Hello everyone.
I hope all of you enjoyed your weekend. Tonight's money/personal finance topic is about, as you've probably surmised from the title of this post, how to develop your money consciousness - that is, create a hospitable atmosphere for abundance in your life. Actually, I lie. It pertains to money consciousness, but I believe that it also applies to a wider realm of things beyond money.
Before I get into the nitty gritty of things though, let me give you a bit of context. Around this time last year, I was getting ready to head to Korea to teach English. After teaching there for a few months, I somehow realized that my life wasn't necessarily taking the direction that I wanted it to take. Since I didn't know where to find self-help books in English, I began downloading self-help audiobooks in order to get to the root of some of my personal angst. This was probably one of the best things that I've done in my life.
One of the audiobooks that had a profound effect on me was called, "Think and Grow Rich", by Napoleon Hill. Now this book sounds like it's all about money, and a large part of it is. But there is an even broader motif within the book. And that motif is about how the thoughts we hold create our realities. I know this sounds a little cookey and new-agey, but bear with me.
"Think and Grow Rich" informs the reader that in order to achieve anything in life - be it weight-loss, a college degree after years of being out of school, or millionaire status - desire has to be present. This desire cannot be a half-hearted desire. It must be an all-consuming desire that one pours herself into completely. Once this desire has planted itself firmly inside the heart and mind of its bearer, then action will take place. But the most important ingredient to achieving what you want in life is desire.
Desire comes in many formats, but it is basically a thought. Now, I often hear people saying that they're broke or can't afford certain things. These words are thoughts and the subconscious mind takes them in and if the subconscious mind hears them enough, it will start to believe these words. This is similar to the way that a child, no matter how intelligent he or she is, will believe she is stupid if she is constantly told so by a person close to her in her life. Your mind believes what you tell it also. If you tell yourself that you never have enough money, or that you could never stick to a budget, guess what? You'll never have enough money, nor will you ever stick to your budget. However, if you operate from a paradigm of abundance, thinking and believing that your coffers are always full, you will find ways to save and you will create avenues by which you can create more income.
Another thing that I do to cultivate my money consciousness is treat money, which is basically an inanimate tool, with a great deal of respect. What do I mean by this? I mean that when I see pennies on the street, I pick them up. I don't just disregard them as being worthless, because they aren't! As a result, I've been increasingly finding larger and larger sums of money on the street. Yep, I'm talking about nickels, dimes, and quarters. I also don't crumple money in my wallet and I keep track of my expenses. If you respect your money and don't disregard "inconsequential" sums, you will begin to see more of it flow into your life.
Lastly, one of the greatest ideas that I gleaned from "Think and Grow Rich" is the fact that daily affirmations help keep us on track toward our goals. So if your goal is to have more money left over at the end of the month, or to be a millionaire and free of financial worry, tell yourself, "I have more than enough money. I am capable of paying all of my bills and still having money to invest. I am free of financial worry." I don't care how untrue that statement may be for you. Just believe it and then your subconscious mind will begin to find ways to make those statements true. Your subconscious might push you to further your education for greater income, to save more, to generate different streams of income, or whatever. But it is essential that you get comfortable believing that you can have "enough" in your life, as opposed to focusing on the lack in your life, if you want the former to be true.
Thanks for reading and if you have any questions, please don't hesitate to post them or email me at jcp182000@yahoo.com.
Sunday, July 1, 2007
Saturday, June 23, 2007
Money and Emotions
Hello everyone.
Today's post was going to be about how to generate an alternative stream of income by writing for "Helium.com". However, because that post would be relatively straightforward and short, I've decided to write on a topic that has been swirling around in my head for a little bit of time.
Before I get into today's topic, which will be money and emotions, though, I'd like to tell you that if you go to www.helium.com, you can find out everything you need to about how to create an account and get paid for writing on any topic that you find interesting.
Now, onto money and emotions.
Ok, so I'm a big fan of Suze Orman. And one of the reasons that I'm such a big fan of hers is not because of any particular advice that she gives - Suze's a famous financial advisor who has her own television show on CNBC - but because she is one of the few prominent media personalities who acknowledges that all of our financial decisions are fraught with myriad emotions. The more literature that you read on investing and personal finance, the more you will hear the refrain that in order to be successful with money, one must remove all emotions. To some extent this is true. "Some" is the operative word however.
