Prosperity – The 7 Secrets – Pt 5

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(…Continued From Prosperity 7 secrets Pt 4)

Money Skill #3. Save it

Wealth Skill #3 is to save money. Wealthy people love to save money…you know, to buy things at wholesale. They never like to pay retail for anything. And now, you know why. But they don’t stop there. You see, anyone can save money by buying at a discount…but do they save the money that they save? That’s the hard part. A friend of mine quit smoking and was bragging about the $50 a month she was saving by not smoking. I asked, “Where is the $50?” She didn’t know. She had saved the money but she hadn’t saved it…put it away. When you save money by changing your buying habits, take the money out of your purse or wallet and get it out of your spending grasp. Put it into a savings jar, and frequently deposit this money into your savings account. That’s when you’ve truly save/saved it.

And here’s another tip. Would you like to learn how to cut your living expenses by 30% in 30 seconds? You would? Well, take out your credit cards, put one away for emergencies, and cut up the rest. Statistics have proven that this simple exercise will automatically and almost effortlessly cut your living expenses by an average of 30% over the next 12 months.

Money Skill #4. Invest it

With the money you’re save/saving plus the 10% of the money you pay yourself off the top, you must learn how to invest your money at billionaire rates. Anyone can park their money at 3%. The trick is to get it to grow at 10 to 20%. There are many traditional investments that are ideal to park your money. At the low end of the interest scale are bank savings accounts and certificates of deposit. Then, you have government treasuries and bonds. Up the ladder are corporate bonds…then the stock market…and some of the most popular investments these days…Mutual Funds. You should have money in all of these areas. Imagine a series of buckets where money is siphoned off from your bathtub. The first bucket should be your emergency bucket. Let your 10% flow there first until you have at least three months worth of living expenses saved. You’d be surprised how many people in this country are only one paycheck away from bankruptcy. Don’t let that be you. This money should be in the safest place possible…probably in an insured bank account…at the highest interest rate you can find where you can access to your money within 30 days. Once this first bucket is filled up, the stream of 10% will overflow into one of three additional buckets—labeled, conservative investments, moderately risky investments and very risky investments. If you are older, you should have more of your money in the conservative bucket. The younger you are the more risk you can take.

The best way to invest for average people is in Mutual Funds. A mutual fund is a collection of individual stocks purchased by a major company and managed by professionals. You give them a small amount of money, they add it to that of thousands of other investors and they watch over it for you. You’d have to have lived in a cave for the past 5 years not to have heard at least something about Mutual Funds.

Here are a few rules about investing.

The longer you invest (leave your money in the market) the lower your risk.

Don’t invest unless you’re willing to leave it for 5 years or more. It’s sole purpose is to grow and compound. Anything shorter than a year is gambling.

Remember, it’s almost impossible to buy low and sell high in the short run. So don’t play the market.

The key is long term dollar cost averaging.

Dollar cost averaging simply means, you should invest every single month, regardless of where the market is heading. Don’t even read the newspapers…just buy month in and month out. Over the long run, this is the best strategy. Do it automatically. Inform your mutual fund company to automatically withdraw the funds from your account each month. If you have to decide each month, eventually you will stop the program and your future will suffer. Do it every month.

When you finish reading this report, if you’re not already doing so, I want you to go to a news stand, and buy a financial magazine like Money Magazine or Smart Money or Kiplinger’s. Look for an ad for a Mutual Fund company that is No-Load…which means no commissions. Look for ads where they will let you get started for $50-100 per month. Sign up for the automatic monthly withdrawal…and get started. If you’re new at this, you’ll learn a lot by just doing it. This will turn up your awareness of the entire process. Soon you’ll start noticing ads for Mutual fund families that really fit you. Then, you can shift your growing nest egg to the new company and start to watch your money grow. Once you have gotten your mutual fund investing program funded and on automatic pilot, you should read some great books on the stock market like Peter Lynches classic, Beating the Market. And then, you can start putting extra cash toward a concentrated program of investing in individual stocks.

Speaking of that, would you like the richest investor in the world to manage your money? His name, by the way, is Warren Buffet. He started in the mid 50’s with just a few thousand dollars and some money from a small group of partners. Over the next 40 years he turned his initial few dollars into tens of billions of dollars. His yearly compounded rate of return on his money is about 20%. If you’d like to buy into Warren Buffets brains, you can buy into Buffets empire…where he has about 90% of his own money. It’s a stock traded on the New York Stock exchange…called Berkshire Hathaway. It trades at many tens of thousands of dollars per share and is the most expensive stock on the NYSE. Buffet doesn’t believe in splitting his stock price…so it just keeps getting higher and higher…as he continues to pile more and more money in it. (Your stock broker can show you how to buy Baby Berkshires…at a much more reasonable price.) There are several excellent books on the market about Warren Buffet. If you love the stock market, you’ll love to read about how this man did it. At the very least, your goal is to get some of your surplus money siphoned off into mutual funds and forget them.

(Continued in Prosperity 7 Secrets Pt 6…)

Authors Details: Robert G. Allen – Prosperity, 7 Secrets.
His colossal bestseller Nothing Down established Robert Allen as one of the most influential investment advisors of all time. Also the author of ‘The One Minute Millionaire’

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About Aymen Fares:

Aymen Fares is an Intuitive Life Coach, Speaker and Author with clients all over the world. He is based in Melbourne Australia and is the editor of this web site. Find out more about Life Coaching with Aymen or join one of his Workshops by clicking on the link “Aymen Fares” above.

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