How to Have Great Tenants

When I first became a landlord about 15 years ago, I intended to be the best landlord a tenant could ever ask for. I listened to my tenant’s stories. I allowed them to pay me “when they could.” I did all the repairs that were needed at my expense, even when it was they who caused the damage.

Of course, I lost a ton of money. What really bothered me, though, was the “thanks” I got when they left (usually without notice) — apartments and houses that were completely trashed, often costing me a year’s worth of rent (rent I hadn’t collected) to put in order.

Rental real estate is still a great business — one I highly recommend you consider getting into. But if you do, heed my advice and practice tough love with your tenants.

• Write a tough contract — one that puts you completely in charge. Include the harshest provisions permissible by law. You don’t have to enforce them. But you will be happy they are there. (You must, of course, keep up your part of the bargain. In exchange for the rent you get, you should give them a clean dwelling in excellent shape. And you should keep it that way.)
• Make it very clear at the beginning that you will evict them if they violate the contract in any way. Furthermore, tell them you will sue them if back rent and damages exceed the amount of their security deposit. Take a photo of them in the apartment to demonstrate the good condition it was in when they took occupancy. (Nobody else does this but me, as far as I know. It works wonders!)
• Charge them penalties from month one. They must know you were and are serious about your warnings.
• Evict them without second thoughts if they fall behind more than a full month’s rent.

When I got some of my family members into the rental real estate business with me five years ago, they objected to my toughness. I let them do it their way because I know that the only way to learn is from experience. They bent over backward being “good” landlords — and learned the same lessons I learned the hard way.

Needless to say, they now follow my “tough love” rules.

[Ed. Note: Need additional income to help support or supplement your real estate business? Ray is offering a complete blueprint to helping you take control of your financial future with a web-based business that you can operate from anywhere in the world – including a coffee shop, your kitchen table, or anywhere around the world where there is Internet access. Discover how you can achieve the American Dream and your financial independence here. You’ve never seen anything like this before.]

Real Estate: 3 Fundamentals You Must Have In Place When Starting Out

Getting started in any new business can be overwhelming. Getting started in the real estate investing business can be downright terrifying. You don’t need a license or certificate to get started. There is no franchise fee or training that you have to go through. All you need is the willingness to learn and the drive to succeed. However, drive alone will only get you so far. Because of the many ways the investing business can be done, there is often plenty of advice on the best way to go. The more people you listen to, the more confused you can get. If you are just starting out and looking for guidance, there are only three areas that you need to focus on. If you can master these areas, your transition into the business will go as smooth as possible.

1. Education: Everything starts with your education. Before you do anything else, you need to know the business you are getting into. It is almost impossible to talk to realtors and hard money lenders without a grasp of the business. Fortunately, we live in a day and age where there is more education available than ever before. Going to a weekend boot camp can give your education a quick jumpstart. From there, you can pick up one of the dozens of books dedicated to real estate investing. If books aren’t your thing, there are real estate websites and blogs (such as this one) where you can pick up something new every day. You can also accelerate your education by joining local real estate investing groups and networking clubs. In a matter of a few weeks, you can go from a complete novice to someone who is confident they know the business. There is an argument for learning from experience. Experience is great, but it is better to learn from other people’s mistakes rather than your own. You don’t need to be an expert in every area of the business, but you need to understand the parts that pertain to you. The education you have directly leads you to everything else you plan on doing in the business. Don’t do anything until you have knowledge of what you are going to do and how you are doing to do it.

2. Financing: Once you know the path you want your business to go on, you need financing to help you get there. The most common form of financing is traditional lender financing. The mortgage market took a hit after the collapse, but has been on the rebound over the past few years. Investment loans are difficult to close, but far from impossible. The two biggest hurdles for loan approval are credit score and down payment. The guidelines for investment loans still require credit scores north of 700 and a down payment of anywhere from 15-25 percent. If you don’t have access to the down payment money, you are not out of luck. In the past five years, there has been an influx of hard money lenders in most areas.

A hard money lender is an individual or group of individuals that lend money based on their own specific guidelines. Credit score is important, but it may not be the most important factor for them. They look at the total credit profile in addition to the property. Here is where your education is put to use. By knowing which markets you want to focus on coupled with your exit strategy you can find hard money lenders to work with. You can also reach out to friends, family and co-workers and see if they have funds they may want to invest. Seeking out private money may be uncomfortable but there are often more people in your inner circle that want to invest than you may think. The bottom line is that you need financing to get started and you have multiple options to choose from.