For instance, if you buy a stock just because you hear a lot about it on tv or on a hunch, without performing a "discounted cash flow analysis" - a process that allows you to determine what a stock's true value is based upon certain growth assumptions - then you are investing with emotions. This is bad. Similarly, if you sell stocks that you have long-term confidence in and that have good financial fundamentals, just because the price goes down for a few months or some media pundit says they're bad, you are also investing with emotion. In these instances, it pays to remove emotions from the equation.
But I believe that in almost every other instance regarding money, it pays to take your emotions into account. Why? I'll explain.
Americans have a ten ton elephant under the rug in their lives. No one wants to talk about money! It is considered taboo, disrespectful, and for most people, it's just downright awkward. In my family, as a child, all of my basic needs were provided for, but we definitely experienced times that were rough (i.e. being evicted from our apartment and having to live with relatives for two years). I could always sense that there was anxiety surrounding money. Some of you may have had experiences similar to mine. I believe that most of our ideas regarding money come from our parents and closest family members, like most of our world views.
So if your childhood was littered with arguments about money, you will most likely be tense when confronting the issue. If there was never enough to go around, you may feel the need to hoard and store up without considering the needs of others. (I struggle with this a lot.) Or you may shop compulsively to overcome that feeling of deprivation. If your parents were wealthy and always gave you what you wanted and you never had to work, you may be a spendthrift who doesn't know the value of a dollar. Or you may have learned the virtues of investing your hard earned dollars if you come from a wealthy family.
What our parents and closest family members communicated to us as children, both implicitly and explicitly, affects our money decisions considerably. I know that my respect for money comes from the fact that I used to always see my mom pick up pennies when she saw one in the street. To this day, I too never hesitate to bend and pick up pennies, nickels, dimes, and quarters that I see on the sidewalk. My mom also gave me and my siblings a biweekly allowance that we had to preserve until the next allowance period. Fortunately, I always managed to have money left over. This financial paradigm I adopted undoubtedly came from my mother.
If we can realize what beliefs and emotions we have tied up with our money, then we can take better control of our financial lives. We can control our impulses to buy those new jeans - when we already have plenty of them - if we understand where those impulses come from.
Make a vow to understand your own money psychology and take control of the financial reins in your life.
Thanks for reading and please feel free to comment or email me at jcp182000@yahoo.com with any questions. Until next time...
Today's post was going to be about how to generate an alternative stream of income by writing for "Helium.com". However, because that post would be relatively straightforward and short, I've decided to write on a topic that has been swirling around in my head for a little bit of time.
Before I get into today's topic, which will be money and emotions, though, I'd like to tell you that if you go to www.helium.com, you can find out everything you need to about how to create an account and get paid for writing on any topic that you find interesting.
Now, onto money and emotions.
Ok, so I'm a big fan of Suze Orman. And one of the reasons that I'm such a big fan of hers is not because of any particular advice that she gives - Suze's a famous financial advisor who has her own television show on CNBC - but because she is one of the few prominent media personalities who acknowledges that all of our financial decisions are fraught with myriad emotions. The more literature that you read on investing and personal finance, the more you will hear the refrain that in order to be successful with money, one must remove all emotions. To some extent this is true. "Some" is the operative word however.
For instance, if you buy a stock just because you hear a lot about it on tv or on a hunch, without performing a "discounted cash flow analysis" - a process that allows you to determine what a stock's true value is based upon certain growth assumptions - then you are investing with emotions. This is bad. Similarly, if you sell stocks that you have long-term confidence in and that have good financial fundamentals, just because the price goes down for a few months or some media pundit says they're bad, you are also investing with emotion. In these instances, it pays to remove emotions from the equation.
But I believe that in almost every other instance regarding money, it pays to take your emotions into account. Why? I'll explain.
Americans have a ten ton elephant under the rug in their lives. No one wants to talk about money! It is considered taboo, disrespectful, and for most people, it's just downright awkward. In my family, as a child, all of my basic needs were provided for, but we definitely experienced times that were rough (i.e. being evicted from our apartment and having to live with relatives for two years). I could always sense that there was anxiety surrounding money. Some of you may have had experiences similar to mine. I believe that most of our ideas regarding money come from our parents and closest family members, like most of our world views.
So if your childhood was littered with arguments about money, you will most likely be tense when confronting the issue. If there was never enough to go around, you may feel the need to hoard and store up without considering the needs of others. (I struggle with this a lot.) Or you may shop compulsively to overcome that feeling of deprivation. If your parents were wealthy and always gave you what you wanted and you never had to work, you may be a spendthrift who doesn't know the value of a dollar. Or you may have learned the virtues of investing your hard earned dollars if you come from a wealthy family.
