How to become rich (note1), at no cost to you or profit to the author (2), guaranteed (3) !!!
(note 1) Rich, not “beyond your wildest dreams”, but merely wealthy, comfortable, and happy
(note 2) I am selling nothing, costing you nothing (except your time and effort), and not profiting from this in any way whatsoever.
(note 3) A guarantee of “money back” will not work since you are paying nothing for this, but my reputation is at stake and I therefore guarantee it in that way. This method is far more likely to work than any other method on a risk versus reward basis.
I will discuss in greater detail my ideas under each of the following category headings:
Although you are free to copy anything I wrote from these webpages, the below material is copyrighted and owned by me and is definitely not for sale by anyone to anyone.
TEMPORARY NOTE: THIS PAGE IS STILL "IN PROCESS" and CERTAINLY QUITE INCOMPLETE. I expect to continue adding to it as soon as I get more time to do so. Too many other priorities exist for today and the foreseeable future.
1-what about this guarantee and risk versus reward (the other possible methods as opposed to this one)? -- The guarantee is a tongue in cheek eye-catcher (after all, this is FREE to you and therefore money-back IS guaranteed). But I can tell you that my own personal experience and a lifetime of observing all of the financial and management disciplines that I talk about below lead me to guarantee that if you follow my advice, you will become as rich as any average person might become. If you are lucky or especially brilliant or you are "very disciplined", you will in that case do even better. The key ro this result is discipline. Stray too often from the path I advise and you will not succeed. There are other methods, of course, but the main part of my suggestions is that every LITTLE BIT is part of the desired solution. It is not merely good investing, or higher earnings, or lesser spending, or proper tax planning, or anything else like that, it is the fact that ALL OF THESE "little bits" are all heading in the direction YOU wish to go. Trying to get rich quickly could work but probably won't. Taking legal or illegal "tips" is not a great idea as any great tip is best kept to oneself; most likely, the "tipper" is merely trying to pump the prices up for himself and, if the tip is good, you will have probably heard about it at a later than optimum time. You might wish to gamble on the horses or the like, but gambling is at best a 50/50 thing and most likely less than 50/50 since the "bookie" (legal or otherwise) takes a cut. And betting on any lottery is the worst gamble that I know of (albeit many times for a good and charitable cause) because the odds are astronomically against you..
No, none of these will do as well as the boring (remember that you're not looking for excitement here - you're looking to be wealthier) slow, steady, advancement (with dividends reinvested) in good, boring, companies that have a long history of boring increases in profits, in which you will share. That last part is not boring, but it should not be too exciting either. What you are looking for a long term (think in the range of a minimum of 5 to 15 years), diversified (think in terms of different industries - don't put all of your eggs in high tech, or oil, or communications, or any one thing - think in terms of at least 5, preferably 10, completely different industries) investments, that will do "just fine" (don't chase high flyers, you are more likely to buy them at the overpriced wrong time, just before they fall) and not make you rich immediately. Buy into companies that are listed on the New York Stock Exchange or NASDAQ or are very well known companies if not so listed. Diversification might also include companies in other countries, but if you feel the USA will do well in the next 25 to 50 years, that is a country that you are most familiar with. Don't invest in any company that you don't understand what it is that they do (thank you, Warren Buffet, for that idea). And I would not invest in any company that does not pay a dividend of some sort (minimum of perhaps 1/2 of 1% and some maximum that makes sense at the time you invest). In normal times, 6% is fine as a maximum but just after a "huge market decline", and high idividend percents must be looked at carefully as there is possibly reason to think that the dividend might be reduced.
2-what IS an investment? -- an investment is buying a share of the ownership of a company wherein you take a risk just as the company itself is risking its own future. Loaning money to a company, to a bank, or to anyone is not an investment, it is a LOAN. While loans (that you judge to be secure from default and will get re-paid on a definite schedule) are OK for a portion of a complete financial plan, we are talking here about a long-term investment plan. (see more about this at #6 below). On the other hand, loans, for which you get paid interest, do not appreciate in value (if anything, they depreciate as a 10-year loan gets repaid with cheaper money (less purchasing power than the money you started with). Therefore, the interest is partially your compensation for your loss to inflation and may, in the long run, be considerably less than you would otherwise think at the time you make the loan to someone.
3-how to reduce the costs of an investment. - People who sell investments to other people get compensated for their work. They are called "salesmen" and they do not have your best interest at heart. Seldom have I seen "sold" investments pay off as well as "non-sold, merely purchased" investments (the difference being mainly YOUR involvement in the decision). Remember that for every $1,000 you invest, only the amount that you can get back immediately if you changed your mind is the real net investment, so realize what the cost of the investment is and reduce THAT cost as much as possible. Discount brokers, mutual funds, ETFs (click here to see more about ETFs), and the like can reduce the costs of investing. When you consider gold (or other hard assets) (and I do not advise buying gold or even gold stocks), remember that not only does it not pay dividends, you have to take care of the hard asset (and it costs you to do so) and the commission, in this case "the spread" between your buying cost and your selling proceeds, is quite great. The details of the cost is a great part of any decision for any investment.
