What to buy?

For adults, keep your expenses low, reduce your liabilities and diligently build a base of solid assets. For young people who have not yet left home, it is important for parents to teach them the difference between an asset and a liability. Get them to start building a solid asset column before they leave home, get married, buy a house, have kids and get stuck in a risky financial position, clinging to a job and buying everything on credit. I see so many young couples who get married and trap themselves into a lifestyle that will not let them get out of debt for most of their working years.

For most people, just as the last child leaves home, the parents realize they have not adequately prepared for retirement and they begin to scramble to put some money away. Then, their own parents become ill and they find themselves with new responsibilities.

So what kind of assets am I suggesting that you or your children acquire? In my world, real assets fall into several different categories:

1. Businesses that do not require my presence. I own them, but they are managed or run by other people. If I have to work there, it's not a business. It becomes my job.
2. Stocks.
3. Bonds.
4. Mutual funds.
5. Income-generating real estate.
6. Notes (lOUs).
7. Royalties from intellectual property such as music, scripts, patents.
8. And anything else that has value, produces income or appreciates and has a ready market.

Mind Your Own Business

Remember this simple observation: The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets.

So how do I start minding my own business? What is the answer? Listen to the founder of McDonald's.

Mind Your Own Business

In 1974, Ray Kroc, the founder of McDonald's, was asked to speak to the MBA class at the University of Texas at Austin. After a powerful and inspiring talk, the class adjourned and the students asked Ray if he would join them at their favorite hangout to have a few beers. Ray graciously accepted.

"What business am I in?" Ray asked, once the group had all their beers in hand. "Everyone laughed," said Keith. "Most of the MBA students thought Ray was just fooling around." No one answered, so Ray asked the question again. "What business do you think I'm in?" The students laughed again, and finally one brave soul yelled out, "Ray, who in the world does not know that you're in the hamburger business." Ray chuckled. "That is what I thought you would say." He paused and then quickly said: "Ladies and gentlemen, I'm not in the hamburger business. My business is real estate."

Keith said that Ray spent a good amount of time explaining his viewpoint. In their business plan, Ray knew that the primary business focus was to sell hamburger franchises, but what he never lost sight of was the location of each franchise. He knew that the real estate and its location was the most significant factor in the success of each franchise. Basically, the person that bought the franchise was also paying for, buying, the land under the franchise for Ray Kroc's organization.
McDonald's today is the largest single owner of real estate in the world, owning even more than the Catholic Church. Today, McDonald's owns some of the most valuable intersections and street corners in America, as well as in other parts of the world.
Keith said it was one of the most important lessons in his life. Today, Keith owns car washes, but his business is the real estate under those car washes.

Most people work for everyone else but themselves. They work first for the owners of the company, then for the government through taxes, and finally for the bank that owns their mortgage.

Getting started

Rule One. You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is Rule No. 1. It is the only rule. This may sound absurdly simple, but most people have no idea how profound this rule is. Most people struggle financially because they do not know the difference between an asset and a liability.

"Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets."

All you need to know is what an asset is, acquire them and you'll be rich.

In most cases, the simplicity of the idea escapes most adults because they have been educated differently. They have been educated by other educated professionals, such as bankers, accountants, real estate agents, financial planners, and so forth. The difficulty comes in asking adults to unlearn, or become children again. An intelligent adult often feels it is demeaning to pay attention to simplistic definitions.

So what causes the confusion? Or how could something so simple be so screwed up? Why would someone buy an asset that was really a liability. The answer is found in basic education. We focus on the word "literacy" and not "financial literacy." What defines something to be an asset, or something to be a liability are not words. In fact, if you really want to be confused, look up the words "asset" and "liability" in the dictionary. I know the definition may sound good to a trained accountant, but for the average person it makes no sense. But we adults are often too proud to admit that something does not make sense.

An asset is something that puts money in my pocket.
A liability is something that takes money out of my pocket.

This is really all you need to know. If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. It's not knowing the difference that causes most of the financial struggle in the real world.

