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Thursday, November 27, 2008

A Personal Message From T. HARV EKER

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So what do you do now?

Take ACTION! If you're already "expert" in business and earning at least $250,000 per year then use "SPEEDWEALTH book" and "Rich Life Club" as a template to enhance the speed of your success. If you're not in this income bracket yet, the best thing you can do is...

Learn! Learn! Learn! Remember, success is a learnable skill. If you truly want to succeed you must work on yourself, study business and become a speedwealth master. The wonderful thing about becoming an expert in this game is when you win, you get rich!

Above all, get the knowledge you need, BEFORE you step into the arena. Think about it: if you were going to play Andre Agassi, the great tennis champion, for money, wouldn't start learning the game and practicing BEFORE you stepped on the court to play him? It amazes me that so many people get into the game of business without acquiring the specific knowledge necessary to win. Then they wonder why they're struggling.

If you're not in your own business yet, this is the time to learn and prepare so when you do "go for it," you'll know what you're doing. If you're already in business and haven't been creating wealth, there's obviously something missing; there's something you don't know. Get the knowledge. Learn the ropes. Apply the SpeedWealth strategies in your business and watch your income skyrocket. That's what I did and it made me a fortune. As you can see, I'm a big believer in education. I love the saying " If you think education is expensive, try ignorance."

There are three types of education you are going to need if you want to succeed to your fullest potential. One is "general business" knowledge. This would include marketing, negotiations, finance, etc. The next is "business specific" knowledge. This entails learning the "ins and outs" of your particular business. The third and most important is "personal development" knowledge. This allows you to fully utilize the first two types of education. Yhe fact is you can have the greatest "tools" in the world, but if you have a leak in your "toolbox" you're going to have a problem. In short, who are you, how do you think, what are your beliefs, what are your habits, characteristics and traits, how confident are you in yourself? In my experience, all these elements have a dramatic effect on both your success and your happiness. I have a motto that "your income can only grow to the extent that you do." The idea is to grow "yourself" and your success will grow naturally and automatically.

To this end, I have created a series of live seminars and tape products designed to help you succeed more quickly, more easily and more happily. Join RICH LIFE CLUB.
The 11 SECRET Millionaire Mindsets For QUICKLY Creating Financial Freedom...
Revealed: Secret Tips The Ultra-Wealthy Don\'t Want You To Know...

T. Harv Eker

Wednesday, November 26, 2008

Traders Toolbox: Money Management Part 2 of 4

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Crucial but often overlooked, money management practices can mean the difference between winning and losing in the markets.

-Amount Of Money To Risk- It’s difficult to come up with hard and fast money to risk on different markets and trades. For our purpose, though, it’s best to think conservatively. Although some studies suggest initially allocating equity in broad terms of original margin (40% to 50% of total equity committed to the markets at a given time in the form of original margin, 15% to a particular market, 5% to a single trade, etc.), many traders consider these percentages too high, and do not consider the market to be a accurate measure of risk or a sound basis on which to allocate funds, because a trader can always, technically, lose more than the margin amount. These traders find it more beneficial to think in terms of the actual money amount they are willing to lose on any particular trade or trades, determined by their stop level or through some other calculation.

Although in specific circumstances professional traders may actually risk comparable or even greater percentages of total equity than those listed previously, on average they risk much less-perhaps 12% to 20% of total capital at a time, and 2% - 4% per trade. Depending on the size of your trading account, these levels might seem overly strict, but again, the idea is to conserve money for the long haul.

In developing your trading goal, determine how much you could accept losing on a trade, both financially and psychologically. Based on total capital and the number of markets in which you are active, allocate your equity proportionally between individual trade, market group and total trading activity levels.

These guidelines protect you from dangers of extreme leverage in the futures markets. Though it may seen attractive to have the change to make big money on a small initial investment, the risk of loss is just as great.

-Determining Reward/Risk Ratios- Another common rule in trading is never to put on a position unless your possible profits outweigh your possible losses by a ratio of 3 to 1, or at the very least 2 to 1. So, if a particular trade has the potential of losing $100, the profit potential should be at least $200 to $300. This is not a bad rule, but like so many aspects of trading, it is somewhat intangible. Once you have formed an opinion of a market, determined your entry point and calculated the maximum amounts you could win or lose on a trade, you still are left with the uncertainty of the probability of your trade winning or losing, and unfortunately there is not secret formula for removing this uncertainty.

Some traders don’t consider probabilities valid at all. The most any trader can do is perform his or her best analysis of the market, and, along with experience and intuition, come up with some rough idea of the probability of success for a given trade. This probability can then be weighed against the reward / risk ratio in selecting trades. For example, would it be better to put on a trade where the reward / risk ratio is four to one and the probability of success is 30%, or would it be advisable to put on a trade where the reward / risk ratio is only two to one but the probability of success is 75%? Using this rule, you’ll be ahead of the game by directing resources to the trades with the greatest chance of success.

To all readers of Investor's Money Journal (IMJ), I want to ask your opinion about this blog if you want an articles purely about stock market or mix of articles about investment vehicles like real estate, networking, etc. Pls. comment.

The MLM Puzzle

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May be your upline always says that you have a lot to know about MLM. Yes, they are right and you have to know a lot about this topic, but it doesn't means that you know nothing about MLM. MLM is a huge industry and no one can know everything about it. The best part of MLM is that you can earn as much from MLM as much you know more about it. MLM is just like a puzzle and there are different parts of it. The more you know, the more parts you get and you can develop your business using it. Now lets see what are these parts and how to get these,

It is most important in MLM life and you could practice it forever to improve your skills. If you want to know more about this then read this article, Aqcuire knowledge before starting MLM. Take part in workshops, seminars, meetings. Read books, visit websites talk with MLM leaders to enrich your knowledge.

Talking skill
This business is all about talking with people. The more you talk the more you can learn from people and know them. Take part in meeting and discussions. Talk with your upline, downline and friends. Talk positive and think positive. Read this article on how to Think positive. Try to talk with many peoples and motivate them. You need to talk much if you want to motivate people.

Invite skill
There is a big role of invites in MLM. A good invite makes a successful sales or joining. MLM is a word of mouth business and the invite works as a ad in MLM. Talk with people and invite them who need great products and opportunities. Read this post for more details: Inviting prospects.

Team management
MLM is a team work and you have to manage your team to ensure a great business. Team management includes helping others, counseling, team meetings and communication. A great team does a great sales and you can achieve the goals very fast with your team.

MLM is a duplicating business. Be a leader and make leaders from your team too. Make them to copy you. This is the way why people earn from MLM without doing any works. People love to follow you if you become a great motivator. Before this you must have great skills and positive attitude. This is MLM's great part which everyone cannot achieve it, very few people get this and they become great legends. Click here to read Part 2

Monday, November 24, 2008

Is Gold the Last Store of Value?

