really made it rich, very few if any have a degree. All the people with degrees work for them.

Before people argue Henry Ford had little or no schooling. I believe Thomas Edison was kicked out of school as being a no hoper & not worth educating & even today Sir Richard Branson is dyslexic & struggled at school, as did Robert Kiyosaki.

Bill Gates dropped out of Havard in the first year because someone designed some software, he saw the opportunity, bought the rights to the software off the individual & the rest as they say is history.

You can never say you are too old as Col Sanders lost his job at 66 & went around trying to sell his recipe for chicken to set up his company. Finally he got his finance & again it is history.

It is hard to see the opportunities if you are not educated or are too upset over that latest setback (believe me that is hard to get over), but if you can put that aside & keep going then the light at the end of the tunnel will come.

Having the right information

Kia Ora,

In reponse to one of my blogs a mate put on face book that he would transfer the $50,000 from Aussie to NZ & make $13,000 on the deal.

On the face of it that looks good, but then you have to look at it closer.

To get that $50,000 there I suspect it would of being transferred from NZ, so you loose in the exchange by what is called arbitrage. That is the difference between what the official exchange rate & what entity you put it through is giving.

For example recently the NZ$ was trading at .74, but if you went to the bank on that day you would get .78 one way & probably .70 the other. In other words either way  you loose some money on the transaction.

Therefore if you transfer money across to another country then back you loose each time.

Then there is the issue of all the money being printed means each day that amount becomes less in value.

So then you have to look at where you would get a better return on your money.

Again that is where the education comes in because to most people the best investments look risky, but as Robert Kiyosaki's Rich Dad would say " the most risky thing is lack of education" or words to that effect.

That is financial education not school education.

It doesn't matter what someone tells you, you have to educate yourself.

With each example don't dismiss it or accept it at face value if you really want to have financial literacy then you have to dig further. 

Fear

Kia Ora,
To carry on where I left off on last blog I will look further at why people with a lotto win or windfall are likely to be the same or worse off within 5 years or sooner.

So why would someone loose all that windfall.

First is the fear factor. Windfalls of a large amount of money can cause people to tremble with fear. They no longer feel safe or secure.

Then the actions most carryout doom them to loose it all. They will buy liabilities in a new house, new cars, trips  & any toy going.

Where as someone with a rich mindset would buy assets which then buy those same toys & liabilities for them.

Those statements will be hard for many to understand, but lets look at an example.

You win lotto & buy a new $1 million dollar house free hold. Suddenly your rates are very high, as are your insurance payments & anything else that might go with that.

But the house is not making you any cash flow (except in theory it may of made a capital gain which you don't realize until it actually sells) & this alone with those costs now so high can be enough for the house to be lost.

Where someone with a rich mindset might buy the same house but take out a loan to do it & use the remainder to buy cash flow positive assets. Those assets mean someone else is paying off your mortgage, your rates etc. All those assets are also likely to being bought using good debt.

The other thing that people will do is buy what they think the rich is as in shares. Thing is they have probably being listening when they had no money to what was a good buy & now having the cash they do what most people do.

They have held on until the market is real hot then they buy at the top. The market crashes & they sell at the bottom. The rich do it the opposite way. When everyone is getting in they get out, when everyone is getting out they get in.

But in the mean time our winners have lost more money & come to the conclusion that investing is risky. What is risky is their lack of knowledge!

Technically with that amount of money they are in the rich part of the world, but without the knowledge they are still poor with money for the taking.

The worst thing you can do when you have a winfall is to be asking "what should I do?" There are plenty of people who know what to do with your money.

One person said to me that if they win lotto their plan is to do a couple of things then give the rest to me for my business because I have done the study & have the plan.

That is my plan & it doesn't mean it will always work. As Robert Kiyosaki says they say that 9 out of 10 businesses fail so you just have to start 10 businesses. In fact he succeeded on number three due to his education & learning from his mistakes & they mistakes of others.

By all means invest in a mates business plan, but make sure you understand what is going on & get it all written up in legal terms. Become your own expert.

The comment came as we were talking about another mate who had lent to his best friend & had nothing on paper. Learnt that one myself the hard way. With friends & family you need to protect yourself more legally than most or it will cause rifts.

What would you do if you won Lotto?

Kia Ora,

Most people believe investing is risky. But then they buy a lotto or lottery ticket each week so they have the chance to be rich.

So what would you do if you won?

You listen to the media reports & most people are saying the same. Pay off the mortgage, give to some charities, help their friends & family out, but most of all they won't change.

When I hear that I know they are likely to join the 90% who will be back where they are or worse off within 5 years, possibly even one year.

They as people don't need to change but their mindset does.

OK I would of done as they did once, but after winning a lotto powerball 2nd division prize(it is not that great an amount) I thought I better look into things, then when I landed some work in Iraq, I thought I better look a bit more. So now I work on my investing, but I still buy a lotto ticket & have a plan on how I would invest it.

