5 Tips to Build Wealth and Success

 

Just came home the Money Summit and Wealth Expo... Whew! What a day! Very productive and I won a ticket from Rich Dad Asia on October in Manila! I will write some key points of the summit tomorrow. Also, let me share to you this nice article from Yahoo Financially Fit, in case you have not read this yet.

5 Tips to Build Wealth and Success

Warren Buffett is worth $45 billion. That wealth isn't only a factor of savvy investing and good business — the "Oracle of Omaha" is also known as a penny pincher. Buffett still lives in the same Omaha, Neb., home he bought in 1958 for $31,500.

Follow his frugal formula, and you too may wind up with a lot more money than you ever dreamed.

1. Live Below Your Means.

Being wealthy isn't just a product of your salary or investment prowess; it's learning how to save.

"We can make a lot of money, you can make a little bit of money, but the second you spend all the money is when people get into trouble. Saving is the key to preserving your wealth," says Ed Butowsky, managing partner of Chapwood Capital Investment Management, a firm that manages money for wealthy individuals.

As many Americans realized during the booming real estate market, just because you think you can afford something doesn't mean you should buy it. Keeping an eye on your bottom line will pay dividends over the long term.

2. Bounce Back From Defeat

With nearly 15 million workers unemployed right now in the U.S., it's easy to get discouraged. Don't! Most successful and wealthy people have overcome obstacles and failure along the way. Steve Jobs was ousted from Apple when he was 30. Today, he's a billionaire and a legend. Plus, after getting fired, he created another billion-dollar media company, Pixar.

"Bouncing back from defeat is something all great achievers have. They have this undying belief good things will happen and will continue to happen," says Butowsky.

Take Michael Jordan. "His airness" was cut from his high school basketball team. Motivated by the rejection, Jordan became a star the next season. The rest is history.

3. Self-Promote

Regardless of the profession, the rich and successful tend to have a strong sense of self-worth — key to skillfully navigating an upward career path. Mark Hurd, who was ousted as CEO of Hewlett-Packard in August, couldn't be kept down for long. Using his business skills and connections, in September, Hurd was named president of Oracle. (Hurd and Oracle founder Larry Ellison are known to be close friends.)

4. Have Street Smarts

Bernie Madoff lived the high life for decades, scamming unsuspecting clients, with a money-making formula that proved too good to be true. Only afterward did we learn that with a little due diligence, most clients could have easily uncovered the fraud.

But it's not only the swindlers and the con men you have to watch out for. Many times, friends and family take advantage of the rich. Whether it's a handout or an investment idea, Butowsky advises his high net worth clients that in most cases, it's wisest to just say "no." The best way to do that: have someone else do it for you.

"You need to really set up a wall between you and your family," he advises. "If you don't want to give them (family or friends) money ... saying no is probably a good idea."

5. Buy Cheap

The rich can afford to splurge, but that doesn't mean they do.

John Paulson, a billionaire hedge fund manager, bought his Hamptons "dream house at a bargain basement price," according to Greg Zuckerman, author of the Paulson-based book, "The Greatest Trade Ever." The story has it that Paulson eyed the home while it was in foreclosure. Finally, on a rain-soaked day, he purchased the home on the Southampton town hall steps. He was the only bidder.

On New York City's Upper East Side, Michael's— The Consignment Shop for Women— has been a bargain-hunting destination for more than 60 years. "We have a good percentage of women who can afford to shop on Madison Avenue but really like the idea of saving that money," says proprietor Tammy Gates.

From Chanel to Gucci and Louis Vuitton, the store specializes in high-end designer merchandise for a reasonable price. Speaking of her clientele, Gates says, "they're wealthy for a reason. They recognize that bargains keep people wealthy. Paying top dollar when you don't have to doesn't make sense."

6 Strategies To Get Rich

In my pursuit for further educating myself when it comes to achieving financial freedom, I enrolled myself in a free online coaching in the Rich Dad Poor Dad lessons of Robert Kiyosaki.

In one of the chapters of the e-learning that I’ve been reading, Robert Kiyosaki suggested the Rich Dads Get Rich Strategies in which he used to get out of the rat race and become a business owner and investor.

I would like to share it all to you my readers so we can also use it to achieve financial freedom just like what Robert Kiyosaki did:

STRATEGY 1: Become financially literate.

The number 1 strategy to get rich is to become financially literate. Financial literacy is not always taught in schools. It requires proficiency in several areas: economic history, accounting, taxes, investing and building businesses. These are difficult subjects but don’t let the difficulty scare you.

Becoming financially literate has nothing to do with how far you got in school. It doesn’t matter whether you’re a failure in school, a jeepney driver, a janitor, or an executive of the company. What matters most is that you’re willing to educate yourself.