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It has been a difficult time for gold bugs for the past two months as gold has been trapped in a broad trading range which made it seem insulated and immune to all of the financial chaos around it. Today's action on Friday the 21st, put all of that in action to rest as gold soared to trade over the $800 in a matter of hours. This may be the move we've been looking for and coming from a two-month base, it seems large enough to propel this market higher.

I have just finished a new video on gold that goes into some depth and shows you potential upside targets for this market. The video can be played on any computer and does not need any special plug-in. It is available free of charge from MarketClub as part of our ongoing educational outreach program. Our goal is to help traders improved the timing and trade selection in a scientific way using tools that are real world tested and have stood the test of time. click to watch the video - Market Club

Friday, November 21, 2008

How low can the DOW go?

Investors Money Journal

How low can the DOW go? - click here to watch the video

Make no mistake about it, the market action on Wednesday (November 19th) was extremely negative for all of the indices that we track. The close below 8,000 on the DOW can only be described as negative, indicating further weakness to the downside. I am looking for this index to trade down to around the 6600-6700 level.

Looking at the charts using our "Trade Triangle" technology, it is clear that the Dow has been under pressure since our first major sell signal at 11,290. I see no reason to alter this stand, as I believe the trend will continue to be on the downside. I expect to see further weakness in the weeks and months to come.
What's an investor to do? As a trader or investor there are three choices you have as an investor:

1. You can go long a market.
2. You can go short a market.
3. You can move into cash.

I'm often amused when I see people buying "defensive stocks." Why not get out of the market entirely when it's going down. Doesn't that make common sense to everyone?

However, most brokers want you to stay in the market at all times fearing that they will miss a bottom. Truth is, most investors (including brokers) missed the top, so what makes anyone so sure that they'll catch the bottom?
The key in trading is not to get out at the top, or in at the bottom. Anyone who tells you to do that isn't playing smart in the markets, and most likely claims that they are holding the "holy grail" of trading.

An investor's goal should be to capture 70% of a move. The middle is the sweet spot, and if you make enough in the middle then who cares about the tops and bottoms. Forget picking up the 15% on the top and 15% on the bottom, it doesn't work consistently to use it as a trading strategy.

The Art of Contrarian Investing: Going Against the Crowd for Profit

Investors Money Journal

A contrarian believes that certain crowd behavior among investors can lead to exploitable mispricings in securities markets. For example, widespread pessimism about a stock can drive a price so low that it overstates the company’s risks, and understates its prospects for returning to profitability. Identifying and purchasing such distressed stocks, and selling them after the company recovers, can lead to above-average gains. Conversely, widespread optimism can result in unjustifiably high valuations that will eventually lead to drops, when those high expectations don’t pan out. Avoiding investments in over-hyped investments reduces the risk of such drops. – Wikipedia

Professionals vs. Non-professionals

“Whenever you find yourself on the side of the majority, it’s time to pause and reflect.”
– Mark Twain

What is the “Crowd”? They are the group of non-performing institutions, individual investors, traders, speculators, and other players in any market that form a collective opinion that is expressed in the terms of a degree of optimism or pessimism. We will call them the non-professionals.

The professionals are the “smart money”. These are the very few that are aware of crowd behavior and are able to adjust their strategies (long and short) to profit from extreme sentiment. Note: professional does not mean institution by definition. Most institutions are part of the crowd.

The key point to make is that when non-professionals display an excessive amount of optimism or pessimism, the professionals enter into the market and drive prices in the opposite position. Any truly non-professional, one-sided opinion or expectation of a market will be unable to anticipate a movement created by the professionals in the opposite direction that is anticipated by the group of non-professionals. This is contrarian investing, going against the masses that believe in only one direction of a market and taking advantage of their unanimous opinion by crushing them on the other side.

Here’s a diagram I created to illustrate the above point:

How does this work? Some might argue that if everyone’s buying and extremely positive, then why would the market crash? The answer: as more and more investors buy, the market will become fully invested. The last ones buying are the ones that bought into the market when the professionals were selling and will be stuck because of this overhead limit. After everyone’s bought, there won’t be anyone left to sustain the buying. Therefore, a fearful panic ensues and the masses start to sell, most of the times much later than they should have done.

A recent example of massive cash inflow (totaling hundreds of billions of dollars) is shown below. Note that the peak of the NASDAQ was on March 10, 2000 at 5,132.52 at nearly the same time when the largest monthly in flow occurred. Clearly, everyone was invested at the full limit.

The Media’s Portrayal of “Professionals”: An Observation in Barron’s April 28th Issue

This is the “Back in the Pool” issue with the funny-looking bull cartoon testing out the pool’s temperature. Barron’s surveyed “professional” investors and here were some “crowd-like” results:

1) Describe your investment outlook through December 2008:
• Very Bullish: 7%
• Bullish: 43%
• Neutral: 38%
• Bearish: 12%
• Very Bearish: 0%!!!

2) Is the U.S. stock market overvalued, undervalued, or fairly valued at current levels?
• Overvalued: 10%
• Undervalued: 55%!!!
• Fairly valued: 35%

These questions were the biggest eye-poppers:

3) Are you beating the S&P this year professionally?
• Yes: 74%!!!
• No: 22%

4) Personally?
• Yes: 72%!!!
• No: 19%

Here’s the most recent chart of the S&P 500:

The media’s definition of “professional” is not always correct so please be aware of the difference. The market is down over 40% year-to-date, so obviously the results have now changed dramatically.

Contrarian Strategies

“The fastest way to succeed is to look as if you’re playing by somebody else’s rules, while quietly playing by your own.” – Michael Konda

• Buy when media headlines read the absolute worst and there is no sentiment divide among investors. Once sentiment becomes entirely pessimistic, buy. Also look out for a bottoming of new capital in flows into stocks. Historically, the good time to buy was when capital in flows were between 10 -15%.
• Sell when everyone is overly bullish and capital in flows into common stock & mutual funds reach a high. (In 1960 the market declined 18%, in 1962 -29%, in 1966 -27%, and in 1968 -37%, while stock ownership levels were between 32- 34%, the highest ever. In 1999-2000, stock ownership levels were at 31-33%, near an all time-high)
• Don’t fight the trend. If the primary trend is down, go short. If the primary trend is up, go long. Why fight the long-term direction of the market?
• Watch financial networks and read newspapers and magazines to get an idea of where sentiment levels are. Magazine covers are my favorite.


“Follow the path of the unsafe, independent thinker. Expose your ideas to the dangers of controversy. Speak your mind and fear less the label of ‘crackpot’ than the stigma of conformity. And on issues that seem important to you, stand up and be counted at any cost.” – Thomas Watson

It’s safe to say that following the real professionals is the way to go. In order to do that, you have to know how they play. There are three points that I stress: 1) there is tremendous pressure and influence to join the crowd and gain easy acceptance, 2) the crowd is wrong the majority of the time, 3) under duress, psychologically, our emotions and objectivity can become distorted and cause us to rationalize (a dominant coping mechanism) or deny (a dominant defensive mechanism) even the basic realities of truth.

