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Wealth Wheel
There are several cash flow strategies for the stock market. Strategies like: credit spreads, options, covered calls, 3 day pop, best 6 days of the month to invest, 6 week system, daily gap trades, and more. You should check it out. In fact later we will talk about these strategies. They are cool. Many investors buy real estate for cash flow, and end up with growth (appreciation). When they were expecting to flip the property and make money. There are specific cash flow strategies in real estate and separate growth strategies. You need to know the difference. Or even worse, folks try real estate, business or stocks without education or a specific plan. The best thing you can do before going on any adventure, is buy a MAP. Know the territory, and path before walking it. Otherwise you get lost. Key 1: Mentors and Education
I would much rather take the advice of two of my mentors, Napoleon Hill and Jim Rohn. Jim Rohn kept encouraged me to learn more. Because as you learn more you earn more. Become more valuable to the people around you, your employer, the marketplace and self. Education, and following a Mentor are absolutely the path to Riches. Get GREAT mentors in your life and your life will become a master piece in short period of time.
Unfortunately, even if you work hard at your job, there is no guarantee they will keep you. Cut backs and layoffs are a common occurrence. What would you do if you lost your job today? Are you like the average person? The average person goes through their savings and checking in 3 months, then credit cards, and are BROKE. That is scary. You must have more than one source of income, hopefully many! More importantly, build a retirement nest egg, that will take care of you. At least 2 million dollars. Lots of folks 2 Million is enough. It time for you to step up and grab the gold ring. To become worth more, earn, more and build financial freedom. Take Jim Rohns advice. WORK on YOURSELF. Dedicate some time, money, and effort to improving your skills in: buying real estate, managing your money, picking stocks, cutting taxes, opening a business, and protection your assets. Napoleon Hill was right too. In your life you must pay the price for specialized knowledge, whether you buy it, become an apprentice to a master craftsman, or tap a master mind group. Find those experts, and put them on your team. The simplest way is to buy their time and knowledge. I loved most of Napoleons book “Think and Grow Rich”. Many of the concepts I live today. All successful people have at the base, the characteristics from his book. You must have: Desire. Maintain your desire, even in the face of obstacles. Faith. Faith in God. Faith in self. Faith in General. Organized Planning. Set your goals, build a plan, follow your action steps. Specialized Knowledge. When you learn you earn. Find a mentor & educational plan.
I have spent time with 50 plus millionaires and at least 2 billionaires. People ask, how do you know some many authors, lectures, business people, and success coaches. Well, let me tell you, I have begged them for an hour of their time, paid for their workshops (just to get time with them), gone to work for them, offered them FREE work to get time with them, bought golf games (at special courses), and just plain bought their time. I once paid a guy $15,000 for a few days of his time. The nice thing about buying their time, whether an hour or a day, they focus just on you. Pure focused time on task, or skill absolutely will get you to success quicker. I will pay anything for knowledge and coaching. I know, how much time and money a mentor or some good education can save. In fact, one of my best marriage strategies (staying married) came from golfing with Ken Blanchard (Author of the One Minute Manager) at the Board of Trade in Toronto. OK. I know you are dying to know. He called it 90 seconds of passion. At first, I thought he was going to express a problem, that the little blue pill might fix. BUT what he shared with me really works, and is one of the reasons, I have stayed married for over 25 years. Ken (like I) travels a bit. So he is not always home. No matter where he is in the world. He stops for 90 seconds, calls his wife and tells her how much she means to him. Awe.... Isn’t that sweet. And it works. I did the same with my wife. It is not much time but over the years, those 90 seconds, once a day while away, add up. They can be the difference between a successful marriage and not. Small strategies applied over time, can make a huge difference. Reminds of the 10% solution, that I learned form Charles J Givens. Take 10% of your pay and put it way for your future. Then live on the 90%. I have run the numbers, it makes sense. Even more important it makes DOLLARS. In my M2 Book, I run some of the numbers. 10% over 15 yrs, 25 yrs, with X ROR (Rate of Return). The numbers are compelling. Combine a few beginning dollars with the right rate of return, and you future can be guaranteed. Let me give you and example from my financial success workshop. If we start with 10k, and get a good rate of return (see below the different annual rates of return), over time (36 years), the effect can be huge. Taking even a small amount, like 10k and putting it away for 36 years at 15%, means 1.5 MILLION in your future. The trick is to use the 10% solution, to get the 10k in an account, and get 15% per year. Did your mutual earn 15% last year, or year before? Not likely. Here are just of a few of the Mentors in my life. Folks that were kind enough to share their philosophy and strategy. I have dozens more, some well known (Warren Buffet, William O’Neill), others that are just quietly making money on the internet (Armand Morin-50 Million a year) or stock market. At last count, several years ago, I spent over 81K on training’s, mentors, education and books and tapes. Now I can in turn share my experience and strategies you! Key 2: Cash Flow. Is King! People get greedy. People get sold on products and investments. People don’t think through their long term, short term, cash flow, growth, risk , reward, speculation investments.