3. Lead Generation: Having financing won’t do you much good if you don’t have deals to work on. One of the common mistakes with new investors is thinking that deals will just fall on their laps. The reality is that you need to generate deals to work on. There are many ways you can do this. The most popular method is to find a good realtor and wait for your phone to ring. Even the busiest realtors only get access to so many investment deals that you are interested in. You need a plan A, B, C and D for how you intend on getting leads. Between mailings, bandit signs, postcards and networking there are multiple different ways to build a pipeline. Most of your actions will be based on your budget. Whatever your budget is there is lead generation for you. Over the course of your career you will most likely experiment with several different types of marketing until you settle on a few that work for you. As an investor you are only as good as the leads you bring in. Before you get going think about how you are going to get your phone to ring.

Everything you do in the real estate business will be based on these three areas. Instead of trying to master every area of the business, keep it simple. Education will give you an idea of what types of deals to pursue and how to structure them. Financing allows you to make offers and get deals to closing. Lead generation will keep your pipeline full and active. If you focus on these three areas alone when you are just starting out, you will avoid the massive learning curve and close your first deal in no time.$

[Ed. Note: Need additional income to help support or supplement your real estate business? Ray is offering a complete blueprint to helping you take control of your financial future with a web-based business that you can operate from anywhere in the world – including a coffee shop, your kitchen table, or anywhere around the world where there is Internet access. Discover how you can achieve the American Dream and your financial independence here. You’ve never seen anything like this before.]

20 Life Hacks that Increase Your Wealth

In today’s digital age, people are growing more and more interested in how to become financially successful with innovative ways to change their lives. Find out what life hacks successful people use to increase their wealth and how you can do the same.

1. STOP WATCHING THE CLOCK

If all you ever do is focus on how much you get paid per hour, you’ll be working long hours for the rest of your life. Take a lesson from Tim Ferriss’ “4-Hour Workweek” and start thinking about how you can get paid for results instead of time. You’ll be motivated to work smarter, not longer.

2. DON’T SHY AWAY FROM SELF-PROMOTION

You’ll never establish a customer base if you never tell anyone about your product. Promotion can sometimes feel pushy, but it’s a crucial part of business. Use social media, local advertising and other marketing methods to get your name out there.

3. STOP CONFUSING WEALTH WITH THE APPEARANCE OF WEALTH

You don’t need to become a full-fledged minimalist, but it’s time to trim the proverbial fat. Look at your budget and eliminate nonessentials. Spa treatments, expensive restaurants, most retail shopping and unused gym memberships are excesses than can sabotage your financial health.

4. CHANGE YOUR PLAYLIST

When you’re not working, you should be learning and gaining as much knowledge as you can, whether it’s related to your business or not. Listen to audiobooks and podcasts while you drive, shower, and clean your house. You’ll find that it’s as relaxing as watching a show at the end of the day, but you’ll be getting a brain workout instead of just vegging out.

5. MONETIZE YOUR TALENTS

If you’ve got a unique skill, you could create a business around your talents. Whether you’re a skilled programmer with a vision for launching a development company or you have a unique style and want to create your own product line, use your interests, passions, and abilities to make money.

6. GET A MENTOR

James Wilkinson, CEO and president of Pamco Machine Works, Inc. in Rancho Cucamonga, Calif., recommended that you “identify successful people in your industry and reach out for advice.”

“Be bold by asking, writing, emailing, or calling them directly,” he said. “Ask them to help you solve a specific problem, give you general advice or become your mentor.”

7. DRINK WATER

Life’s simplest necessity can actually increase your wealth. If you cut back on sodas, coffee, and other costly and unhealthy beverages and stick with water instead, your teeth can get stronger (saving you money on dental bills), your anxiety can lessen (saving you money on prescriptions and therapy), and your brain can become healthier and more efficient.

8. GIVE MORE

Don’t make the mistake of thinking that greed equals growth or that your success must come at the expense of others. Help people by volunteering, giving of your time, truly listening and being generous. Be happy to share your successes with people. You will create more avenues to success by gaining allies than by making enemies.

9. STOP WISHING — SET GOALS INSTEAD

Wealthy people don’t allow their success to hinge on hopes. They commit to success by working to achieve clearly defined goals. Set some goals for the next week, month, six months and beyond. Define your goals and outline the smaller steps you should be taking to achieve them. A good calendar system helps.