What our parents and closest family members communicated to us as children, both implicitly and explicitly, affects our money decisions considerably. I know that my respect for money comes from the fact that I used to always see my mom pick up pennies when she saw one in the street. To this day, I too never hesitate to bend and pick up pennies, nickels, dimes, and quarters that I see on the sidewalk. My mom also gave me and my siblings a biweekly allowance that we had to preserve until the next allowance period. Fortunately, I always managed to have money left over. This financial paradigm I adopted undoubtedly came from my mother.
If we can realize what beliefs and emotions we have tied up with our money, then we can take better control of our financial lives. We can control our impulses to buy those new jeans - when we already have plenty of them - if we understand where those impulses come from.
Make a vow to understand your own money psychology and take control of the financial reins in your life.
Thanks for reading and please feel free to comment or email me at jcp182000@yahoo.com with any questions. Until next time...
Sunday, June 17, 2007
Way #4 to Generate Income - Domain Name Buying
Hello everyone.
It's good to be back after a weeklong hiatus. Today's post is going to be about Way #4 to generate an alternate stream of income - buying domain names.
First of all, you might ask yourself, what is a domain name? Well, a domain name is basically a website's URL (i.e. www.yahoo.com). Here, the domain or the host of the website is Yahoo! But let me explain a little further.
During the late 90s, there were a lot of small Web companies with names like www.1800flowers.com or www.beaniebabies.com or even www.watermelons.com. Some of these companies -these dot coms - survived and did well. But others went bankrupt and were put out of business. Subsequently, Internet users weren't visiting that now defunct site and so the name was less lucrative. That's where domain name buyers come in.
Because these website names did not generate a lot of traffic after the companies went bankrupt, some of the more enterperneurial websurfers out there decided to go to www.afternic.com or www.register.com and try to bid on different domain names.
Okay, now, you may say to yourself. I know how this works. But how does it makes money? Good question. Well, just as advertisers pay bloggers each time a blog visitor clicks on a link, if you buy a domain name, anytime someone visits that website with the domain name you own, and clicks on an advertiser's link, you get paid. The trick is to buy domain names that are common enough that lots of people visit the site.
Think about things this way. Whenever someone is looking for something, she doesn't always Google it. If a woman were looking for wedding dresses, she might go to www.weddingdresses.com. Or if a guy were looking for a new stereo system, he might go to www.stereos.com, where he would find tons of advertisements for stereos and other audio/visual equipment. The owner of the domain name 'www.stereos.com' makes money in her PayPal account everytime someone clicks on those advertisements.
Go to www.afternic.com, create an account, and check out the site to learn about how to bid for domain names functions. Also, here is the link to an interesting Business 2.0 article about one of the most successful domain name buyers of our time - Kevin Ham.
http://money.cnn.com/magazines/business2/business2_archive/2007/06/01/100050989/index.htm
Thanks for reading and I hope you all enjoyed. And please feel free to post any questions or comments.
It's good to be back after a weeklong hiatus. Today's post is going to be about Way #4 to generate an alternate stream of income - buying domain names.
First of all, you might ask yourself, what is a domain name? Well, a domain name is basically a website's URL (i.e. www.yahoo.com). Here, the domain or the host of the website is Yahoo! But let me explain a little further.
During the late 90s, there were a lot of small Web companies with names like www.1800flowers.com or www.beaniebabies.com or even www.watermelons.com. Some of these companies -these dot coms - survived and did well. But others went bankrupt and were put out of business. Subsequently, Internet users weren't visiting that now defunct site and so the name was less lucrative. That's where domain name buyers come in.
Because these website names did not generate a lot of traffic after the companies went bankrupt, some of the more enterperneurial websurfers out there decided to go to www.afternic.com or www.register.com and try to bid on different domain names.
Okay, now, you may say to yourself. I know how this works. But how does it makes money? Good question. Well, just as advertisers pay bloggers each time a blog visitor clicks on a link, if you buy a domain name, anytime someone visits that website with the domain name you own, and clicks on an advertiser's link, you get paid. The trick is to buy domain names that are common enough that lots of people visit the site.
