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.
Sunday, January 31, 2010
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.
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.
Friday, January 29, 2010
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.
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.
Thursday, January 28, 2010
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.
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.
Wednesday, January 27, 2010
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.
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.
Tuesday, January 26, 2010
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.
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.
Monday, January 25, 2010
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.
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.
Sunday, January 24, 2010
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.
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.
Saturday, January 23, 2010
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.
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.
Friday, January 22, 2010
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.
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.
Wednesday, January 20, 2010
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.
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.
Tuesday, January 19, 2010
Again Why Financial Education?
Kia Ora,
Probably best again to emphasize why it is time to look at Financial Education.
I was already on this path when I saw this book to the left. Reading it then doing some follow up, really worried me that I was not going to ready in time to both avoid the worst of what is coming & to take advantage of the opportunities that are starting to appear (not that they aren't there all the time, but this is really good opportunities).
It is all based on facts that can be followed up & it is based on history but also having that financial IQ to see it. Rich Dad seen the first part fall into place, based on history in 1971 when President Nixon took the US (& therefore the world) off the gold standard.
This was then followed by the implimentation of the US retirement scheme that has morhped into what they know as 401(K) & the fault within that scheme. NZ's Kiwi saver has followed alot of what is in this scheme & will be affected by the flaw as well as proposed changes to US law regarding Mutual funds.
The flaw? It requires those that put their money into the US schemes to begin pulling their funds out at age 70 & a half. Now with an estimated 65 to 75 million Baby boomers beginning to retire & a large number being on this plan it might just have an effect on the market. If they have anything left in their portfolios after the last few years.
Then with the US talking about limiting withdrawals on the 'safest' Mutual funds which many NZ Kiwi saver schemes are likely to be in or in the same stocks, then it will effect people wider than just the US.
Couple that with the inflation caused by going to a fiat currency in 1971 it means you might still get your money at the end of time (if the funds fees haven't eaten much of it up-what Gareth Morgan(NZ Maverick economist) is always warning about), but what will it actually be able to buy?
This is why financial education is so important & not what the governments, most financial advisors or banks say is financial education either.
Probably best again to emphasize why it is time to look at Financial Education.
I was already on this path when I saw this book to the left. Reading it then doing some follow up, really worried me that I was not going to ready in time to both avoid the worst of what is coming & to take advantage of the opportunities that are starting to appear (not that they aren't there all the time, but this is really good opportunities).
It is all based on facts that can be followed up & it is based on history but also having that financial IQ to see it. Rich Dad seen the first part fall into place, based on history in 1971 when President Nixon took the US (& therefore the world) off the gold standard.
This was then followed by the implimentation of the US retirement scheme that has morhped into what they know as 401(K) & the fault within that scheme. NZ's Kiwi saver has followed alot of what is in this scheme & will be affected by the flaw as well as proposed changes to US law regarding Mutual funds.
The flaw? It requires those that put their money into the US schemes to begin pulling their funds out at age 70 & a half. Now with an estimated 65 to 75 million Baby boomers beginning to retire & a large number being on this plan it might just have an effect on the market. If they have anything left in their portfolios after the last few years.
Then with the US talking about limiting withdrawals on the 'safest' Mutual funds which many NZ Kiwi saver schemes are likely to be in or in the same stocks, then it will effect people wider than just the US.
Couple that with the inflation caused by going to a fiat currency in 1971 it means you might still get your money at the end of time (if the funds fees haven't eaten much of it up-what Gareth Morgan(NZ Maverick economist) is always warning about), but what will it actually be able to buy?
This is why financial education is so important & not what the governments, most financial advisors or banks say is financial education either.
Monday, January 18, 2010
Different ways of learning
Kia Ora,
One of the things that first struck me when going down the financial education path was Robert Kiyosaki talking about how we learn most from the mistakes we make (or what we see others make) & how he developed his game as playing games was the second most effective way of learning, after actually doing it, as defined in the cone of learning. In fact the education system teaches the least two methods that the bulk of people learn.
It was something I found when becoming an instructor in the army. Being good at math, I thought the other bright NCO's (Non -Commissoned Officers) on my course would have no trouble picking up on my lesson. Wrong again.
Then I started to reflect on those few courses I had assisted instructing on up until that stage & there seemed to be a pattern. This was also born out by those that struggled at Math at school, but when required to do basically trigonometry to adjust fire(machine guns, mortars or artillery) where OK once they related it to the ground or a physical representation.
More recently I read the book to the right. Though part of the Rich Dad series & it has some financial education information it concentrated more on the different ways we each learn.
It reflects something I had begun to think as my time in army continued. No one is really dum we just all learn differently.
This book basically outlines for people to define their childrens interests of dreams (not the dreams of us adults or parents for them) & channel them towards the path that will assist them in life. Give them a reason for doing well in certain parts of the school system so they focus where they want to be. It will make school more interesting for them.
Rich Dad Poor Dad for Teens: The Secrets about Money--That You Don't Learn in School! [RICH DAD POOR DAD FOR TEENS] [Paperback]
I then thought back to what I had dreamt about when young & found that although it had at times being a difficult route as I stuck to my guns, I had actually being going through life gathering the information to make that dream come true.
Though I had being an 'A' student I lost interest in that track & had being doing things the hard way to get to the same place.
There has to be an easier way & I think if you read this book & use what is in it for you kids then their life might take an easir path. How many of us are in jobs we don't like?
One of the things that first struck me when going down the financial education path was Robert Kiyosaki talking about how we learn most from the mistakes we make (or what we see others make) & how he developed his game as playing games was the second most effective way of learning, after actually doing it, as defined in the cone of learning. In fact the education system teaches the least two methods that the bulk of people learn.
It was something I found when becoming an instructor in the army. Being good at math, I thought the other bright NCO's (Non -Commissoned Officers) on my course would have no trouble picking up on my lesson. Wrong again.
Then I started to reflect on those few courses I had assisted instructing on up until that stage & there seemed to be a pattern. This was also born out by those that struggled at Math at school, but when required to do basically trigonometry to adjust fire(machine guns, mortars or artillery) where OK once they related it to the ground or a physical representation.
More recently I read the book to the right. Though part of the Rich Dad series & it has some financial education information it concentrated more on the different ways we each learn.
It reflects something I had begun to think as my time in army continued. No one is really dum we just all learn differently.
This book basically outlines for people to define their childrens interests of dreams (not the dreams of us adults or parents for them) & channel them towards the path that will assist them in life. Give them a reason for doing well in certain parts of the school system so they focus where they want to be. It will make school more interesting for them.
Rich Dad Poor Dad for Teens: The Secrets about Money--That You Don't Learn in School! [RICH DAD POOR DAD FOR TEENS] [Paperback]
I then thought back to what I had dreamt about when young & found that although it had at times being a difficult route as I stuck to my guns, I had actually being going through life gathering the information to make that dream come true.
Though I had being an 'A' student I lost interest in that track & had being doing things the hard way to get to the same place.
There has to be an easier way & I think if you read this book & use what is in it for you kids then their life might take an easir path. How many of us are in jobs we don't like?
Sunday, January 17, 2010
Back to Financial Education
Kia Ora,
The next part of Financial education is what Robert Kiyosaki has defined as they Cash Flow Quadrant & which segment or segments you fit into.
The quadrant is divided into four segments. We will quickly go through each segment but for more infromation & a better understanding it is better to purchase his book 'The Cash Flow Quadrant" which is basically part two of Rich Dad Poor Dad.
First part of the Quadrant is the top left where most people fit.
This is the E quadrant where all employees fit no matter how much they earn. They can be earning several million dollars a year but still have the mindset of someone in the E quadrant, that they need a job to succeed. The higher paying the job the better.
Yet when you play the game Cashflow a few times you soon hear a different reaction. When I read that in Rich Dad Poor Dad I thought what a load of s...! But everyone does it who plays the game more than a couple of times. They get a card for a high paying profession & you hear a groan & everyone else sniggers. Because with a higher wage comes higher costs like for the kids. You also start to hear people moan everytime they land on a paycheck. Why because they don't mind collecting their paycheck but by landing on that square they have missed an opportunity & it happens in real life.
All the opportunities I missed in Iraq that would of put me ahead of the game when I reflect back is a lesson in itself.
The next Quadrant is the S quadrant which is for self employed or small businesses, this is in the left bottom of the set up. These are basically the business doesn't work where the person, doesn't show up.