Investors will be able to join the crowd when appropriate, but remain flexible to leave the crowd at times when the market warns us. I encourage each investor to respect the nature of human weakness and to become a free-spirited independent thinker.

Thursday, November 20, 2008

Getting Started As a Real Estate Investor

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Whether you are new to real estate investing, or you have just reached a "plateau" and need some ideas, these reminders will help "jump-start" your real estate investing career and get you back on track.

Surround yourself with like-minded people
"Creative" real estate is non-traditional, which means that most people don't do it this way. Thus, most people you speak with will tell you it won't work. If you tell them you heard it in a seminar or a course you bought from a late-night television "guru," they will laugh and call you "gullible."

Attorneys and other professionals will denounce it because it sounds unusual. Keep in mind that these people are either threatened by their own lack of success or are looking to protect their own butts.

The first thing you should do is join a local real estate investment club. These associations will help you keep your thoughts in the right place and prove to your subconscious that it really does work.

If you cannot find a group, form a "mastermind" group that meets for breakfast once a week. If you don't know what a mastermind group is, you should read Think and Grow Rich by Napoleon Hill. If you have read it already--read it again, again and again.

Have a team
Don't wait until you have a deal brewing to find the players. You need to find the following players on your team right now:

Preferably one who does real estate deals for himself as well as others.

*Title or Escrow Company
Stay away from the big name companies, and find one that caters to investors. Make sure they understand double closings, land contracts etc.

*Insurance Agent
Find one who understands land contracts, landlords, etc.

Find one who is aggressive and owns real estate.

One who will give you free estimates and knows how to "cut corners" in the right places.

*Mortgage Broker
One who is savvy, creative, and experienced with investors.

In case you need one for money or experience.

Someone you can call to smooth out the rough spots.

Don't talk to unmotivated sellers
This is the biggest mistake I see beginning investors make. They waste time talking to sellers who are marginally motivated. Even worse, they drive by the house and look for comps without even talking to the seller first! Never visit a house before speaking with the seller over the phone.

I love Ray Como's Mastermind Script Book. It has hundreds of questions designed to extract the seller's motivation over the phone. Heck, the course will save you enough gas money to pay for itself! [For more ideas read: How to Make Sure the Seller is Really Motivated]

Be persistent
Anyone who has ever been in sales will tell you that few deals are ever made on the first try. In fact, most deals are made after contacting a prospect for the fourth or fifth time.

Let me give you an example. I contacted a guy who had a junker house he was thinking of selling. I met with him once and made him an offer. He didn't like it. Did I stop there? No way! I called him twice a month for a year. I mailed him two more offers that he rejected. We finally came to an accord and closed this month.

Have a follow up system like a salesman. I use a program that allows me to schedule follow ups and keep a running history of calls and conversations.

Keep educated
"If you think education is expensive, try ignorance."
I am not sure who first said it, but I give him credit. You can lose more money with a mistake than you can learning how to avoid one. Even if you have been at this business for years, you need to keep up with current trends and laws.

As an attorney, I have to go to seminars every year. Some are boring, but I always learn something that either makes me more income or prevents a lawsuit.

Have a plan
Don't just wander around looking for deals. Have a plan. Make X number of phone calls a week. Spend $X per month on advertising. Make X number of offers per week. Pass out X number of business cards each day.

Eventually, you start to get lucky. I mean that facetiously because luck always happens to those who are at the right place at the right time. If you plan and persist--you get lucky.

Treat this as a business
People are lured to investing in real estate because of the quick buck they are promised. Don't hold your breath; you won't get rich quick. An "overnight sensation" usually takes about five years.

I would guess that 90% of the people who take a seminar quit after three months. This is a business like any other. It takes months, even years to cultivate customers and have a life of its own.

You need to treat it like any other business. Give it time, effort, attention, and professionalism, and it will flourish before you know it.

by William Bronchick, JD

How to Make Sure the Seller is Really Motivated

One of the common complaints investors across the country share with me is that they talk with a seller who sounds motivated on the phone but turns out to be a dud when they go meet with this seller.

Let's look at the ways you can make sure the sellers you meet are the best use of your time.

Screen, but don't over-screen

First, understand that you will never GUARANTEE yourself that you will only meet with motivated sellers unless you are willing to make a whole lot LESS money. Does this seem contradictory to all the strong pushes I have made in the past to only work with motivated sellers?

Here is what I mean. You will always be more effective negotiating deals face to face than you will be over the telephone. In person you have the ability to create rapport and an emotional connection with the seller which is a hundred times harder when talking over the phone.

I sincerely believe that you must qualify sellers carefully, but not so carefully that you screen out everyone who isn't an ABSOLUTE deal. It's because 50-70% of the people you talk with that might be ready to sell to you at very good price and/or terms WON'T be 100% visible to you over the phone.

For example, in a moment I will share with you a script for qualifying sellers over the phone. One of the questions will be, "What is it that you owe against the property?"

Usually if the sellers are motivated they will be more than willing to share the answer with you. If they are unwilling to open up and answer, this often indicates that they aren't as motivated. BUT this is NOT a hard and fast rule.

On one rental property I called the seller and (from a "for rent" ad the seller had placed in the paper) I asked this question. The seller said he didn't feel comfortable telling me that on the phone.

I could have taken this to mean I should cancel my appointment with him. I am glad I didn't. I ended up with a ten-year lease option on the condo for a price of $110,000. Three years later that same condo is worth $165,000 and climbing!

The bottom line is that you should screen, but not so harshly that you screen out all of your possible deals. It is a fantasy to believe that in a ten-minute phone conversation you can ever KNOW with absolute certainty who is ready to sell at the right price and terms and who isn't. My belief is that you would do well to error on the side of seeing more sellers than fewer.

All that said here is exactly how I re-qualify sellers I plan on meeting with to make sure they really are ripe for me to meet with them...

I like to re-qualify on a second phone call versus completely qualify on the first phone call.

I typically do a quick sort of people who have properties for sale or rent working through them quickly to set several appointments for later in the week. Then, in a second phone call, I spend focused time with the few sellers I have appointments with doing my final screening.

I like doing it this way because on OUTBOUND calls I make to people with for sale or for rent properties I work VERY quick to do my initial sort. It slows me down too much to try to do this initial sort AND to catch myself to slow down and do a deeper qualification with the 5-10% that merit a closer look.

Two quick points

ONE: My partner, Peter, prefers to do everything I do in one phone call. He feels comfortable BOTH quickly sorting through sellers/landlords and then taking the time to go deeper with the ones he sees as worthy of spending time with.