Think about things this way. Whenever someone is looking for something, she doesn't always Google it. If a woman were looking for wedding dresses, she might go to www.weddingdresses.com. Or if a guy were looking for a new stereo system, he might go to www.stereos.com, where he would find tons of advertisements for stereos and other audio/visual equipment. The owner of the domain name 'www.stereos.com' makes money in her PayPal account everytime someone clicks on those advertisements.
Go to www.afternic.com, create an account, and check out the site to learn about how to bid for domain names functions. Also, here is the link to an interesting Business 2.0 article about one of the most successful domain name buyers of our time - Kevin Ham.
http://money.cnn.com/magazines/business2/business2_archive/2007/06/01/100050989/index.htm
Thanks for reading and I hope you all enjoyed. And please feel free to post any questions or comments.
Sunday, June 10, 2007
Way #3 (Alternate Income Streams) - Blogging for Cash
Hello everyone.
I hope that all of you had a wonderful weekend. Today's post is going to be about how to make money through blogging. Since you're on my blog, I will assume that you know what a blog is, and not insult your intelligence. However, in this post, I will outline different ways to attract viewers and subsequently advertising attention to your site, so you can make some money.
In order to have a successful blog that people want to look at, you must have something interesting or worthwhile to talk about. For me, it's obviously personal finance. Ever since high school, I've been intrigued by the way people handle money - largely, I guess, because I didn't have particularly copious amounts of it growing up.
So after you figure out what you'd like to write about, be it baseball, politics, personal finance, or home decorating, you want to go to http://www.blogspot.com and set yours up. It's really easy to do and Google makes the whole process user friendly. You have the ability to add "page elements" such as links to other websites, news articles relating to your blog topic, and AdSense to your blog. AdSense allows advertisers to place ads on your blog and through the 'pay-per-click' model, whenever someone clicks on an advertisement on your page, you begin receiving checks.
So, in order for blogging to be lucrative financially, you have to post consistently and have a relatively large following of readers who click on ads. How does one go about building this large following? One of the methods I've used is creating a group on the Facebook (www.facebook.com) and inviting all of my friends. Word of mouth is very powerful, I've found, in the internet age and if a group resonates with someone, he or she will join it. My Facebook group contains a link to this blog and I'm also in the process of creating a MySpace page to connect with even more people.
In addition to using social networking sites to draw more people to your site, if you include fun features such as daily quotes, or video clips pertaining to your blog topic, readers will be more likely to return. For instance, I am in the process of developing a podcast for Gen Y Financial Freedom in order to inform more people and increase financial literacy. All of this will and does make for a more heavily-trafficked website.
In my next couple of posts, I will talk about other ways to use the internet as a cash-generator. If you have any questions, please do not hesitate to post them or ask me directly by email at jcp182000@yahoo.com or jcp182000@gmail.com. Thanks for reading and I'll see you all back here tomorrow.
I hope that all of you had a wonderful weekend. Today's post is going to be about how to make money through blogging. Since you're on my blog, I will assume that you know what a blog is, and not insult your intelligence. However, in this post, I will outline different ways to attract viewers and subsequently advertising attention to your site, so you can make some money.
In order to have a successful blog that people want to look at, you must have something interesting or worthwhile to talk about. For me, it's obviously personal finance. Ever since high school, I've been intrigued by the way people handle money - largely, I guess, because I didn't have particularly copious amounts of it growing up.
So after you figure out what you'd like to write about, be it baseball, politics, personal finance, or home decorating, you want to go to http://www.blogspot.com and set yours up. It's really easy to do and Google makes the whole process user friendly. You have the ability to add "page elements" such as links to other websites, news articles relating to your blog topic, and AdSense to your blog. AdSense allows advertisers to place ads on your blog and through the 'pay-per-click' model, whenever someone clicks on an advertisement on your page, you begin receiving checks.
So, in order for blogging to be lucrative financially, you have to post consistently and have a relatively large following of readers who click on ads. How does one go about building this large following? One of the methods I've used is creating a group on the Facebook (www.facebook.com) and inviting all of my friends. Word of mouth is very powerful, I've found, in the internet age and if a group resonates with someone, he or she will join it. My Facebook group contains a link to this blog and I'm also in the process of creating a MySpace page to connect with even more people.
In addition to using social networking sites to draw more people to your site, if you include fun features such as daily quotes, or video clips pertaining to your blog topic, readers will be more likely to return. For instance, I am in the process of developing a podcast for Gen Y Financial Freedom in order to inform more people and increase financial literacy. All of this will and does make for a more heavily-trafficked website.
