|
|
|
Does Your Life Include a RIPE Plan?—Planning Tips for Retirement, Investing, Protection, and Estate Planning – Part 2 (Investing)
Does Your Life Include a RIPE Plan?—Planning Tips for Retirement, Investing, Protection, and Estate Planning – Part 2 (Investing) by: Janet L. Hall After reviewing your retirement plan, or lack of one, you might have had a huge eye opener to the...
DXInOne E-Currency Exchange: Hidden Profitable Investing Opportunities
Very few oportunities online have the privilege of claiming they
can guarantee to make a profit for you. It's probably hard to
believe at first, but once you grasp how the e-currency exchange
system actually works you can see that it's not out of...
How Do I Implement The Lease Purchase Plan?
Well, as we have discussed in previous newsletters first you have to set up goals for yourself, both long term and short term. Don’t forget these goals define how your business is run. They will determine what you do on a daily, weekly and...
Property Investing Is Now Easier Than Ever!
I started investing in property in 1996 with only £500 and now I own a property portfolio of 150 properties worth over £10m. I can already hear you – “it was easier back then!” Ironically it wasn’t.
Let me explain a little more. The buy to...
Small Cap and Big Cap Investing
To be honest, it doesn't matter what type of stocks we invest
in. Common stock with small capitalization (defined as having
market capitalization of $ 500 Million or less) and big
capitalization (market capitalization of $ 5 Billion or more)
can...
|
|
| |
|
|
|
|
|
|
How To Start Investing For Financial Independence, Part 2
Last week, we started a multi-part series about how to go from being a beginning investor to being “financially independent” in a steady and predictable way. Many, many people want to overly complicate this process so let's briefly, let's recap that discussion.
The bottom line steps that I suggested in the last article was:
1) Look for an opportunity that will return at least 150% in 2 yrs or less;
2) Be mentally and financially prepared if the investment does not work out;
3) Have VERY good reasons why you don’t think you will lose money…… You may not make as much as expected, but you would rather not lose money at this stage.
4) Be patient. This single result should not either make or break you but it is crucial to a longer term plan.
I gave an example where a hypothetical person had gone through this process and ended up with a profit of $43,000 (before taxes) and $36,000 of after tax profit. When this profit was combined with their original investment, they now had around $55,000 of operating capital for Step 2.
Before we get to Step 2, let's take a step back. For a lot of people, if I told them that somebody made $43,000 on a quick investment, they would think these people had "struck it rich". Kind of like winning the lottery, right? NO! In the grand scheme of things, this investment will do very little to impact their financial independence. That is, it will take discipline to now use these profits to go into the next investment, and then use those new profits to go into the 3rd investment, etc. So, in our opinion, this first investment was merely a stepping stone towards a much bigger objective.
In Step 2, most savvy investors will now realize they have just been given some extra monopoly money, or money that was not originally theirs, to work with. In the investment and trading world, this is referred to as the "market's money"; i.e., money that you got from the market that you can then use to generate revenues above and beyond what was possible with your original investment. Quality traders can use this concept to produce huge % returns in a year while risking no more than 10% of their original portfolio.
So let's say the investor now decides to repeat the process and buy two more preconstruction lots in a different development. In the two years since the first investment was made, suppose now that property has escalated. In addition, the investor finds a good deal on two lots and each is $250,000 to purchase.
Now, the investors visits their check list to see if this makes sense:
1) Look for an opportunity that will return at least 150% in 2 yrs or less -- yes, they have reason to believe this will occur for their down payment amount;
2) Be mentally and financially prepared if the investment does not work out--yes, they don't think it will happen but if they lose their entire 10% down payment, they are ok with this.
3) Have VERY good reasons why you don’t think you will lose money…… You may not make as much as expected but you would rather not lose money at
this stage -- They have done their due diligence and feel strongly about the investment.
4) Be patient. This single result should not either make or break you but it is crucial to a longer term plan-- they are not swinging for the fences but rather patiently using the previous market's money to increase their investment.
Well, like the other investment, suppose this one works out in their favor. In their two year holding period, the lots experienced a 35% increase in price. Not bad. They were hoping for more since they knew some places had that kind of increase in a few months but they are not complaining. After closing costs, the investor had about $55,000 invested and netted a total of $162,000 after expenses. Of course their silent partner, Uncle Sam, wanted their cut so now they are left with a $137,700 in profits and $192,700 in working capital. Not too bad after only 4 years.
Now let's ask the question are they financially free? We'll, I doubt it. The investor could probably now survive for 2-3 years on the nest egg but only if they did not reinvest it. However, if the family and friends find out about this gain, then they will think the investor is now "rich" and living like the Vanderbilts...... For anybody that has made it to Step 2, you know they are far from rich because now they want to invest to go to Step 3 and this will likely consume most of their money. Frequently you will find people in the $0.5 -$2Million dollar net worth in this category where they are doing great on paper but they don't have any more "extra" money to spend than they did a few years ago. After Step 3-4 however, this can change dramatically.
