Have you ever wondered when was the right time to buy an investment ?
Do you think you can just buy an investment and hold it forever ?
Truth is there are good times and not so good times to buy most investments !
Life is All About Cycles
Yes, life is all about cycles ! In your own life, you have many cycles. From your natural internal bio cycles such as mood and normal bodily functions to external cycles such as reaction to weather conditions and other influences in your life. Cycles are everywhere ! Have you ever thought about how many times you breath in a minute or hour ? Probably not.
Just as our own lives have cycles, so too does the average investment. Investment cycles are normally much longer than our body cycles, but they do absolutely exist. Nothing in the investment world goes up forever. Also, most things in the investment world don't go down forever. ( they can only go down to zero when the company goes bankrupt )
In most cases investments go up for a period of time and then fall back (or correct) for a period of time. Good investments will generally have an upward trend, but they still have cycles of growth and correction.
Identify Cycles Before You Invest
If you really want to get rich and stay that way, you had better study the cycles of what it is you want to invest in. You must be able to identify ahead of time where in the cycle your potential investment is. If you don't, you will risk paying too much or even worse you will risk losing a part of your investment.
As I said earlier, there are good times to buy most investments and not so good times. The trick is to know when these times are. Generally after a long period of growth is not so good a time, whereas after a long period of correction is maybe better or possibly even good.
You will find that many experienced investors do most of their buying when markets are performing poorly. After a long period of growth is when they often sell and wait for another buying opportunity. They know how to use the cycles to their advantage. The average investor does not.
Length of Cycles
Each type of investment has a different length of cycle. Generally, the Real Estate markets have very long cycles that can last years or even decades. Stock markets have cycles that are much shorter, months or even years for instance.
Individual companies can have even shorter cycles based on seasonality or other factors that influence their sales. Every company will have different cycles.Each one must be studied separately.
What To Do
The most important thing to remember is that everything has cycles. You should learn all you can about an investment before you invest. If the time does not look right, don't be afraid to wait for a better time. Never feel pressured into buying now if it doesn't make sense. You will not lose money while you are waiting. Remember the number one investment rule. Don't lose money !
As always, I welcome your comments and suggestions for future topics.
Tuesday, November 27, 2012
Friday, November 23, 2012
Tuesday, November 20, 2012
How To Get Rich - The Absolute Second Step
If you have been a regular reader of this blog, you will already know what the very first step to building wealth is.
For those of you who are new, I suggest reading my previous posting entitled " How to Get Rich - The Very First Step" before you continue reading here. No sense repeating what I have already written.
Make the First Step a Habit
Once you make the first step a habit, you will see a growing amount of money accumulating in your savings account. It is always nice to see this amount continually growing and adding to your overall wealth.
The fact is, if you were to just do this one step you will probably be better off than the average person that has trouble with this discipline. However, I think you owe it to yourself to do even better. You owe it to yourself to reward yourself by making your money work for you.
Chances are you are already used to working hard for your money. Would it not make sense then to make the money you save work just as hard for you ? Of course it would !
Put It To Work
The absolute second step to building wealth is to put your savings to work. This basically means that instead of leaving your savings in a bank savings account forever you must find opportunities that will give you an income from your savings. In other words, invest your savings to get an income in return.
There are many types of investments, but unfortunately many are not so good or even downright bad. The trick in the investment world is to not lose money. Picking bad investments is not the way to ensure a wealthy future.
It is not my intention to give you specific investment picks, but to educate you on what types of investments you are personally comfortable with. There are plenty of sources out there that will give you specific picks when the time comes.
Where To Start
For the new investor I recommend taking it slow and learning as much as you can about the different forms of investment. There is nothing wrong with leaving the bulk of your savings in low risk investments such as term deposits or money market funds until you feel comfortable. Remember the number one rule of investing "Do Not Lose Money"
Be careful not to fall for the promise of a big return. Generally there is no such thing without taking a big risk with your savings. Risk and Reward always go hand in hand.
As your savings and your education grow, you will eventually feel more comfortable with taking a little more risk in order to earn a little more income from your investments. I encourage you not to jump ahead too quickly until you fully understand the consequences of your decisions.
I will be writing more about investing in the future, so stay tuned or better yet, subscribe to my blog today.
As always, I welcome your comments and suggestions for future topics.
For those of you who are new, I suggest reading my previous posting entitled " How to Get Rich - The Very First Step" before you continue reading here. No sense repeating what I have already written.
Make the First Step a Habit
Once you make the first step a habit, you will see a growing amount of money accumulating in your savings account. It is always nice to see this amount continually growing and adding to your overall wealth.
The fact is, if you were to just do this one step you will probably be better off than the average person that has trouble with this discipline. However, I think you owe it to yourself to do even better. You owe it to yourself to reward yourself by making your money work for you.
Chances are you are already used to working hard for your money. Would it not make sense then to make the money you save work just as hard for you ? Of course it would !