If this is how you prefer doing things, then you should use the ideas I will share on re-qualifying sellers at the end of your first call with the seller rather on a separate second call. Both work fine, I am merely sharing with you how I like to do it.

TWO: On calls I make to sellers who have called me off of my ads and other marketing campaigns, I almost always do my deeper qualification on my first call to them.

I use the re-qualifying call idea when working with sellers/landlords I am calling straight from THEIR ads they have in the paper or signs they have around the neighborhood.

Sample re-qualifying call script
[Note: This script assumes that you already have spoken to the sellers on an earlier phone call, talked with them for at least three to five minutes, and set up an appointment to meet with them.]

Ring, ring...


Hi, this is ____, I was just calling back to double-check my directions to meeting with you tomorrow. It sounds like I caught you in the middle of something?

Oh, okay, well if you can just give me the zip code of the property I am sure I'll be able to look it up in my map book.

While I have you on the phone may I ask you a couple of questions?

What's the square footage of the house [or some other harmless question that gets the seller comfortable answering questions and warmed up to talking with you about the house.] How many bathrooms did it have again?

And what was it that you owed against the house, roughly?

And your payments are? Best guess?

Does that include the real estate taxes and insurance?

Now I know you told me on the phone before, but why was it again that you were selling the property? [scrunching up your face over your brow and under the inside corner under your eyes to get the right tonality-called "scrunchy face"]

And when did you want the property handled, six months? Twelve months? Ideally when did you want the property handled?

Oh Okay, that makes sense. A question for you [scrunchy face and softer voice] what were you planning to do if you didn't sell the house right away? What was your back-up plan?

Had you ever thought about just renting it out?

If they answer yes--

What do you think it would rent for?

If they answer no--

I know you don't plan on renting it out, but if you did rent it what do you think it would rent for? This just gives me a better idea of the value of the property.

At this point go back and make sure you build some more rapport with the sellers. Ask them about their families or hobbies or anything else you can get them to talk about that they genuinely enjoy and you can sincerely be interested in them for.]

Now go back and ask the following questions:

Now who else besides you is on title to the property?

If they are the only ones skip the next questions about getting all the legal decision-makers to the property for the appointment.]

Obviously we'll need to have ALL of us meeting ___[day you have appointment]___ at the property just in case we find it's a fit and I decide I want it. I just want to make absolutely certain that you and ___[other people on title] are all going to be there. Are you all?

Ask a few rapport questions again, even trying to include the other owners, so you can gather some information about them that will help you connect faster when you meet with them at the property.]

Great I'll see you (and ___[other people on title]___) on _____ at _____am/pm. Have a great day.

Is it time to meet the sellers face-to-face?
From the answers to these questions you should be able to determine whether or not the seller is BOTH motivated and has the right situation where you can help them and make a profit.

Motivation means two things:
1. A compelling reason to sell
2. Time pressure to do it fast (usually 60 days or less)

Situation means one of two things:
1. Enough equity for you to get a great cash price
2. Seller NOT needing their equity (or at least all their equity) out when you buy it from them. This means they could be flexible on the TERMS of the sale

If the seller shows both a fit in motivation and situation, I would recommend that you meet with them. If you are left with a sense that they really aren't motivated, then either cancel or delay your appointment OR throw them a trial offer right there over the phone to gauge their reaction.

For example say:

Mr. Seller, I don't know if I could do this, but what if I was able to cover your $1,400 per month payment for a while and down the road the road I cashed you out of the house at say, $177,000-178,000 is that something that we should even talk over when I come out to meet with you and see the house, or maybe not?

If the sellers say yes, follow up that question with:

I'm curious. What about me covering your payment of $1,400 per month and cashing you out at the $177,000-178,000. Would that even be a fit for you?

By this point you should know if they are worth investing your time to go and meet with them.

I hope this game plan for re-qualifying sellers helps you best use your time and close more deals.

by: David Finkel is an ex-Olympic level athlete turned real estate millionaire and one of the leading investing experts in the nation. He is a Wall Street Journal and Business Week best-selling author of over 40 business and investing books and courses, including the wildly successful, Real Estate Fast-Track and The Maui Millionaires.

Times Like These, Ask Yourself: What Would Warren Do?

“Be fearful when others are greedy and greedy when others are fearful.” How’s that for a classic Buffett quote. Look- whether your like the guy or not, he’s a financial genius; so in times like these, who do I watch? None other than good ol’ Mr. Buffett himself.

There’s no question what Buffett is doing right now. If you’ve followed some of his latest moves, he’s taking an extremely aggressive approach to an injured economy. Just ask him! Recently, he was caught saying that he’s “been buying American stocks” with his personal money. Interesting… American stocks? Well wait a minute! Maybe Warren is just getting so old, he can’t manage to make it over to the remote to turn on the TV to see what’s happening right now to American stocks.

Or maybe he’s just a genius, and you and I should do what he does.

So what’s he doing right now? Well, for starters, he picked up Berkshire Hathaway in the latter part of September. He also saw an opportunity with Constellation Energy and picked them up for $4.7 billion. Viewing Goldman Sachs as real steal, he picked up another $5 billion there; not to mention his $3 billion of preferred shares from GE, which is supposed to end up yielding somewhere in the neighborhood of 10%.

If the point isn’t clear enough, if you’re fortunate to have some spare funds lying around the house (right, as if anybody really has that!), go out and buy! There’s no time to wait! Well, according to Mr. Buffett there’s not time to waste.

I don’t necessarily think that he’s saying to go out and pick up stock from these particular companies, but the message should be clear- in a falling, injured US economy, rather than taking your losses and selling, why not hold on to what you have, and take any extra money and throw it in while stocks are on sale!

What are you doing? Waiting? Have you sold a lot of yours? Holding… ?


Monday, November 17, 2008

Can Real Estate Still Be a Good Investment?

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That's a question we are all asking today. Why? Because of the many stock market investors who speculated in real estate, the problems surrounding sub-prime loans with the resulting foreclosures and bank failures, and falling home prices.

If the late Dr. David Schumacher, my mentor for the past 10 years and author of the now-famous book, The Buy and Hold Strategies of Real Estate, were still around, I know what he would say because he said it during the last downturn in 1990-1995. He would tell us not to worry. This is only temporary and part of the normal cycle of real estate.

It creates bargains that can benefit you. This cycle has been happening since Montgomery Ward began offering homes for $1,500 through its catalogs. As sure as the sun rises and the seasons come and go, real estate will make those who own it rich over a period of time. He would add that now is the best time to get great deals in real estate.

The Real Estate Cycle

Real estate is still the best investment possible. It always has and always will do well in the long run. This is the fourth real estate cycle I have been through and none of the downturns were fun. However, if you have patience and look at the long term, your real estate will go up in value more than any other investment. Do not treat real estate as you might treat the stock market, worrying about the ups and down.