In my next couple of posts, I will talk about other ways to use the internet as a cash-generator. If you have any questions, please do not hesitate to post them or ask me directly by email at jcp182000@yahoo.com or jcp182000@gmail.com. Thanks for reading and I'll see you all back here tomorrow.
Monday, June 4, 2007
Way #2 to Generate An Alternative Stream of Income
Hello everyone.
In my last post, I outlined five different ways to generate an alternative stream of income. I also said that I would dedicate an article/post to each one of them. Last time, I spoke about stocks, stock price appreciation, and income from dividends. Today, I will discuss rental property.
A lot of personal finance gurus talk about how buying a home is one of the best investments you can ever make. And in some instances, it may be a good purchase. It allows you to "build wealth" through equity and moderate price appreciation, and you can live in it and enjoy plenty of memorable experiences with family and friends.
But I disagree that it is the best investment one can ever make. Not if you want to get rich! If you want to get rich, you will think of a home as a liability, not necessarily an asset. Why is this? Well, when you buy a house, you usually have a real estate agent help you and he or she generally gets a 3 or 4% commission on the purchase price. There are also closing costs, which include document preparation fees, wire transfer fees, inspections - to see if you're in a flood zone, and title insurance and escrow fees. All of these fees can easily add up to several tens of thousands of dollars.
And on top of this, every month, you have to pay property taxes and the mortgage. This greatly decreases your cash flow - the income you use to survive. However, if you buy a property, and rent it out, while living in it, you have turned that liability into asset. Why? Because the renters who inhabit your house are paying you to be there. Here's a greatly simplified example.
Let's say that you've bought a house in College Town, USA, where the median house price is $225,000. (Median means that half of the prices are above this number, and half are below.) After including all costs for various types of insurances, property taxes, and the mortgage payment, the monthly bill for this property is $1,650. If this property has three rooms, in addition to a basement (where you'll be living), after performing thorough credit and background checks on the tenants, you can rent out each room for $550 ($1650/3) a piece.
Most students - and their parents for that matter - would jump at so great a price. By renting the rooms at $550 a piece, you are breaking even, which means that your revenue is covering your expenses and there is no profit left over. But if you've done your research beforehand, and you know that there is an impending housing crunch on the local campus, or the neighborhood is hot, you could raise rents by a moderate $100 a month for each room. This would mean $300 in profit per month, or $3,600 a year. And this is in addition to the renters paying off your mortgage.
Of course, things are much more difficult than I'm making them appear here, as you will have leaky roofs and other problems that as a landlord, you will legally be rquired to take care of. But if you maintain your property well, buy properties in areas that have favorable demographic trends (i.e. the South, with baby boomers headed there for retirement and the explosion in Mexican population growth), you can profit nicely, albeit slowly as a landlord.
The Internal Revenue Service and the tax code also provide one advantage to the small property investor. The government allows you to use $10,000 worth of contributions and gains from your Roth IRA to purchase your first home, provided that Roth IRA (a retirement investment vehicle) has been open for at least five years. So if you think you want to try your hand at property investing, and want to save for it in an a tax effective way, open a Roth IRA. For more information on what this is, check out the post entitled, "How to Open a Brokerage Account/Different Types of Accounts."
Landlording is not for everyone, but it is a way to put extra cash in your pocket while putting a roof over your head at someone else's expense. I recommend picking up Robert Griswold's "Property Management for Dummies." It's a good resource to get started.
Thanks for reading and please feel free to post with any questions or comments you may have.
In my last post, I outlined five different ways to generate an alternative stream of income. I also said that I would dedicate an article/post to each one of them. Last time, I spoke about stocks, stock price appreciation, and income from dividends. Today, I will discuss rental property.
A lot of personal finance gurus talk about how buying a home is one of the best investments you can ever make. And in some instances, it may be a good purchase. It allows you to "build wealth" through equity and moderate price appreciation, and you can live in it and enjoy plenty of memorable experiences with family and friends.
But I disagree that it is the best investment one can ever make. Not if you want to get rich! If you want to get rich, you will think of a home as a liability, not necessarily an asset. Why is this? Well, when you buy a house, you usually have a real estate agent help you and he or she generally gets a 3 or 4% commission on the purchase price. There are also closing costs, which include document preparation fees, wire transfer fees, inspections - to see if you're in a flood zone, and title insurance and escrow fees. All of these fees can easily add up to several tens of thousands of dollars.