Allways buy income-generating assets

As I said at the start of this section, the most important rule is to know the difference between an asset and a liability. Once you understand the difference, concentrate your efforts on only buying income-generating assets. That's the best way to get started on a path to becoming rich. Keep doing that, and your asset column will grow. Focus on keeping liabilities and expenses down. This will make more money available to continue pouring into the asset column. Soon, the asset base will be
so deep that you can afford to look at more speculative investments. Investments that may have returns of 100 percent to infinity. Investments that for $5,000 are soon turned into $1 million or more. Investments that the middle class calls "too risky."

The investment is not risky. It's the lack of simple financial intelligence, beginning with financial literacy, that causes the individual to be "too risky".

If you do what the masses do, you get the following picture:
Income = Work for Owner
Expense = Work for Government
Asset = (none)
Liability = Work for Bank

As an employee who is also a homeowner, your working efforts are generally as follows:

1. You work for someone else. Most people, working for a paycheck, are making the owner, or the shareholders richer. Your efforts and success will help provide for the owner's success and retirement.
2. You work for the government. The government takes its share from your paycheck before you even see it. By working harder, you simply increase the amount of taxes taken by the government - most people work from January to May just for the government.
3. You work for the bank. After taxes, your next largest expense is usually your mortgage and credit card debt.

The problem with simply working harder is that each of these three levels takes a greater share of your increased efforts. You need to learn how to have your increased efforts benefit you and your family directly.

Once you have decided to concentrate on minding your own business, how do you set your goals? For most people, they must keep their profession and rely on their wages to fund their acquisition of assets.

Mortgage loans

Mortgage loans are probably the biggest loans that most people will ever take in their lives. Do NOT fear them! Generally, people do not have the cash to pay for a home and have to resort to making use of a loan.

These loans are available to people who have a good credit history and who earn over a certain amount per annum. The loans are secured against the home which means that the home will belong to the bank until it is fully paid off.

Most banks and financial institutions will not give first time borrowers a loan for the full purchase price of the home, so be prepared to have to pay a down payment. Have this money saved ready in the bank. Your credit history will be checked so make sure that you have a good one.

Loans are g8!

One must realize that all who have accumulated great fortunes, first did a certain amount of dreaming, hoping, wishing, desiring, and planning before they acquired money. Fact is that ALL IMPULSES OF THOUGHT HAVE A TENDENCY TO CLOTHE THEMSELVES IN THEIR PHYSICAL EQUIVALENT. The subconscious mind, (the chemical laboratory in which all thought impulses are combined, and made ready for translation into physical reality), makes no distinction between constructive and destructive thought impulses. It works with the material we feed it, through our thought impulses.

Fear is a funny thing. It will make you do something, but it will also take things away. That choice is yours and no one else’s.

Now, if YOU want to be financially independent, you have to do what every (!) rich person on this planet have -= assets =- things that put money in your pocket, constantly, every month.

Most people think that theirs cars or their home are their asset - which is totally wrong. It is their liability and they have to pay bills for it every month. So, if You want to get rich, what do you have to do? Yeah, build up your asset column.

In this blog, I will write about how to get loan from the bankers, how to start your own business with real estates, how to manage properties and generally... how to get rich!

6 Steps

There are 6 steps of becoming an INVESTOR:

1) Decide to became an INVESTOR. This is all it is about actually here. You must decide, for yourself, that u want to be rich and if you want to be rich, you need to be financially literate. And investor you cannot became if you do not financially literate yourself. And that is what YOU do just now, reading at my blog.
2) Find The Area where you will buy your first(s) assets.
3) Identify Properties.
4) Analyze, Offer, Negotiate
5) Put Together The Deal
6) Property Menagement

How to build ap your asset column?

If you went to banker and ASK for a loan, he/she will ask you two things.

1) Have much money have you saved by now? Its good to have some money accumulated because banker will easily lend you money if he/she knows that you KNOW how to handle your own money.

2) What do you need loan for?

Now, lets get back in time and lets see how money evolved. Money (paper, coins) actually does not exists. Why is that? Well, I am economist. My first lecture on university was that money has no value. People accepts money because, and only because they can give it to another human and he/she will accept it.

Banker knows that. It is one of the reasons he will not give you money for: art, post stamps, buying/selling other currencies, bonds, stocks etc but assets like real estates? He will give u loan right away! Of course u need to match few basic criteria to get loan but, all in all, you can get it easily.