10. ADAPT AS YOU PURSUE GOALS

While being committed to your project is important, it’s equally necessary to be able to identify when to adjust the plan or even change the end goal. If you’re developing an app and you start seeing the need to change directions, don’t be afraid to shift focus if it will mean long-term success.

11. CLEAR CLUTTER FOR MORE BRAIN SPACE

A certain amount of messiness is acceptable as part of the “creative mindset,” but at some point clutter becomes a distraction to your work whether you realize it or not. Clear your primary work area so you have some space for your thoughts. You’ll be surprised by how much more productive you can be in a clean room.

12. DRIVE LESS

Not only will less driving save you money on gas, maintenance, and potential accidents, but the exercise of walking and biking can help boost your brainpower by slowing the brain cells’ aging, improving memory, and alleviating anxiety.

13. IDENTIFY NEEDS AND INVENT SOLUTIONS

If you ever think to yourself, “I wish there was a product that could …” then start thinking about how to turn those ideas into realities. Chances are, if you identify a need, other people would pay money for a solution to the same problem.

14. ACCEPT CRITICISM

Don’t be too proud to accept advice and criticism. It doesn’t always feel good to hear criticism, but not being discouraged by it, learning from it, and moving forward can feel great. Use criticism to motivate you to further perfect your business model.

15. ASK QUESTIONS

Wealthy people are driven by the desire to learn and grow. By asking a lot of questions, you can learn from other people’s mistakes and experiences, gain knowledge about your field, and create strong relationships with people.

16. STOP BLAMING FAILURES ON BAD LUCK

If you want to be able to take credit for your successes, you need to start taking credit for your failures. Success is as much a mindset as it is a status.

17. BLOCK YOUR TIME

As helpful as media and social media are for connecting, informing, and entertaining, most people find themselves distracted too frequently. Between click-bait titles, cute videos, friends’ updated statuses and online games, it’s a wonder anyone gets any work done at all.

Set up a timer or a block on your computer for the websites that are your biggest time wasters. Create blocks of time in your schedule for work and play. Your mind will be clearer, and you’ll have more time to focus on what’s important.

18. RECOGNIZE THAT YOU REAP WHAT YOU SOW

Think of your brain as a crop field. If all you ever did was harvest creativity and success, your fields would soon be dry, barren, and picked over. Allow yourself time to sow seeds of success by resting, thinking, brainstorming and taking breaks.

19. PUT YOUR MONEY TO WORK

You work hard, and your money should, too. Make your money work for you by investing in stocks, mutual funds, CDs, peer-to-peer lending, real estate and other vehicles that can help you build wealth. If you and your money work at the same time, you can earn money even faster.

20. ASSOCIATE WITH OTHER SUCCESSFUL PEOPLE

Rubbing elbows with successful people is a great way to take steps toward building wealth. By creating relationships with influential people, you can reach a wider customer base. You can also learn about wealth and business from seasoned pros.$

[Ed. Note: Ray's personal team will create 10 six-figure earners before the year is over. Our system walks you through the process of growing your profitable online business using a proven online business model. Ray shows you exactly what he did to grow his six-figure business. To find out more about Empower Network, go here.]

11 Money Tips for Older Adults

WHEN MONEY MATURES

Getting older isn’t all bad. If you’ve accumulated wealth over your working years, it can be the time to enjoy all of that hard work. But financial stresses often arise, including budgeting concerns, income limitations and even fraud. These tips will help older adults ensure their cash lasts as long as they do.

BUDGET CAREFULLY

During retirement, income tends to be lower than it was in the prime earning years, and that means older adults need to look for ways to limit expenses to make their nest eggs last. One key is to track living expenses to make sure you don’t burn through savings too fast.

DON’T BE TOO GENEROUS

When grown children are struggling with their own financial lives, it can be tempting to open up your bank account to them. The problem with this approach is that it can stress your finances and lead to family tension. It’s important to make protecting your money a priority, even while trying to help your children.

PLAN WITH YOUR PARTNER

Even if you’ve been married to your spouse for years, it’s possible that you have different visions of how to spend your retirement years. Couples often do not talk about financial goals. Discuss each other's dreams and goals and start planning for it.

MAKE SURE YOUR BANK IS ON YOUR SIDE

Some banks cater to older clients more than others, with perks such as using larger print in communication, meeting outside of the bank and speaking clearly without being condescending. Asking about your bank’s age-friendly policies before you need them can help ensure you don’t get frustrated with its policies later.