And on top of this, every month, you have to pay property taxes and the mortgage. This greatly decreases your cash flow - the income you use to survive. However, if you buy a property, and rent it out, while living in it, you have turned that liability into asset. Why? Because the renters who inhabit your house are paying you to be there. Here's a greatly simplified example.
Let's say that you've bought a house in College Town, USA, where the median house price is $225,000. (Median means that half of the prices are above this number, and half are below.) After including all costs for various types of insurances, property taxes, and the mortgage payment, the monthly bill for this property is $1,650. If this property has three rooms, in addition to a basement (where you'll be living), after performing thorough credit and background checks on the tenants, you can rent out each room for $550 ($1650/3) a piece.
Most students - and their parents for that matter - would jump at so great a price. By renting the rooms at $550 a piece, you are breaking even, which means that your revenue is covering your expenses and there is no profit left over. But if you've done your research beforehand, and you know that there is an impending housing crunch on the local campus, or the neighborhood is hot, you could raise rents by a moderate $100 a month for each room. This would mean $300 in profit per month, or $3,600 a year. And this is in addition to the renters paying off your mortgage.
Of course, things are much more difficult than I'm making them appear here, as you will have leaky roofs and other problems that as a landlord, you will legally be rquired to take care of. But if you maintain your property well, buy properties in areas that have favorable demographic trends (i.e. the South, with baby boomers headed there for retirement and the explosion in Mexican population growth), you can profit nicely, albeit slowly as a landlord.
The Internal Revenue Service and the tax code also provide one advantage to the small property investor. The government allows you to use $10,000 worth of contributions and gains from your Roth IRA to purchase your first home, provided that Roth IRA (a retirement investment vehicle) has been open for at least five years. So if you think you want to try your hand at property investing, and want to save for it in an a tax effective way, open a Roth IRA. For more information on what this is, check out the post entitled, "How to Open a Brokerage Account/Different Types of Accounts."
Landlording is not for everyone, but it is a way to put extra cash in your pocket while putting a roof over your head at someone else's expense. I recommend picking up Robert Griswold's "Property Management for Dummies." It's a good resource to get started.
Thanks for reading and please feel free to post with any questions or comments you may have.
Thursday, May 31, 2007
Ways to Generate Income - Aside from Your Primary Job
Hello everyone.
In my last post, I said that I would discuss ways to generate a stream of income aside from your primary job. I will outline five different ways, and dedicate one post a piece to each.
The five different ways are (and there are many more, but these are five that resound with me):
1) Buy stocks, and either sell them for a profit in one or two years, or hold them for extended periods (3-20 years) of time and collect dividends.
2) Buy rental property in areas where real estate has stabilized or is reasonably priced, particularly in college towns.
3) Create a blog and have companies advertise on your site.
4) Buy domain names on the internet.
5) Write articles on www.helium.com.
Ok, so number 1. Buy stocks. A few posts ago, I explained what a stock is. But I'll explain it again. A stock is ownership in a company. If you own McDonald's stock (symbol: MCD), whenever somebody buys a grilled chicken salad or a McFlurry, you, as the owner of the company are entitled to a portion of the profits.
Now, now, you may say. I can't possibly own all of McDonald's. But that doesn't mean you can't own some of it. For a more in-depth look at what stocks are, check out the post entitled, The Difference Between Stocks, Bonds, and Mutual Funds.
Here's the fun part. Picking the stock. I must forewarn that I am making stock picking seem much easier it actually is. Don't get me wrong. Successful stock picking, as does any investment search, requires study and practice. This is not a get-rich-quick site. But neither is it a get-rich-slow site.
Where do you go to find ideas? Peter Lynch, one of my heroes, and one of the greatest investors of all time tells investors to look around them. If you shop and contribute to the economy, then you are constantly bombarded with potential investments.
What do I mean by this? What music player do you see tons of people walking around with, jogging with, reading with, dancing with? You guessed it, the iPod - and this is of course made by...Apple, Inc. (symbol: AAPL) . This is the company that has those zany ads with psychedelic colors and people spasming all over.
If you had noticed in 2003 or 2004 that lots of people were carrying this company's music player, which was easy to use and pleasing to look at, you would have turned an initial investment of $1,000 into $40,000 in the span of 3-4 years. Don't believe me? Check out this chart from Yahoo! Finance.
http://finance.yahoo.com/q/bc?s=AAPL&t=5y
or click on the Yahoo! Finance link on the side of this page, and type AAPL in the Quote box.