4-what about loans to banks or companies? -- As I pointed out (see #2 above), a loan to a bank or other company is not an investment. It may (or may not) be a part of your financial plan, but I think that in the long run, these loans should be kept to a minimum and long-term investments should be your main plan. See also #10 below regarding tax planning. One part of your overall plan should be to minimize (i.e, reduce) your tax refund. Yes, I am serious. When you get a tax refund, all you are getting is a return of a previously paid, non-interest-earning, loan to IRS. You are better off, assuming you use this money wisely, holding onto your tax money during as much of the tax year as you can and paying IRS as little as possible only when it is due (i.e., by April 15th).
5-You must be strict insofar as your focus is concerned - all efforts should be headed in the same direction and then they ADD UP - If you read this web-page carefully, and if you follow every bit of advice I give you, your plan will more likely come to pass. Every little bit helps. If every little bit (all towards the same end) is added, the final result will be much better than doing (for example) 17 of 19 ideas but offsetting all of the little good things with the ONE BAD exclusion. As an EXTREME example (because I don't mean for you to follow THIS ONE unless it is comfortable for you to do so), with this particular paragraph in mind, I tried an experiment. Whenever I use toothpaste, I don't put more than a little bit on the brush (my dentist's idea of sufficient quantity) and therefore I don't waste toothpaste (TP from now on). But I also flatten and continue to roll up the tube so that I don't waste TP that way too. And since I was born during the depression and my family was at the opposite end of "well off", I learned at an early age not to waste, so doing this (all of my life) was not a problem for me and so I did not waste TP. Where is the experiment? Hold on, I'm getting there. Anticipating this paragraph, last week, as I neared the end of a TP tube, I decided to push this savings thing a little further and I squeezed just a little more TP out of the tube. And surprisingly, each day for a week, I did the same thing until the effort (my thumb and pointer finger hurt a little when I did it this final time) was no longer worth it. I saved only one-week's worth of TP but I now have one additional free week of TP for every tube I need. Not worth it? Maybe, it's your decision after all, but the basic point here isfor you to get in the habit of not wasting. Little by little, you continue to have more wealth. I estimate that TP (and any other non-wasters) are worth well over $2,000 a year in savings. More about this later when we talk about spending (see #12) and compounding (#13).
6-what is a safe investment (diversification, good and less risky, long term)? A bunch of cliches come to mind. Don't put all of your eggs in one basket, don't try to get rich quick, don't let your emotions run away with you, and long-term in not one week or one year. But all of these are individual parts of good advice. You'll find that various parts of the economy prosper when others are somewhat less prosperous. And, as I said above, boring is good in investing, excitement is best left for gambling (which I do not advise), keep your head on straight and don't do anything emotional. This is the time for thinking and not reacting. And pursue a buy and hold philosophy. I've held securities in my own portfolio (I calculated this on June 19 2010 -- on which day I had 159 separate purchases in my current portfolio - and I have held one as little as 54 days and another as much as 33 years) for an average of 13 years each.. This is a buy and hold philosophy. It has been proven to almost universal acceptance that although "timing" your buying well is much easier than "timing" your selling well, neither is really easy or generally successful. Accepting that (see #7 below) means that no one knows what tomorrow will bring and how the price of any security has not already been determined by others and that you really will not be able to out-guess the correct "timing" of purchases or sales. With that in mind, buy good stuff, hold it, keep the dividends (see #1 above), and sell it only when you need the money for some purpose or (and this is a good tax planning tip - see #10 below) when you need "for tax purposes" a capital gain or a capital loss or some other tax planning transaction. I say this, contra to what most other people say (which is "do not sell for tax reasons") because unless you have some other GREAT non-tax reason to buy or sell, timing should not be a factor as it is impossible to out-figure everyone else who is trying to do the exact same thing at the exact same time. You can't beat them. But "the market" CAN (and probably will) beat you.
One other thing that might be useful in buying or selling. If you are disciplined sufficiently to ALWAYS (pick one day of the year, every year, to do this) re-allocate your portfolio, reallocation might prove useful to you (but I'd personally rather just buy and hold AND ADD to my portfolio whenever I or you find yourself LIGHT in some particular category.
One last thought about Buy and Hold. Depending upon when you are reading this, this may be old or very old history. I've owned BP (think Gulf of Mexico oil spill - 2010) for 18 years, 18 years of receiving huge dividends and a lot of appreciation. I held it through all of that. Then the unexpected "spill happened" and the stock diminished in value some 50%. Well, there was no way I could have known that so as to sell it before it went down. And selling on the bad news would be not a great idea. But buying and holding meant that even after the spill and the 50% decrease, I still had all of those dividends plus a remaining $35,000 unrealized capital gain. I wished the workers, entrepreneurs, land owners, and tourists around the Gulf did as well as I did and I also wished that the management of "my" company would have been more careful and prepared for this spill. My point is that even in this catastrophic event, buy and hold worked out pretty well.