45% Growth. Once we have multiple sources of income working. We can turn our attention to longer term growth. Long term growth makes us rich. One strategy I heard early in my real estate investing career was “buy one rental property a year, for 10 years and in year 15 you will be a millionaire. Run the numbers, it is true if the appreciate rate is about 6 percent or great. Simple growth strategies can make us rich. But it all about the ROI. See growth section on time, roi and compounding. We may consider strategies such as:
10% Speculation. We can speculate and get a better pay day. But we must understand the realationship between, risk and reward. Only a small part of our investing should be speculation. Unfortunately, many investors speculate too much. They gamble on the long shot, when they should be making small amounts of money consistently over time. A few examples of speculation maybe:
Now if you have the right education, and experience these “speculative” strategies can be more safe. As experience, can give you higher probability of success. As the forex investor, that knows support, resistance, world economy, an Elliott Wave, or Gartley pattern. He will tell a hundred to one leverage, is not risky, but profitable. The key here being EDUCATION, STRATEGY and EXPERIENCE.
Strategy: Use The Power of CompoundingWhat is compounding? Simply stated, it is the act of making money from the money you made on money, or interest on your interest. As with all investments, there can be calculated a definite rate of return that has already been realized over a period of time. Hopefully, you invest wisely and this rate of return is a large positive number. Once your investment has realized a profit, you are faced with a dilemma and must choose between one of two options. You may either take the profit and spend it, or reinvest your profit and experience the power of compounding first hand. Consider the following: Investor “A” purchased a $1,000 position in mutual fund XYZ one year ago. Today, mutual fund XYZ posted a $50 cash dividend. Investor “A” used the $50 to take his wife on a date and plans to do the same each year when the dividend is paid. Investor “B” purchased a $1,000 position in the same mutual fund on the same date as Investor “A”. He, however, has chosen to purchase additional shares of the XYZ fund with the $50. If each of the two investors continue to do the same for 20 years, and the mutual fund has a 10% increase in value annually, plus pays a 5% cash dividend here is how each investor will end up at the completion of the 20 years: Investor “A”$1,000 grows at a rate of 10% (the annual increase in share value) to become $6,727.50. Investor “B”$1,000 grows at a rate of 15% (the annual increase in share value plus the reinvestment of the cash dividend) to become $16,366.54.
Let us look at something simple 10k and see what can happen over 36 years, at different rates of return. 5, 8, 10 and 15 percent per year. The differences are very interesting. Strategy: Earn 15% per Annum (minimum) I STRONGLY recommend the minimum annual return you must have on your investments is 15% (without risk). Most financial advisors will say, “well if you want those returns,, there will be a lot of risk, and you have to be prepared to ride out the losses”. What a lie. You can get 15% or more, fairly safe. Ever hear about Tax Liens? Banks buy them. Trusts buy them. 18%, 25% or greater per year, and every once and a while you can pick up a property for pennies on the dollar. I cover how to buy them, easily and simply form the comfort of your home and computer. And you can even buy them in to your retirement program. Strategy: Diversification can help with growthDiversification provides a means of reducing risk. A diversified portfolio includes securities from different asset classes. Since bonds or real estate tend to do well when stocks don’t, you could construct a portfolio that includes a certain percentage of stocks bonds, tax liens, real estate and business enterprises. This helps ensure that at least a portion of your holdings is always doing well. When you diversify, you try to ensure that at any given time, the value of some of your holdings might be down, and some might be up, but overall you’re doing fine. The trick is to find securities, or assets that don’t have tendencies to increase or decrease in price at the same time. Or look for the right balance of cash flow vs growth. Key 4: Big Hits—nothing like a win fall. If you are on the right path, if you are following the plan to wealth, and building your cash flow, growth and speculation strategies, every once and awhile you will have a BIG HIT. A Win Fall. It may take the form of a stock running long (like Google), with huge profits. It may take the form of a real estate deal that you sell for 100k, when you thought you would get 25k. Or a business opportunity, that just drops in your lap. These are BIG HITS. The reason, you get them, is because you are looking for general opportunites. As you look for solid opportunites, every once and a while you fall into a GREAT deal. Thank your stars and keep going. The challenge for many people, is that they look for the BIG deal first. Often getting eaten in the process.
