Investing is putting your money to work for you. Powerful investing is a strategy that can be mastered, but there is much misinformation, or lack of information and potential for loss including outright fraud that exist in the area of investing that can destroy any good financial plan.
Powerful investing is not like saving money. Savers earn an average 6% to 10% return that is immediately canceled out by taxes and inflation. On the other hand, a powerful investment plan can return up to 20% per year.
Your objective as an investor is to put your money to work safely and effectively making yourself rich instead of making financial institutions rich. Through your choice of investments you can enjoy income, tax shelter, and maximum growth or any combination you choose.
There are five basic ways to increase your wealth:
- Putting yourself to work -- employment
- Putting other people to work -- business
- Putting your ideas to work -- inventing, marketing, or consulting
- Putting your money to work -- investing
- Putting other people's money to work -- leverage
Working for someone else is the first money-making experience for most of us. There are two limiting considerations when you put your financial future in the hands of the "company."
Your success is directly tied to the success and attitude of your employer, over which you have little or no control.
Your income and lifestyle are limited by your experience, age, education, the opportunity for advancement, and your ability to sell yourself on the job.
Putting together a powerful investment program will put an end to the lifelong dependency on others (employers or the government), even if you don't want the responsibility of starting your own company. A powerful investment plan is your ticket financial freedom, both during your working years and after retirement.
There are two approaches to investing -- putting your money to work, and putting other people's money to work. You put your money to work when you invest in:
- Stocks
- Mutual Funds
- Certificates of deposit
- IRA's
- Treasury's
- Retirement Programs
- Bonds
You put other people's money to work when you:
- buy a home with a mortgage
- use a brokerage firm or a mutual fund margin account
- take an option on a piece of real estate
- borrow money from your business, etc.
Putting your own money to work is direct and easy to understand, but limits your benefits to the profits that can be generated by your own capital. Putting other people's money to work can be more profitable, but can also be more risky and difficult to understand. The main benefit of other people's money is that you can create profits and/or tax deductions far beyond what your own capital can generate. Using other people's money is a more advanced step you will want to consider once you have mastered to basics of investing your own money.
Following are Charles J. Givens' three major objectives of a sound investment plan that can be converted to strategies (see "More Wealth Without Risk" p. 391).
Strategy #270
Earn 20% per year safely by using only the 10 best investments.
Strategy #271
Pay no or low commissions by working directly with government & financial institutions.
Strategy #272
Use tax shelters and investment strategies to protect your investment income.
As a craftsperson, your job is to organize or reorganize you investment dollars around a combination of these powerful, safe investments. Your decisions on which investments to choose will depend on your investment experience or lack of it, your financial goals, and the amount of money you have to invest. Personal knowledge will eliminate risk and fear in your investment plan. Risk occurs most frequently when you act solely on the advice of others, without sufficient knowledge, making decisions without taking control.
The greatest risks are taken, not through the investments chosen, but through the lack of personal knowledge of how to use investment strategies correctly.
from More Wealth Without Risk
by Charles J. Givens
