In the first part of this investment trilogy, “MIND” of investment was discussed. In this second part, let’s discuss the “BODY”. This is the part where people were asking, “which investment is good?” “What shall I invest in?”

Firstly I would like to separate investing and trading. Media tends to lump them together. Media’s definition is as long as you put money in the market even for one day, you are an investor.

From my view, those who go in and out of market a few times a day or even a month are consider trader. Those looking for fast money are trader. Those who made buying and selling decision based on everyday market prices are trader.

Traders are not concern with the story behind the investments. An example is what is the profit of a company for the past 5 years. Traders are only concern of the everyday market prices where they can long or short the investment, making money from the difference of buying and selling.

There are many these kind of traders – Stock traders, forex traders, options traders etc. There is a possibilities of traders trading a numerous trades in a day. Morning they are in the market, by evening they are out of the market. Media does called them investor as well, but I prefer to separate them. Because they are really not investors.

Ok, here is a personal preference. I don’t really like traders because I feel they didn’t add any value to the market. What do I mean by that?

If I want to make $10,000, I will create a value, either in products or services of $10,000 or more for other people. There is a value add to the bigger picture. However, in order for a trader to make $10,000, someone just have to lose $10,000. No value added.

Isn’t it the same with all other investment? At first glance it seems the same. There is a trading elements in it, but if you look deeper, you’ll find a difference.

As an investor, you may also make money on the difference between buy and sell. The difference is there is an value add elements to that. Say you invest into a listed company. That money is used to grow the company, research new products, expansion etc. All these actually add values to humanity and society.

In other words, an investor looks for good investment opportunities to grow their wealth. While a trader looks for market pricing to make easy money.

There are many investment opportunities out there. From real estate, equities, commodities, oil, gas, land – in my opinion you can create huge amount of wealth just by mastering one. For me, I did quite an amount of work on equities. Though I’ve not master it yet, I intend to be a master of it.

Whichever investment opportunities you decided upon, there are a few investment principles that will never change.

Learn The Trade

Majority of those who lost money in investment don’t know or understand what they actually invest in. Isn’t it true for those who invested into Minibond? There are many other examples of ignorant investors losing their money.

Few months ago there was a company presenting a Land investment opportunity to me. It’s a big company here in Singapore, but I shall not name it here. I turn that down simply because I do not know enough. Yes, I do know how the company do with the land. But I do not know enough of “land knowledge” to make a buying decision. I do not know based on what factors, the company make a buying or selling decision.

Learn what you need to learn. Master everything you need to make a great investment decision. Understand that particular market inside out. Research on the companies and industries that you are interested. Find out as much information as you can about the industries, companies and market. Talk to the management to find out the future strategies. Find out how the company make money.

Warren Buffet is the best investor in our time simply because he knows his trade. He knows everything about equity investment. He knows if a business make sense by looking at its financial reports. He never gone into other investment opportunities other than equities. He is really an example of mastery in one.

Make When You Buy Not When You Sell

“Make money when you buy not when you sell.” This statement is from Robert Kiyosaki, author of Rich Dad Poor Dad. I take this as one of my investment principles that guide me in my investment decisions. Some may not agree on this, but I’m not forcing anyone to agree.

Based on Robert Kiyosaki’s idea, this principle applies to investment that generate an income. This means you get your return on investment irregardless whether you are holding or selling the investment.

A simple example will be purchasing a house to rent out for an income. You make money from this investment when you buy it. I met some who change to a bigger house, stay in it and claim that it’s an investment. In their definition, maybe. But in mine, it’s not. They are simply hoping that the price will goes up in the future. This is an example of making money only when you sell.

There are other investments makes you money when you buy. Equities gives dividends. That’s why I’m comfortable with equities because it doesn’t violate my investment rules.

Set Your Investment Rules

Have your own investment rules. The reason why I asked you to discover more about yourself in the first part of this trilogy is so that you can then set your own investment rules. With so many investment opportunities, there will be some that doesn’t suits you. But because of all the temptation out there, you may be tempted to make a silly decision.

Having your own rules helps to filter those investment that doesn’t suits you. One of the rules that I have is the investment must be simple enough to understand. Based on this rule, all the banks and insurance companies are out of my radar. It’s hard to understand the bank businesses. The money is going everywhere and I don’t know where they earn their money comes from.

It may take sometime to set your own rules. I took a few months to set my rules, even till now I’m adding rules after having some investment distinctions.

Hope that you can make money in this economy downturn. Actually I’m so excited in this downturn, as there are tons of undervalue equities to scoop. I hope that you too can see those opportunities.

This post is hard to come by. Strangely, I was staring at the screen not knowing what the topic shall be. I was going inwards looking for answers. “What shall I write about today?” It has been a while since I last post something here, and I force myself to write something here today.