This would encompass approximately 97% of NZ businesses according to Government statistics. This also includes people such as Dr's & lawyers whom many work for themselves. Many earn a high income but are no better off than those on low income. A few years ago I used to assist a PI doing debt collection & that was one thing they said. All the affluent areas you had a lot of issues in recovering debt where as in poorer areas they strived to ensure the bills were paid or were happy to come to an arrangement.
Next we move to the upper right portion of the set up. This Quadrant is the B or business. Basically this is where as the business owner you work on, not in the business. You can go away in theory for a year & when you come back the business will be going better than when you left. Robert talks about this being about 500 employees. Not something you see a lot of in NZ, although it doesn't take much. My security idea I am aiming to launch once it got to a certian stage & that would early in its life it would probably be looking at 700 staff & if returning at full capacity would be around $87 million a year. It is mind blowing when you actually sit down to work out how your little idea could go. Main reason for sitting down though was to see how much was needed to make it pay for itself. Of course it was well below that & getting those figures would mean something was terribly wrong with society.
The last part of the Quadrant is the I or Investors,
This is where you want to be. One it means your income is passive so no work required or not in the normal sense of the word. This is when you have more time to do those things you want like travel, help out or learn something new.
It is also where you enjoy all the tax advantages of th rich.
It is funny when you go back through to check what people like Robert Kiyosaki is saying that taxes were voted in to punish the rich but they have different rules to play by & it is the poor & middle class who pay most of the tax.
In NZ you often hear people say my taxes are paying for those on the benefit. But having being on the benefit, I can tell you beneficiaries pay tax. I can also tell you that for a while being in the rich mans world the tax advantages have meant all the tax I have paid for last few years I have being paid back at the end of each tax year.
Even though for the moment I am not in that category I am still benefitting from them as I aim to get back up there.
There is a quote " being poor is eternal, broke is tempoary" meaning you think poor you always will be, you think rich having no money is just a blip on the radar.
The next part of Financial education is what Robert Kiyosaki has defined as they Cash Flow Quadrant & which segment or segments you fit into.
The quadrant is divided into four segments. We will quickly go through each segment but for more infromation & a better understanding it is better to purchase his book 'The Cash Flow Quadrant" which is basically part two of Rich Dad Poor Dad.
First part of the Quadrant is the top left where most people fit.
This is the E quadrant where all employees fit no matter how much they earn. They can be earning several million dollars a year but still have the mindset of someone in the E quadrant, that they need a job to succeed. The higher paying the job the better.
Yet when you play the game Cashflow a few times you soon hear a different reaction. When I read that in Rich Dad Poor Dad I thought what a load of s...! But everyone does it who plays the game more than a couple of times. They get a card for a high paying profession & you hear a groan & everyone else sniggers. Because with a higher wage comes higher costs like for the kids. You also start to hear people moan everytime they land on a paycheck. Why because they don't mind collecting their paycheck but by landing on that square they have missed an opportunity & it happens in real life.
All the opportunities I missed in Iraq that would of put me ahead of the game when I reflect back is a lesson in itself.
The next Quadrant is the S quadrant which is for self employed or small businesses, this is in the left bottom of the set up. These are basically the business doesn't work where the person, doesn't show up.
This would encompass approximately 97% of NZ businesses according to Government statistics. This also includes people such as Dr's & lawyers whom many work for themselves. Many earn a high income but are no better off than those on low income. A few years ago I used to assist a PI doing debt collection & that was one thing they said. All the affluent areas you had a lot of issues in recovering debt where as in poorer areas they strived to ensure the bills were paid or were happy to come to an arrangement.
Next we move to the upper right portion of the set up. This Quadrant is the B or business. Basically this is where as the business owner you work on, not in the business. You can go away in theory for a year & when you come back the business will be going better than when you left. Robert talks about this being about 500 employees. Not something you see a lot of in NZ, although it doesn't take much. My security idea I am aiming to launch once it got to a certian stage & that would early in its life it would probably be looking at 700 staff & if returning at full capacity would be around $87 million a year. It is mind blowing when you actually sit down to work out how your little idea could go. Main reason for sitting down though was to see how much was needed to make it pay for itself. Of course it was well below that & getting those figures would mean something was terribly wrong with society.
The last part of the Quadrant is the I or Investors,
This is where you want to be. One it means your income is passive so no work required or not in the normal sense of the word. This is when you have more time to do those things you want like travel, help out or learn something new.
It is also where you enjoy all the tax advantages of th rich.
It is funny when you go back through to check what people like Robert Kiyosaki is saying that taxes were voted in to punish the rich but they have different rules to play by & it is the poor & middle class who pay most of the tax.
In NZ you often hear people say my taxes are paying for those on the benefit. But having being on the benefit, I can tell you beneficiaries pay tax. I can also tell you that for a while being in the rich mans world the tax advantages have meant all the tax I have paid for last few years I have being paid back at the end of each tax year.
Even though for the moment I am not in that category I am still benefitting from them as I aim to get back up there.
There is a quote " being poor is eternal, broke is tempoary" meaning you think poor you always will be, you think rich having no money is just a blip on the radar.
Saturday, January 16, 2010
Where else do I get my information?
Besides Robert Kiyosaki there are people like Dr Dolf de Roos who has a PHd in engineering from Canterbury University here in NZ, but has never worked a day in his life. In fact when he first started at Unviversity he realized that having academic qualifications did not mean you would be rich.
An interesting Character who has at different times being an advisor to Robert Kiyosaki & Donald Trump (presents in Trumps University course on investing). He is responsible for many of the car ports here in Christchurch being added in the 1970s.
Others I have read or listened too are books on Warren Buffett, a book by Buckmaister Fuller called "Grunch of the Giants", also books by & on Sir Richard Branson & a number of others.
Also from Optionentics for my options trading. A good part of this is the software. Though I haven't made a great amount & still learning, the software does give you up to date financial news often of the type that the general public don't see. For example the collpase of Icelands banks were on there four days before a small clipping in the local newspaper & a full two weeks before an article on it. It was deliberately kept quiet as possible for the fear that the worlds economies would collapse.
I also get several emails from various sources with updates again with information that is not readily available to the general public.
That is the point. Once you start to educate yourself you find there are sites both free & paid for from which you can get alsorts of information that most people are not aware off. It is up to you to become your own expert so you can sift through all the information & decide what is true.
It is also the point of Robert Kiyosakis latest book 'Conspiracy of the Rich' is don't fight them, but learn what they do & put yourself in a position to take adavantage of it as they are manipulating the worlds economies for their own benefit. Or as Mike Maloney says "there is about to happen the greatest transfer of wealth ever".
It is only rubbish if you do not want to educate yourself & prefer to carryon as most people will because it is easier that way.
What I write here is only my take on what information I am getting. It is up to the individual to see if it is backed up by facts. Most won't because as Robert Kiyosaki says "they are too lazy to want to look". Harsh, but true. A business owner here in Christchurch seeing what is happening has offered all his staff financial education each night after work. He has 80 staff, only 4 show up. For the rest it is too hard to try & change they way they think.
The same is happening with my blogs. This one on financial education is because I want to help people & get the message out there. But it gets very few hits, as one person said to me yesterday "I know it is coming, understand it but don't want to think about it. Where as my security blog where I am just letting off steam due to my frustration with industry & NZ apathy to question of security is getting a lot more hits.
Or as they often say there are three types of people. Those who make things happen, those who ask whats happening? & those who say "what happened" the last being where most people would fit.
Most people would say that the recession is over but if you look at the information it is only the start of the depression. Alot of the information contradicts each other but one thing that is coming through. The next 24 months are likely to be the worst in modern history economically, but it is also the time of most opportunities. It is also likely that the middle class is about to be wiped out.
The next trick is you might make a lot of money but can you hold it. Many will have read "Think & Grow Rich" by Napoleon Hill & in there & the subsequent books they talk about someone (one of several) who uses their techniques & becomes wealthy. What they don't say is this one person spent the last five years of their life borrowing money & was broke when he died.
Just two days ago a good friend whom I play a lot in cash flow came around. He was saying his new career he has a lot of people making $200,000 a year, but if they loose their place they have nothing to keep them going. He has taken this job because it is an area he wants to excel in in investing. Has told his new boss that he only expects to be there a few years because of investments.
His boss has taken my mate under his wing because of all his staff with the flash cars etc this guy is the only one who understands what the boss is about. That he has an older vehicle is of no consequence & in fact shows he is on a different track to the rest.