7-How does your emotions effect investing? "Buy on bad news, sell on good news". Be aware that everyone has emotions and emotions are the almost impossibly last thing that you can remove from any investment decisions. But you must try to do just that, as much as you are capable of doing. Therefore, since most people can not do that, the more you do it the more you will benefit. Almost every quick move in the general market, both up and down, reflects this since any good news is generally overexaggerated and the same thing happens on bad news; overexaggeration again. Hence, better to buy on bad news; sell (if you must sell) on good news and in the absence of either buying or selling, do nothing when the latest news is foremost in everyone else's mind. Remember, you are not the first person to receive that news and all of the others have already acted upon it; that is why the news have already caused the big up or down moves.
8-what about credit? Do not a borrower be. Interest rates are ALWAYS too high and unless you can figure out a foolproof and profitable way to use the money you borrowed, you are wasting too much of your precious buying power. Buy only when you can afford to pay for something now. The only exceptions to that generalization is to buy permanent personal (for yourself) housing (and do not speculate on housing prices for a fast turnover) at a good price when fairly priced long-term mortgages are available to you. The key to permanent housing is a long term commitment to housing priced appropriately for you in your current earning status. Don't bet on the future. So many things can and do go wrong.
9-Insurance - depending on your risk situation, insurance is an expensive luxury Where necessary, buy it but know that in the very long run, unless you have a specific risk that you can not afford to not cover, self-insuring is best for average person. Just a little at the beginning of your life and more and more self-insurance as you become wealthier AND can afford to take on more self-insured risks.
10-Taxation and tax planning - accepting your tax position without planning is a huge waste of wealth. The esteemed jurist, Learned Hand, said "there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. ... all do right, for nobody owes any public duty to pay more than the law demands” Planning saves money probably more than most other ways available to you : Plan for known near or far off events like deaths, marriages or any other tax bracket changing events, use tax-loopholes available to you for their advantages, use RothIRAs, use preferred tax rates on investment income, etc etc etc and et cetera.
11-Estate Planning -- not just in saving money for your heirs, but other ways Contributions to charities can be timed for maximum tax benefits. Gifts can likewise be timed.
12-Other planning, budgeting, control, and re-evaluation - make written plans or goals (as specific as possible), quantify these goals with (at very least) an annual budget (using 365 times daily costs, and 52 times weekly costs, and 12 times monthly costs, etc., etc.) so that you have a budget for the next 12 months. Make all estimates/goals as accurate as possible taking into consideration your realistic expectations of what you want to (and can) accomplish. Review your annual plan (including each category of income and each category of expenditure at least quarterly and update it when necessary. This is and was your plan. Only you can make it happen by sticking to the plan. Usage of credit should not matter as using credit, for this purpose, should be considered no different than using cash. The budget is your plan's control. Staying inside of your expenditure limits is part of your focus and should be part of your discipline and is definitely part of your control. There is nothing wrong with having a category called "unplanned pleasures" or something like that BUT staying within your plan applies here, too. If you have a partner in any sense of this word, plan with your partner's agreement for his or her part in the plan. At least once a year, make up a list of net liquid assets (what you own that can be quickly liquidated for the value you currently place upon it, less anything you owe, whether due to credit cards, mortgages, taxes, etc.). The net of all of these things should be presented in a side by side detailed tabulation and comparative (by years) listed so that you can see if the "net liquid assets" are increasing or otherwise keeping pace with your long term plan (or goals). Part of your planning is to recognize that every specifically described item in your budget is or has one or more "options". You can make a decision to change each item somewhat. For example, you can live in more (or less) expensive housing, and the same is true for almost every other category of both income or expenditure. Each contains choices that YOU can make to increase or decrease it.
13-start early in life Start in the first days of life, if possible. Or your parents can start this for you. Remember that compounding is a huge friend of yours, and seldom appreciated but extraordinarily helpful. Much more on appreciation LATER but know now that the types of investments that I've talked about above have a long long long history of growing in any average period of 10 years of more at the average rate of 8% OR MORE each year.
14-set goals for yourself Financial goals are one thing, but also set education goals as well And don't forget to manage your time well as setting priorities is very important (create goals for yourself in exercising, eating, thinking, enjoying, etc., because they are all parts of time management and goal setting). Consider sleeping less (however, not too little because of medical results). Learn to take risks (but be careful in managing risk-taking - not too many and not beyond your ability to manage failure). Above all - be organized and stay organized.
15-invest in yourself but treat yourself to a good life on a balanced basis. A budget or projection of cash flow will aid in the planning for everything. MORE on this LATER
16-what is "rich"? - this is something YOU must define for yourself. For some, it is able to live comfortably without many financial concerns; for others, it is just being "not poor". But one way anyone can become richer is to observe some of the following kindnesses to other people in your life:
The author of the above is unknown based upon the statement in the source I got it from.
17-My grammar and spelling leaves a lot to be desired. Credit that to the MPWCFoundation's insistence on low overhead and my desire to "just make the meaning clear"
18-I have no editorial support and this is free to you (so I most likely will not be available to answer emails sent to me on the subjects covered on this webpage )