Lastly, another fun topic - dividends. Dividends are portions of earnings that companies give back to investors. Usually the way that people make money in the stock market is through price appreciation. This means that the price of the stock goes from $35 to $40. But this is not the only way to make money in the stock market.
A $35 stock that pays out a dollar of earnings for every share that you own gives you something called a dividend yield, of 2.85% or 1/35. So, if you own 100 shares of this stock, you get $25 every quarter/three months, or $100 a year. And if your $3500 initial investment (100 x $35) goes up to $4000 (100 x $40), for a 14.28% gain, you also get the 2.85% gain/$100 from the dividend. This brings your total gain in the stock to $600 ($4000 - $3500) + ($100), or in percentage terms, 17.1% (14.28% + 2.85%).
To get started investing in stocks, click on the post entitled How to Open a Brokerage Account. Also, check out www.fool.com and go to the Investing Basics section to learn more. And don't be afraid to ask questions and post here.
Thanks for reading.
In my last post, I said that I would discuss ways to generate a stream of income aside from your primary job. I will outline five different ways, and dedicate one post a piece to each.
The five different ways are (and there are many more, but these are five that resound with me):
1) Buy stocks, and either sell them for a profit in one or two years, or hold them for extended periods (3-20 years) of time and collect dividends.
2) Buy rental property in areas where real estate has stabilized or is reasonably priced, particularly in college towns.
3) Create a blog and have companies advertise on your site.
4) Buy domain names on the internet.
5) Write articles on www.helium.com.
Ok, so number 1. Buy stocks. A few posts ago, I explained what a stock is. But I'll explain it again. A stock is ownership in a company. If you own McDonald's stock (symbol: MCD), whenever somebody buys a grilled chicken salad or a McFlurry, you, as the owner of the company are entitled to a portion of the profits.
Now, now, you may say. I can't possibly own all of McDonald's. But that doesn't mean you can't own some of it. For a more in-depth look at what stocks are, check out the post entitled, The Difference Between Stocks, Bonds, and Mutual Funds.
Here's the fun part. Picking the stock. I must forewarn that I am making stock picking seem much easier it actually is. Don't get me wrong. Successful stock picking, as does any investment search, requires study and practice. This is not a get-rich-quick site. But neither is it a get-rich-slow site.
Where do you go to find ideas? Peter Lynch, one of my heroes, and one of the greatest investors of all time tells investors to look around them. If you shop and contribute to the economy, then you are constantly bombarded with potential investments.
What do I mean by this? What music player do you see tons of people walking around with, jogging with, reading with, dancing with? You guessed it, the iPod - and this is of course made by...Apple, Inc. (symbol: AAPL) . This is the company that has those zany ads with psychedelic colors and people spasming all over.
If you had noticed in 2003 or 2004 that lots of people were carrying this company's music player, which was easy to use and pleasing to look at, you would have turned an initial investment of $1,000 into $40,000 in the span of 3-4 years. Don't believe me? Check out this chart from Yahoo! Finance.
http://finance.yahoo.com/q/bc?s=AAPL&t=5y
or click on the Yahoo! Finance link on the side of this page, and type AAPL in the Quote box.
Lastly, another fun topic - dividends. Dividends are portions of earnings that companies give back to investors. Usually the way that people make money in the stock market is through price appreciation. This means that the price of the stock goes from $35 to $40. But this is not the only way to make money in the stock market.
A $35 stock that pays out a dollar of earnings for every share that you own gives you something called a dividend yield, of 2.85% or 1/35. So, if you own 100 shares of this stock, you get $25 every quarter/three months, or $100 a year. And if your $3500 initial investment (100 x $35) goes up to $4000 (100 x $40), for a 14.28% gain, you also get the 2.85% gain/$100 from the dividend. This brings your total gain in the stock to $600 ($4000 - $3500) + ($100), or in percentage terms, 17.1% (14.28% + 2.85%).
To get started investing in stocks, click on the post entitled How to Open a Brokerage Account. Also, check out www.fool.com and go to the Investing Basics section to learn more. And don't be afraid to ask questions and post here.
Thanks for reading.
Tuesday, May 29, 2007
An Investor vs. An Employee
Hey everyone.