One of the things that I learned about financial literacy is on cash flow patterns. Based on these cashflow patterns, you would be able to determine if you belong to poor, middle class or rich persons.

Kiyosaki compared people with average financial intelligence vs. people with advanced financial intelligence:

People with average financial intelligence know only:

• Bad debt, which is they try to pay it off.
• Bad losses, which is why they think losing money is bad.
• Bad expenses, which is why they hate paying bills.
• Taxes they pay, which is why they say that taxes are unfair.
• Climbing the corporate ladder instead of owning the ladder.
• Buying shares of a company rather than selling shares of a company they own
• Investing only in mutual funds or picking only blue-chip stocks

People with advanced financial intelligence know the difference between:

• Good debt and bad debt
• Good losses and bad losses
• Good expenses and bad expenses
• Tax payments and tax incentives
• Corporations you work for and corporations you own
• How to build a business, how to fix a business, and how to take a business public
• The advantages and disadvantages of various investment vehicles: paper securities, real estate properties, and businesses

STRATEGY 2: Work to Learn

Most people focus on working for pay that rewards them in the short term; over the long term, this strategy can be disastrous because it doesn’t build up enough assets for a stress-free retirement. You’re not sure if your employer will be there for the next 10 years. What if you were laid off? Or what if the company closed?

If you want to be financially free, you need to seek work for what you’ll learn, not for what you’ll earn. This is one of the main reasons why I left my previous company. With my tasks, I am no longer learning and in that way, I feel rusty. It’s not always the pay that matters. It’s the satisfaction and the amount of learning that you get. The skills you learn when you work for someone else can be invaluable when you begin to work for yourself—and if you want to be financially free, you’ll have to work for yourself.

Kiyosaki said that there are three essential skills that we need to learn from our job while we are working for somebody else. These are Leadership, Management, and Sales & Marketing.

STRATEGY 3: Find Mentors, Build a Team

They say that no man is an island and that two heads are better than one. The same applies when you want to get rich and achieve financial freedom. You need to seek out mentors and advisors who can teach you the valuable skills you’ll need to become a business owner and investor. No one climbs Mount Everest alone, and you shouldn’t try to climb your personal financial mountain without the aid of others. Without support, you’ll never reach the top.

Kiyosaki said that “business is a team sport.” One thing is certain: When you want to get rich, you need to set out to work for yourself. In doing so, you’ll need more than just friends and family—you’ll need a team of professional advisors. According to Kiyosaki, one secret of the rich is their humility. They surround themselves with people who know more than they do. They surround themselves with experts.

STRATEGY 4: Work For Yourself

Kiyosaki said that most people work first for the owners of the companies that employ them, then for the government through taxes, and finally for the banks that own their mortgages. No wonder they have little left at the end of their working days! To escape the rat race, you need to work for yourself.
You should think like Rich Dad. Instead of saying, “but the odds of a start-up succeeding are against me—nine out of ten companies fail within five years,” say to yourself, “one out of every ten businesses succeeds within five years, and mine will be one!”

STRATEGY 5: Create Money

Kiyosaki said that “Money isn’t real. It’s just an idea!” Today, we are now living in the information age. The information age allows some individuals to get ridiculously rich from nothing more than ideas and agreements. There are people who makes a lot of money in the internet either by maintaining a website or by trading stocks and forex online. Today, it’s not at all out of the ordinary for millions to be made instantaneously out of nothing.

How do you create money?

Finding an opportunity that everyone else has missed.

Learning how to raise money through investments and assets.

Working with knowledgeable people to help you reach your financial goals.

STRATEGY 6: Give Back

Kiyosaki believe on charitable giving. Personally, I also believe on the universal law of nature and that’s Karma: “Do unto others what you want others to do unto you.”

Also, we should not forget Newton’s Law that states: “For every action, there’s an equal reaction.” If you’re a greedy Scrooge, people will respond to you in kind. You have to give money to get it back. Remember, give and you shall receive.

How Much Did Your Money Grow In The Past 12 Months?

How Much Did Your Money Grow In The Past 12 Months?

10 Ways to Break Bad Money Habits

10 Ways to Break Bad Money Habits

Most of us have plans in every aspect of our life. We want to buy a new house, new car, trip around the world and many more. Yet so many of us spend carelessly and impulsively, spending all we have right now, without considering to save or invest for the future. Looking back in 2008, all of us reflected on where our money went every time there were money coming in. And it may seems that you are making enough money but it just slips away from you, maybe it’s time to wake up and break some BAD money habits.