An interesting Character who has at different times being an advisor to Robert Kiyosaki & Donald Trump (presents in Trumps University course on investing). He is responsible for many of the car ports here in Christchurch being added in the 1970s.
Others I have read or listened too are books on Warren Buffett, a book by Buckmaister Fuller called "Grunch of the Giants", also books by & on Sir Richard Branson & a number of others.
Also from Optionentics for my options trading. A good part of this is the software. Though I haven't made a great amount & still learning, the software does give you up to date financial news often of the type that the general public don't see. For example the collpase of Icelands banks were on there four days before a small clipping in the local newspaper & a full two weeks before an article on it. It was deliberately kept quiet as possible for the fear that the worlds economies would collapse.
I also get several emails from various sources with updates again with information that is not readily available to the general public.
That is the point. Once you start to educate yourself you find there are sites both free & paid for from which you can get alsorts of information that most people are not aware off. It is up to you to become your own expert so you can sift through all the information & decide what is true.
It is also the point of Robert Kiyosakis latest book 'Conspiracy of the Rich' is don't fight them, but learn what they do & put yourself in a position to take adavantage of it as they are manipulating the worlds economies for their own benefit. Or as Mike Maloney says "there is about to happen the greatest transfer of wealth ever".
It is only rubbish if you do not want to educate yourself & prefer to carryon as most people will because it is easier that way.
What I write here is only my take on what information I am getting. It is up to the individual to see if it is backed up by facts. Most won't because as Robert Kiyosaki says "they are too lazy to want to look". Harsh, but true. A business owner here in Christchurch seeing what is happening has offered all his staff financial education each night after work. He has 80 staff, only 4 show up. For the rest it is too hard to try & change they way they think.
The same is happening with my blogs. This one on financial education is because I want to help people & get the message out there. But it gets very few hits, as one person said to me yesterday "I know it is coming, understand it but don't want to think about it. Where as my security blog where I am just letting off steam due to my frustration with industry & NZ apathy to question of security is getting a lot more hits.
Or as they often say there are three types of people. Those who make things happen, those who ask whats happening? & those who say "what happened" the last being where most people would fit.
Most people would say that the recession is over but if you look at the information it is only the start of the depression. Alot of the information contradicts each other but one thing that is coming through. The next 24 months are likely to be the worst in modern history economically, but it is also the time of most opportunities. It is also likely that the middle class is about to be wiped out.
The next trick is you might make a lot of money but can you hold it. Many will have read "Think & Grow Rich" by Napoleon Hill & in there & the subsequent books they talk about someone (one of several) who uses their techniques & becomes wealthy. What they don't say is this one person spent the last five years of their life borrowing money & was broke when he died.
Just two days ago a good friend whom I play a lot in cash flow came around. He was saying his new career he has a lot of people making $200,000 a year, but if they loose their place they have nothing to keep them going. He has taken this job because it is an area he wants to excel in in investing. Has told his new boss that he only expects to be there a few years because of investments.
His boss has taken my mate under his wing because of all his staff with the flash cars etc this guy is the only one who understands what the boss is about. That he has an older vehicle is of no consequence & in fact shows he is on a different track to the rest.
Friday, January 15, 2010
Information
Kia Ora,
I was asked yesterday where I get this 'rubbish' from. Depends on who point of view you are looking from as to whether it is rubbish. That is why all financial education if it is worth anything requires the student to do their own checking of the facts (known in the investing world by the words due diligence).
Much of the education part comes from the teachings of Robert Kiyosaki, but it is nothing new just put in a simple to understand format. The biggest issue is changing a persons mindset to be able to understand what he is saying.
Others will say well all this is great but you haven't made it yet. No I haven't but by trying to help those that want help, it helps me understand it better & as I learn more I can teach more & you never finish learning.
I well remember a friend of mine saying (prior to me reading Rich Dad Poor Dad) that many years ago he went to a bank manager for a loan in a country town here in NZ.
Now you have to remember this would of being early 70's as he is a bit older than me & so today it might seem sexist but sentiment & message are still the same.
The bank manager says to him "so what assets do you have?" His reply. "well I have my ute (for those not from Australia or NZ a type of pick up truck is the best description)". With that he says the Bank manager looks over his glasses at him & says "young fella a car is not an asset. It is like a woman, a liability. it costs you money".
Many women would say role has reversed these days. Point is the bank manger used to understand what an asset was where as most bank staff you deal with today are nothing more than salespeople & have no understanding of how system really works.
All they are trying to get you to buy into is an item that is an asset to them that allows them to profit from your imput.
I was asked yesterday where I get this 'rubbish' from. Depends on who point of view you are looking from as to whether it is rubbish. That is why all financial education if it is worth anything requires the student to do their own checking of the facts (known in the investing world by the words due diligence).
Much of the education part comes from the teachings of Robert Kiyosaki, but it is nothing new just put in a simple to understand format. The biggest issue is changing a persons mindset to be able to understand what he is saying.
Others will say well all this is great but you haven't made it yet. No I haven't but by trying to help those that want help, it helps me understand it better & as I learn more I can teach more & you never finish learning.
I well remember a friend of mine saying (prior to me reading Rich Dad Poor Dad) that many years ago he went to a bank manager for a loan in a country town here in NZ.
Now you have to remember this would of being early 70's as he is a bit older than me & so today it might seem sexist but sentiment & message are still the same.
The bank manager says to him "so what assets do you have?" His reply. "well I have my ute (for those not from Australia or NZ a type of pick up truck is the best description)". With that he says the Bank manager looks over his glasses at him & says "young fella a car is not an asset. It is like a woman, a liability. it costs you money".
Many women would say role has reversed these days. Point is the bank manger used to understand what an asset was where as most bank staff you deal with today are nothing more than salespeople & have no understanding of how system really works.
All they are trying to get you to buy into is an item that is an asset to them that allows them to profit from your imput.
Thursday, January 14, 2010
So Much going on.
Kia Ora,
Sorry being getting off subject of financial education with so much going on. Such as those controlling money in the US over last few days it has leaked that they have being discussing putting restrictions that will impact the low risk mutual funds. In essence they are looking at stopping people taking their money out of mutual funds if things get worse & people look to move their cash.
This is commonly known as a run if everyone does it at once. What Britain had to avert with Northern Rock & Sir Richard Branson tried to step in & help save the situation.
Question you have to ask is. Why are they considering putting this in place if the economy is in recovery? They know when these things hit they hit fast & all at once.
The US did this during the last depression with Government Bonds as people sort to redeem them, they decided they didn't have to hounour them anymore.
So back to education & start with the basics.
Best definition I have found come from Rich Dad series, so will start there.
First an asset. It is something that puts money(cash flow) into your pocket. Investment property, shares (in some cases), business,
Liability takes it out. Therefore even your own free hold house is usually a liability as you end up paying rates (NZ) or land tax, insurance, water charges (in most places) & electricity or gas, but no money flows in.
Then we have to consider the asset classes. In reality there are only four. I have seen recently so called financial experts outlining 11 to 17 classes but 8 to 14 of those were actually one class or derivitaves of that one class of asset.
The classes are Businesses(a business is where you work on, not have to work in it). Real Estate, Commodities (gold, silver,oil,water,food stuffs) & Paper (Shares/stocks, options, futures, ETF's etc).
Things though are getting very interesting in the world of finance. Someone was quoting Dickens the other day when referring to 2010. "It was the worst of times, it was the best of times". In other words get yourself educated to make most of the opportunities.
Sorry being getting off subject of financial education with so much going on. Such as those controlling money in the US over last few days it has leaked that they have being discussing putting restrictions that will impact the low risk mutual funds. In essence they are looking at stopping people taking their money out of mutual funds if things get worse & people look to move their cash.
This is commonly known as a run if everyone does it at once. What Britain had to avert with Northern Rock & Sir Richard Branson tried to step in & help save the situation.
Question you have to ask is. Why are they considering putting this in place if the economy is in recovery? They know when these things hit they hit fast & all at once.
The US did this during the last depression with Government Bonds as people sort to redeem them, they decided they didn't have to hounour them anymore.
So back to education & start with the basics.
Best definition I have found come from Rich Dad series, so will start there.
First an asset. It is something that puts money(cash flow) into your pocket. Investment property, shares (in some cases), business,
Liability takes it out. Therefore even your own free hold house is usually a liability as you end up paying rates (NZ) or land tax, insurance, water charges (in most places) & electricity or gas, but no money flows in.