Since 1929, real estate has gone up an average of five percent a year; if you stay away from the obvious non-appreciating areas like Detroit, it is more like seven percent a year. At that rate, properties will double in value over 10 years with compounding. Add a federal tax benefit of 28 percent plus state tax deductions, the depreciation write-off for rental property, and the eventual pay-down of the loan and you have a strategy rich people have always used to accumulate wealth.


Over the past 30 years I have watched many flippers who buy, fix up, and sell. I do not know many who have much net worth or are wealthy because of flipping. It is simply a very risky way to make money.

Those who have prospered are the ones who are in it for the long haul and patiently watch their properties increase in value over time. This past downturn was created by speculators who all flipped at the same time, putting too many properties on the market for sale and rental. I guarantee that over the long haul, you will always regret selling any property you have every owned.

Buy and Hold

Since time passes by anyway, the buy-and-hold strategy is a great way to become rich. Dr. Schumacher experienced at least five real estate cycles and did extremely well, acquiring an eventual net worth of over $50 million.

You just can't go wrong in purchasing an inexpensive condo, townhouse, or single-family home in a good location where there are jobs. Make sure you have a fixed-rate loan, make sure it cash flows, hold on to it for 10 to 20 years, and you have a property that has doubled or even quadrupled in value. When you need to retire, simply do a cash-out refinance to live on or to supplement your retirement pension.

For example, the first property I purchased for $75,000, a townhome in Lake Arrowhead, CA, is now worth $650,000. My first oceanfront condo, which I purchased in Long Beach, CA, in 1982 for $112,000 and used as my residence, is now worth $500,000. One-bedroom condos I purchased in Maui, HI, in the late 1990s for $80,000 are now worth $400,000. Homes I bought around the same time in Phoenix, AZ, for $75,000 are now worth twice that. I could go on and on and on.

What are your Options?

What are your options to building wealth today? The options are to buy real estate and build wealth or to not purchase property at all, to struggle a lot and have nothing to show for it.

1. You could do nothing. The 25 percent who do not own a home end up with no assets when they retire. They have a car loan and owe an average of $9,000 on their credit cards. Those who do not purchase rental property may be forced to work past age 65 to supplement their meager retirement income.

2. You can try to depend upon your retirement. The above chart shows that you should not depend on your retirement income alone to support you, because it won't. Those on Social Security or most retirement programs end up living below the poverty line and are forced to work until they drop, so that is not a solution. Other investment options are not doing so well, either.

3. Invest in the stock market. We are definitely in a slowdown (I refuse to believe we will have a recession), so the stock market is not going to do well for several more years.

4. Invest in gold and silver. They have already made their run; it is doubtful they will do much better. Gold and silver are used as a hedge against inflation and a weak dollar. It looks like oil prices are headed down and the dollar is strengthening.

5. Invest in real estate. Those who invest in real estate almost always do well. The following graph shows how the top one percent in income have acquired their wealth. As you can see, the vast majority have invested in real estate.

Don't Think Short-Term

Real estate is not designed to be considered short-term. Right now, real estate is going down in value in many cities, but it is going up in many others. It is a terrible time to sell and pull out any equity. Only about five percent of the properties are for sale. Most homeowners and investors are simply holding on to their real estate and are waiting for the next upward appreciation cycle.

The Four Greatest MISTAKES People Make in Real Estate

Real estate always does well when purchased correctly. It is people's choices and sometimes greed that mess up an almost perfect investment.

MISTAKE #1. Purchasing Property That is More Than One Can Afford

Often individuals are attracted to and purchase a home they cannot afford. They struggle their entire lives just to make the payments. Then if they have an illness, job loss, or divorce, they are in big trouble.

MISTAKE #2. Buying Properties That Don't have Cash Flow

When rental properties are going up rapidly, everything seems desirable and people purchase rental properties that don't cash flow. Often that can lead to disaster with large, negative cash flows when the market softens. Properties that cash flow are a no-brainer. They are great no matter what happens. These are the ones you want to buy and hold. Eventually they will be paid off.

MISTAKE #3. Refying Too Much Out

When prices are going up, one is tempted to take out the maximum amount allowed on an equity line on one,s home or do a cash-out refi on a rental property. That is dangerous if one cannot make the payments or support the negative. It is like abusing one's credit cards, which often ends in bankruptcy. It is especially discouraging when values drop below the loan amount, as is happening with many homeowners right now. One should not get discouraged, they will eventually return to their original value and then surpass that, usually within 2½ to 4 years.

MISTAKE #4. Getting the Wrong Loans

We have all seen the problems with sub prime loans. Those with low incomes were not the only parties using these loans. Some bought million-dollar homes in a gamble that they would up in value. Five-year Option ARMS also became popular, but they caused major problems to the investor when they reset. Loans like these should be refinanced as soon as possible. The same is true for adjustable-rate mortgages. Fixed-rate loans are the only suitable loan type for anyone who plans to hold on to his properties.


It is never fun to be in a down cycle and see the equity in your home and rental property slip away. However, do not be discouraged, this is just part of the cycle of real estate.These down cycles are always good times to pick up more property at great prices, but be sure you keep a reserve for unforeseen problems (such as illness or job loss) so you can still make your payments. Make sure you purchase good properties in good locations, priced below the median price for the area, in markets that have good job growth.Properties will return to their 7-plus percent appreciation and then you can watch your wealth build once again. So, don't worry. Real Estate is still the best long-term investment.

Run Your Investment Like a Business

I have found that people who have made money consistently through their investments are able to do so because they treat it with same seriousness as they would in building a business or a second career.

If you treat investing as just a "by-the-way" activity that you spend time on now and then, you will never be able to succeed. So, how can you run your investing activity professionally like a home business?

Just as an entrepreneur has to decide on the mix of products that his business will sell, you have to decide on the type of investment strategies you will use to generate the profits that you aim for. You also have to decide how you are going to allocate your investment funds between them.

There are whole ranges of investing strategies to make money. Some of them are short-term and some of them are long-term. Some of them require daily monitoring while others require monthly monitoring.

The kind of strategies you should employ depends on your targeted rate of return as well as the amount of time you have to spend. For example, being a full time trader who is able to monitor the markets for 5-6 hours a day.

My fellow investor Conrad focuses 100% of his money into very short-term momentum trades that make him quick gains within a few days. Because of his smaller investment capital (which he first started with), he solely uses Call & Put Options that give him the highest possible return of 100%-200% on his money. His strength in Technical analysis gives him an advantage in picking the best momentum trades.

As a person who has full time businesses to run and relatively less time to trade on a daily basis, I allocate 80% of my money into medium-term value stocks as well as buying ETFs that track the overall market and its sectors. My strength in fundamental analysis and business strategy also gives me an advantage as a value investor. I would only focus the remaining 20% of my funds into short-term momentum trades to give my returns an added boost.