PUT FRAUD SAFEGUARDS IN PLACE

Older adults are at a greater risk for financial fraud, but there are ways to reduce that risk. Family members can be alerted to large withdrawals from accounts, debit cards can be programmed to only work in certain locations and names and numbers can be placed on “do not call” lists.

PREPARE FOR COGNITIVE DECLINE

When it comes to managing money, signs of cognitive decline tend to show up in one’s 60s and 70s. It can become harder to manage bills, calculate tips and make change. Sometimes adult children or others can help prevent bigger problems, like falling behind on bills, by noticing those red flags and stepping in to help.

KEEP LEARNING

While cognitive decline is real, other research suggests that older adults with higher levels of financial literacy are more likely to have higher wealth levels. Understanding concepts of investment risk and the stock market is associated with the ability to build and preserve wealth.

PROTECT YOUR DIGITAL ASSETS

If you’re active on social media or have an extensive digital library or music or books, you’ll want to consider how to pass on those digital assets when you die. You can include your wishes in your will, pick someone to share account information with and restrict your privacy settings now so you’re not oversharing personal details with strangers.

GET MONEY HELP FROM YOUR ADULT CHILDREN.

Adult children can often play a useful role in helping their parents manage money as they age. It’s important to enlist the support of children before experiencing a crisis or cognitive decline, so they know the basics of where to find account information if they need to. Talking through plans and wishes, and even writing out an overview of how you want to manage money as you age, can also help.

CONSIDER LAUNCHING A BUSINESS

Starting a business in midlife or later can add to your income in retirement as well as bring a measure of professional and creative satisfaction even after you leave your day job. Author Lynne Strang, who opted for self-employment at midlife herself, found a huge growth in the amount of support available to older entrepreneurs, including at AARP and the Small Business Administration.

TEACH YOUR GRANDCHILDREN ABOUT MONEY

Grandparents can play a significant role in teaching grandchildren about the value of a dollar. A 2014 survey from TIAA-CREF found that many young people say they are open to talking about finances with their grandparents, but only a small percentage actually have those conversations. Still, most grandchildren say their grandparents do influence their financial habits.$

[Ed. Note: Ray's personal team will create 10 six-figure earners before the year is over. Our system walks you through the process of growing your profitable online business using a proven online business model. Ray shows you exactly what he did to grow his six-figure business. To find out more about Empower Network, go here.]

Don’t Ignore Buy & Hold Rentals

There is more than one way to invest in real estate. While most investors focus on rehabs and flipping, there are other options available. One of those options is buy and hold real estate. This exit strategy probably wouldn’t make for good TV, but it can do wonders to your portfolio. Five, ten and even twenty years comes quicker than we would like. By positioning yourself in the market now, you set yourself up quite nicely for the future. There are also other benefits of rental properties that are often overlooked. Before you quickly dismiss a buy and hold property, you need to know all the benefits.

There are many horror stories from disgruntled landlords. Between damage to the property to parking cars on the front lawn, if you own a rental you have probably heard it all. Being a landlord can be frustrating and difficult at times. The reality is that if it was easy, everyone would do it. Like any other investment you make, you need to weigh the risk vs. the reward. The risks, or downside, are that you need to be on call at all times and constantly take care of your property. If you don’t treat your property like an investment, it will come back to haunt you. For every horror story, there is one from an investor who retired off the rental property they bought years ago. Here are some of the positives with buy and hold rentals.

Cash Flow: The ideal rental property is one that leaves you with surplus money at the end of the month. This surplus is called cash flow. One of the ways that landlords get in trouble is by not knowing all the numbers. In addition to your loan repayment you need to add all utilities, insurance, taxes, seasonal costs and maintenance. If you lowball these numbers your bottom line cash flow will be reduced. After you add up all your expenses you deduct that from your rental income leaving you with your cash flow. We are currently in a peak rental market with rental demand at an all-time high. This number may not stay this way forever. Your cash flow will vary from year to year but you should be able to have an idea of where it will be. The idea of a tenant paying down your mortgage and leaving you with extra every month is very appealing. What you do with your cash flow will go a long way in determining what kind of an investor you are. With the right property and a good grasp of your numbers you can have cash flow every month for the foreseeable future.