Then we have to consider the asset classes. In reality there are only four. I have seen recently so called financial experts outlining 11 to 17 classes but 8 to 14 of those were actually one class or derivitaves of that one class of asset.
The classes are Businesses(a business is where you work on, not have to work in it). Real Estate, Commodities (gold, silver,oil,water,food stuffs) & Paper (Shares/stocks, options, futures, ETF's etc).
Things though are getting very interesting in the world of finance. Someone was quoting Dickens the other day when referring to 2010. "It was the worst of times, it was the best of times". In other words get yourself educated to make most of the opportunities.
Wednesday, January 13, 2010
Why is Debt good?
Kia Ora,
People are always saying get out of debt, but you should only get out of bad debt & increase your good debt (that which buys you a cash flow positive investment).
Why? Because the monetary system to keep going require expansion & the only way to do that is by creating new debt. So you have the instituitions creating new types of trading such as the ETS or carbon credits to create money out of nothing.
Issue right now is the lending instituitions are not lending. The only growth or so called green shoots have come from government stimulus. Now the governments are saying they are going to cut back on that. You only have to see the reaction to China raising its interest rates to slow inflation, to see how good the economy really is.
Through out history these bubbles have burst at some stage. Just the same as the gold bubble will at some time burst. The only difference with the gold bubble is it will get to such a ridiculous price that the next day it will be just an ounce of gold, but the currency it is based against will be worthless just as Zimbabwe's has just done, so they have taken up a currency that is doing the same as theirs. The US dollar.
Where as the currency will be worthless & something will replace it, gold will be able to still buy items.
Notice I haven't included silver in this. The reason is silver is becoming very rare or so the information has us believe. The reason why is silver has so many uses besides just being a precious metal & has being manipulated to stay at historically low prices. Historically silver should be today US$94 an ounce, not US$18.5. Silver is used in medicine as well as all electronics since it is the most conductive metal around.
Now some gold is also used in electronics but its price has being such of late that people are extracting it from computers that are recycled. Silver being so low no one is bothering yet. Basically there is only about four months silver left at current usage rates. Only 25% of it is mined for silver itself. The rest comes as a by product of mining other metals, gold in particular, but gold production is falling. Silver is thought to have only 15 years worth of the metal left, making it the most precious metal on the planet.
So there is a belief that silver could pass gold in price.
Why the emphasis on gold & silver? Because history shows when you educate yourself, that when governments or society creates too much currency one of two things happen. It all crashes & we end up with a deflationary depression as per the so called great depression or gold & silver revalue themselves to an amount equivalent to the amount of currency created. Either way society moves to the only true money, gold & silver.
The situation is not so bad when associated with a gold standard, where you can only have so much currency in the system if you have a certain amount of gold. Why we move off gold standards is usually to pay for wars & this creates a fiat currency. A fiat currency lasts, going on history 40 years. Since Bretton Woods agreement in 1944 ties all the worlds currencies to the US$ & the US (or President Nixon) took the US off the gold standard in 1971 causing the whole world to be on fiat currencies means that about 2011 the US$ will be worth nothing. Its estimated worth today on when it started as a fiat currency is 3 cents.
Not to say gold & silver will be the only good investments, but you need to educate yourselves & prepare.
People are always saying get out of debt, but you should only get out of bad debt & increase your good debt (that which buys you a cash flow positive investment).
Why? Because the monetary system to keep going require expansion & the only way to do that is by creating new debt. So you have the instituitions creating new types of trading such as the ETS or carbon credits to create money out of nothing.
Issue right now is the lending instituitions are not lending. The only growth or so called green shoots have come from government stimulus. Now the governments are saying they are going to cut back on that. You only have to see the reaction to China raising its interest rates to slow inflation, to see how good the economy really is.
Through out history these bubbles have burst at some stage. Just the same as the gold bubble will at some time burst. The only difference with the gold bubble is it will get to such a ridiculous price that the next day it will be just an ounce of gold, but the currency it is based against will be worthless just as Zimbabwe's has just done, so they have taken up a currency that is doing the same as theirs. The US dollar.
Where as the currency will be worthless & something will replace it, gold will be able to still buy items.
Notice I haven't included silver in this. The reason is silver is becoming very rare or so the information has us believe. The reason why is silver has so many uses besides just being a precious metal & has being manipulated to stay at historically low prices. Historically silver should be today US$94 an ounce, not US$18.5. Silver is used in medicine as well as all electronics since it is the most conductive metal around.
Now some gold is also used in electronics but its price has being such of late that people are extracting it from computers that are recycled. Silver being so low no one is bothering yet. Basically there is only about four months silver left at current usage rates. Only 25% of it is mined for silver itself. The rest comes as a by product of mining other metals, gold in particular, but gold production is falling. Silver is thought to have only 15 years worth of the metal left, making it the most precious metal on the planet.
So there is a belief that silver could pass gold in price.
Why the emphasis on gold & silver? Because history shows when you educate yourself, that when governments or society creates too much currency one of two things happen. It all crashes & we end up with a deflationary depression as per the so called great depression or gold & silver revalue themselves to an amount equivalent to the amount of currency created. Either way society moves to the only true money, gold & silver.
The situation is not so bad when associated with a gold standard, where you can only have so much currency in the system if you have a certain amount of gold. Why we move off gold standards is usually to pay for wars & this creates a fiat currency. A fiat currency lasts, going on history 40 years. Since Bretton Woods agreement in 1944 ties all the worlds currencies to the US$ & the US (or President Nixon) took the US off the gold standard in 1971 causing the whole world to be on fiat currencies means that about 2011 the US$ will be worth nothing. Its estimated worth today on when it started as a fiat currency is 3 cents.
Not to say gold & silver will be the only good investments, but you need to educate yourselves & prepare.
Tuesday, January 12, 2010
Why this Portfolio investment?
Kia Ora,
Of course I have said before my investments are at present mainly in gold & silver.
Why? Because after my mistakes of getting upset with the banks & continual knock backs based on what I now earn I had to look to something that would bring in an extraordinary return on investment (ROI ). Note I often add these words because you need to change your vocabulary to that of the rich & learn to understand them.
Suddenly there are these video snippets on the internet that take my eye. Chrismartenson.com crash course is one that is a set of 22 video presentations that explain how things are manipulated & how they affect the real world finance. Then there was the use of a video by mysilvercoins.com of Robert Kiyosaki & one of his advisors saying the same thing but in much more layman terms with a prediction for 2008.
So using that knowledge & the knowledge of history my plan is to use the capital gains to purchase cash flow producing investments. This time in history is probably the one time considering how the system works that having little debt maybe an advantage. Usually the way to get ahead is by being in good debt.
If I still had my good debt I would still have some gold as a hedge (note the use of the word hedge as opposed to the poor person calling it a speculation) against inflation.
So people say the economy is recovering. Is it? Most of the good news actually comes from the stimulus packages, which has required more money to be printed. It is also coming from China spending up large.
There is a difference between what China is doing though & what the rest of the world is doing. Where as the US & Britain in particular have being printing (Quantitive easing) money to keep the economy afloat, China has being running around with all its US bonds trying to get rid of them whilst they are still worth something & using them to buy assets such as gold mines or gold mining companies, resources & anything that will produce a good cash flow no matter what the economy does.
China's main worry is keeping its people in jobs, not what the US is doing as its biggest threat hsitory shows is from its own people.
There are worries that this is not sustainable & it is starting to cause inflation. The US on the other hand is printing money getting more in debt to stimulate the economy, but talking to pull back which is likely to crash the economy, then there will be more printing of currency which will end with most likely hyperinflation.
Of course I have said before my investments are at present mainly in gold & silver.
Why? Because after my mistakes of getting upset with the banks & continual knock backs based on what I now earn I had to look to something that would bring in an extraordinary return on investment (ROI ). Note I often add these words because you need to change your vocabulary to that of the rich & learn to understand them.
Suddenly there are these video snippets on the internet that take my eye. Chrismartenson.com crash course is one that is a set of 22 video presentations that explain how things are manipulated & how they affect the real world finance. Then there was the use of a video by mysilvercoins.com of Robert Kiyosaki & one of his advisors saying the same thing but in much more layman terms with a prediction for 2008.
So using that knowledge & the knowledge of history my plan is to use the capital gains to purchase cash flow producing investments. This time in history is probably the one time considering how the system works that having little debt maybe an advantage. Usually the way to get ahead is by being in good debt.
If I still had my good debt I would still have some gold as a hedge (note the use of the word hedge as opposed to the poor person calling it a speculation) against inflation.
