Investing for Those Starting at Zero

Over the past decade and a half I’ve had the chance to teach investing and money concepts to tens of thousands of people all over the world. And I’ll tell you, the results for each of these people is exactly the same. As you pursue your journey to become an investor, you can gain an important new vision of how money works. You’ll never look at it the same way again. Your confidence will grow. And you’ll have a great time along the way.

I’m the author of two books, Stock Market Cash Flow and 401(k)aos that help people learn some of the problems they are facing with retirement. I also show you how we can solve these problems.

The road to becoming a successful investor might have some bumps along the way. It’s completely normal. Bumps in the road do not mean that you are failing. It just means you’re on the journey.

With each of my own failures along the way, I have faced a point of decision to either move forward or quit. When you decide to stand up and move forward, you transform that failure into a lesson learned rather than an ending point to the story. I’m so grateful for my mistakes. I know that sounds weird. I’m not saying they were fun, and I’m not saying I want to repeat them.

One of my greatest mentors is Robert Kiyosaki. He’s the author of Rich Dad, Poor Dad, the best-selling personal finance book of all time. I’ve had the chance to work closely with Robert and his personal team during my time as a Rich Dad Advisor for paper assets.

For those who really know Robert, he’s much more than an author. He is an entrepreneur and an investor extraordinaire. One of the most powerful lessons I’ve ever learned from him is this: “We must know the difference between an asset and a liability if we are going to invest successfully.”

My purpose isn’t to help the person who already has millions of dollars. Instead, my goal is to help the single mom starting from scratch. It’s for the father who was wiped out by medical bills and is trying to climb out of bankruptcy. This is for the college student who is struggling to find a field of study she feels passionate about, and deeply wants to become an entrepreneur.

I have started businesses and purchased real estate without any money. The purpose of this article is to help you begin to see how anyone can start at that same beginning point and find success. Whether your desire is to start a business, invest in real estate, trade stocks, or buy commodities, this information is designed to help you achieve your goals even if you have nothing to start with.

At this point in your journey, don’t become too preoccupied with getting across the finish line. Instead, I want to help guide you to the starting line. I don’t believe there’s any one recipe I can hand you that will magically make you millions. What I can give you are the principles used by the rich every single day. As a result, you will gain an understanding of how you can create something valuable from nothing.

In my travels I have met tens of thousands of people who have the heart and desire to succeed, yet feel the heavy challenge of starting at square one with nothing.

Doesn’t It Take Money To Make Money?

All of us carry a lot of beliefs about money, and our beliefs tend to guide our actions, our feelings, and our thoughts. By the time you finish going through the Nine Secrets of the Rich that I have put together for you, I am willing to bet that you will no longer believe that it takes money to make money. If you do, perhaps investing on your own isn’t the right path for you.

There are two reasons why I believe this notion of needing money to make money is false:

1. My personal experience has taught me that it’s 100% possible to achieve good success when starting with no money. I have personally reaped many thousands of dollars in cash flow for me and my family starting with nothing. And I’m going to show you examples of that, large and small.
2. In my circle of friends and mentors, I’ve seen firsthand how other people have accomplished the same thing. They have shown that it doesn’t take money to go out and make money. I’m going to show you many of their techniques, philosophies, and how simple it can be for an average person to do the same thing.
   
   

Here’s even more proof for you. Consider the following famous wealthy people:

• T. Boone Pickens is an oil and gas investor worth about $1.2 billion
• Donald Trump is an icon in real estate, and his wealth is worth somewhere between $3 billion and $7 billion
• Richard Branson is an amazing businessman with multiple companies under his Virgin brand, currently worth about $4.5 billion
• George Soros is known as a master of paper assets (my favorite, of course) and is worth about $20 billion dollars
• And Warren Buffet, perhaps the greatest investor ever, is worth about $53 billion according to Forbes, and he has had success in almost every asset class

Now think about this: What if we took away all of the wealth of these people by taking every last penny from their bank accounts. Where do you think they would be in five years?

Since they don’t have any more money, do you think they would be destined for poverty?

Would we see them on the streets homeless without hope of ever getting it back?

Or do you believe that they would find their way back on top?

When I ask this question to groups of investors, almost everyone realizes that these icons would become rich again. If that is true, how could they do it? If it takes money to make money, how can a person that is absolutely penniless climb up to the highest levels of wealth again?

Is it because of dumb luck happening again and again to the same person?

Or is it because they possess some type of knowledge that other people don’t have?

The Answer Is Education

These people, and many others, have risen to the top for a reason. They have taken responsibility for their financial education and learned how to invest properly and wisely. They didn’t take shortcuts. They continually improved their financial education levels until the inevitable outcome was huge success.

If a person wants to be a concert pianist, the only thing that stands between where they are now and performing on a stage is training, mentors, hard work, and time. The catalyst for everything is education.

You will see that the secret ingredients to every worthwhile investing strategy are education and effort. If you are willing to put in a little work, a little time, manage risk wisely, and get out of your comfort zone, you can begin to experience your own success.

My greatest concern in showing you how to invest with no money is that some people may assume that they don’t have to do anything. There will still be important lessons to learn and legwork to be done. There are no shortcuts. In the end, though, I believe you will find it’s worth the effort.

Source: http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/April-2018/Investing-for-Those-Starting-at-Zero.aspx

Is this the Beginning of the Big Stock Market Crash?

Written by Andy Tanner | Friday, February 23, 2018

Read time: 5 min

Where we are, where we might be going, and how I plan on profiting no matter what direction the stock market decides to go

I’ve had some requests to explain a little bit about the recent roller coaster activity in the market. There have been a lot of big drops and then big rises.