“Wealth” came to my mind. Last week some of my friends were discussing about money management and investing. Probably it’s a sign for this posting.

Then I thought I wouldn’t want to write about money or investing in just one post. I had done that before, and it didn’t add lots of value to others as those “1 post” articles are too superficial. This time I decided to break this into a trilogy. Sharing a lot more information here, hopefully you can gain some benefits in this financial crisis time.

Do you know why you should invest? There are many answers to this question.

“To counter inflation.”
“To retire comfortably.”
“To retire young.”
“To grow my money.”
and many more….

All these answers are correct. But I want to bring these answers further, to allow you to have a more tangible view on investment. My answer is:

“All of us must have at least one million dollars by the time we retire. That’s the minimum. Reason is with inflation, maintaining our lifestyle, increasing health care expenses – a million dollar is just right.

In this first part of the trilogy, you probably find the “MIND” of investment. This post is not about which is the greatest investment tools in the world. Or which investment can get you rich in the shortest possible time. Or which investments makes me most money. This part one is about “YOU” as an investor. My question to you is: “Do you know YOU?”

WHO ARE YOU

What is your risk appetite? Would you be fine seeing your investment going through a roller coaster ride? Are you someone who plays long term or short term? Are you a person who is impatience? You must see growth in few days to few months time. Are you a dramatic or a drama-less person? Do you like the thrill of investing? Would you feel relax having someone managing your portfolio for you?

Discovering yourself is the most important stage of investing. This will decide on the kind of investment vehicles that are suitable for your personality.

I’m am a patience investor with a long term horizon. I enjoy the thrill of finding good investment, but prefer a drama-less investment. I do not like someone else to manage my investment. I like to do it on my own.

I’m a big fan of DIY investing. Nobody is responsible for your money except yourself. Not your financial planner, fund manager or broker. They do not have any obligation to make money for you. Remember whether you make or lose money, they are getting paid. Therefore, I rather do my own investment since those who promise to make money are not obligated to do that.

YOUR INVESTMENT BELIEFS

There are some godly beliefs that can make you bunch of cash. On the other hand there are some deadly beliefs that can make you broke. One of them is “it takes high risk to make high profit.” This is absolutely BS. The world greatest investor of our time, Warren Buffet is someone who doesn’t take huge risk. In fact he’s walked away from risk.

His famous principle to investing is “never lose money.” You can see there is a two different beliefs between the average investor and the top investor. One go into the market to make a killing, the latter protect his downside before going into the market.

I strongly think that this belief causes most people to lose their money. High risk high return, this is what they teach in schools. Can you imagine how many years we spent in schools learning this wrong belief? Investing based on “high risk high return” belief is like going to the casino to play the roulette wheel. That’s a high risk high return investment, don’t you think so?

Top investors will always reduce the risk, ensure that they don’t lose money before putting down their money. They understand the fact that if you lose your chips, then you can’t bet at all. They are using all means to protect their chips. If they can’t reduce the risk, they will walk away. There are many other investment opportunities out there.

When I started investing, I do not understand what do they mean by reducing risk. There must definitely be risk in investing. In the later stage, I gain distinction on risk. We can definitely lower the risk to protect our asset.

How do we reduce risk? How do we protect our downside? In the next part of the trilogy, I will share more of how to keep your money.

A clarification I want to make. I’m not a spiritual master and I’m no where near any spiritual path. But in this post I’m going to share about the Law of Attraction. Again like I said, I’m not the expert on this, I’m only sharing it based on my experiences.

From the time I learned about Law of Attraction (LOA), I believed it works 100%. I never doubt it. But I must admit that at times it didn’t seem to work. Like losing a few major business deals in 2008 is really a pain. Yet, I didn’t stop manifesting and applying the LOA in my life.

In the beginning of 2009, something happened. Something wonderful happened. The LOA that I have been applying went into hyper speed. Things that I’ve manifested happened so fast that I almost couldn’t breath. Please understand I’m not complaining, in fact I am feeling awesome. It’s just that I didn’t expect it to happened so fast.

Image by Matthew Stewart | Photographer via Flickr

Right at the end of 2008, I did my new year resolution, set my 1 year and 5 year goals. One of my goal is to have 6 training engagements per month. That will give me a pretty good income and also have a life. Just the first two months of 2009, I’m engaged at least 6 times per month.

One more interesting incident on LOA. Most people has a dream car, so do I. Now I always thought that an Audi will be my car. But this incident happened that change my dream car. I borrowed a BMW to drive around 2 weeks ago. But the car broke down on the road which makes it an unforgettable experience. By right I should have negative comments about BMW, but I didn’t.

In fact, after the incident, I was so clear that my dream is a BMW. I’ve never been so clear about the kind of car I want. I must say I feel very good about driving my friend’s BMW. I started to share with my friends and family that I’m a BMW man now.