1.  First of all, do have a budget. Many people live without one – and that includes many affluent people including our government. This may take few minutes of your time daily but this habit could change your future positively. Simply write in a notebook or encode in an excel or in your iPod/Ipad, your budget for a day/week/month and simply track down your expenses, including credit card expenses, small or big purchases, put detail as much as possible. This habit will make you more conscious and aware on your spending, distinguishing those from essentials or needs from wants or desires. 

2. Distinguish necessities/needs from wants/desires. Ask this question; is it a want or a need? Why don’t you come back next week or next month to see if you really want that product? Don’t be an impulse buyer. Yeah, it is easy to swipe that deadly weapon (credit card!) but come to think of the monthly amortizations. Marketing and advertising nowadays leaves many consumers unable to tell the difference between a want or a need. They run up debts to buy what they want, rather than what they need. How many of them understand that by borrowing they are actually spending away future earnings.

3. Carrying a balance on credit cards. Now that you have distinguished your needs and decided to use your credit card to acquire those needs. And here comes the credit card statement, you do not have enough cash to pay for it and leaving a balance on due date. Be a responsible credit cardholder, leaving a balance for example, amounting to P10,000 which is charged by the credit card companies by an average of 3.5% a month or 42% a year!!!, which if compounded for three years, your debt will amount to P28,632.88. This amount does include the 5% penalty if you fail to pay the minimum amount due every month. Indeed, a deadly weapon. (FYI, bank savings account earns only 1% per year)

4. Not having an insurance. A single accident can wipe out your savings account. Most people are allergic to insurance agents but mind you, life insurance is essential especially when you have a family and you do not have enough savings to support your family when something bad happens to you. Remember Typhoon “Ondoy”? Damaged cars and houses, luckily for those people who got insurances for their properties. There are a lot of cheap term life insurances out there. Ask and be prepared.


5. Not matching employer’s contribution to retirement. One of the biggest mistakes that lots and lots of people make, especially young people, is not investing in their employer’s retirement plan at least up to the point where they get the employer’s match. By not doing that they’re leaving additional income on the table. FYI, contributions on these retirement plans are part of your net worth, increase your net worth and prepare for your retirement as early as possible if you want to retire as soon as possible also.

  
6. Know the difference between good & bad debt. Do you know the difference? Robert Kiyosaki, author of "Rich Dad, Poor Dad", defined these two types of debt, a bad debt is a debt you incur on a disposable item or a durable good that will depreciate or will take cash from your pocket. It is a debt on something that has no potential to gain value. You want to avoid as many bad debts as you can. Of course, there is also good debt – for example, a mortgage, a business loan or a student loan, sari-sari store loan or even a tricycle loan. These are so-called “investment debts” that can potentially create value down the road and bring gains, income and cash on your pocket.

7. Educate yourself, be financially literate. No, it is not the same of academic literacy which you learn from school. Some people are very cavalier when it comes to spending and saving money. Others are convinced that they will never be able to build wealth, so they spend their days addressing short-term financial needs and give no thought to the wealth and income they will need in maturity.  In both cases, the root problem is a lack of education. Those who spend money like water don’t understand its value; those who shun financial planning and investing don’t understand its potential. People with greater degrees of financial educationtend to be more rational when it comes to financial decisions. (Not always, but often.)

8. Not managing your investments. You do have investments but don’t get too emotional about your investments. Don’t drag your life down when the market go down. Your investments may lose value, but not you. You can re-create your investments, you are the creator of it.

9. Spending and spending, saving “what’s left.” Again, please pay yourself first, you are the one who earned for that money, pay yourself first, set aside your savings, and then spend the residual. Live within the budget. Invest the excess.

10. Set financial goals and do something about it. When people educate themselves about money – the ways to potentially make it, the ways to plan to protect it – they start to see how the financial world “works” and they tend to explore their own financial potential. This exploration may lead them to meet with a financial advisor or planners. That conversation can inspire them to set and plan for specific objectives, and get a relationship going – a shared commitment to wealth building.  If you haven’t had such a conversation, today is as good as any day for that to happen.

Hope these tips will help you. Feel free to comment or ask. Thanks for reading! =)

Learn how to grow money!

Do you have P100,000 lying around or in a regular bank earning only 0.5% a year?

WE ALL know this is true: One reason why the rich get richer, so to speak, is because they have access to betterinvestment advice—the kind that is often unavailable to regular investors whose bank account balances don’t go beyond six digits.

So the Inquirer’s Daxim Lucas, Doris Dumlao and contributor Ditas Lopez polled some of the most influential and well-connected bankers and investment managers in the country to get the best advice as to how one should invest a hypothetical P100,000 (an amount small enough to be within the reach of middle-class savers and investors, but large enough to give investors access to a wider array of instruments).