So people say the economy is recovering. Is it? Most of the good news actually comes from the stimulus packages, which has required more money to be printed. It is also coming from China spending up large.
There is a difference between what China is doing though & what the rest of the world is doing. Where as the US & Britain in particular have being printing (Quantitive easing) money to keep the economy afloat, China has being running around with all its US bonds trying to get rid of them whilst they are still worth something & using them to buy assets such as gold mines or gold mining companies, resources & anything that will produce a good cash flow no matter what the economy does.
China's main worry is keeping its people in jobs, not what the US is doing as its biggest threat hsitory shows is from its own people.
There are worries that this is not sustainable & it is starting to cause inflation. The US on the other hand is printing money getting more in debt to stimulate the economy, but talking to pull back which is likely to crash the economy, then there will be more printing of currency which will end with most likely hyperinflation.
Monday, January 11, 2010
Portfolio Investments
Kia Ora,
So why have I gone for a portfolio investment?
When working in Iraq banks & lenders could not stop falling over themselves to give me money, but as soon as I came back & was back on low wages, no matter what I know it is sorry. So as I made my mistakes & kept hitting brick walls as well as all my attempts to grow a cash flow from Security company came to naught I had to look elsewhere. Now when you play the game of cash flow one thing that people do often is buy a portfolio investment to get capital gains to allow them to get into deals. Even with the knowledge gained & still being refused a loan (but then aren't most people unless you are in that rich rules area of life) then had to look at what else there was.
So when hearing of this investment, I did the homework. If it comes off it will be amazing return on investment (ROI) but history shows that this is a part of the cycles documented back to the Roman empire with the first depression due to hyperinflation recorded in 300 AD though it is believed to have happened in Babylonian times & who knows how long in China & India. Each time man thinks he can control the course of finance it just proves him wrong.
This investment is an old tried & tested & in fact in the US constituition these two items are the only real money, even though one President banned people from owning one of them (so carried out an illegal order) which was only rescinded in the 1970's.
When at school the system teaches history by memorizing dates, but what is behind many of those dates is never fully explored.
Even here in NZ we have heard the expression "I don't give a continental". But where in history does that come from. Well it comes from the end of the US war of independence when one George Washington was printing a currency called a continental to pay for the war. He printed so many (though not as much as has being printed of late by governments, in particular the US) that hyperinflation kicked in & the continental became worthless. The portfolio investment or one of them I have invested in went to an adjusted price of US$1 Trillion an ounce. So when you hear people say it is at a all time high recently. It is not. It is only at a high in this current cycle.
Just in US history aloan it has happened several times. When people talk of the greenback that actually was the currency printed by President Lincoln to pay for the US civil war which also became worthless but the name has stuck.
Why does it become worthless? For each note of a currecny you print (or new word is quantitive easing) it means all those currently in circulation become worth less than they were the day before.
So why have I gone for a portfolio investment?
When working in Iraq banks & lenders could not stop falling over themselves to give me money, but as soon as I came back & was back on low wages, no matter what I know it is sorry. So as I made my mistakes & kept hitting brick walls as well as all my attempts to grow a cash flow from Security company came to naught I had to look elsewhere. Now when you play the game of cash flow one thing that people do often is buy a portfolio investment to get capital gains to allow them to get into deals. Even with the knowledge gained & still being refused a loan (but then aren't most people unless you are in that rich rules area of life) then had to look at what else there was.
So when hearing of this investment, I did the homework. If it comes off it will be amazing return on investment (ROI) but history shows that this is a part of the cycles documented back to the Roman empire with the first depression due to hyperinflation recorded in 300 AD though it is believed to have happened in Babylonian times & who knows how long in China & India. Each time man thinks he can control the course of finance it just proves him wrong.
This investment is an old tried & tested & in fact in the US constituition these two items are the only real money, even though one President banned people from owning one of them (so carried out an illegal order) which was only rescinded in the 1970's.
When at school the system teaches history by memorizing dates, but what is behind many of those dates is never fully explored.
Even here in NZ we have heard the expression "I don't give a continental". But where in history does that come from. Well it comes from the end of the US war of independence when one George Washington was printing a currency called a continental to pay for the war. He printed so many (though not as much as has being printed of late by governments, in particular the US) that hyperinflation kicked in & the continental became worthless. The portfolio investment or one of them I have invested in went to an adjusted price of US$1 Trillion an ounce. So when you hear people say it is at a all time high recently. It is not. It is only at a high in this current cycle.
Just in US history aloan it has happened several times. When people talk of the greenback that actually was the currency printed by President Lincoln to pay for the US civil war which also became worthless but the name has stuck.
Why does it become worthless? For each note of a currecny you print (or new word is quantitive easing) it means all those currently in circulation become worth less than they were the day before.
Sunday, January 10, 2010
So what?
So what? My passion has caused me to get upset & where did that land me. Well lesson I am still learning is to control that anger caused by my passion.
When I got upset with bank in the end because banks all concentrated on what I earned not on what deals would do to bring them in cash flow positive. It showed they lacked financial IQ & business advisor showed they didn't know what a business was. So I got upset took my business elsewhere to only find they were no better once I had signed up. If I had let the situation cool & thought about it I would still have the good debt of a cash flow positive asset (even in these times) & then had an amount to invest as I have now done in portfolio investments.
What is a portfolio investment? It is something you have no real cash flow from but are investing for capital gains which in my case is to invest in cash flow positive assets. Ideally you invest for both cash flow & capital gains. The only problem with capital gains it is not guaranteed & things do not always go up as salespeople claim.
So my issue now is cash flow. Instead of getting a job which is always a fall back, it is pushing ahead with business idea & using my greatest asset (the bit between your ears) to see new opportunities.
One of those opportunities comes via my blogs. By adding Adsense adverts I can earn an income when people click on the adverts beside the blogs for a certain amount of time. In fact yesterday there was an article about a 61 year old who had set up a website in Auckland NZ & is now earning $20,000 a month from adsense. Ok not all will go to that level but it is the type of thing you need to look at.
Another idea that people can look at is solar panels & small wind turbines. These seem expensive to purchase, $7,500 for 1KW solar or wind power, $15000 for 2KW, but when you are aware (most people aren't) that recently here in NZ the lines companies were given permission to raise their prices by rate of inflation as from April 2010 & that when set up properly these alternate power sites can send excess power to some of the companies for payment, suddenly these become very much an asset.
So getting a loan for such an asset would make sense first on bills you no longer pay & then cash flow you are likely to get.
When I got upset with bank in the end because banks all concentrated on what I earned not on what deals would do to bring them in cash flow positive. It showed they lacked financial IQ & business advisor showed they didn't know what a business was. So I got upset took my business elsewhere to only find they were no better once I had signed up. If I had let the situation cool & thought about it I would still have the good debt of a cash flow positive asset (even in these times) & then had an amount to invest as I have now done in portfolio investments.
What is a portfolio investment? It is something you have no real cash flow from but are investing for capital gains which in my case is to invest in cash flow positive assets. Ideally you invest for both cash flow & capital gains. The only problem with capital gains it is not guaranteed & things do not always go up as salespeople claim.
So my issue now is cash flow. Instead of getting a job which is always a fall back, it is pushing ahead with business idea & using my greatest asset (the bit between your ears) to see new opportunities.
One of those opportunities comes via my blogs. By adding Adsense adverts I can earn an income when people click on the adverts beside the blogs for a certain amount of time. In fact yesterday there was an article about a 61 year old who had set up a website in Auckland NZ & is now earning $20,000 a month from adsense. Ok not all will go to that level but it is the type of thing you need to look at.
Another idea that people can look at is solar panels & small wind turbines. These seem expensive to purchase, $7,500 for 1KW solar or wind power, $15000 for 2KW, but when you are aware (most people aren't) that recently here in NZ the lines companies were given permission to raise their prices by rate of inflation as from April 2010 & that when set up properly these alternate power sites can send excess power to some of the companies for payment, suddenly these become very much an asset.
So getting a loan for such an asset would make sense first on bills you no longer pay & then cash flow you are likely to get.
Passion
As I have being writing this blog I have being re reading some of one of my mentors writings. One thing that I never picked up before was that anger comes out due to the passion, & to succeed you need passion.
Since embarking on this journey to learn as much as I could & raise my financial IQ as I have found the lack of knowledge by those we have to go through to move ahead mind boggling & frustrating.