All it would do is bring my goals closer quicker, it doesn't change my plans essentially.

So what would I do?

This weekend powerball is I think $5 million.

10% goes to charity, usually 10% of any earnings goes to my investment account(no matter how small the amount) but in this case most of it is going to be invested.

From there I would take $3million for investing in each company(3) I have currently set up, each company would then purchase good cash flow investments (probably commercial property of a type I have identified that are likely to do well whatever the economy does).  This will give the companies cash flow to base their operations on & allow them to jointly set up a fourth company in line with my plans. These companies & in fact all my plans are based on my definite major purpose in life & how to make a difference in the world.

The remaining $1.5 million will purchase Gold & Silver as a hedge against the coming inflation/hyperinflation due to the same mistakes history shows will bring this about.

Any little bits extra, as there is always more than the stated amount especially when a lot of tickets are sold, I will treat myself & my partner if I find one.

So what is your plan should you get a windfall? No good saying it won't happen to me, then it won't. Or if it does you will be one of those people who we see on TV who have lost it all. Or you can have the Donald Trump mindset, loose it all & back to a Billionaire again.

Diversification

Kia Ora,

For most people in the world their investing begins & stops in the stop market in the form of mutual funds.

The advice is these offer the best protection by diversifying your portfolio.

Or not putting all your eggs in one basket.

Some call that deworsification or you are making your situation worse by not financially educating yourself.

Warren Buffet basically says that diversification is for those that do not understand or can't be bothered learning or words to that effect.

Why the last few blogs have being about stocks is because when you play the game Cashflow many people get carried away with the fact that stocks get you  the money to buy the properties with passive income.

Now that is important, but it means they miss the point of buying cash flow positive assets. their main focus is on the stocks. To get out of the rat race they rely soley on that stock going up.

When they go looking in real life they  don't find that special stock but invest in a mutual fund because of diversification as it spreads your risk.

The rich on the other hand focus on one area until successful then look at the next. In fact the word focus can be broken down into the following Follow One Course Until Successful.

You can succeed in Mutual funds but despite their claims most Mutual funds do not do well year in or year out. What they do do is provide the broker with a sure income through fees whether the year was good or bad.

If you really want to see how the average Mutual fund does then look at monkeydex.com where the monkey consistantly outperforms mutal funds.

Still if you do the study then Mutual funds might be the way for you.

Personally I have my strategies & they don't include mutual funds especially something like the Kiwisaver here in NZ, my tribal scheme of Whai Rawa or a 401k in the US.

Shorting Stock

Kia Ora,

Thought I would continue with some more around stocks today as I received an email from one of my sources on the subject of shorting stock.

What caught my eye is a point that I probably didn't make that well with options.

When you short a stock you sell what you don't own. The broker has checked that they can borrow the stock & you believe it is going to go down. If it does you then buy it back & the broker returns the borrowed stock to the owner.

Now the concept you can trade or buy & sell something you do not own is something most people struggle with.

But it fits perfectly with the Rich maxium of "Own nothing control everything".

Though I haven't looked at it, I think this is along the lines the Carbon credits & emission trading scheme will work.

You will own say a block of forest & the person polluting will then pay to borrow your credits so they can continue polluting. Or even better someone will sell your credits to someone else after they have paid a lower amount to borrow them from you. It is all about making a market out of nothing.

It has nothing to do with making the environment better. It is just another derivative bubble to keep the economy expanding they hope. One is down so lets come up with another idea.

Warren Buffet has called derivative trading in particular Options "Weapons of Mass Destruction". That doesn't mean he hasn't used derivatives, futures in particular, it is just he is very aware of how good & bad they can be.

It is the same old story before you invest in anything do your homework.

Stock Market

Kia Ora,

When most people think of investing they think of the stock market. To profit in the basic stock market you need to buy low then sell high. Most people buy high & sell low & you actually see this when you play the game of cash flow.

But the stock market is more than just basic stocks. In fact it is always launching new ideas to trade on so to keep expanding the economy. Many of those derivatives are created out of nothing.

You have as an example Shares, ETF's, Options & then short selling.

You can trade as Warren Buffet does where you buy after analysis on value & soundness of the company(note he never bought shares in the dot.com bubble as the companies had no intrinsic (real) value & were not sound. He also didn't understand them) or to just aim for cash flow or for capital gains (where price goes up & you cash in to make a profit).

There is a saying in all trading that "the trend is your friend". Even in a down market there are always good trades which are trending up.

If you think the market is going to go down then you can short the market, that is bet on it going down, but especially if you trade naked (don't have some type of insurance such as actually owning the shares or have an option trade covering it)then you could be in real trouble.

