Investing - The Basics

[winston]

My Best "How to Get Rich" Advice By Dr. Steve Sjuggerud

I've just hired a new employee…

He's young – 22 years old. But I've known him since he was 10, when he lived two doors down from me. And I want to get him pointed in the right direction in life… right now.

What advice do you give a 22-year-old just starting out? It's the same advice I'd give just about anyone who wants to grow his wealth…

I quickly pulled the book How to Get Rich by Felix Dennis off my bookshelf. This book is fantastic for this new employee… and maybe you, too.

How to Get Rich is the most honest story of how to generate wealth I've ever read.

The book isn't like any other "self-help" book you've ever read. It's a rare gem for two reasons: 1) It was written by a guy who actually made himself filthy rich, and 2) the guy can write. It is an easy read.

As for advice for the young man in my office, Dennis writes:

If you are young, then I ask to you remember just this: you are richer than anyone older than you… Time is always running on, and the young have more of it in their pocket than the richest man or woman alive…

Continuing on this idea, if you could "turn the clock back for me by forty years," Dennis says, "I would willingly swap you every penny and every possession I own in return. And I would have the better end of the bargain, too!"

The young are richer than the richest man… I love that perspective for a young man starting out.

But the book is not just about advice for young people starting out – far from it. It's for all people aspiring to have more money in their lives.

I guarantee you will disagree with Dennis on many things he says. You won't believe that rich people think the way he does… or that what he says is really how to get rich. But from what I've learned after accumulating a few dollars in my life, Felix Dennis is telling the truth.

Don't get me wrong… the book is not a step-by-step how-to book on getting rich. But to me, it is far more valuable. It is an accurate explanation of how Dennis became rich and what he thinks it would take for you to get rich, too.

He dares you to make yourself rich… to go for it. And he warns you will never get rich if…
• You are unwilling to fail…
• You care what the neighbors think…
• You are not prepared to work longer hours than almost anyone you know…
• You cannot convince yourself that you are "good enough" to be rich…

Felix Dennis doesn't sugarcoat it. He tells it how it is.

It is a must-read for my new young employee… And going back through it this week reminded me that it's a must-read for you, too.

Source: Daily Wealth

[winston]

How to Start Out in Stocks – Here at Record Highs By Dr. Steve Sjuggerud

I just received a fantastic letter from "Pastor Mark" – a new subscriber…

Pastor Mark's fear is the "right" fear to have right now…

He is worried about buying in at this point, after the U.S. stock market has run up so much and is sitting near record highs.

Boiling it down, he says, "I don't really want to buy into some of the positions that have already run up so much."

He asked me to share "some practical insight, guidance, or suggestions on the best way to enter the positions and what positions might want to be avoided if entering in at this stage of the game."

Pastor Mark says he's new to investing. Fortunately, he's been "doing a lot of research and reading," which is clear from his letter. And he says he's "ready to jump in, albeit with fear and trepidation."

Pastor Mark, you are not alone in your worries… I am certain thousands of other folks are thinking the same things you are right now.

Let me focus my answers on how to start out buying now, especially with stocks at new highs…

1) You can ALWAYS find reasons NOT to invest… the hard part is overcoming those reasons.

This is one of the most important concepts you can possibly learn…

In December of 2010 in DailyWealth, I wrote:

There's ALWAYS a reason NOT to invest. It's incredibly easy NOT to invest. It's much more difficult to puff your chest out, hold your head high, set your fears aside, and put your money to work.

You can always come up with an excuse to NOT put your money to work. In that essay, I said, "Nobody will fault you for not investing. Meanwhile, you won't make any money."

I highly recommend you go back and read that DailyWealth…

You will never be a massively successful investor unless you understand this concept and learn to overcome it.

Having said that… when stocks are at new highs:

2) You must play good defense, first and foremost.

Before putting new money to work, the first question you must answer is, how much money are you willing to lose? I am serious…

Most people are thinking about how much money they could potentially make, or how much they've missed out on. But you can't control either of those. But you do have some control over how much you are willing to lose…

For example, you could use "trailing stops" and/or stop losses. If you have $50,000 in savings, and you are not willing to lose more than $5,000 of that, then you must use 10% "stop losses" across the board. This is even more crucial after a huge run-up in stock prices. (You can read more about trailing stops and other stop losses right here.)