Equity: Building equity does not happen overnight. It wasn’t that long ago that people bought houses as a way of saving for retirement. The goal wasn’t to use their property as a piggy bank when the market turned. This same strategy can be applied to your rental portfolio. With a rental property your tenant is paying down your mortgage for you. Essentially someone else is paving your path to retirement. Depending on what type of loan you have this could take 15, 20 or 30 years to happen. You also have the option of selling at any time before you own the property free and clear. The more equity you have the greater your options are. The best part is that you do not have to come out of pocket to make this happen. Your tenants are building your equity for you.

Tax Benefits: This is the most overlooked benefit of rental properties. Not every rental is going to produce massive cash flow every month. In some markets it may take years to see a significant amount of equity. Every year you own a rental you will see the tax benefits. Uncle Sam lets property owners write off mortgage interest on your tax return. Rental property owners also can use depreciation and other rental expenses as a write off as well. A property with so-so cash flow can look like a home run after you factor in the tax benefit at the end of the year. Here is where a good accountant can save you thousands of dollars. By doing nothing but taking advantage of the tax breaks rental owners are allowed you will see the impact.

Owning rental property is not for everyone. For starters you need to be able to manage the property or pay someone to do it for you. Secondly, not every property makes a good rental property. You need to have an understanding of your market and what renters desire. Lastly, you need to be able to deal with tenants. The process of finding tenants and working with them can be frustrating at times. Dealing with a bad tenant will cost you time and money. Unfortunately you never know what type of tenant you have until they start their lease. While there are negatives and obstacles associated with rental properties the rewards are great to. Some of the most successful investors made their money through buy and hold properties. Cash flow, equity and tax benefits are just some of the reasons to buy rental properties. They may not be as appealing as a sweet rehab deal but can do more for your portfolio. If you have been ignoring buy and hold rental properties is may be time to take a look.$

[Ed. Note: Need additional income to help support or supplement your real estate business? Ray is offering a complete blueprint to helping you take control of your financial future with a web-based business that you can operate from anywhere in the world – including a coffee shop, your kitchen table, or anywhere around the world where there is Internet access. Discover how you can achieve the American Dream and your financial independence here. You’ve never seen anything like this before.]

Full Contact Passive Income Investing

Getting from where you are today, to where you want to go, might require some full contact passive income property investing. Passive income is being adopted as the primary goal of more and more individuals. Piling up a sizable nest egg and accumulating net worth in real estate equity is great, but ultimately everyone needs income. Everyone needs passive income if they are going to achieve true financial freedom. The challenge is getting to the point of being able to rely on passive income investments to provide for all living costs, and to maintain it.

Paid Vacations & Consistent Income

Not everyone wants to retire early. Not everyone wants to retire to the beach and golf course. Some want to keep actively pursuing valuable careers and other causes. But who doesn’t want the luxury of being able to go on vacation regularly, take holidays off with the family, and have the confidence that income will keep coming in even on sick days?

That’s not going to happen unless individuals invest in passive income producing investments or automate businesses that can keep producing it. CMS company Full Contact knows a lot about automation. The firm also pays its staff $7,500 to take vacations. The company’s CEO describes this as an investment in long term sustainable growth. So could offering paid vacations be a smart move for real estate companies and investors too?

There are four benefits Full Contact says it derives from paying team members to take vacations include:

1. Happier workplaces
2. Increased productivity
3. Attracting great talent
4. Employee retention

These factors are important for all real estate companies and investors with assistants. Whether you only have a property manager and bookkeeper, or you have hundreds of employees, achieving more of the above is a positive thing.

Ensuring Passive Income

Whether investing in rental properties, mortgage notes, or a real estate wholesaling, business continuity requires people. Consistent performance requires people that aren’t burnt out. If your financial future and entire business or portfolio relies on a few key people, it may all fall apart if something happens to them. Health issues, burnout, dissatisfaction, and technical and family emergencies can all be threats. Ensuring everyone takes a vacation means that your income and finances will never be reliant on any one individual. You’ll have to find a solution to fill the gap. And you’ll be prepared for when you must. This can be more automation, using temps, getting further ahead of the curve, and documenting systems.

When you find great talent and reliable team players, you’ll want to keep them. This might require patience, training, and making some allowances. Great talent is a rare resource and a highly valuable one. Don’t let them go. But do treat them well, and have a backup.

This equally applies to real estate business owners and investors too. In order to ensure ongoing passive income you cannot rely on yourself to be there on call all the time. That’s not truly passive income or an investment. That’s buying a job or being a temp.