What most people talk about but don't realize is there actually are different rules for those that are rich. Whilst in Iraq I was earning enough to benefit from those rules.
So many people tell me but many of the things you talk about are from America they don't apply here. They do, but tend to have a local variation.
One area where the US & NZ are virtually word for word are identical are the rules that define the rich & the deals they can enter which most people can't. Those words were put together in 1933 in the US by the father of JFK. Those rules should of being adjusted to fit todays world but they haven't, meaning that today it is easier for people to be pulled into those deals but without the financial education or IQ required to operate at those levels.
Since embarking on this journey to learn as much as I could & raise my financial IQ as I have found the lack of knowledge by those we have to go through to move ahead mind boggling & frustrating.
What most people talk about but don't realize is there actually are different rules for those that are rich. Whilst in Iraq I was earning enough to benefit from those rules.
So many people tell me but many of the things you talk about are from America they don't apply here. They do, but tend to have a local variation.
One area where the US & NZ are virtually word for word are identical are the rules that define the rich & the deals they can enter which most people can't. Those words were put together in 1933 in the US by the father of JFK. Those rules should of being adjusted to fit todays world but they haven't, meaning that today it is easier for people to be pulled into those deals but without the financial education or IQ required to operate at those levels.
Saturday, January 9, 2010
Experts
Kia Ora,
As one Mentor says "be your own expert". That doesn't mean you have to know everything but you have to have an understanding so that no one can pull the wool over your eyes.
Having faith in that the 'experts' know what they are doing all the time has cost me well over $100,000. Though in these mistakes they have helped me understand things.
At the same time if you know more than your experts then you are in trouble. As Henry Ford once said during a court case over a claim he was stupid "If I want answers to these stupid questions which take me away from my main task of creating business then I only have to press a button to have someone answer it for me" or words to that effect.
People only get degrees to work for the people without them in reality. In fact the modern education system is the new slavery. Job actually means Just Over Broke.
Probably the other issue with so called 'experts' is many are just salespeople. The likes of financial advisor's & bankers these days do not actually understand what a real asset is or that the advice they are giving is only giving people's money to the rich.
Probably biggest lesson I have learnt is to try & control my emotions when dealing with these people, because there are lessons to be learnt from their mistakes & my mistakes & if my emotions get on top of me, I might end up better off, but could of being even better off had I used the lesson to my advantage.
As one Mentor says "be your own expert". That doesn't mean you have to know everything but you have to have an understanding so that no one can pull the wool over your eyes.
Having faith in that the 'experts' know what they are doing all the time has cost me well over $100,000. Though in these mistakes they have helped me understand things.
At the same time if you know more than your experts then you are in trouble. As Henry Ford once said during a court case over a claim he was stupid "If I want answers to these stupid questions which take me away from my main task of creating business then I only have to press a button to have someone answer it for me" or words to that effect.
People only get degrees to work for the people without them in reality. In fact the modern education system is the new slavery. Job actually means Just Over Broke.
Probably the other issue with so called 'experts' is many are just salespeople. The likes of financial advisor's & bankers these days do not actually understand what a real asset is or that the advice they are giving is only giving people's money to the rich.
Probably biggest lesson I have learnt is to try & control my emotions when dealing with these people, because there are lessons to be learnt from their mistakes & my mistakes & if my emotions get on top of me, I might end up better off, but could of being even better off had I used the lesson to my advantage.
Friday, January 8, 2010
What next?
Kia Ora,
Email received today talks of commodities (oil, gold & silver) being good investments (already knew that), but it also talks of the second round of subprime payments & more & another issue that has being talked about of late is the possible collapse of the Chinese economic bubble as there is less demand for their products.
China has being using $US bonds to buy as much resources as possible including gold mines. This in part is due to a hedge against inflation, but also in an attempt to keep their people working. Right now they are beginning to lay people off in large numbers. China is worried because the greatest threat the Chinses face they know from history is their own people when times get tough.
For some time now the Asian nations in particular, including China & India, have being telling their people to buy gold & silver due to economic storm that is coming.
The other issue they talk about is commercial property. World wide this market is collapsing so if you are prepared it will be another great investment.
If you are like me & aren't earning that much yourself at present then I have focussed what I have in gold & silver (don't just take my word for it. do the research). Gold for the short term & silver for longer term.
Ideally I would have prefferred to have gone with cash flow positive investments as I found out abou them in my next mistake along the path.
Was working in Iraq as security & it was a goal, but my other was to build equity back home to be able to use in building my security business on return. Then I decided I would read this book Rich Dad Poor Dad I had being hearing about. Already had one property & was in process of buying another to be constructed. Reading the book I realized what I was doing wrong & moved to correct it to make everything cash flow positive.
Part way through correcting mistakes, lost my contract. Thing is if I had being following the book from the beginning coming back would not of being a big deal as cash flow positive investments would of meant all good at this end. Irony was all the way through I was seeing these opportunities to have being in that position, but without the knowledge I was missing them.
So don't pass up the chance to seek out knowledge. If you don't have the money, don't say" I can't afford it". Say "how can I afford it(legally)".
Email received today talks of commodities (oil, gold & silver) being good investments (already knew that), but it also talks of the second round of subprime payments & more & another issue that has being talked about of late is the possible collapse of the Chinese economic bubble as there is less demand for their products.
China has being using $US bonds to buy as much resources as possible including gold mines. This in part is due to a hedge against inflation, but also in an attempt to keep their people working. Right now they are beginning to lay people off in large numbers. China is worried because the greatest threat the Chinses face they know from history is their own people when times get tough.
For some time now the Asian nations in particular, including China & India, have being telling their people to buy gold & silver due to economic storm that is coming.
The other issue they talk about is commercial property. World wide this market is collapsing so if you are prepared it will be another great investment.
If you are like me & aren't earning that much yourself at present then I have focussed what I have in gold & silver (don't just take my word for it. do the research). Gold for the short term & silver for longer term.
Ideally I would have prefferred to have gone with cash flow positive investments as I found out abou them in my next mistake along the path.
Was working in Iraq as security & it was a goal, but my other was to build equity back home to be able to use in building my security business on return. Then I decided I would read this book Rich Dad Poor Dad I had being hearing about. Already had one property & was in process of buying another to be constructed. Reading the book I realized what I was doing wrong & moved to correct it to make everything cash flow positive.
Part way through correcting mistakes, lost my contract. Thing is if I had being following the book from the beginning coming back would not of being a big deal as cash flow positive investments would of meant all good at this end. Irony was all the way through I was seeing these opportunities to have being in that position, but without the knowledge I was missing them.
So don't pass up the chance to seek out knowledge. If you don't have the money, don't say" I can't afford it". Say "how can I afford it(legally)".
Thursday, January 7, 2010
What is the world Rushing too?
Kia Ora,
Things are rushing along in the worlds economy yet most people are turning their heads away or sticking them in the sand.
Over the last few days there has being a US$200 billion bail out (to put it in perspective if you count a dollar per second it takes 12 days to count a million, 32 years to count a billion & 32,000 years to count a trillion). Iceland has refused to pay debt back to foreign countries, Dubai is still jittery & other sovereign debt issues surfacing are Greece (which the EU has apparently refused to bail out), Spain, Portragul, Italy & Ireland not to mention Britain & the US (which still has a tripe A rating mainly to prop up the worlds economy but should be C rated so junk bonds.
Only two days ago I received an email warning to stay away from the ETF (electronically traded funds) GLD because they don't actually have the gold or silver they say they do. Now due to research when increasing my financial IQ I was aware of this issue in all ETF trading gold & silver. There is estimated more gold & in particular silver(at least twice as much) being traded than is physically available. It has become an issue because a court case has being taken in US to expose this.
How will this effect the world. Well it has happened before. In 1994 Warren Buffet took out US$650 million(129.8 million ounces) of futures on Silver. They matured in 1998 & most people take their gains in cash. Mr Buffet though asked to be paid in the silver as he is allowed too. It caused panic & the markets were closed whilst they found the silver to pay him. Over night the price almost doubled.
It is expected the same will happen here. All trading on the ETF's will cease whilst they sort it out but the physical gold & silver will race up in price. Not to mention the current rises due to inflation.
Then people may get jittery & start asking for the gold & silver held in storage only to find they have being paying storage fees for metal that was going to be brought at some future date & is not actually held in the storage facilities. How do we know this? It came out when Lehmans were caught out. Their only comment was "Everyone is doing it". Not much attention was paid to that then.