3) Don't worry about how much stocks have gone up… worry about what you are getting for your money.

There's no denying that U.S. stocks have gone up – a lot. But with bonds paying you next-to-nothing, and your savings account paying you even less, U.S. stocks are still a good value compared with all other financial investments. If you are worried about buying them here, read No. 1 on this list again.

4) Be willing to look beyond U.S. stocks.

I believe European stocks and emerging markets are better values than the U.S. stocks today.

You may wonder why I keep buying U.S. stocks when I think these other countries are better deals.

I think being fully diversified across all of these sectors is the way to go. We have made money sticking with the trend in U.S. stocks, and we haven't made as much in Europe and emerging markets, but we know the value is there. Our eggs are spread out over a few baskets.

One crucial fact here… Typically, when the U.S. sneezes, the rest of the world catches a cold. What that means is foreign stocks will likely fall if U.S. stocks fall. Don't think that because you're buying cheaper stocks outside the U.S. that you are safer.

In my opinion, foreign stocks have more upside potential from here, so I want to own them. But they are certainly not immune from downside risk.

So, to invest at new highs, at minimum, you must:
Learn to overcome your objections.
Play good defense.
Don't worry about how much something is up… worry about what you're getting for your money.
Be willing to look beyond U.S. stocks.
All of these are difficult to do… You can understand these concepts rationally. But emotionally, something happens inside that makes them difficult to implement.

In addition to these few thoughts for how to buy when stocks are at new highs, I highly recommend you go back and read my 10 rules for successful investors.

Pastor Mark, I can't give you all of the answers neatly in one little DailyWealth. Hopefully today's essay gives you some of the insights – and the confidence – to do what's right for you…

Source: Daily Wealth

[behappyalways]

Ten Investing Facts of Life
http://www.bloombergview.com/articles/2 ... ts-of-life

[winston]

This Powerful, Hidden Force Could Make You a Millionaire By Brian Hunt

If you're interested in becoming wealthy, one obvious thing you must do is save money.

It's one of the basics of wealth building… and you've probably heard all about it.

But what you probably haven't heard about is the powerful, hidden force that is released when you save money instead of spending it.

Knowing about this force can make you a millionaire relatively early in life.

Not knowing about it will cripple your ability to build wealth. Ignorance of this force keeps a lot of people in the poorhouse. Know about this force, and you're ahead of 99% of Americans when it comes to money.

I call this powerful, hidden force "the butterfly effect of spent money."

Here's how it works…

To most people, a thousand dollars spent is just that. It's one thousand dollars you don't have anymore. Spend one thousand dollars on a trip or a few expensive meals, and you're less wealthy by one thousand dollars.

But if you're truly interested in being wealthy, it's essential to view that one thousand dollars differently than most people…

It's essential to view spent money with the butterfly effect in mind.

When you do this, your idea of spending money will be altered forever… and your ability to build wealth will massively increase.

The "butterfly effect" is an idea from science that describes how small events can end up creating huge impacts. It comes from the idea that the flapping of a butterfly's wings could theoretically alter the path of a hurricane.

There are many examples of the "butterfly effect" in life. For example, let's say you get up late and make it to the coffee shop 15 minutes later than normal. But while waiting in line, you meet your future spouse. A home, a family, and a lifetime relationship results from you waking up late… which seemed insignificant at the time.

Another example of the butterfly effect: You have a great meal at a new sushi restaurant. The next day, you tell your friend about it. Your friend tries the restaurant. He enjoys it so much that he tells a dozen other people. Those dozen people try the restaurant, enjoy it, and tell lots of other people. The restaurant gets hundreds of customers as a result of your meal… which seemed insignificant at the time.

It works the same way with money…

When you spend money, you surrender its ability to compound for you… which causes giant ripple effects over the course of your life.

Compounding occurs when you place money into an investment that pays you a cash return. But instead of taking the cash return and spending it, you "reinvest" it… and buy more of the investment.

By doing this, your dividends earn more dividends and your interest earns more interest.