Forcing yourself to take regular vacations is just as important. It’s good for you. It’s good for your family and the others you love. And it will be great for your portfolio. It might seem difficult at first. But it will force you to create a better business and property portfolio.

The truth is that we don’t give and get enough vacation time in America anyway. At least not according to decades of productivity studies. After 40 hours a week performance declines. And many countries have instituted mandatory 30 or 40 day vacations for all workers. We may want to work more. We may not need 30 days off. But in order to be competitive, productive, and sustainable vacations are important.

Hacking Passive Income

Some individuals are prepared to jump right into turnkey real estate investing. This may require cash or credit that some don’t have. Those that can should explore this option. It means simply locking in the passive income and other benefits of income property investing without ever having to be directly engaged.

Other individuals may not be there yet. Perhaps they lack both credit and cash on hand to acquire turnkey properties. Real estate investing is still the best way to get ahead. But it might require a full contact approach to catch up. Go hard early with wholesaling or fixing and flipping houses. Build credit and credit lines as well as capital. Just don’t lose sight of the ultimate goal. Plan a clear trajectory and timeline for developing truly passive income streams.

Conclusion

Passive income is essential for everyone. There are various real estate investment strategies to generate it, but don’t neglect to think about ensuring the continuity of those income streams. Paid vacations or turnkey property investing programs can help with this.$

[Ed. Note: Need additional income to help support or supplement your real estate business? Ray is offering a complete blueprint to helping you take control of your financial future with a web-based business that you can operate from anywhere in the world – including a coffee shop, your kitchen table, or anywhere around the world where there is Internet access. Discover how you can achieve the American Dream and your financial independence here. You’ve never seen anything like this before.]

How to Increase Response by 15 Percent

Years ago, I had a client who sold utility software for IBM mainframes.

He would send out a letter with a technical description of the software and its function. He would offer to send the software on magnetic tape for a “free 30-day trial.” That was (and still is) an industry standard.

One day, he made a minor change to his offer. Instead of “a free 30-day trial,” he said, “Use this software free for 30 days.”

Much to his amazement, response to all his mailings increased by 15 percent.

When he asked his buyers why this made such a difference to them, they explained that the word “trial” was a turnoff. It made them think of all the extra work they would have to do in order to try out the software for 30 days. They would have to come to the office late at night, take systems offline, interrupt service, and possibly lose files.

But being able to “use” the software at no cost was immensely appealing to them.

What can we learn from this?

1. The wording of your offer is important — not a trivial afterthought.

2. You never know which offer will pull best unless you test several different ones.

3. If you can’t understand the appeal of the winning offer, talk to some of your customers and find out what it is. You might learn something that will help you make your offer even stronger.$

[Ed. Note: Ray Buckner’s personal team will create 10 six-figure earners before the year is over. The Traffic Authority system walks you through the process of growing your profitable online business using a proven online business model. Ray shows you exactly what he did to grow his six-figure business. To find out more about Traffic Authority, go here.]

How to Invest Like a Multimillionaire

Okay. You want to be a super-successful investor. I get it.

You are already living on a fixed income. Or you are nearing retirement and worrying about whether you’ll be able to kick back and earn a passive living from your investments. I know how you feel.

But here’s the thing. The secret to lifelong financial security is this: Never give up your active income. Keep a controlling stake in your business or start a side business that will pay you dividends till the day you die. That is the only serious financial security you can ever have. There is nothing you can do passively that compares to it.

But no more on that subject in this essay — I know how middle-aged investors think. They don’t want to be told they have to keep working. They’ve been working their whole lives. They want easy solutions. Big returns. And they don’t want to make all the tough decisions themselves, like they’d have to do with a business.

In short, they want a guru. I’m not a guru, but I do know about the technicalities of investing.  I have done very well with my investments these last 20 years. So today I’m going to tell you most of the important things I know. What you are about to read are “truths” I’ve discovered from my experience.

I might not be able to give you everything you really want — triple-figure returns guaranteed. But I’ll give you the next best thing: the system that kept me out of every major financial collapse in my lifetime and made me very wealthy without spending four to eight hours a day studying the markets.

One thing I bring to the table is long-term perspective. I said I’ve been investing for 20 years. That’s true. My first investment, a speculative bid on a Chicago condo, was in 1996. I lost all my capital and more. And it changed me. I became very skeptical of going after huge returns. That is why I never got suckered into all the bubbles that have taken place since then.