LOA works in hyper speed again. The next day after I shared with my friends, a close friend called to say he wanted to sell his BMW, and he’s willing to let go at a undervalue price. I am struck with no words.

So I started thinking how does LOA works in this kind of speed for me this year. One conclusion is the power of clarity. In both incidents, I was very clear on what I want, I don’t know how I’m going to get it, but that’s what I want. I just send out the intention clearly to the Universe.

And in both incidents, I shared with people. I shared my resolution, goals with my wife. I shared the BMW with my friends. I didn’t just shared from the brain aspect, but from the emotion aspect as well. I shared how I felt when I was driving that BMW. I was sharing with conviction.

In both incidents, I didn’t have any attachments to the results. I was not desperate, I just told the Universe what I want , why I want it and how I felt about it, and I kind of forgot the whole thing. The detachments probably allows the Universe to do its work on me.

I am very grateful with all that’s happening. I know this is going to be a wonderful year for me.

]]> http://www.inspiration-junction.com/2009/02/07/attracting-with-clarity/feed/ 0 http://www.inspiration-junction.com/2008/11/24/wealth-is-a-habit/ http://www.inspiration-junction.com/2008/11/24/wealth-is-a-habit/#comments Mon, 24 Nov 2008 09:06:15 +0000 skyjoe76 http://www.inspiration-junction.com/?p=46

Few days ago, I wrote about Success Is A Habit. Over the weekend, I had an AHA. Since I wrote about Success Is A Habit, maybe I can also write about Wealth Is A Habit.

The rich has wealthy habit, the poor has poor man’s habit. The rich doesn’t become wealthy overnight. They simply follow the wealthy habit closely over a long period of time. This goes the same for the poor. The poor don’t become poor overnight, they simple follow the poor man’s habit over and over again.

The good news is the poor can turn into the rich just by changing their habits. All it takes is a little bit of discipline. Is it that simple? If it’s that simple, why aren’t there too many rich people around?

Reason is because though it is simple, most are unwilling to change or some do not have that discipline to follow the wealthy habit strictly. My question is are you willing to do whatever it takes to be rich? Good thing is you are not require to do whatever it takes, you just need some discipline.

So what gave me the right to tell you this? How would I know that by a small change of your lifestyle you can be rich? Because I was there, holding on to a poor man’s habit for 27 years of my life. Up until then, I was broke with no savings at all. I spent every single cents I have every month.

At the age of 27, I found out something is very very wrong. I started seeking for answers. I wanted to be rich, and I learn about the wealthy habits from wealthy people. After 5 years of following strictly to the wealthy habit, I can say that I am pretty comfortable now.

Image via Wikipedia

How are some of the poor man’s habit that keeps you poor?

Paying everyone else first before paying yourself. What this means is when your income arrives, you pay your bills first, go shopping first, the left over is your savings. This is call the “Others first” mentality. Now you have worked hard for money, finally when money comes, you choose to give it to others first and yourself last. Are you ripping yourself off.?

Yes, pay yourself first. You probably heard it elsewhere, somewhere. Now if you are hearing it again simply because it works. It works for me and many others.

Start by opening a new account, call it the Financial Freedom Account (FFA). Do not get any ATM card for this account, make sure you can’t withdraw money from this account easily.

FFA is only use for investment purpose, never ever ever use it for any other purposes, not even for emergency.

From now onwards, transfer at least 10% of your income monthly or weekly to your FFA. Once your income comes in, transfer at least 10% to your FFA right away. DO NOT WAIT! When you wait a little longer, your bills will come. Then your mind will tell you to pay others first. Be discipline, the moment you got your income, take 10% out, put into your FFA.

You might asked, “but every month I have nothing left, how can I save 10%?” If you are facing this challenges, you are OVERSPENDING! Cut, cut, cut your expenses. Did you drink Starbucks coffee? Cut that and you will save $6 – $8 daily. Did you order a desert after your main course? You do not need any desert for extra energy. Cut that. By doing these, you will find yourself having an extra $100 – $200 more monthly.

Start from today, just pay yourself first, the rest will take care of itself. You will be amaze that you can actually live by 90% of your income.

Another rule to remember, don’t find out how much you have in your FFA account for a year. Just put at least 10% into it, but don’t find out how much you have in there. I did this, and found out I could save so much a year later.

When I realized I can actually save so much, I increased the percentage. Because I wanted to grow the FFA in a faster rate. I wanted to achieve financial freedom much much faster. Right now, I am already using my FFA to invest giving me passive income.

After following strictly to this habit for 5 years, I can say I’m pretty comfortable right now. I’m out of that struggle. I’m enjoying the some of the fruits right now.

There are a few more wealthy habits that I followed closely, I will share in the future posting. For now just focus on paying yourself first.