You can think of compounding returns like rolling a snowball down a hill. As the snowball gets larger, it's able to gather more snow… which enables it to get larger… which enables it to gather more snow… which enables it to get larger… and so on.

Eventually, you build a snowball the size of a house.

Compounding is the ultimate way to turn a little money into a lot of money. It's one of the great secrets of wealth.

Given enough time, a good compounding vehicle will turn tens of thousands of dollars into millions of dollars.

For example, let's say you invest $10,000 in an investment that pays a 5% dividend. Your intention is to compound over the long term.

In Year 1, a $10,000 investment paying 5% in dividends will pay you $500. You take this money and buy $500 more of the investment.

In Year 2, your investment has grown to $10,500, but still earns 5%. That year, you'll earn $525 in dividends… which you can use to buy more of the investment.

In Year 3, your investment has grown to $11,025, but still earns 5%. At the end of that year, you'll earn $551.25 in dividends… which you can use to buy more of the investment.

You can see how it works…

After 10 years of compounding, a stake of $10,000 throwing off 5% in dividends will grow to $16,289. After 20 years of compounding, a stake of $10,000 throwing off 5% in dividends will grow to $26,533. After 30 years, it will grow to $43,219. After 40 years, it will grow to $70,400.

And remember, this number assumes no further money is added as the years go by… or that the investment produces any capital gains.

As you can see, long-term compounding produces extraordinary effects.

Compounding is an important concept for young people to learn… because they have the power of TIME on their side.

The longer you can compound, the more extraordinary the results.

After you learn about the extraordinary power of compounding, you'll view every "spend or save" decision in a whole new light.

You'll realize that each dollar spent is a dollar that is not compounding for you. You'll realize that due to the "butterfly effect of spent money," small spending decisions can end up having huge long-term impacts on your level of wealth.

For example, let's say you have the choice to buy a $10,000 car or a $20,000 car.

You could easily get by with the $10,000 car, but the $20,000 would be a bit nicer… it would have a better brand name… and it might impress a few people.

Let's study how this decision will affect your wealth over the long-term.

First, let's say you spend $10,000 on the car and place the other $10,000 you could have spent into an investment yielding 5%. You compound that wealth for 10 years.

As I mentioned, a $10,000 investment compounding at 5% a year for 10 years grows to $16,289.

The money you spent on the car didn't just fly out the window. You bought something of value. But that car (like almost any consumer item) will depreciate in value.

Once you buy a car (or almost any other consumer item), it begins to lose value. Most 10-year old cars with substantial miles are worth less than 10% of their purchase price. In a normal case, your $10,000 car would be worth around $1,000.

This means that the decision to spend $10,000 on the car and invest the other $10,000 left you with $17,289 after 10 years (the $16,289 investment and the $1,000 car).

Now… let's say you spend the whole $20,000 on the car. The car will be worth about 10% of your purchase price in 10 years, or $2,000.

The entire $20,000 was placed into something that depreciated in value… rather than something that compounded in value.

The difference between the two decisions is $17,289 (spend less) versus $2,000 (spend more).

The decision to buy the lower-priced car means you end up with 8.6 times more money.

The butterfly effect is massive. A seemingly small decision produced a huge difference in your level of wealth over the long-term.

Now… imagine making hundreds of decisions – big and small – to save and compound instead of to spend and consume over the course of your life. Choosing to save $500 here… $300 there… and $2,000 there.

Over the course of your life, these accumulated decisions to save can literally mean millions of dollars to you.

The biggest and most important "butterfly effect" decision will most likely be your decision on what house to buy. This is the biggest spending decision of most people's lives.

Will you try to keep up with the Joneses and buy a $600,000 house? Or will you buy a more affordable house for $300,000?

The butterfly effect here is HUGE. A home may maintain its value, but buying a more expensive house almost always means spending a lot more on furniture, curtains, decorations, light fixtures, electricity, upkeep, taxes, and insurance. Spend an extra $100,000 on this stuff instead of saving it, and you can subtract more than $1,000,000 from your wealth over the long term.

Now… don't get me wrong. I'm not saying don't spend any money. Far from it. Buy some nice dinners, buy some vacations, buy some "toys." Enjoy life. I've spent lots of money on experiences.