Surprisingly, the results of our discussions with these financial experts showed that investment success was not achieved through secrets known only to the affluent, but on decisions that are mainly ... common sense.

For longtime treasurer Roland Avante, fixed-income securities are the
way to go if one had P100,000 lying around waiting to be invested.


Antonio Moncupa Jr.
President
East West Banking Corp.

“An investor with P100,000 to spare should consider investing in an equity-based mutual fund, especially if the money will not likely be needed on short notice.

If it’s really for investment, meaning you don’t expect to use it for any personal consumption needs in the foreseeable future, I would advise to invest it in an equity mutual fundlike Philequity Fund, which has been a consistent good performer.

Those who are more risk-averse, however, should place the money in bonds or fixed-income investments. Keep the money in a short-term time deposit, and when the inflation scenario gets clearer, buy retail investors bonds issued by the Bureau of the Treasury.

Too many outside factors could affect inflation and interest rates [at present],” he said. “Let the situation simmer for now.”

Ron Logan
SVP/head of personal financial services
HSBC Philippines

“If a client requires capital protection and guaranteed return, he or she could opt to invest in government securities. FXTNs [Fixed Treasury Notes] are medium-to long-term debt instruments with tenors ranging from two to 25 years.

These securities are unconditional obligations of the Republic of the Philippines and backed by full taxing of the government.”

Pascual Garcia III
President
Philippine Savings Bank

“I would suggest that it (P100,000) be placed in an equityfund at this time, given the decline in stock prices. It’s an opportunity to buy at cheap prices. A bond fund would also be okay, not at this time, but once the Bangko Sentral ng Pilipinas has finished its series of interest rate hikes.”

Lorenzo Tan
President
Rizal Commercial Banking Corp.

“Put it in a balanced fund so you’ll get some equity upside, ride on the rise of the Philippines because during times when there’s a storm coming, the investment managers protect you by moving out of equities to fixed income.”

Roland Avante
Treasurer
Sterling Bank of Asia

“The retail treasury bonds (RTBs) being offered by the government at present are a very attractive investment vehicle. RTBs—just like the more traditional treasury bonds—are government IOUs issued to creditors, with the proceeds going to the state’s coffers to help fund its operations. What makes RTBs unique is that they are available in denominations of as low as P5,000, and are distributed to small investors.

Buy the newly issued 10-year RTBs. The yields are good, plus the investor may actually realize capital gains on this investment when the inflation rate stabilizes.

Given the track record of the central bank in keeping inflation in check, there’s a good chance that RTB investors will gain more than they had initially expected.”

Eugene Acevedo
President and CEO
Philippine National Bank

“A person with P100,000 to invest should put it in Australian dollars.

The Australian dollar is expected to appreciate over the short to medium term because of the growing demand for commodities, which are Australia’s main export.

One should buy Aussie dollars to ride on commodity price increases. They also ride on the growth of the Chinese economy. It (Australian dollar) is proxy for China’s growth.”

(Demand from China for practically all kinds of commodities that Australia produces will bode well for the currency. But the challenge is in finding a local bank that trades in the relatively exotic currency.)

Ador Abrogena
EVP for trust and investment group
Banco de Oro

“Assuming a three-year horizon, you can place it in equity. If you want something you can take out anytime, you place some of your P100,000 in the money market or bond fund and the balance, which you can leave for three years or more, can be placed in an equity fund. With a bond fund, for example, you’re subject to risk but it also takes very short time for you to recover. If net asset value falls, it takes a short time for it to recover. The balanced and equity funds, they take a while to bounce.”

Theresa Marcial-Javier
SVP/head of asset management
Bank of Philippine Islands

“Assuming that the client is moderately aggressive with an investment horizon of five to seven years and theinvestment objective is balanced (to achieve growth through a balance between interest income and capital gain over the medium term), the P100,000 can be allocated in diversified BPI investment and mutual funds as follow: P15,000 in cash equivalent (BPI short term fund); P52,000 in fixed income fund ALFM peso bond fund; P23,000 in ABF Phils. Bond Index Fund and P10,000 in equities (BPI equity fund).”

Mahendra Gursahani
Philippine CEO
Standard Chartered Bank

“With that amount of savings you want it to be safe and secure so I won’t recommend anything other than putting it in a special deposit account with the central bank which gives you 4 percent interest.”

Allan Yu
Head of investment for Metropolitan Bank and Trust Co.

“I recommend a balanced fund because it offers a more diversified mix of assets. It offers you the long-term growth potential of equities and also the more stable returns of fixed income.”

via: http://business.inquirer.net