Before we conclude this week's article, let's talk about a very common, and deadly mistake. In the language of Texas Hold'em poker, it is the All In mentality. Frequently, after a first success, people now feel bulletproof and decide they want this process to go faster. They leverage everything the have and take on as much risk as the banks will allow them. If things work out for them, they will explode their wealth with that step. However, if something slips up, they are in trouble.
Most people believe nothing like that can happen to them they are too smart. I mean everybody knows that real estate does not go down, Right? I know a gentlemen who is extremely smart, extremely business savvy, and grew his net worth to well over a BILLION dollars. Within a few years of that mark, he net worth was NEGATIVE and had to declare bankruptcy because of real estate. The process of building wealth in a controlled fashion over 6-10 years is so straightforward that I cannot see taking those kind of risks to make it happen in a much shorter time frame.
About the Author
Chris Anderson is a leading authority on preconstruction real estate investing and has been referenced in many venues including the New York Times and USA Today. Get updated information about preconstruction projects at GetPreconstructionDeals.com.
|
|
|
|
|
| Investing: Stock Quotes, Charts & Market News - MSN Money |
| Investing home page features investment tools like stock quotes, charts, a portfolio manager and much more. Plus market news and financial commentary from ... |
| moneycentral.msn.com |
|
| Investing : Stock Investing, Investing News |
| Our stock investing news is designed to help new and seasoned investors alike. See all of our investing news online at BusinessWeek.com. |
| www.businessweek.com |
|
| globeandmail.com : globeinvestor.com |
| GlobeInvestorGOLD Canada's most comprehensive investment tool. ... This Globe and Mail report will profile alternative investment products designed to help ... |
| www.globeinvestor.com |
|
| Fool.com: Investing, Stock Research, and Personal Finance |
| Investing information and an enjoyably useful site. Updated hourly. |
| www.fool.com |
|
| Investing, Stock Quotes and Research, Personal Finance and ... |
| Free comprehensive guide to investing and personal finance. |
| www.investorguide.com |
|
| Open Directory - Business: Investing |
| Business: Financial Services (17198); Business: Major Companies: Company Information (28); Recreation: Collecting (5684); Society: Issues: Fraud: Investment ... |
| dmoz.org |
|
| Better Investing - We'll show you how! |
| The National Association of Investors Corporation (NAIC) teaches individuals how to become successful strategic long-term investors. |
| www.betterinvesting.org |
|
| Dow Jones, Nasdaq, S&P 500, stock market data - CNNMoney.com |
| ... Real Estate Tips Main FSB 100 Small Cap Investing - Top 50 5 Best Bosses Which States Love Small Biz? ... Investing after Pfizer's flop - 3 strategies ... |
| money.cnn.com |
|
| Investing News, Personal Finance, Stock Market, Mutual Funds ... |
| Reuters.com is your source for investing news, personal finance, stock market, mutual funds and investments. Reuters is the leading global provider of news, ... |
| today.reuters.com |
|
| Investment - Wikipedia, the free encyclopedia |
| Investment or investing [1] is a term with several closely-related meanings in ... Types of financial investments include shares or other equity investment, ... |
| en.wikipedia.org |
|
| Investing In Bonds |
| Information about bond investing from The Bond Market Association. Bond price information, articles, introductory guides, and links to related sites. |
| www.investinginbonds.com |
|
| Investing for Kids |
| Welcome to Investing For Kids. This Web site is designed by kids for kids. It examines stocks, bonds, ... It teaches the principles of saving and investing. ... |
| library.thinkquest.org |
|
| internet.com - the Internet and IT Network from Jupitermedia Corp. |
| The definitive internet resource. |
| www.internet.com |
|
| InvestorWords.com - Investing Glossary |
| The most comprehensive investing glossary on the web, with over 5000 definitions and 15000 links between related terms. |
| www.investorwords.com |
|
| Investing - Share prices | FTSE100 | Stock quotes | Stock exchange ... |
| Also on Investing:. December Fund of the Month: River and Mercantile UK Smaller Companies · Virtual Trader: play our £100k fantasy sharetrading game ... |
| money.uk.msn.com |
|
| JS Online: Business: Investments |
| Investing, Personal Finance. More investing stories from the Journal Sentinel ... Readers share investment advice, savings tips COLUMNIST HUMBERTO CRUZ ... |
| www.jsonline.com |
|
| Welcome to the Investing Online Resource Center! |
| Independent, non-commercial information on online investing. |
| www.investingonline.org |
|
| Investing for Your Future |
| Online course for beginner investors. Course and program description, registration, resources, feedback and contacts. |
| www.investing.rutgers.edu |
|
| investing | baltimoresun.com |
| Business, technology, real estate and investing news, primarily from The Baltimore Sun. |
| www.baltimoresun.com |
|
| Investing for Beginners |
| Investing for beginners gives new investors articles on the stock market,interviews with leading financial experts, discussion boards, a free weekly ... |
| beginnersinvest.about.com |
|
|