I'm simply saying that if you want to become wealthy, don't go wild with your spending. If you do, you'll hamstring your ability to compound over the long-term.

The next time you're thinking about spending a few grand on something you don't really need, remember the butterfly effect of spent money. You won't be letting go of just a few thousand dollars. You'll be missing out on tens of thousands of dollars that compounding can produce for you over the long-term.

If you consistently choose to "save and compound" over "spend and consume," it will cause enormous positive effects on your wealth. Hundreds of accumulated decisions will end up making a million-dollar impact on your wealth.

Keep this in mind, and you know one of the great secrets of accumulating wealth.

Source: Daily Wealth

[winston]

The No. 1 way to take control of your retirement this year by Dr. David Eifrig

The key to great wealth is remembering one truth…

No one will care about your wealth as much as you will.

You need to be the one who cares about your wealth and your retirement. No one else will.

The government won’t. You can’t count on Social Security or the government to pay for your retirement. For decades, the folks in Washington screamed how broke the fund was. And each year, they took away more and more of what was promised from money you paid.

For example, make more than $25,000 a year in retirement and you lose half your payments to taxes. Make more than $34,000 and you lose 85% of it back to the federales in taxes.

And you can’t count on financial planners to protect you either. When I talk to people about their investment planning, they say something like, “I don’t know. My guy has got me invested in some funds or something.”

That simply doesn’t cut it. Your “guy,” as good as he may be, doesn’t care about your wealth as much as you do. Many are happy to take your cash in fees or annual charges… money you could easily use to improve your retirement if you paid a little more attention.

This doesn’t mean you need to spend all day trading stocks or becoming an expert in finance. You just need to know what your guy is doing and why. If he won’t sit down and explain it, fire him.

You don’t need to be an expert, but you need to be financially literate. You need to know the words “diversification,” “asset allocation,” and “compounding.”

Take 10 minutes to understand a little bit about stocks, bonds, and mutual funds… You’ll want to learn about the fees you’re paying, who is getting the money, and if you even need to pay fees at all.

Why? Because no one else will. The only person who truly cares about the future of you and your family is you.

I’ve dedicated myself to helping people learn these things that they need to learn. I believe that a year or so of reading my newsletter teaches people how to understand finance and investing.

If you’re feeling a little behind on fully fixing your finances, here’s what I want you to do…

First, resolve that this is the year that you set your financial plan in motion…

Next, come up with a simple two-step saving and investing plan that works for you. If you’re working with an advisor, have him explain his thought process behind regular saving and investing.

And if you’re new to investing, resolve to invest in your first mutual fund by the end of February.

It doesn’t need to be a lot. You can invest small amounts by using an online service like Sharebuilder. Start with $50, or even $25. You can do it.

You can and should use the help of experts. But remember they’re working for you, not the other way around.

Again, I’ll put it simply:

You have to and can understand your finances.
You have to and can make a simple plan for your retirement future.
And you are the only one you can count on to do it.
Once you have this powerful attitude in place, you can easily learn the other important lessons of finance…

Source: Retirement Millionaire

[winston]

15 Must See Money Tips For 2015

By Austin Netzley

Source: Business Insider

http://www.thetradingreport.com/2015/01 ... -for-2015/

[winston]

#1 Investment Mistake Never to Make By Richard Russel

DON'T LOSE MONEY: This may sound naive, but believe me, it isn't.

If you want to be wealthy, you must not lose money, or I should say you must not lose BIG money.

Absurd rule, silly rule? Maybe, but MOST PEOPLE LOSE MONEY in disastrous investments, gambling, rotten business deals, greed, poor timing.

Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big time – in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own businesses.

Source: ETR

[winston]

The world's simplest way to become a millionaire

by Dr. David Eifrig

Source: Retirement Millionaire

http://thecrux.com/doc-eifrig-how-to-ma ... n-imagine/

[winston]

Investment Advice TO a World Champ By Dr. Steve Sjuggerud

I met a legend over the weekend…

He's a now-retired international sports hero.

I don't want to share his name today, because he told me quietly that he could use some financial help, and he probably wouldn't want that word out in public.