Put It To Work
The absolute second step to building wealth is to put your savings to work. This basically means that instead of leaving your savings in a bank savings account forever you must find opportunities that will give you an income from your savings. In other words, invest your savings to get an income in return.
There are many types of investments, but unfortunately many are not so good or even downright bad. The trick in the investment world is to not lose money. Picking bad investments is not the way to ensure a wealthy future.
It is not my intention to give you specific investment picks, but to educate you on what types of investments you are personally comfortable with. There are plenty of sources out there that will give you specific picks when the time comes.
Where To Start
For the new investor I recommend taking it slow and learning as much as you can about the different forms of investment. There is nothing wrong with leaving the bulk of your savings in low risk investments such as term deposits or money market funds until you feel comfortable. Remember the number one rule of investing "Do Not Lose Money"
Be careful not to fall for the promise of a big return. Generally there is no such thing without taking a big risk with your savings. Risk and Reward always go hand in hand.
As your savings and your education grow, you will eventually feel more comfortable with taking a little more risk in order to earn a little more income from your investments. I encourage you not to jump ahead too quickly until you fully understand the consequences of your decisions.
I will be writing more about investing in the future, so stay tuned or better yet, subscribe to my blog today.
As always, I welcome your comments and suggestions for future topics.
Tuesday, November 13, 2012
How to Get Rich - Use Other Peoples' Money - Part Two
Do you know how to use other peoples' money to grow your wealth ?
Do you think all types of loans are created equal ?
This post is a continuation of my first post on this topic ( "How To Get Rich - Use Other Peoples Money" ) review first post before proceeding (check the side bar for link under most viewed posts)
All loans are not created equal. Read on to find out what investment loan, if any, may best be suited for you in your current position.
Line of Credit
A Line of Credit is an open ended load that can be paid off at any time and quite often you can make interest only payments which keeps your investment working longer for you. This type of loan is recommended for most liquid investments such as stocks and bonds, REITs, Royalty Trusts, etc. Basically for anything that can be cashed in quickly if necessary.
If you have equity built up in your home, you should also be able to secure your line of credit with this equity in order to ensure a much lower interest rate. Secured lines of credit generally receive a much lower interest rate as there is less risk for the lenders.
Mortgage
A Mortgage is a loan on Real Estate that is secured by the actual real estate. If you own your home, you will likely already be very familiar with this form of loan. I generally only recommend this form of investment loan if you are planning to purchase revenue producing real estate as your investments. These are not well suited for liquid investments as there are too many restrictions and penalties built in should you decide to cash in your investment and pay off your loan. Good for long term revenue producing real estate only.
Margin Accounts
Margin Accounts are loans that are offered by your stock broker and are secured by the asset you are purchasing. I'm not personally comfortable with this form of loan as your broker can require partial or full repayment at any time your investment is below water (in a loosing position) You have absolutely no control over when to make repayment and you may have to sell your investment at a loss in order to repay your loan. Losing money on your investments is never a good way to get rich.
What To Choose
The line of credit, the mortgage and the margin account are basically the most widely used forms of "using other peoples' money" that investors use today. Which form you use will be determined by your type of investment, the length of time you wish to hold your investment, and last but not least, the form of loan that you will be able to qualify for.
I personally use lines of credit and mortgages for my investments and have never used a margin account. I believe in having total control over when I repay my loan amounts.
Using other peoples' money can be very rewarding, however, there is also a great deal of additional risk involved and should only be utilized by experienced investors. This is not the place for the average investor to be starting as it could lead to a total loss of the invested amount should things go wrong.
As always, I welcome your comments and suggestions for future topics.
Do you think all types of loans are created equal ?
This post is a continuation of my first post on this topic ( "How To Get Rich - Use Other Peoples Money" ) review first post before proceeding (check the side bar for link under most viewed posts)
All loans are not created equal. Read on to find out what investment loan, if any, may best be suited for you in your current position.
Line of Credit
A Line of Credit is an open ended load that can be paid off at any time and quite often you can make interest only payments which keeps your investment working longer for you. This type of loan is recommended for most liquid investments such as stocks and bonds, REITs, Royalty Trusts, etc. Basically for anything that can be cashed in quickly if necessary.
If you have equity built up in your home, you should also be able to secure your line of credit with this equity in order to ensure a much lower interest rate. Secured lines of credit generally receive a much lower interest rate as there is less risk for the lenders.
Mortgage
A Mortgage is a loan on Real Estate that is secured by the actual real estate. If you own your home, you will likely already be very familiar with this form of loan. I generally only recommend this form of investment loan if you are planning to purchase revenue producing real estate as your investments. These are not well suited for liquid investments as there are too many restrictions and penalties built in should you decide to cash in your investment and pay off your loan. Good for long term revenue producing real estate only.
Margin Accounts
Margin Accounts are loans that are offered by your stock broker and are secured by the asset you are purchasing. I'm not personally comfortable with this form of loan as your broker can require partial or full repayment at any time your investment is below water (in a loosing position) You have absolutely no control over when to make repayment and you may have to sell your investment at a loss in order to repay your loan. Losing money on your investments is never a good way to get rich.