Key 5: Leverage—tool of the rich. Nearly every one of us uses the power of leverage at least once in our lives, whether you realize it or not. At some point, almost all of us buy a house for our families. And it is very rare when a person pays cash for their home. Instead, buyers go to their banks, credit unions, or other financial institutions to obtain a mortgage (or deed of trust) for the purchase of their new home. Lets say for example that your new home will cost $150,000. Your bank reviews your good credit and agrees to give you a loan for the purchase of the house. They do require you, however, to pay the first 10% from your personal savings. So, you pay $15,000 and the bank pays the remaining $135,000 to the buyer and obligates you to a $135,000 loan. You now control a $150,000 investment in real estate for $15,000 out of your pocket. Of course you will have to make monthly payments to your lender, but if you do not buy a house, you will have to make monthly payments to a landlord. This is using leverage. Now lets take a look at the power leverage provides us as investors. For this example, we will compare two investors that purchase 100 shares in ABC Corporation. The first investor decides to fully pay for his investment, while the second investor purchases his shares using leverage (commonly referred to as using “Margin”). For this example, lets assume shares of ABC Corporation were purchased at $100 per share and appreciate 20% over the course of 1 year. Therefore: $100/share x 100 shares x 20% appreciation = $12,000 for the value of the shares after that year. Each investor made $2,000, but:
That is the power of leverage! Leverage can be used for investing in stocks, bonds (if you leverage tax free municipal bonds, they are no longer tax-exempt), and mutual funds (once they have been owned for at least 30 days) through the use of brokerage margin accounts. Bear in mind however, that leverage is a double-edged sword. It amplifies your investment results, whether they are good or bad, so use this wealth-building tool wisely. Any time we can borrow money, to buy and asset, and we get a high return on the asset value over time, we have HIGH leverage. Here are some place to gain leverage:
Strategy: Use Options for leverage What is an Option? An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset (a stock or index) at a specific price on or before a certain date. An option is a security, just like a stock or bond, and constitutes a binding contract with strictly defined terms and properties. Listed options are all for 100 shares of the particular underlying asset. Prior to the founding of the CBOE, investors had few choices of where to invest their money; they could either be long or short individual stocks, or they could purchase treasury securities or other bonds. But once the CBOE opened, the listed option industry began, and investors now had a world of investment choices previously unavailable. Options vs. Stocks
In order for you to better understand the benefits of trading options, you must first understand some of the similarities and differences between options and stocks. Similarities:
Differences:
Some people remain puzzled by options. The truth is that most people have been using options for some time, because option-ality is built into everything from mortgages to auto insurance. In the listed options world, however, their existence is much more clear. If, for example, you wanted to rent a certain property, and left a security deposit for it, the money would be used to insure that you could, in fact, rent that property at the price agreed upon when you returned. When you buy a Call option, the price you pay for it, called the option premium, secures your right to buy that certain stock at a specified price, called the strike price. Put options are options to sell a stock at a specific price on or before a certain date. In this way, Put options are like insurance policies. With a Put option, you can “insure” a stock by fixing a selling price.
All for pennies on the dollar. A great use of Leverage. Key 6: Tax and Asset Protection. Strategy: Invest for Retirement-Defer, Deduct, and Divert Many investors put off starting their retirement plans simply because they’re confused and overwhelmed by the options. Just figuring out the abbreviations of the many available retirement plans can be a challenge. You might be able to invest through an IRA, Roth IRA, SEP IRA, SIMPLE IRA, 401(k), 403(b), or other type of plan, depending on a number of factors, including your income, whether or not you’re self employed, and whether or not you can participate in a retirement plan sponsored by your employer. A retirement plan is a special type of account that you can establish at a bank, brokerage, or any other financial institution, either on your own or through your employer. The U.S. government wants to encourage you to save for your own retirement, so they’re willing to give you some pretty nice tax breaks to encourage you to save in these accounts, as long as you agree not to take out the money before you retire. Did you catch that? You don’t have to pay taxes on the profits that you earn in a retirement account, at least until you retire when (presumably) you’ll be in a lower tax bracket. Since you don’t have to worry about taxes in the meantime, all your earnings will compound in the account and lead to higher returns (remember the discussion about compounding?). The end result is that your retirement account can grow and grow and grow at a faster rate than it would otherwise. If that is not enough to compel you, there is more incentive. You can even get a tax break in every year that you contribute to a retirement plan. Want a way to cut your taxes? The government will give you a tax break right now if you’ll contribute to your retirement plan.
Never mind all the tax savings, though, since the real purpose of retirement plans is to let you slowly build wealth. During all your working years, you’ll contribute to your plan. When you retire, you’ll be able to enjoy your golden years free from financial worries.
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Unfortunately, many folks start off with the wrong step or mix up strategies. Example, they invest in stocks for growth, when what they really want is cash flow. Cash flow to augment a job or even replace a job. Everyone should have multiple sources of cash flow (just in case). You need a CASH FLOW strategy in the stock market, not a growth strategy. Most advisors talk about growth strategies, like buy and hold, or fundamental analysis. That does not pay the bills. 