Options can be used both to just trade & bring in cash flow, or as insurance for something you are invested in going the other way even for a short period.

At present Options or the insurance are getting expensive as one of the main factors used in options to determine the price is the volatility. Right now the VOX or options volatility measure has gone very high over the last few days. Even though a current trade I have has gone against me over last three days, its price has stayed the same or gone up as the volatility has gone up.

So if you are going to buy options right now you use strategies that lessen your exposure.

I talk about Option trading because it is the one I understand the best.

It can be a cheaper way into the market, but it can be very dangerous. For example as I have said right now volatility is high & you see a good trade for a call option (that is an option that makes you money when the stock goes up). So you buy that call & in fact the pattern looks so good & your other indicators all are in line including the trend, you put a large amount of your account in the trade.

Everything keeps going up but the volatility falls. Everything is going right but you loose most if not all your money. Why" It is called volatility crush. As the volatility falls, so does the price paid for the option.

So you hang in there in the hope it will come back.

Now this is where options get tricky. They loose most of their value in the last month of trading (unlike a share an option is time based & that also is part of what the price paid is). Many people get in the last month because the charts show it is a good trade & because the time value has being eroded it costs less.

So they buy or you hold on hoping it comes back. If it has gone wrong for me I will be trying to sell or hope it goes to zero.

Why? Because if on expiry date the trade still has that intrinsic (real) value in it then you will be assigned. That is you then have to buy those shares at the full price. Now when you buy one option you actually buy a contract which uin the US is 100 shares or in Aussie 1000 shares give or take a few.

So if that share is worth $50 & you have 5 contracts then that is not 5 times 50, but 500 times 50 you need to pay within I think it is three days.

People go but how because when you buy an option you have the right but not the obligation to buy. That changed when you got assigned & that is in the contract when you sign onto a brokerage account.

So, the point is like any investing if you know the rules it isn't as risky as people think.

Even then you must only invest that which you are prepared to loose.

One thing I have found with options trading I have learnt a lot & still get information that the average person is not privy too. Or the 'rubbish' that my old mate Fish was on about on facebook.

Does it always mean I am right or get to take advantage of that information. Hell no. wish I could, but it gives me something to focus on & move forward too.

How is Debt good?

Kia Ora,

It is one of the things that people find hard to grasp as they are always taught that debt is bad. Much of it is & we go into debt to own our own house or a car or just because we can. But none of those are assets you are buying.

When it is good debt it buys you assets that returns you a positive cash flow return after all associated costs have being covered.

So you buy a house for example with a $5000 deposit you get a loan of $45,000 & the income from the property brings in $150 positive cash flow. Not a great amount but it adds to your, or your entity that owns it, cash flow. Keep a few of these & at some stage you will be in a position to sell & reinvest for greater cash flow or the cash flow from the investments will be greater than your expenses.

True at present getting the loan might be an issue, but at some stage the financial institutions have to lend.

If they don't the economy will collpase.

The whole montary system is set up so that there has to be new currency being pumped into it & that comes through loans.

This is part of the reason why President Obama has ordered US banks to start lending to small businesses.

It takes a change of mindset but if you can put yourself through that then it will be worth it.

Frightening

Kia Ora,

Have just had someone I have being debating this financial education idea with in.

They said that last night they were talking to a young couple who have recently bought a house & are struggling. The next comment from the couple was well at least we have our house as an asset.

That is frightening because yes it is what most people still think. They knew what I was going to say & just maybe the change in thinking required to understand this all is starting to get through.

Maybe not too as then their solution to my cash flow problem is get a job. That thinking was good in the industrial age, but not in the information age. We need to change that thinking.

My issue is more with the mental blocks from the industrial age & identifying the ones that are holding me back. That is an issue we all have to deal with if we are going to make the required changes.

Another mate was asking about buying a house. To me he would be better whilst still in a good paying job to, if he can invest in good cash flow properties (& there are some that will stay good even in this climate) which will give him a cash flow as well as some cash for when the market really tanks to get more what he wants for lower price.

That way he can have his house (a liability despite what the banks say) & some assets that give him cash flow for when he leaves his employment. To help if he wishes I have offered to take my game of cash flow around to play some games. It doesn't cost anything but time.


Remember an asset puts money in your pocket. A liability takes it out.

It is sometimes hard when you are on the cusp of changing sides of the cash flow quadrant & the only answer people have is to get a job.

They mean well, but they are coming at it from their side of the cash flow quadrant & in their context because what you are trying to do to them seems risky. It is only risky if you don't have some knowledge. It might not work, but it is better to move when you see what is coming, than sit there just doing the same old thing.

As the saying goes "there are those who make things happen, those who say what is happening & then those who say what happened?".

Most people fall into the last category.

Knowledge & still struggling

Kia Ora,

It is great having all this knowledge, but when you are still struggling, it is hard to convince others.