Another thing I bring to the table is a long-term perspective. I’ve been an insider in the investment advisory business for about as long as I’ve been investing. I've learned from a lot of the top gurus. I know how they make money when they make money. And I know how they hide their losses when they lose, which is often.

Today, I’m going to give you the straight dope on how I invest. It’s all about not being an idiot. It’s all about sticking to the basics. It’s not difficult. In fact, it’s easy.

If this doesn’t sound like too much braggadocio to you, read on.

Successful investing has three elements:

1. How much you have to invest

2. How long you keep it invested

3. The rate of return you can get

All other things being equal, the more money you have to invest, the easier it is to get rich.

It’s also much easier if you have time on your side. It’s easier, for example, for an 18-year-old with $5,000 in his bank account to acquire a multimillion-dollar fortune than it is for a 65-year-old with $1 million in net assets. When you have more time, you can take less risk and let the miracle of compound interest work in your favor.

If you are young, I recommend the book Automatic Wealth for Grads. It provides a blueprint for wealth that anybody, and I mean anybody, can follow. But you aren’t 18, are you? You don’t have that much time. And that is where the third element of successful investing — rate of return — comes into play.

You’ve done the arithmetic and you realize that the only possible way for you to acquire any sort of respectable retirement fund is to get triple-digit returns on your investments.

But let me tell you something about triple-digit returns. They happen. They happen all the time. But they don’t happen to me all the time. And they probably won’t happen to you. Triple-digit returns are like eagles in golf. There are hundreds, if not thousands, of eagles every day around the world. But even the best golfers don’t experience them very often.

Making money in the markets is much like golf: every time you tee off you should be looking to shoot below par (i.e., above market), but to be a great player you can’t  try for a hole-in-one on every par three or try to get one in two on every par five. You need to play the game strategically because you know that odds are the eagles will not come that often.

My investment strategy has always been based on the fact that I know I am not destined to get triple-digit returns with any frequency. Still, I’ve done very well.

So how much do you have to invest? $10 million? $1 million? $100,000? $10,000?

If you have $10 million, you don’t need to worry about triple-digit returns. You can achieve financial independence by making 5 percent on your money. The secret to successful investing when you have that kind of dough is to restrain your greed and curtail your expenses. You can live like a billionaire for about $100,000 a year. $10 million at 5 percent gives you an income of $500,000 a year — way more than you need.

If you have a million to invest, you need more than 5 percent. If you buy my $100,000 figure (and in a future essay, I’ll show you how that can be done), you will need to get a 10 percent rate of return. That’s not so difficult. I know many investment advisory services that consistently deliver 10+ percent returns to their readers.

If you have less than a million to invest, you have a challenge. You need to get high returns on your money. By high, I mean 15 percent, 25 percent, and the occasional triple-bagger.

But high returns usually mean high risk. And high-risk investing — for most individual investors — means the possibility of losing most or all of your money.

All the investment research I’ve ever read has proven that if you invest exclusively in high-return/high-risk investments, you will eventually go broke.

Can you deal with that? If not, you need to have a secondary supplemental income from an active interest in a business. But I told you I wouldn’t talk about that today. Today, my job is to show you how to make above-average market returns on the measly money you have saved for your retirement.

But to do that, I have to define the word “save.”

The Difference Between Saving and Investing

Most people think of saving and investing as synonymous. That is a big mistake.

Investing is what you do to grow your wealth. Saving is what you do to preserve it.

I have always divided my assets into the following four categories:

• Private property (homes, art, other valuables)

• Active investments (businesses I own or control)

• Passive investments (stocks, bonds, etc.)

• Savings (stored, safe wealth)

Private property can have significant financial value, but since you are using it (and want to continue to use it while you are living), it cannot be considered an investment.

Active investments, as I’ve pointed out, are great investments so long as you stay active with them.

Passive investments are the things you normally think about when you talk about investing. But passive investment is risky. You don’t want to take a risk with your savings. That’s why I don’t consider passive investing to be a form of saving.

Savings is the money you put aside every year after you’ve bought the private property you want and have made the investments you want. Saving is what you want to keep.

In the past, I have put my savings into four vehicles: cash, bonds, rental real estate, and commodities.