I’ve spoken a lot about how I am skeptical of the high price of this market. I still am. People are asking me, “Andy, is this the big drop you’ve been talking about?” To answer this question that seems to be on everyone’s mind, I want to explain what I think is happening right now in a way that anyone should be able to understand.

Looking at current charts of the market, I do see some spikes in in volatility. This shows me that the market’s unpredictability is increasing. But do I think that this is a big one? No, probably not. However, I think there are some things that we should start watching more closely.

When I say that the market seems to be too expensive or overvalued, here’s what I mean: How much does it cost us in price to earn a dollar of profit? It’s another way of looking at the idea of earning a return on our investment.

In the stock market, there are many big investing companies (“institutions”) that buy and sell huge blocks of stock. These institutions are probably the biggest force in the market to affect prices. When the market is going up rapidly like it has been over the past year, these institutions want to ride it as long as possible. But at the first sign of trouble, the institutions will start selling immediately. These days, this is usually the cause of our big market drops.

What can this mean for the average investor like you and me? Well, I think it’s very important to know as much as possible about any type of investment you want to get involved with. So let’s spend a few minutes to understand how a company or a market gets valued.

Suppose you had a money machine. When you turn the crank on your money machine, it spits out a dollar for you. These dollars you create are your earnings.

In the world of business, there are all kinds of money machines. If the company is Apple, the action that turns the crank is the devices they sell. If the company is Pfizer, they turn the crank through the sale of pharmaceuticals. The more the crank gets turned, the more money they earn.

For investors like us, our two main questions are:

• How much does it cost to buy a particular money machine?
• How much earnings does that money machine generate?

When we know the answers to these two questions, we can do a little math to come up with the Price to Earnings Ratio (PE Ratio).

If you are familiar with real estate investing, this is very similar to the Cap Rate (except the values are flipped). Overall, it’s a way for us to quickly understand if a particular investment is a good value, or if it’s too expensive.

In the world of stocks, many investors keep and eye on the Shiller PE index, a price earnings ratio based on average inflation-adjusted earnings from the previous 10 years,. The median Shiller PE Ratio has historically been around 16 - 17. It’s a good barometer of what value we should be targeting. Again, a PE of 16 means that it costs us about $16 for every $1 of earnings we receive from that stock.

Looking back in time, we can see that there have only been a few times that the PE Ratio for the S&P 500 has been above this level. Before the crash of 1929, prices almost doubled and people were paying up to $30 for every dollar of earnings from the S&p 500. And during the dot-com boom people were paying HUNDREDS of dollars for companies that had zero earnings.

When the price of stocks gets really high, we’re forced to answer these questions: Are these high-priced companies cranking out enough dollar bills to still be valuable investments to buy? Are the profits worth the expensive price tag? The moment investors see that the PE ratios are too high, they will only continue to buy if they see growth. And if the outlook for growth becomes pessimistic, selling can insue.

Of course, this doesn’t mean that the market is going to crash immediately. But as we look back historically, there have only been a couple of times in the past I mentioned before when investors have been willing to pay this much for stocks. As the dot-com bubble showed, when investors were paying $44 for $1 of earnings, they eventually said it wasn’t worth it anymore. That’s when the big crash occurred.

The Risk Of Having A 401(k) Account

Most people with retirement accounts such as a 401(k) have not been worried over the past few years. They hope the value of their accounts go up and up. For those who have these types of accounts, there are two things to keep in mind:

1. The value of your account does NOT mean you have that much money waiting for you. Instead, it represents the current value of all the investments that are held in your account. When you want to get money out of the account, your account manager will sell shares at whatever the current market value on the date you sell.
2. When the market goes up, the value of your account will go up with it. But when the market drops or crashes, your account value drops with it. There is no protection for you.

Protecting With “Stock Insurance”

Insurance is a great tool to protect things that you value. We buy insurance for our homes, for our cars, and for our health. We don’t need insurance every single day, but we buy it to protect us when those rare bad events happen. It’s impossible to predict exactly when a bad event will happen, but it’s easy to prepare for it.

One of the great tools available for stock investors is to buy “insurance” on your stock positions. This is what we teach our students every week in my Mentor Club. We show how to protect yourself from any anticipated market problems, and also how to turn that into cash flow. In fact, many times we can structure positions so that we generate enough cash to actually pay for this insurance.

The tool we use to buy this insurance is called a stock option. When we are educated on how options work, and how to maximize them for different situations, we can control our risk and predict our cash flow very accurately.

The key is to know when to buy the insurance. It’s a lot cheaper to buy insurance when you don’t need it than when your house is going up in flames. The same is true with stock protection.

Even though we don’t know exactly when a big crash will happen, we can spot early signs based on what has happened in the past. This allows us to buy insurance via options at lower prices versus buying in the middle of a crash. We call this kind of insurance a “hedge.”

Our Students Learn To Do This With Zero Risk

One of the advantages of learning to trade stocks and options is you can do it risk-free with a practice account. Also known as paper accounts, these allow you to make trades using real market prices and information – but you can practice and improve your skill without risking any real money.

Virtually every online brokerage allows you to open and use these types of practice accounts. They’re virtually the same, so you can open one with any brokerage you choose.

We teach these strategies and techniques in our Mentor Club. This is our weekly training service where you get to follow along as we find profitable trades, set them up, make adjustments as needed, and show you exactly how much we make or lose on every trade.

Our students learn how to set themselves up to profit no matter if the market is going up or down. They also learn how to protect themselves from big market crashes that hurt the typical stock investor who sits on a buy and hold account.

Anyone can join The Mentor Club risk-free for 30 days. It’s a great way to see if this type of cash flow investing is right for you. You can get full details at AndysMentorClub.com.

Source: http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/February-2018/Is-this-the-Beginning-of-the-Big-Stock-Market-Cras.aspx