It means something is missing or you are not facing up to a fear.

It is even harder to convince the majority when they can't see the wood for the trees.

Or as that Quote Robert Kiyosaki uses, "Don't teach pigs to sing, as it wastes your time & annoys the pig". Or try to help but when it is obvious that they can't change, part friends & agree to disagree.

Right now though it is important for as many people as possible to get their financial IQ up to speed.

Now with it getting harder or even near impossible to use good debt to increase your wealth, there needs to be greater use of  the greatest financial tool available. Your Brain.

If you have kids then ask them what is a great business idea as they will see the future. In particular using the internet to bring in a passive income. Harder for us older folks as we are still caught up in industrial age thinking.

It changed to the information age in 1989, but we are still catching up. It is no longer about going to school, getting good grades to get a good job, it is about working smarter not harder.

That means lowering your bad debt, where possible using good debt (ie a credit card can be both depending on what you use it for. For a new stereo is bad debt, for financial education is good debt).

Most of all it is the hard part of changing your mindset & it is hard.

Another big part of the equation is having that partner who shares the same goals & dreams or purpose. It definitely makes things easier. Me, I am still looking but looking at the examples through out history, it is no accident that their is a saying "Behind every good man there is a good woman". Of course it works the other way too.

Fractional banking

Kia ora,

One of the things that are going to make the next few years difficult is the issue of fractional banking.

It is probably best explained in books like that to the left but will give it a go.

When you deposit money in a bank it gives the bank the right to then loan a number of that currency out. So for example each  $1 you deposit the bank can loan another $10 which it has created out of thin air. The numbers over the last few years have ranged from what I understand from $12 to $40 for each $1 deposited.

So the bank is paying you say 3% for your $1 in savings, but is loaning say $10 at up to 14% or more. Therefore they have multiplied your $1 but at least 10 then pay you a small amount of interest (usually less than real inflation) whilst charging a much greater amount of interest on that currency created out of thin air.

What this means is seen in this saying. A dollar today is worth more than a dollar tomorrow. Since 1971 when the US took their dollar off the gold standard (then it was only a quasi gold standard but it kept things in check) & therefore the worlds currencies for every dollar printed it made all the rest worth less. This causes inflation & in the end the fiat currency as it is now called becomes worthless.

Meanwhile commodiities such as gold & silver revalue themselves as they have done through out history each time this happens.

So for example as the US dollar becomes worth less other countries stop accepting it & then we get deflation which is what has being happening of late. Now to keep things going more money has to be printed or created. One way of creating money is for banks to loan, but they are not doing that at present.

In the US President Obama has just told the banks to start loaning to small businesses (jobs in the rich dad way of thinking) as this is the bread & butter for most economies.

When a bank loans or you use your credit card it creates money that wasn't there before.

For NZ a good example of this is when the couple took off to China with the money given wrongly to them as part of a loan, it was announced that the police will not be able to charge them with theft. There are other charges they can charge them with but not theft because the money wasn't the banks & didn't exist until the couple signed the papers for the loan.

So for the system to keep working it means that money or currency has to keep being created & each time that happens that $1 in your pocket becomes worth less. At some stage the $1 will be worth zero & on historical ecidence that will be 40 years after it became a fiat currency which is 2011 & what ever happens in the US happens between 12 to 18 months later in NZ.

Now at present there are a lot of smoke & mirrors in the US. Banks are going to be charged to ensure they pay back the bailouts.

First many have but they money they are saying is profit or are bailing out with is money from AIG which insured them & has received one of biggest bailouts so far & is now not paying back its bail outs. If AIG fails basically the worlds economies do.

But AIG have to pay back according to the proposed laws. Then comes the next part of the smoke & mirrors. Not covered in those bailouts are the car companies & even more importantly Freddie Mac & Fannie Mae who both just got US$ 200 billion in bail outs. In fact these two will not have to pay back at all. So the money going to them will mean bail outs are being paid back with more bailout money.

They don't even mention Ginnie Mae which has being racking up the debts Freddie Mac & Fannie Mae were stopped from taking on.

It is right now that Warren Buffet has being waiting for. Keeping an eye on good companies or those in industries that will keep going no matter what happens such as security. Here in NZ the richest family used to be the makers of toilet paper.

He will be looking to invest now in what everybody else is getting out off as long as the business is sound.

To invest the way Warren Buffet does you need to be able to read the figures (goes for any investing but his way in particular). He never invests in something he doesn't understand. So he bought into Wrigleys because he unsderstands chewing gum & its other products, but even though Bill Gates is a friend & on Buffets own board of directors he spent years before he bought any shares. He waited until he understood the product or the serivce. All the while though he recommended people buy into Microsoft because he found Gates to be a good person & trusted him. But only invest if you understand the investment.