So that is why it is important to improve your financial IQ through education & research of history & stay ahead of the game. It is also why it is important to learn from your mistakes & the mistakes of others.
Things are rushing along in the worlds economy yet most people are turning their heads away or sticking them in the sand.
Over the last few days there has being a US$200 billion bail out (to put it in perspective if you count a dollar per second it takes 12 days to count a million, 32 years to count a billion & 32,000 years to count a trillion). Iceland has refused to pay debt back to foreign countries, Dubai is still jittery & other sovereign debt issues surfacing are Greece (which the EU has apparently refused to bail out), Spain, Portragul, Italy & Ireland not to mention Britain & the US (which still has a tripe A rating mainly to prop up the worlds economy but should be C rated so junk bonds.
Only two days ago I received an email warning to stay away from the ETF (electronically traded funds) GLD because they don't actually have the gold or silver they say they do. Now due to research when increasing my financial IQ I was aware of this issue in all ETF trading gold & silver. There is estimated more gold & in particular silver(at least twice as much) being traded than is physically available. It has become an issue because a court case has being taken in US to expose this.
How will this effect the world. Well it has happened before. In 1994 Warren Buffet took out US$650 million(129.8 million ounces) of futures on Silver. They matured in 1998 & most people take their gains in cash. Mr Buffet though asked to be paid in the silver as he is allowed too. It caused panic & the markets were closed whilst they found the silver to pay him. Over night the price almost doubled.
It is expected the same will happen here. All trading on the ETF's will cease whilst they sort it out but the physical gold & silver will race up in price. Not to mention the current rises due to inflation.
Then people may get jittery & start asking for the gold & silver held in storage only to find they have being paying storage fees for metal that was going to be brought at some future date & is not actually held in the storage facilities. How do we know this? It came out when Lehmans were caught out. Their only comment was "Everyone is doing it". Not much attention was paid to that then.
So that is why it is important to improve your financial IQ through education & research of history & stay ahead of the game. It is also why it is important to learn from your mistakes & the mistakes of others.
Wednesday, January 6, 2010
Lessons & latest
Kia Ora,
Well what is going on? US Government is bailing out again to the tune of US$200 Billion of Freddie Mac & Fannie Mae. Why because the next round of subprime payments are due starting this month & most of them are held by these US Government entities. To make it look like things are better they even formed a new enitity called Ginnie Mae that was continuing all those deals that the former two were stopped from doing as the subprime crisis broke.
Any way back to the lessons learnt.
Once I had worked out my purpose in life which as I say keeps morphing into something bigger, information began to flow as I was ready for each step.
Probably the next biggest mistake was hearing about this book 'Rich Dad Poor Dad' & saying I would want to read that but not or not until I had being working in Iraq for sometime.
In the meantime I had read another book 'The Richest Man in Babylon". Using the process outlined there has helped me in my path. Each time I strayed from it things have gone off the rails.
Basically the process is the first bill you pay is yourself. A minimum of 10% which you put aside for investment. I have now extended this to 10% for donation to those entities I always said I would help once I had the money. Thing is the money never came until I actually started giving. This is in line with what one person says is the real saying behind it is better to give than receive. The claim is that the original saying has being manipulated from "It is better to give to receive". So the more you give the more you receive. That doesn't just have to be in monetary terms either. It can be in time or knowledge.
It has being hard at times to stick to this formula, but it feels worth it in particular when instead of saying I will help once I have the money, I am making my little contribution. All going well those contributions will grow to a very large amount in the future. It also means in todays world where everyone has their hand out for a donation I am in control of where my money goes to help those I know either need it or actually do make a difference.
Well what is going on? US Government is bailing out again to the tune of US$200 Billion of Freddie Mac & Fannie Mae. Why because the next round of subprime payments are due starting this month & most of them are held by these US Government entities. To make it look like things are better they even formed a new enitity called Ginnie Mae that was continuing all those deals that the former two were stopped from doing as the subprime crisis broke.
Any way back to the lessons learnt.
Once I had worked out my purpose in life which as I say keeps morphing into something bigger, information began to flow as I was ready for each step.
Probably the next biggest mistake was hearing about this book 'Rich Dad Poor Dad' & saying I would want to read that but not or not until I had being working in Iraq for sometime.
In the meantime I had read another book 'The Richest Man in Babylon". Using the process outlined there has helped me in my path. Each time I strayed from it things have gone off the rails.
Basically the process is the first bill you pay is yourself. A minimum of 10% which you put aside for investment. I have now extended this to 10% for donation to those entities I always said I would help once I had the money. Thing is the money never came until I actually started giving. This is in line with what one person says is the real saying behind it is better to give than receive. The claim is that the original saying has being manipulated from "It is better to give to receive". So the more you give the more you receive. That doesn't just have to be in monetary terms either. It can be in time or knowledge.
It has being hard at times to stick to this formula, but it feels worth it in particular when instead of saying I will help once I have the money, I am making my little contribution. All going well those contributions will grow to a very large amount in the future. It also means in todays world where everyone has their hand out for a donation I am in control of where my money goes to help those I know either need it or actually do make a difference.
Tuesday, January 5, 2010
Mistakes
Kia Ora,
Study has shown that all those who have made it rich & held their money have had a focus on a greater goal.
Mine started simply to use my skills & form a top security company to give those leaving the military a place to work on first leaving the military as they adapt to world outside. This has become even more imperative as figures come in from other countries i.e. Britain an estimated 75% of those living on streets are said to be former military personel. In the US it is estimated 900,000 ex military personel are living on the streets.
To adapt to the world outside the military is said to take most ex military people a minimum of 4-8 years without operational experience added in. NZ has since 1993 being sending more & more personnel on operational deployments. Not to mention those of us who have worked in the PSD environment.
Since that simple idea it has morphed to actually in a way that helps society, the environment & just makes communities more secure so they can experience growth.
I know huge dreams but as the maker of Avatar said. You just have to dream as big as you can.
Study has shown that all those who have made it rich & held their money have had a focus on a greater goal.
Mine started simply to use my skills & form a top security company to give those leaving the military a place to work on first leaving the military as they adapt to world outside. This has become even more imperative as figures come in from other countries i.e. Britain an estimated 75% of those living on streets are said to be former military personel. In the US it is estimated 900,000 ex military personel are living on the streets.
To adapt to the world outside the military is said to take most ex military people a minimum of 4-8 years without operational experience added in. NZ has since 1993 being sending more & more personnel on operational deployments. Not to mention those of us who have worked in the PSD environment.
Since that simple idea it has morphed to actually in a way that helps society, the environment & just makes communities more secure so they can experience growth.
I know huge dreams but as the maker of Avatar said. You just have to dream as big as you can.
Monday, January 4, 2010
Smoke & Mirrors
Kia Ora,
Have decided to go through mistakes I have made so far to give lessons. But today it will be more on the smoke & mirrors of our finance system.
A lot of the information I have being getting comes from the US. I am asked but what has that to do with NZ. There are always going to be little differences but much of what happens in NZ copies what has happened in US. Also because like all currencies the NZ Dollar is tied to the US due to Bretton Woods (1944 agreement), what happens there affects us.
For example the US says it has debt of around US$11 Trillion, when in fact it has debt of US$119 Trillion at last count with most of it 'off book' in the same way Enron had much of its debt 'off book'.
Much of that debt is the US medicare (comparison here is best ACC) which was in the black until the Clinton administration borrowed it all.
Even more worrying for NZ is when you listen to how their 401K retirement plans are set up & why they are not going to work the similarity to Kiwisaver is frightening. Right from the beginning you have heard Gareth Morgan go on about hidden costs of most schemes. That is exactly what happens in a 401K & at retirement most Americans will not have enough to live on that is if inflation or hyperinflation hasn't wiped it out. The money will still be there, but it will buy very little.
Don't believe Government statistics on inflation or unemployment. Governments manipulate those figures. In the US there is a site called shadowstats. It basically tracks these figures the way they did prior to Governments manipulating them.
For example here in NZ the government says that inflation is almost 0% at present, when in fact at the supermarket prices have gone up about 10% in last year or less.
First thing they have done is remove assets (property etc - did you know that to justify that they say you don't own your house but rent it from yourself) which have all gone up in recent years (in this last year alone gold has gone up 30% & Silver 60% & house prices are still up even though they dropped this last year).
Then they do something like they did two years ago. They removed mince meat from the list monitored because it wasn't 'a staple meat anymore' which surprised us that heard it. Real reason was it was going up in price. They replaced it with flat screen TV's. Now any new technology will drop in price relative to that it was first introduced to market over time. Just look at computers. More power lower price by comparison.