But these days, I think that bonds are very risky. I still invest in them, but I don’t consider them to be savings. Cash gives me near zero return, so keeping money in cash is no longer an option since inflation will cause it to diminish — just the thing I don’t want to happen to my savings. I got out of rental real estate about five years ago when it was obvious I couldn’t get a safe return on my money. I’m back into it now, but cautiously.

But rental real estate is not a passive investment. It is active. The only way you can assure a good return is to own and manage your properties carefully. In that regard, it’s like running a business. It’s not as difficult as most businesses, but it’s still very hands-on.

As I said, if you have less than a million dollars to invest, you have to be willing to take some risk to make the kind of returns you need to enjoy a decent retirement.

So, where should you put your money?

Getting Your 15 Percent to 25 Percent and Occasional Triple-Bagger

It’s not easy to get 15 percent to 25 percent on passive investments. Studies show that it’s nearly impossible. But I know guys who have done it. And I’ve been watching them do it for decades. They have secrets — little tricks of the trade — that I can share with you.

First, and most important, they don’t keep all their eggs in one basket. They diversify.

I have always favored that approach. And because I didn’t want to be bothered looking at individual stocks, the money I had in the stock market was invested in index funds. But today, I don’t think that makes sense. The stock market has been overvalued and now is in correction mode. If I had all my stock money in index funds, I’d take that big hit with them.

I still believe in diversifying. But now I think it makes more sense to do it by finding sectors and individual stocks that seem likely to outperform the market. That means I’m going to have to get “active” with my passive investments.

Having a bird’s eye view of the investment advisory business, it is clear to me that some advisors have been doing very well. And some of them did well even in 2008 and the beginning of 2009, when everyone was getting killed. I have studied and researched many of these people. So I will be picking and choosing from their recommendations.

But I don’t intend to simply pick a few gurus with great performance records and blindly do what they tell me. I will educate myself on their investment ideas and strategies and use that knowledge to make decisions that match my temperament and my financial objectives.

You have to be in charge of your own portfolio. And part of being on charge of your portfolio is not to let your emotions get in your way.

Greed and fear are two of the emotions I’m talking about. Greed will make you buy bad stocks, simply because you are convinced their prices will go up. Fear will prevent you from buying good stocks because you are scared of the market or a market sector or something else.

Insecurity is another one. Insecurity makes it difficult for an investor to admit that he was wrong about a stock he put his money into. Not admitting you were wrong means not selling a bad stock when it’s going down. Many investors never sell their stocks, even when they are left with pennies on the dollar. A healthy attitude is one that says, “Although I invested in a particular stock in good faith, I’ll never know enough about the stock or the market to be 100 percent right all of the time. When the market causes the price of one of my stocks to come down, that is just its way of telling me that I didn’t have all the facts.”

How to Make Smart Investment Decisions

I’ve always followed a simple rule: Before putting money in a passive investment, I apply the same criteria that I apply to buying a business:

• I never buy a business I don’t understand.

• I never buy a business whose management seems the least bit shifty to me. If I have doubts, I stay away.

• I never buy a business that isn’t making money unless I can clearly see how it could make money if I added something to it that I have.

What’s Interesting Right Now

Since realizing that I have to get “active” with my passive investments, I’ve been keeping an eye on the predictions pundits are making for various market sectors. Much of it seems just plain dumb to me. But some of it I find very convincing. For example:

• Natural gas demand is set to increase significantly, and select companies will profit handsomely.

• The world’s population continues to increase, along with the demand for agricultural products. The standard of living in developing nations is rising and that will push food prices even higher. There will be plenty of opportunities to profit by investing in raw food commodities and the fertilizer producers.

• I stopped investing in gold when it hit $1,000 an ounce. (I got in around $350.) But there is a great deal of solid evidence that suggests that gold could surpass its average annual gain of 16 percent over the last decade.

• Commodity prices will head higher because of increasing demand and the prospect of higher inflation.

• I have always liked investing in businesses that appeal to Baby Boomers. Baby boomers have been driving the U.S. markets since the early 1950s. I don’t see any reason for this to change until they (we) are dead.

• Healthcare. (See my thoughts on Baby Boomers.

These are trends I believe in. As a businessman, I’ve made all of my big money getting into trends as they are taking off and then getting out when they are clearly overvalued. If you look at the miserable history of professional trend investors, you’d think this was a crazy strategy to pursue. But most of these guys lost money because they got in too late or stayed too long. I don’t think that is at all necessary if you are prudent (i.e., if you are a chicken investor.)$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…]