Tuesday, September 24, 2013

How To Get Rich - Learn the Meaning of Risk

Have you ever been afraid of doing something because it is too risky ?

Do you think living with risk is too dangerous to your future ?

Truth is, risk is a vital part of getting ahead in life !

What Is Risk

Risk is defined as the potential negative impact of any decision you make. There is risk in everything you do or don't do. Life is all about risk.

If you decide to be safe and lay in bed all day because life is too risky, think again. You will be risking becoming lazy and obese and be more likely to attract health problems.

When investing, if you stick to safe low yielding investments, you will be risking that your money will be worth less in the future due to inflation and taxes.

Risk is everywhere and can never be avoided.

Managing Risk

Now that we understand everything has risk, how do we use risk to make the best future decisions ? Well, this is the tricky part and everyone will be different. Everyone has a different tolerance for risk.

Generally, one has to weigh the potential reward with the potential risk. Think of it as a scale. One side is reward and the other is risk. Determine the most probable outcome of your decision given historical statistics etc. Next determine the odds of that outcome not happening Place these on your scale and see which one is larger.

In many cases, the larger the potential reward, the larger the potential risk. In a lottery for instance, you risk a small amount of money for an even smaller chance of winning. The lure of a big windfall is what sells tickets. I would rather be the owner of the lottery corporation where the odds of winning every time are pre- determined. Lotteries make a lot of money.

If people were to use the above scale before buying a lottery ticket, they wouldn't buy one. The odds of winning are simply far too high. Instead, take the same money and save it for investing where the odds of making money are better.

Why Most Will Never be Wealthy 

I used the above lottery example to show why most people will never become wealthy. Simply, they do not understand how risk works. All they see is the potential reward and ignore the huge risk they are taking with their future wealth.

What To Do

Remember, everything has risk. You must learn to balance your potential reward with the potential risk you are taking. You should start making a conscious effort to use this balancing scale in everything you do. You may be amazed at how much easier your future decision making will become.

As always, I welcome your comments and suggestions for future topics.

Tuesday, September 17, 2013

How To Get Rich - Avoid Investment Scams

Do you think everyone who promotes investments is honest ?

Do you think others will always look out for your best interests ?

The sad answer in NO, many focus on their own greed first !

Greed Promotes Corruption

The sad truth is that wherever there is money there is an influx of greedy individuals looking to capitalize in whatever way they can. This includes shady or downright dishonest individuals that simply do not care who they hurt in order to satisfy their wants.

It is human nature that everyone wants more out of life. Everyone will develop different ways to try and achieve this desire and some will choose a life of dishonest or even criminal activities. Luckily the vast majority of individuals are honest, but how do you know which ones are not ? How do you avoid the smooth talking shady individuals ?

Beware Promises of Huge Gains

The shady individuals tend to play on the prospects' own individual greed. They look for individuals who want to make a fast buck and focus strictly on promoting huge gains if one were to invest. Their target prospect is one who has some money and a strong desire to make a big investment windfall in order to brag to their friends. These prospects are most often either desperate or simply uneducated to investing.

It is possible to make huge gains on an investment. However, with that potentially huge gain there has almost always been an equal if not greater degree of huge potential risk. A simple rule of thumb should be " the bigger the stated gain the more you should investigate all details of the investment" . Another even simpler rule would be to avoid these big gain promises all together. The odds of it being a scam are much, much greater.  

Always Have A Way Out

When investing, you should always know your exit plan before you enter into any investment. Things do not always work out as you plan and you need to have a fast way out in order to limit potential losses.

A dishonest investment promoter will almost always leave you with very poor options for getting out if you have to. In many cases, the investor will have to find their own buyer. This is a situation you want to avoid.

If the promoter is playing down your concern to have an exit strategy, then you simply need to exit the meeting and look elsewhere.

What To Do

To avoid most scams you should be wary of promises of huge gains. Remember, the bigger the potential gain, the bigger the potential risk.

Also, always, always. always know your exit plan before investing in anything. Only invest in investments with good markets to sell into if you must. Otherwise, you could be stuck with a bad investment for a very long time. Remember, you are investing to make money. Period. No other reason qualifies.

As always, I welcome your comments and suggestions for future topics.

Tuesday, September 10, 2013

How To Get Rich - Invest For Income

Would you like to get paid right away from an investment you make ?

Do you think waiting for a rise in value is the way to become wealthy ?

Truth is, Income Investing is the safest and most profitable !

What Is Income Investing

The definition of Income Investing is investing in a product that will put money directly in your pocket as soon as you buy. You will not have to wait for some future date when you hope your investment rises in value to cash in and make a profit.

Some Income Investments can actually pay you both ways ( money directly in your pocket every month or quarter and profits from Capital Gains once you eventually sell )

Why Is Income Investing Safer

Income producing investments are generally much safer investments than those that don't pay regular income. The reason being is that the business you are investing in must be profitable in order that it can pay you cash every month or quarter. Simply put, if it were not profitable, it would not be able to pay you anything.

Investing in anything that does not pay regular income is more like speculating or even downright gambling You are betting that there will be a rise in value. Common forms of this investment are small mining companies or small start up businesses. Generally, stay away from these if you want to get rich. If not, you may as well just buy a lottery ticket.

Show Me The Money

Yes. There is only one reason to invest in anything. To make money. Period. The sooner and more often you can get paid the better.

Another benefit to Income Investing is the eventual reduction to everyday stress. The more your investment income grows, the less dependent you become on your job or career for survival. A much better life than worrying how to pay your everyday bills.

With Income Investing you are also not as concerned with the everyday ups and downs in the markets. As long as you keep getting your regular income every month or quarter, you are more comfortable waiting out the inevitable market downturns.

What To Do

Invest only in products that put money in your pocket from day one. Stay away from the hot stock tips or start up Real Estate deals that are generally very risky and very profitable for the promoters. If you want to gamble, go to the casino or buy a lottery ticket.

As always, I welcome your comments and suggestions for future topics.

Tuesday, September 3, 2013

How To Get Rich - Learn Not to be Afraid of Mistakes

Are you afraid to make a mistake that will ruin your financial life forever ?

Do you think the wealthy never make mistakes ?

Truth is, mistakes are common but not life changing !

Fear of Trying

One of the biggest obstacles to building wealth is the fear of trying something new. In order to grow in any facet of your life you must learn to try new things and to take the odd chance that something new will work out.

Of course not all things you try will be successful. However, if you never try, you will never know if something would have worked for you or not. Most people "sit on the fence" so to speak and never take the necessary action to try something new. Don't let that be you.

Get Off The Fence 

Yes, get off the fence. If you have been thinking of trying something for a while now, ask yourself why you still haven't taken action and given it a try. Your most likely answer will be fear or the lack of knowledge to take the first step.

If your answer was fear, then your first step must be to gain the necessary knowledge in order to ease that fear. Knowledge will give you power and ease the fear of not knowing how to start.  

Find a Good Source for Knowledge

There is an overwhelming amount of information available these days over the internet and other sources. However, not all of the information is valuable or even accurate. You must find yourself a good quality source and follow the advice you are given. I would like to think that this blog is an excellent starting point for most individuals. Dig deep into it and give it a try.

What To Do

To get off the fence and try something new. First gain the necessary knowledge from a good source. Secondly take action and just do it. Give your idea a try and you may be surprised. Stay tuned for future wealth building topics.

As always, I welcome your comments and suggestions for future topics.