So net effect it makes it look like inflation is down. All the time they are telling people to save when system requires you to get into debt (hopefully good debt) to keep it going.
It also means they have to keep coming up with ideas that create a market & therefore currency out of thin air. The latest one is carbon credits & Emission Trading. They are all derivitives & the more derivitives you have the more unstable everything becomes because they are backed by nothing substantial. As an Options trader I buy & sell things I don't own & are never likely too.
Whats a derivitave? Best explanation I have heard is to think of it like orange juice which is a derivative of an orange.
Robert Kiyosaki has actually written a book about all this called "Conspiracy of the Rich" in which his aim is to alert you too it, don't fight it, but work with what the rich do to get yourself ahead of the game.
If you can see past the smoke & mirrors then you can use that knowledge to help you & your Whanau.
Have decided to go through mistakes I have made so far to give lessons. But today it will be more on the smoke & mirrors of our finance system.
A lot of the information I have being getting comes from the US. I am asked but what has that to do with NZ. There are always going to be little differences but much of what happens in NZ copies what has happened in US. Also because like all currencies the NZ Dollar is tied to the US due to Bretton Woods (1944 agreement), what happens there affects us.
For example the US says it has debt of around US$11 Trillion, when in fact it has debt of US$119 Trillion at last count with most of it 'off book' in the same way Enron had much of its debt 'off book'.
Much of that debt is the US medicare (comparison here is best ACC) which was in the black until the Clinton administration borrowed it all.
Even more worrying for NZ is when you listen to how their 401K retirement plans are set up & why they are not going to work the similarity to Kiwisaver is frightening. Right from the beginning you have heard Gareth Morgan go on about hidden costs of most schemes. That is exactly what happens in a 401K & at retirement most Americans will not have enough to live on that is if inflation or hyperinflation hasn't wiped it out. The money will still be there, but it will buy very little.
Don't believe Government statistics on inflation or unemployment. Governments manipulate those figures. In the US there is a site called shadowstats. It basically tracks these figures the way they did prior to Governments manipulating them.
For example here in NZ the government says that inflation is almost 0% at present, when in fact at the supermarket prices have gone up about 10% in last year or less.
First thing they have done is remove assets (property etc - did you know that to justify that they say you don't own your house but rent it from yourself) which have all gone up in recent years (in this last year alone gold has gone up 30% & Silver 60% & house prices are still up even though they dropped this last year).
Then they do something like they did two years ago. They removed mince meat from the list monitored because it wasn't 'a staple meat anymore' which surprised us that heard it. Real reason was it was going up in price. They replaced it with flat screen TV's. Now any new technology will drop in price relative to that it was first introduced to market over time. Just look at computers. More power lower price by comparison.
So net effect it makes it look like inflation is down. All the time they are telling people to save when system requires you to get into debt (hopefully good debt) to keep it going.
It also means they have to keep coming up with ideas that create a market & therefore currency out of thin air. The latest one is carbon credits & Emission Trading. They are all derivitives & the more derivitives you have the more unstable everything becomes because they are backed by nothing substantial. As an Options trader I buy & sell things I don't own & are never likely too.
Whats a derivitave? Best explanation I have heard is to think of it like orange juice which is a derivative of an orange.
Robert Kiyosaki has actually written a book about all this called "Conspiracy of the Rich" in which his aim is to alert you too it, don't fight it, but work with what the rich do to get yourself ahead of the game.
If you can see past the smoke & mirrors then you can use that knowledge to help you & your Whanau.
Sunday, January 3, 2010
Why Financial Education?
Kia Ora,
First alittle housekeeping. May of being misleading in saying on previous blog that outlined was path to riches. As Robert Kiyosaki points out each person must find the path (or genius) that excites them & they understand. For Robert it started with property, but though he remains anchored in property he uses the education he has to ensure he is in the right area at the right time. Warren Buffett focussess his path on control of companies through understanding financial accounts. Richard Branson relies a lot on his intuition & his personal brand.
They all make mistakes but learn from them. They don't wait until it is all perfect.
So why bother with financial education?
Because despite what the 'experts' say things are almost certainly about to get very bad. If you do the research you will find that all that is happening is history is repeating itself & all the advice we are getting worked for the last depression, but is unlikely to be right for this one.
Why? Because bascially the worlds economy is controlled by a group of families who know this is part of a cycle, so they position themselves to ensure they benefit. How do we know they control the economy. Well it will surprise people but the top 50 plus central banks of the world are actually privately owned instituitions. Top of these is of course the US Federal Reserve, which is not federal, not a bank, has no assets & is essentially not owned by Americans.
Each time the cycle hits a depression these groups ensure that more wealth & control are transferred to them.
Again why bother with financial education? To find out what those that control the economies are doing then set yourself to be ahead of the game.
Currently there are four scenarios being floated.
Everything to continue as normal after recent hiccup. Almost certainly the most unlikely path due to actions taken to keep economies going.
Deflation: What the last 'Great' depression was. Why governments threw so much money at this recent hiccup to stop deflation. Possible as things are much more unstable that people realize. Deflation causes everything to loose value.
High Inflation: Likely due to amount of currency printed to not only bail out during last hiccup but also to 'grow' economies. The printing of fiat currency history shows causes inflation & in the end the currency becomes worthless. Inflation will cause prices to rise though not neccesarily in value. It means your savings become worth less. For every dollar printed it causes all others to loose value. Hence you may hear people say a dollar today is worth more than a dollar tomorrow.
Hyperinflation: Very likely as US in particular has being printing so much currency & if there is another deflation threat then the head of the Federal Reserve has said he will throw money out of Helicopters to the people to stop it (hence his nickname in US as Helicopter Ben). This is when your currency will become really worthless. In 1923 hyperinflation hit Germany due to all the currency printed during the war. There is a story of a woman with a wheel barrow full of cash going into to see how much the loaf of bread was that day. On coming out she found all her cash on the ground as someone had stolen her wheel barrow as it was worth more.
First alittle housekeeping. May of being misleading in saying on previous blog that outlined was path to riches. As Robert Kiyosaki points out each person must find the path (or genius) that excites them & they understand. For Robert it started with property, but though he remains anchored in property he uses the education he has to ensure he is in the right area at the right time. Warren Buffett focussess his path on control of companies through understanding financial accounts. Richard Branson relies a lot on his intuition & his personal brand.
They all make mistakes but learn from them. They don't wait until it is all perfect.
So why bother with financial education?
Because despite what the 'experts' say things are almost certainly about to get very bad. If you do the research you will find that all that is happening is history is repeating itself & all the advice we are getting worked for the last depression, but is unlikely to be right for this one.
Why? Because bascially the worlds economy is controlled by a group of families who know this is part of a cycle, so they position themselves to ensure they benefit. How do we know they control the economy. Well it will surprise people but the top 50 plus central banks of the world are actually privately owned instituitions. Top of these is of course the US Federal Reserve, which is not federal, not a bank, has no assets & is essentially not owned by Americans.
Each time the cycle hits a depression these groups ensure that more wealth & control are transferred to them.
Again why bother with financial education? To find out what those that control the economies are doing then set yourself to be ahead of the game.
Currently there are four scenarios being floated.
Everything to continue as normal after recent hiccup. Almost certainly the most unlikely path due to actions taken to keep economies going.
Deflation: What the last 'Great' depression was. Why governments threw so much money at this recent hiccup to stop deflation. Possible as things are much more unstable that people realize. Deflation causes everything to loose value.
High Inflation: Likely due to amount of currency printed to not only bail out during last hiccup but also to 'grow' economies. The printing of fiat currency history shows causes inflation & in the end the currency becomes worthless. Inflation will cause prices to rise though not neccesarily in value. It means your savings become worth less. For every dollar printed it causes all others to loose value. Hence you may hear people say a dollar today is worth more than a dollar tomorrow.
Hyperinflation: Very likely as US in particular has being printing so much currency & if there is another deflation threat then the head of the Federal Reserve has said he will throw money out of Helicopters to the people to stop it (hence his nickname in US as Helicopter Ben). This is when your currency will become really worthless. In 1923 hyperinflation hit Germany due to all the currency printed during the war. There is a story of a woman with a wheel barrow full of cash going into to see how much the loaf of bread was that day. On coming out she found all her cash on the ground as someone had stolen her wheel barrow as it was worth more.
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