My response to 1 of the most common questions asked on www.asktogetrich.com. Find out the hidden capital you have that can make you money:
1. Intellectual Capital
2. Niche Capital
3. Relationship Capital
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Many of us have heard the statistics stating that 95% of businesses fail in their first 5 years. Or, we know of people that keep losing on their investments. WHY? Although I believe there are many factors, the one that seems most likely to repeat itself is lack of education and discipline.
Even many that know what they should be doing lack the discipline to take productive action on that understanding. I have coached people that have a lot of knowledge, but lack the wisdom (knowledge properly applied) to make things work. I have seen “investors” be gamblers because they cannot control their own emotions and thoughts, and therefore rationalize why they should still do a particular trade/deal/business. Many will say, “Yes, I already know that, Chris, but teach me something new.” My response is “Yes, you may understand it, but you don’t get it.”
You MUST master your thoughts, words, actions, and emotions to be a great entrepreneur/investor. In a recent Time Magazine online Q&A, Robert Kiyosaki repeatedly answered questions reminding everyone that discipline is the key to success in investing, and the lack thereof creates failure. In the video interview, he even mentioned how military training has helped him be successful today.
In short, the only way to succeed in anything is discipline. Like in the military, set up a “code” to govern your actions, especially when life’s “bullets” are whizzing by your head.
MASTER YOUR LIFE BY MASTERING YOUR THOUGHTS, MONEY, TIME, AND EMOTIONS.
Many believe that if they do everything they are taught by the financial industry, they will be financially free. From what I’ve seen and what common sense tells us, it’s a load of *%&@! Here’s a few reasons why:
1. Traditional savers still feel broke after years of saving. I have yet to meet someone in retirement that KNOWS their money will last for the rest of their life. Listen why. Some can do it for a certain number of years before they can’t enjoy retirement anymore. The only people I know that have peace of mind are those that invested outside of 401k/IRA’s, OR the financial advisers getting paid commissions on their clients hoping for better returns.
2. Numbers aren’t reality and people aren’t numbers. Just because some suave salesman pulls out his fancy calculator and tells you it’s going to be alright, doesn’t mean it will be. Can he/she foresee your future? What if something changes in 20 years? 20 minutes?
By the way, Mr. Adviser, stop looking at my financial assets to produce returns for you and look at me as the REAL investment!
3. Average returns are not actual returns. If they tell you “Historically, this ‘investment’ has done ___%…” ask them if they will guarantee it in writing. THEY CAN’T!
Also, you can have a positive average rate of return, and in reality, still be losing money. Watch this video to learn how.
4. Inflation is much higher than what many believe. This is the most subtle way to tax the poor and middle class so the politicians look better. Listen here.
5. Your taxes will likely be higher. Even if taxes don’t increase (which I’m sure they will), you will likely have to pay more solely due to inflation. Things get more expensive over time meaning you need more money each year.
Besides, if your retirement accounts actually succeed like your adviser crosses his/her fingers for, wouldn’t you be in a higher tax bracket? If not, it’s probably because your accounts failed.
6. You cannot accumulate enough to only live off of the interest. Like I mentioned in one of my recent podcasts, it’s nearly impossible for even the best savers to live off of 4-5% of their money each year.
7. Paying off “debts” early will shrink your nest egg. Although I am in favor of paying off liabilities, there’s a catch. If pay off your liabilities, it will take money away from your retirement. Unfortunately, you cannot eat a paid-off home. Paying off “debts” is more in the self-interest of the banks than for you. Many retirees are currently asset rich/cash poor which restricts their freedom. For alternative strategies, listen now.
Stop “planning” for retirement!!! Instead, make it happen by DOING THE OPPOSITE which gives you a better chance. Learn the “art” of investing to start becoming financially free today!
If you need further convincing, check out these scary stats!
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You’ve been “had” by what sounds ideal! Listen why!
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If you’re asking this question, the answer is NO! Listen to find out why, and what real estate professionals are not wanting to tell you.
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A funny quote I heard Ben Stein quote his father saying was “Figures don’t lie, but liars figure.“ That has stuck with me, especially as I read bureau statistics and corporate reports, all of whom have a tremendous self-interest to “fluff” their statistics to make you and I feel warm, fuzzy, and cozy all over (Click to see how the bureaus or banks report their “figures”).
They publish statistics giving us a false hope of a recovery, but could backfire if we made choices based on those “facts!” Couldn’t that have a similar consequence for us as it did the failed banks when a subprime borrower would claim they made $10,000/mo. on the mortgage application when they really only made $5000/mo.? Unfortunately for us, we don’t have the government bailing us out!
I did the same thing when I was a financial adviser. If I wanted to give hope to my client (or to scare them into doing business with me), I would run numbers that were historically accurate, but using average returns, government’s inflation statistics, etc. I would show potential clients what they “could” have in retirement while offering no promises. I would even show a conservative inflation statistic of 2-3% (my inflation podcast killed this statistic) to encourage them to save more with me. By adjusting these numbers, I could show nearly any outcome I wanted! Do you see my point?
My advice is to NOT make financial choices based on speculation or so-called “official” statistics. Whether you choose to invest in business, real estate, etc, it’s up to you. In mutual funds (401k’s and IRA’s) and similar paper assets, you have high risk because they are dependent on these statistics. Why gamble your hard-earned money away? I recommend you invest where you CAN control your own statistics!
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Chris Miles and Dale Clarke teach the difference between understanding the “art” of investing, instead of only the “science.” You will understand why you need BOTH in order to succeed in your investing and how this understanding increases your rate of return of your investments. Learn what most investors and investment professionals won’t teach you!
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Watch this video first before listening to the podcast!
Also, refer to our video “Money Not Math” on this website to see if you can figure out what is happening to our “investments.”
On the podcast, Dale Clarke and Chris Miles discuss how 401k’s and IRA’s are affecting Americans’ ability to retire. Is there hope?
The 401k Fallout
Chris Miles teaches how you can determine what is a great rate of return in your investments and how you can actually INCREASE that return further. Listen to learn what most investors don’t understand!
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Chris Miles discusses the myths people buy into in accumulating money rather than “utilizing” money, and how cash flow creates more financial freedom. Listen to learn why this is.