Whatever investment you decide to use, always remember that you need to diversify your money adequately into at least 8-10 different stocks or options at any one time. No matter how much research you do and no matter how good a company's stock can look, things can turn against you with a single piece of negative financial news. Be prepared to make losses on a few trades, it is only natural.

However, if you stick to the rules and cut your losses, the profits you make on your winning trades would be enough to build a small fortune.

Secrets Of Millionaire Investors by Adam Khoo

Sunday, November 16, 2008

Create Passive Income - Power of Duplication (Leverage)

Not all business are created equal.

Some business are just glorified jobs.

Let me tell the story of Maria.

Maria was an accountant in a huge company. She had so much work, she worked until late into the evening every single night. Obviously, she hated her job. She felt trapped in her 8 a.m. to 10 p.m. prison everyday.

One day, she walked into a bookstore. On impulse, she bought a book on how to start a business. She read it in one sitting and got all revved up. Maria begun to dream of having her own carinderia (simple mini-eatery).

You see, Maria loved to cook. As a child,Maria was a helper in grandmas canteen. Through her mentor, she learned how to market, how to create delicious meals, how to run a kitchen like a battleship and how to make customers happy.

Maria resigned from her jo and jumped headlong into her new business.

And people loved her food. And because her house was on a busy street, sales were brisk and profits were good.

Maria was having a time of her life. She was doing what she loved and was earning more than her accountant's salary.

There was just one problem: One year into the business, Maria realized she was working harder and longer than when she was an accountant. Yes, she still worked until 10 in the evening. But this time, she didn't start at 8 a.m. but at 4 a.m., because she had to do the marketing early in the morning. I was an 18-hour job.Sure, she loved what she was doing. it was clearly her core gift and passion. But would she be able to continue with this backbreaking schedule?

From my point of view, Maria replaced one job with another job. Yes, the second job is now her own, but unless she trains others to do her work and duplicate herself, its just a glorified job. Unless she changes her approach, she will suffer from two things:

1. Entreprenur's Burnout

Maria is a perfectionist and cant delegate. She can't see someone else in front of her stove (she calls it her throne). She believed she has to be the one who does the cooking or the food wouldn't taste the same. When a business owner is like Maria, burnout is not far away. Stress will build up until Maria gets sick physically or emotionally - and may be forced to give up the business.

2. Dead-End Profits

Maria can never expand her business and increase her profit exponentially. Her earnings will remain stuck. Or if ever it will increase, it will increase via addition, not multiplication.

Remember that one of your goals is passive income.

You need to set-up a business in such a way that, one day, it can run without you. Or at least, with minimal supervision. Your goal is that while you sleep, your business earns for you.

When Maria can train cooks to duplicate her culinary skills and managers to duplicate her managing skills, she can exponentially expand her income by doing any of the following: offer catering services for parties, or start a new branch in another part of the city, or sell her sauce in bottles, or write cookbooks, or start her own cooking show on TV!

That's why every time I enter into any project, I always do it with a team around me. Never alone.

And together we crate a system for a project that's replicable and duplicable.

In other words, it's got to run on autopilot without my direct supervision.

Here's my ideal leader: If I appoint someone to be project head (or business manager). ater six months, I dont want her bothering me anymore except for major directional issues. If she/he still bothers me for tiny matters, I've chosen the wrong leader - or I trained her wrongly.

Excerpt from the Book of 8 Secrets of the Truly Rich by Bro. Bo Sanchez

Process Flow of Registering A Business

Step 1:
Seek approval / clearance from the Barangay.

Step 2:
Secure Tax Identification Number (TIN) from the Bureau of Internal Revenue (BIR) District Office where the office is to be located.

Step 3:
Apply for business permit and license from the City / Municipality where the business is to be located.Get sector specific clearances, or example:
* Travel Agency - Departmet of Tourism (DOT)
* Food and Cosmetics - Bureau of Foods and Drugs (BFAD)
* Pawnshop - Banko Sentral ng Pilipinas (BSP)
* Learning Centers - Department of Education (DepEd)
* etc..

Step 4:
Register with Bureau of Internal Revenue (BIR) District Office where the business is to be located for Authority to Print Invoice and Book of Journal

Step 5:
Register your business for compliance to good employer-employee relationships, incentives and benefits, social, community and environmental responsibilities:
* Social Security System (SSS)
* Department of Labor and Employment (DOLE)
* PhilHealth* Pag-ibig
* Department of Environment and Natural Resources (DENR)

If Sole Proprietorship:
* Register with the Depatment of Trade and Industry(DTI) for Business Name Certificate

If Partnership / Corporation
* Register with Securities and Exchange Commision (SEC)

If Cooperative:
* Register with the Cooperative Development Authority (CDA)


Keep Your Money in the Market

As the world economy reels under the weight of the worst financial crisis since the Great Depression, we have been left with a broken financial system. Financial institutions around the world have suffered life-threatening, self-inflicted wounds by purchasing over a trillion dollars of complex mortgage-backed securities backed by dodgy loans based on inflated real-estate values. These assets have been financed with enormous leverage and with short-term debt. Just prior to its "rescue," Bear Stearns had a debt to equity ratio of over 30 to 1, making it susceptible to a "run on the bank," although Bear was not a commercial bank but rather part of the "shadow banking system" built on derivatives.

The long-run solution to the present crisis must involve substantial deleveraging and a recapitalization of our financial institutions. In the meantime, credit has been essentially frozen and a world-wide recession seems almost inevitable.

But just because stock markets have panicked, investors should not. The best position for investors today is not "fetal and 100% in cash." We are not going to have a depression, and we have survived financial crises before. A century of investing experience, as well as insights from the field of behavioral finance, suggest that investors who bail out of equities during times like these are almost always making the wrong decision.It is very tempting to try to time the market. We all have 20/20 hindsight.

It is clear that selling stocks a year ago would have been an excellent strategy. But neither individuals nor investment professionals can consistently time the market. The herd instinct is extraordinarily powerful. When the economy and the stock market were booming in early 2000, investors could easily convince themselves that prosperity would continue without interruption and that stocks catering to the "New Economy" were surefire tickets to wealth. Individuals poured more money into equity mutual-funds during the last quarter of 1999 and the first quarter of 2000 than ever before. And not only was the timing wrong but so was the selection of funds. The money flow was directed to the hot Internet funds. Investors liquidated "value" funds that owned less exciting businesses, whose stocks sold at only modest multiples of their earnings and book values.

The herd instinct works exactly the same way in bear markets. Nervous investors convince themselves that every "light at the end of the tunnel" is a train coming in the opposite direction. Panic is just as infectious as blind optimism. During the third quarter of 2002, which turned out to be the bottom of a punishing bear market, investors redeemed their mutual funds in droves. My own calculations show that in the aggregate, investors who moved money in and out of equity mutual-funds underperformed the buy-and-hold investors by almost three percentage points per year during the 1995-2007 period.