What To Choose
The line of credit, the mortgage and the margin account are basically the most widely used forms of "using other peoples' money" that investors use today. Which form you use will be determined by your type of investment, the length of time you wish to hold your investment, and last but not least, the form of loan that you will be able to qualify for.
I personally use lines of credit and mortgages for my investments and have never used a margin account. I believe in having total control over when I repay my loan amounts.
Using other peoples' money can be very rewarding, however, there is also a great deal of additional risk involved and should only be utilized by experienced investors. This is not the place for the average investor to be starting as it could lead to a total loss of the invested amount should things go wrong.
As always, I welcome your comments and suggestions for future topics.
Tuesday, November 6, 2012
How to Get Rich - Turn Negative into Positive
Have you ever listened to a negative person complain about everything ?
Do you enjoy the atmosphere created by a negative person ?
A negative person can be a real downer to your life ! Don't be one of them !
Negative is Everywhere
We are all exposed to so much negativity in everyday life it can be downright depressing. Just listening to the news everyday can depress anyone. Negative sensationalism sells and the media knows this. It's not very often you see a positive enlightening news article.
It's no wonder there are so many negative people around. They listen to the news, they listen to other negative people, etc. etc. Many are defeated before they even start out in life. What a shame it is that we live in a society where it is deemed normal to be negative.
Can You Change
On the other side of the coin there are positive people that refuse to let anything get them down. They seem to attract good fortune and everything just seems to go their way. I think we all know at least one of these individuals but maybe not as well as we would like to. We feel intimidated and not good enough to hang out with them. (negative)
The good news is that you too can become one of these positive individuals. It may take some hard work and constant mental conditioning, but it is possible.
Think of life this way. For every negative action that happens there is an equal and opposite positive reaction somewhere. This is a law of nature Life is always in balance. The trick is for you to find the positive reactions and embrace them.
It may seem like a simple thing to do but in reality it is far from it. You must first learn to overcome the negative conditioning that you have been used to living all of your life. This is not east and near impossible for many individuals. The negative for them is just too overwhelming.
Turn to The Positive
To reverse your polarity (negative to positive) you must start thinking of the positive outcomes to a negative event. There is at least one somewhere, but sometimes they are well disguised. As an example, the good side of a stock market crash is that everything is on sale. There are many bargains to be had for those that embrace the positive.
Another way to become more positive is to filter out the negative whenever possible. You can start by realizing that the media makes money from the negative. Stop believing everything you read or see. Life is not as bad as what they make it seem. Do your own research and you may be amazed.
There are also many books and other programs that are designed to help you think positive thoughts. Make it one of your goals to look for things to encourage your positive thoughts. It is a lifestyle worth embracing.
Turn negative thoughts into positive ones and you will be amazed at what opportunities you will begin to see beyond the fog of the normal negative world we live in.
As always, I welcome your comments and suggestions for future topics.
Do you enjoy the atmosphere created by a negative person ?
A negative person can be a real downer to your life ! Don't be one of them !
Negative is Everywhere
We are all exposed to so much negativity in everyday life it can be downright depressing. Just listening to the news everyday can depress anyone. Negative sensationalism sells and the media knows this. It's not very often you see a positive enlightening news article.
It's no wonder there are so many negative people around. They listen to the news, they listen to other negative people, etc. etc. Many are defeated before they even start out in life. What a shame it is that we live in a society where it is deemed normal to be negative.
Can You Change
On the other side of the coin there are positive people that refuse to let anything get them down. They seem to attract good fortune and everything just seems to go their way. I think we all know at least one of these individuals but maybe not as well as we would like to. We feel intimidated and not good enough to hang out with them. (negative)
The good news is that you too can become one of these positive individuals. It may take some hard work and constant mental conditioning, but it is possible.
Think of life this way. For every negative action that happens there is an equal and opposite positive reaction somewhere. This is a law of nature Life is always in balance. The trick is for you to find the positive reactions and embrace them.
It may seem like a simple thing to do but in reality it is far from it. You must first learn to overcome the negative conditioning that you have been used to living all of your life. This is not east and near impossible for many individuals. The negative for them is just too overwhelming.
Turn to The Positive
To reverse your polarity (negative to positive) you must start thinking of the positive outcomes to a negative event. There is at least one somewhere, but sometimes they are well disguised. As an example, the good side of a stock market crash is that everything is on sale. There are many bargains to be had for those that embrace the positive.
Another way to become more positive is to filter out the negative whenever possible. You can start by realizing that the media makes money from the negative. Stop believing everything you read or see. Life is not as bad as what they make it seem. Do your own research and you may be amazed.
There are also many books and other programs that are designed to help you think positive thoughts. Make it one of your goals to look for things to encourage your positive thoughts. It is a lifestyle worth embracing.
Turn negative thoughts into positive ones and you will be amazed at what opportunities you will begin to see beyond the fog of the normal negative world we live in.
As always, I welcome your comments and suggestions for future topics.
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