Business & Investing are Team sports!

Kia  Ora,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Opportunities or Negativity?

Kia Ora,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

What the Eye can't see!

Kia Ora,

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

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

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

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

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

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

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

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

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

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

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

New Property tax laws

Kia Ora,

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

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

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

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

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

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

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

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

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

That is their reality.

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

Well if you are going to dream, dream big.

Words & Assumptions

Kia Ora,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Apples versus Oranges.

Kia Ora,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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