In the next few posts, I will be talking specifically about ways to generate income, and various ways to look for investments. In this particular post, I would like to post an article by a guy whose wisdom I'm sometimes skeptical of. You may have heard of him. His name is Robert Kiyosaki, author of 'Rich Dad, Poor Dad'.
This article is about the obsolescence of the traditional 'job 'and how the internet has and will continue to change the global economy. I 100% agree with him in this instance. Enjoy.
Keeping Your Business Ideas Fresh
In the next few posts, I will be talking specifically about ways to generate income, and various ways to look for investments. In this particular post, I would like to post an article by a guy whose wisdom I'm sometimes skeptical of. You may have heard of him. His name is Robert Kiyosaki, author of 'Rich Dad, Poor Dad'.
This article is about the obsolescence of the traditional 'job 'and how the internet has and will continue to change the global economy. I 100% agree with him in this instance. Enjoy.
Keeping Your Business Ideas Fresh
Sometimes life just isn't fair.
When I was growing up in the 1960s, my parents said to me, "Listen to your elders. You need to learn to respect their wisdom. Someday when you're older, young people will listen to you." So I listened to my parents and grew up respecting the wisdom of those older than I was.
But that notion has been turned upside down: Nowadays, people my age need to listen to and respect the wisdom of people who are younger than we are.
Ideas from an Earlier Age
In business, success often depends upon the relative age of your ideas. And today, people of all ages are in trouble because their ideas aren't just old, they're obsolete.
One example of an old idea is that of the traditional job. Jobs are a centuries-old concept created during the industrial revolution. Despite the reality that we're now deep in the Information Age, many people are studying for, or working at, or clinging to the Industrial Age idea of a safe, secure job.
Now people aren't just losing their jobs -- their jobs are migrating to foreign countries or disappearing altogether. As Alan Blinder, an economist and former vice chairman of the Board of Governors of the Federal Reserve System, says, "A new industrial revolution -- communication technology that allows services to be delivered electronically from afar -- will put as many as 40 million American jobs at risk of being shipped out of this country in the next decade or two." That's double the number of U.S. workers in manufacturing today.
In spite of such alarming figures, our schools still program kids to look for jobs. Advising people to go to school to learn to be an employee is as obsolete as advising young people to become peasants and work for a landlord. People need to be trained to be investors and entrepreneurs, not employees.
Obsolete Every 18 Months
My point is this: In a rapidly changing world, nothing is more dangerous than an idea whose time has come and gone. Just look at how Amazon.com has changed the world of brick-and-mortar booksellers such as Borders and Barnes & Noble, or how Skype is tearing down monster corporations like AT&T, or how Napster shot a torpedo into the record industry. Where do you think the people who work for those Industrial Age employers will be in 10 years?
As I said, people aren't losing their jobs -- jobs and companies are disappearing. I'm glad I listened to my rich dad and became an entrepreneur rather than the employee my poor dad wanted me to be.
Most people today realize that knowledge is doubling every 18 months. Does that mean that we now become obsolete every 18 months? Maybe so. Personally, it makes me feel like I need to assign an expiration date to my ideas, and update them regularly.
Many people my age are in serious financial trouble because they have old, Industrial Age ideas that they never update -- wanting job security, counting on a pension for life, relying on Social Security and Medicare -- while attempting to survive in the Information Age.
That's a mistake. Much of my company's revenue comes from the web, even though I remain a technophobe. My company survives because I've learned to respect the ideas of people younger than me, and recognize when my wisdom is obsolete.
Timeless Business Ideas
Although many business ideas go out of date every day, there are some that are timeless and essential regardless of the era we're in. Here are a few:
• Be passionate about your products and what your brand stands for. Brands die if the leader's passion dies, or if the leader's passion is simply to make money.
• Build a community. Good entrepreneurs are community builders, actively involved with their communities and dedicated to the community's well being. If you're dedicated to your community, it will be dedicated to you.
• Communicate clearly. Speak in the language of your customers. Don't attempt to baffle them with jargon in an attempt to appear smarter than they are.
• Tell it like it is, and don't be a phony. In business, there are too many people who will say anything to get their hands on your money.
• Be human. Don't be afraid to say, "I don't know" or "Can you help me?" If you're a good leader, people will be more than happy to help you build your business.
Now more than ever, we all need to be careful about whom we listen to. Just because someone is older than you no longer means they're wiser. Their ideas may have been good yesterday, but tomorrow they might be obsolete.
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