Look at history: The market eventually bounded back from the damaging stagflation of the 1970s and the savings-and-loan crisis of the early 1990s, when a whole industry had to be rescued. Stocks also recovered from the Asian crisis of the late 1990s. Similarly, investors who held on after the more than 20% one-day stock-market decline in 1987 were eventually well rewarded.

So what should investors do? By all means, young 401(k) investors, and those in their prime earnings years, who are stashing away funds from every monthly paycheck, should stay the course. If you decide to eschew equities during periods of ubiquitous pessimism, you will lose all of the advantage of "dollar cost" averaging (buying more shares when prices are low than when they are high). Asset allocations should be shifted to safer securities over time as the investor ages, but only gradually and on a set schedule as through a "target maturity fund."

If you are now approaching retirement and failed to move to a more conservative asset allocation, you should not do so now in response to a time of panic. If anything, well diversified investors should, at the end of each year, consider rebalancing to ensure that your portfolio composition remains consistent with the risk level appropriate for your financial circumstances and tolerance for risk. But this is likely to mean shifting into equities and not out of them.

Suppose you started the year with a portfolio of half stocks and half Treasury bonds. You are likely to find that the value of your bonds has gone up, as Treasury yields have fallen, and your stock portfolio has declined. Suppose the allocation at rebalancing time is two-thirds bonds and one-third stocks. The appropriate strategy is then to sell safe bonds and buy more equities to bring the stock/bond ratio back to 50%. Over the past decade, rebalancing a 50-50 portfolio each year has added to investors' returns and reduced risk.

We will have a serious recession now, but a 1930s-style depression is highly unlikely. We will not let the money supply decline by 25%, as we did in the '30s, and automatic stabilizers (like unemployment insurance) are now a significant element of fiscal policy. Don't forget that the U.S. economy is still the most flexible in the world and our "innovation machine" is alive and well.

No one has consistently made money by selling America short, and I am confident the same lesson is true today.

Mr. Malkiel is a professor of economics at Princeton University and the author of "A Random Walk Down Wall Street," 9th ed. (W.W. Norton, 2007).Copyright 2008 Dow Jones & Company, Inc. All Rights ReservedThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit

Multi-Level Marketing (Networking), the Ulimate Money Machine

Have you ever been to a great movie or a great restaurant and told a friend about it? That's called word-of-mouth advertising. Business love word-of-mouth advertising because it's much more effective than all the money they spend on any other form of advertising, promotion, or marketing. Network marketing is a way for business to leverage the power of word-of-mouth advertising.

Let me give you a hypothetical example. Suppose you recommend a great restaurant (Let's call it USANA's Restaurant) to your sister. Your sister and her husband make a reservation for dinner and, during the meal, the waiter asks them how they heard about USANA's Restaurant. They mention your name. How would you feel if the owner of the restaurant sent you a thank you letter and a coupon for a free meal in appreciation for your recommending his restaurant? It would probably make you fell wonderful. The restaurant owner also explains in the letter that because of your recommendation, USANA has gained a new long-term customer. This customer didn’t result from USANA's Yellow Pages ad or it's radio and newspaper campaign. Therefore, the owner wants to reward you for this new word-of-mouth customer. Anytime your sister visits his restaurant in the future, he will send you a check for 10% of the value of the meal as a continuing thank you. Sure enough, every several months you receive a small thank you check. You're so impressed that you encourage others to visit USANA. This generates more free-meal coupons plus more 10% word-of-mouth checks. After a year, you are receiving small checks each month. After several years, you've help to create dozens of monthly customers, which generates hundreds of dollars of extra, no hassle income to you. That would be nice, wouldn’t it?

Excerpt from the book of Robert Allen's Multiple Stream of Income

Saturday, November 15, 2008

Is a Bank an Investment Vehicle?

When I was a kid, a bus ride cost 25 centavos.Today, the same bus ride costs seven pesos.

What happened? In one word, inflation.

Overtime, your money loses its purchasing power.

When it comes to money, there are really only three kinds of people in this world. 1. Spender 2. Saver and 3. Investor. And sadly, only one of these three will win the money game. Which one are you? Let me introduce them to you by way of a story. James, Jim and John were salesmen. The three of them landed a huge deal. And their company gave each of them a P100,000 commission check. They were totally blown away by their luck, but they used their money in very different ways. Because James was a Spender, Jim was a Saver, and John was an Investor.

1. Spender

Upon receiving his check, James encashed it, and went straight to a fancy restaurant and invited all his friends to celebrate his good fortune. Later that day, he bought himself a new hi-tech gadget like cell phone, MP4 player, portable playstation, etc. The next day he took a holiday trip to Boracay.In three days, James had nothing left from the P100,000 commission.

This is the story of his life. After many years of working, he has no savings to show, but he has many credit cards debts.We see spenders everywhere, and I hope you’re not one of them.

2. Saver

Jim walked straight to the bank with his P100,000 check.He approached the friendly bank teller with a smile and said, “Miss, I don’t plan to touch my money for a long time. It’s P100,000. How much interest will you give me?

She nodded and said, “Let’s put it in a time deposit account. We’ll give you five percent interest a year. That’s the highest we can give you, sir.”

“Okay!” he agreed, signed the deposit slip, and walk out happy.Thirty-six years later, he was 65 years old. He retired at age 60, got his retirement package, spent it in five years, and was now totally broke. That was when he remembered his time deposit. He visited his bank.

He saw the same friendly teller “Hi, I deposited P100,000 some 36 years ago,” he said, “and I’m finally withdrawing it. How much is it now?”

“Just a minute sir,” she looked at her computer, and after a few minutes looked op and said, “Sir, you now have P400,000.”

The retired salesman blinked hard. “After 36 years, it’s only grown to P400, 000? Perhaps you’ve made a mistake, miss.”

“I’m no longer a miss, sir. Lola na ako. And no, there’s no mistake…”Savers are good, disciplined, honest people, but savers still don’t win in the money game.

3. Investor

John was the Investor. He doesn’t go straight to the bank. He goes to where the bank puts their money. In other words, he bypasses the bank.

Out of the three salesmen, only John has raised his financial I.Q. He learned that the banks put a part of their money in investment vehicles like mutual funds, bond funds, equity funds, and stocks. So he thought, if it’s good for them, why not for me?

So John takes a few days researching for the best mutual fund investments in the country and visits one of them.

He approaches the lady behind the desk and says, “I’ve never done this before but I want to invest in mutual funds. How much interest will you give me?”

The lady shook her head, “Unlike banks, we don’t guarantee our interest rates. They depend on the ups and downs of the market.”

“Isn’t that scary?” John raised hi eyebrow.

“It is – if you plan to invest for only a short period of time. But if you plan to invest long term and ‘forget’ about it, it won’t be scary. Like for the past years, we’ve given our investors an average of nine percent to 12 percent growth.”