I didn't really answer him when we were together. But as I thought about it later, the right advice for him is the same advice that I would give to you…

This is serious stuff. I urge you to take it seriously, and commit these ideas to memory. Let's get started:


1. Nobody will care more about your finances than you.

This is critical for you to embrace, immediately. Nobody is going to care more about your finances than you. You simply can't just find somebody smart and hand your money responsibilities off to them.

You can't just hand off your life and hope it goes okay – this is your life we're talking about! How many rock stars and sports stars have you read about that are broke today because they handed off this responsibility? Don't do it.

The quicker you take control and ultimate responsibility with your money, the quicker you will start building your legitimate fortune. And you can't ever give up that responsibility.

Let me be clear… It is alright – even smart – to work with smart people, and to delegate some of your money responsibilities to carefully chosen people. The important part is, you just can't "check out." You have to be the team captain here… the captain of your money ship.


2. There is no magic bullet, or shortcut.

You didn't become a sports legend by taking shortcuts. You had to work harder than the next guy, learn more than him, and focus with more intensity than the next guy to achieve your goals.

If you want to invest successfully, you have to do the same thing. You can't get by on one hot tip after another. The shortcuts don't work. This leads us to the third idea…


3. If you don't understand it, don't buy it.

It's easy to get dazzled by promises of big profits… It's even easier to get sucked in when the promises are accompanied by slick brochures and fast talk with a lot of words that you don't understand.

You'll save yourself a lot of loss (and time) if you remember this: If you don't understand it, don't buy it. Don't ever cheat on this one. It will cost you.


4. Buy investments that are 1) cheap, 2) hated, AND 3) in an uptrend.

I've built my wealth and reputation on this philosophy. In short, you can't buy what's already incredibly popular – because if you do, chances are you've already missed it. Instead, you have to buy what people are skeptical of.

Separately, waiting for an uptrend is a crucial part of this strategy as well… It helps take the risk out of the idea, and it helps "confirm" that your investment thesis is "right."

If you want my opinion today, property is probably your best bet. Here's why:

It's surprisingly affordable (when you factor in today's record-low interest rates). I say "surprisingly" because most people look at house prices versus incomes, and they wrongly assume that house prices are expensive. The correct way to look at it is relative to monthly payments (interest rates). And based on that, house prices are plenty affordable after all.

Also, investors are skeptical about property now, wrongly thinking that it is overpriced. (So it is hated – or at least not loved). AND property is in an uptrend. PERFECT.

Best of all, you can understand it. You hold the keys, you paint the walls… with YOUR property, you control your destiny.

My money is where my mouth is with this one… Back in 2010, I owned no property outside of my home. Today, property makes up the biggest percentage of my own financial assets – by far.

Property is what I'm doing with my own money.

You will always hear about ways to make higher returns, or faster ways to make a buck, than property. But chances are today you'd be risking much more than you can imagine, relative to the potential reward. It's simply not worth it.

Again, right now, property is affordable, unloved, in an uptrend, and understandable. You control your destiny, to a better degree than with other investments. Particularly if you are not an expert in investing, and don't intend to be, then property makes sense for you.

I could go on and on about "do's" and "don'ts" when it comes to your money… But I won't.

Instead, let's leave it at these simple-but-absolutely-critical points…
1. Nobody will care more about your situation than you, so don't hand off your finances.
2. There is no magic bullet or shortcut. (The "hot tip" doesn't exist.)
3. If you don't understand it, don't buy it. (If it sounds too good to be true, it probably is.)
4. Buy investments that are cheap, hated, and that have started their uptrend.
That's it. Commit these points to memory.

Again, property, right now, ticks a lot of these boxes. That's where I'd suggest you start…

Source: Daily Wealth

[winston]

Learning just this one simple concept could make you rich by Brett Aitken, analyst, Stansberry Alpha:

There is a simple path to wealth…

It doesn’t require much work. It doesn’t require much knowledge. You don’t have to be lucky, or even all that good.

You just have to learn one simple concept: Capital Efficiency.

It’s one of our favorite strategies… Finding companies that generate massive amounts of cash without having to pour huge sums back into capital investment to keep the business going and growing.

They don’t have to spend much money investing in their businesses because their primary asset is their well-established, good reputation.

http://thecrux.com/learning-this-one-si ... -you-rich/