“Yes, I do plan to invest for the long-term,” he says, “but do I have to invest millions to join your mutual fund? I don’t have millions.”She laughed. “Sir, the minimum is P5,000 per investment.

”His eyes bulged. ‘What? That small? Then anyone can invest!”

“Mutual funds are the great equalizer. Some call it the secret of the rich which is now available to the poor. Banks don’t treat people equally, but we do. Someone who puts P5 million in the bank gets a higher interest than someone who puts P5,000. But in mutual funds, it doesn’t matter how much you put in. Five million or P5,000, you earn the same interest.”

So John invested his P100,000 and left happy.Thirty-six years later, at the age of 65, John wanted his investment back. So he walked into the same mutual fund company and asked about his investment fare the past 36 years.

The lady on the desk said, “To be honest, there were bad years and good years. There were years your money lost earnings but there were great years when your money earned 20 percent and more. In the past 36 years, you averaged 12 percent a year.”

“Is that good?” he asked.

“According to my records,” she smiled, “your original P100,000 has now grown to P6.4 million. Now you tell me if that is good.” She winked.

“That’s very good!” John grinned from ear to ear.

Mga kabayan and friends, now you know why banks have nice, tall, expensive buildings.

They get your P100,000 and invest it in an investment vehicle where they earn P6.4 million, and then return to you the P400,000.How much did they earn? 6 million.

So next net time your bank offers you a cup of coffee for depositing P100,000, realize that the cup cost you P6 million.

Here’s my big question: At least for your retirement fund, why not bypass the banks? Why don’t you invest your money where banks invest their money?

You can. Anyone can.

Check out for a listing of mutual funds in the Philippines.

Excerpt for the book of 8 Secrets of the Truly Rich by Bro.Bo Sanchez

Are You Riding Vehicles Towards Wealth?

Here’s my question: If you’re living in Manila, can you walk up to the mountains of Baguio? Of course you can. It may take a while but you can do it.

The average normal pace for normal human beings who don’t exercise much is five kilometers an hour. That means, it will 50 hours of non-stop walking to reach Baguio. If you stop for food, rest and sleep, you could probably walk for 10 hours a day. So, in total, you can walk up to Baguio in five days. Not bad right? I cant guarantee what will happen to your lungs after walking side-by-side with smoke belching buses for five days, but at least you’ll arrive.

But you can ride a bicycle to Baguio too.

Even if you’re not a super biker, you could still pedal your way up in two days.

Now that’ great improvementBut you can improve that even further.

You can ride an air-conditioned car and arrive in five hours.

Isn’t that fantastic?

And if you’re really in a hurry, you can ride a plane and do it in 45 minutes.

My friend, in the same way that there are many ways to Baguio, there are also many ways to wealth.

The rule is simple: You’ve got to ride something.

Remember that three kinds of people in the world: Spenders, Savers, and Invetors.

Spenders don’t even try to walk to their wealth. They just stay put.

Savers walk to their wealth. Many people are not riding anything towards their wealth. They’re just walking towards it. These people are working very hard, simplifying their life saving as much money as they can – but they put their savings in the wrong place. After 50 years of working hard, they look at their total net worth and it has barely grown. Some are retire with nothing at all. Some are bit wiser and are able to retire owning their homes, but have nothing else. Do their homes give them income each month?

Investor rides bicycles, cars, and planes to their wealth. He uses savings and grow it exponentially. He uses his core gifts to create wealth. He uses his mentors, networks and family.

Excerpt from the 8 Secrets of the truly Rich by Bro. Bo Sanchez

Investing Tips for Beginners

Here are some investing tips for beginners:

1. Invest in what you know.Choose investments that you know and understand.

Forms of investments:

a.) Savings accounts - Probably the safest type of investment. There is low risk involve and the yield is also low. If you availed of it through a bank, your investment is insured by the PDIC upto P250,000.

b.) Time deposits - Similar to savings accounts with the exception of you agreeing not to touch your money for a certain period of time. With this, the bank will offer you a higher yield compared to regular savings account.

c.) Bonds - Bonds are IOUs from the government or corporations. Initial investments in bonds and risks are higher compared to bank deposits. But the yield potential is also much higher. It may be preferable to invest in Mutual funds or UITFs (pooled resources) which offer lower initial investments.

d.) Stocks or Equities - Stocks are traded in the stock market and prices fluctuate everyday. There are mutual funds and UITFs investing in stocks and equities.

e.) Money market - Money market refers to short term commercial papers maturing in 1 year or less. There are mutual funds and UITFs with portfolios made up of money market only.

f.) Real Estate

g.) Art and Jewelry

2. Don't follow the herd.Before following what the others are doing, think and assess first the situation. Don't panic. Sometimes panicking can force you to sell at a loss.

3. Focus on the business, not the stock.If you invest on the stock market, focus on the business and not on the stock prices. Know the business behind the stock, assess its future and see if it will be profitable. As the stock market prices fluctuate everyday, looking at the prices everyday may cause you to lose your mind.

4. Think long term. When investing in stocks, mutual funds, and UITFs, think long term. Be prepared to just leave your money and let it compound. Learn to sit back and relax. Investing long term allows your investments to average out over that period. Averages have the tendency to rise over the years so you need not worry when the market is down because it will tend to average itself in the long run.


Investment Principles Worth Knowing

Principle no. 1:

There's Never the Perfect Time.Nobody knows what the future brings, anything can happen at any given time. That is why there really is no perfect time to invest. However, according to Judith Go, Citibank Philippines' Citigold wealth management director, "one thing is sure: Over the long term, markets tend to trend up." There is no perfect, problem-free time to invest but it is possible to make a gain in spite of whatever situation the economy is in.

Principle no. 2:

It's Time in the Market, Not Timing that Matters.Following from the discussion in principle no. 1, we can say that it's not really about perfect timing but more of the amount of time spent in the market. If you can stay in the market for a long time through highs and lows, you will be rewarded with higher profits in the end.

Principle no. 3:

Fright or flight? Hold on to the Fundamentals.Don't panic over short term trends. It's true that Asian stocks are down lately, but looking at it from a long term view, the truth is, stocks held 20 years ago will most likely be much more valuable now in market price.Bear markets are not forever, don't panic right away.

Principle no. 4:

Cash isn't King all the Time.Cash deposits, like savings accounts and time deposits, are not really the best places to put all your funds in. Although these investments are safer, it allows you to earn only a minimum amount of interest.

"While you may be a conservative investor, still the principle holds: Don't put all your funds in cash deposits. Venture out a little into stocks, bonds, and pooled funds (mutual funds or UITFs) investing in equities and bonds to have the chance to earn more gains. The higher the risk, the higher the potential gains. And the adage "Don't put your eggs in one basket" holds true. Diversify and watch your money grow

Philippine Daily Inquirer's September 8, 2008 issue shared by Citibank Philippines