Monday, July 25, 2016

Money Paradox - could spending money make you rich instead of saving ?

Why spenders are winners and savers are losers in the new economy

Now that it’s available to stream on Netflix, I’ve heard a lot of people talking about the movie The Big Short, which came out late last year. If you haven’t watched it yet, you should.

The movie is based on the true story of against-the-grain traders who bet against the housing market right before the housing collapse in 2008. At the time, everyone thought they were crazy.

One great scene depicts trader Dr. Michael Burry, the founder of hedge fund Scion Capital, leaving a meeting with Goldman Sachs where he convinced them to sell $100 million in swaps against Goldman’s CDO holdings in the housing market. The Gold-man team members are laughing, hysterically, thinking they just took money from a baby. In the end, Dr. Burry had the last laugh. And so did the others betting against the hot air balloon that was the housing market in the mid-2000’s

Those who spent their money betting against the housing market made billions of dol-lars. Those who saved money or believed that the value of their house would always go up, lost…and lost big.

Savers are still losers

All this illustrates an important concept that I’ve been teaching for many years: savers are losers.

In an economy where almost everything is built to take your money, saving it is of little value. From inflation to taxes to hidden fees in your 401(k), the system is stacked against you.

In today’s economy, spenders are winners. By this I mean people who know how to spend their money in the right places and in the right investments. Why is this?

Why spenders are today’s winners

Money is not backed by anything. It is a currency, which like a current of electricity, is always moving. Today, money flows from one sector to another. If it stops moving, like a current it dies. If your money isn’t moving, it is dying, slowly, losing value day by day.

The rich know they must keep track of where money in the markets is moving, and they must move their money accordingly. This is why the traders who made the big short profited so spectacularly. They were paying attention and saw where money was moving. But more than that, they saw the assets it was moving into and understood the value of those assets was garbage. They knew that they could get ahead of the curve and move their money to where others eventually would. And in the world of money, the first always feast and the last always starve.
Know where to spend, and you’ll win

This is hard for the average person to wrap their mind around. For generations, we’ve been taught to save our money wisely. Today, that advice is no longer good or wise advice. Today, if you want to get ahead financially, you must know how to spend your money wisely.

Spending money wisely, of course, takes financial intelligence. And that takes financial education. In order to see and understand the markets, you must teach yourself the language of money and the concepts that make the markets run. You must study, and hard.

The good news is that information is plentiful. All you have to do is look. Today, start thinking less about saving your money and more about spending it. This subtle mind shift will make a huge difference in your financial future.

Tuesday, July 19, 2016

Start your own business on Amazon

A system for selling online that anyone can master

Over the last month, I’ve talked a lot about starting your own business selling products on and how to outsell your competition. We partnered with Amazon expert and entrepreneur Brad DeGraw to put together a system that will make you successful, and we’ve told you about Jungle Scout, the only tool you need to know what products to sell.

Today, I’m wrapping up this series by recapping six reasons why you should start your own business and sell on Amazon.

1. You can do it from anywhere
As a young kid, my rich dad had to help at the family store. He spent many hours in the evenings and weekends tending and stocking. It was a big commitment that consumed not just his time, but his family’s time as well. The beauty of e-commerce is that you can set up a store online and sell from anywhere and at anytime, without having to personally tend your inventory or spend twelve hours a day sitting at a register. Amazon allows you to sell while you’re doing other things and your systems fulfill those sales. It’s true freedom.

2. It’s scalable
With traditional retail, if you want to grow, you need to find another location, build additional inventory, hire more staff, and more. It’s a huge commitment with a lot of risk. With Amazon, you simply continue to find good products, optimize your pages, and watch as your customer base grows. You invest in the system, not in locations.

3. It’s easy to learn
Learning Brad’s system and getting started selling on Amazon is easy to do. In fact, his 9-year old son uses the system with great success. Who needs an allowance when you can make thousands of dollars with your own business as a kid? Seriously though, if a 9-year old can do it, so can you.

4. You don’t need to handle inventory
Like I mentioned earlier, a huge downside of traditional retail is that you have to keep your physical product in inventory and on hand. With Amazon, you work in a system that eliminates this need. Your manufacturers handle the production and shipment of your inventory. You simply fulfill the purchase through Amazon and collect the cash.

5. You don’t need to deal with China
When I mention manufacturers, a lot of people immediately think of China—and what a headache it would be to deal with a foreign partner. The good news is you don’t need to deal with China. Brad uses US manufacturers to great success, and so can you. And there’s great benefits in doing so. They speak English, have uniform quality standards, are located in better time zones, and they take the initiative to figure out how to get things done.

6. It doesn’t take a fortune to get started
Finally, and perhaps most important, it doesn’t take a fortune to start your business and sell on Amazon. Brad started with $100 and a Wi-Fi connection. So can you.

Monday, July 11, 2016

Life vs Sports vs Team Work

Millions of people go through life repeating what they learned in school, taking the test of life on their own, not asking for help, and being bullied or told what to do by big and powerful organizations.

Their mantra is, “If you want something done right, you have to do it yourself.”

On the other hand, my rich dad said, “Business and investing are team sports.” The reason why most people struggle financially today is because they go onto the financial playing field as individuals, not as a team.

The greatest individual performers in the world understand that they are nothing without a team. Take, for example, this quote by Babe Ruth, arguably one of the greatest baseball players in the history of the game: “The way a team plays as a whole determines its success. You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.”

But a problem does occur when it becomes hard to figure out who is or should be on your team and who is playing for other teams. For instance, when a young couple goes in to meet with a financial planner, odds are that planner is playing for the other team—the mega-financial corporation he or she works for. Every credit card you have is playing for the other team. Your mortgage plays for the other team. The world is full of people who are employees and self-employed turning to businesses and investors to help them financially. The problem is those people and those tools all play for the businesses and investors—not for you.

Oftentimes these other teams have millions of dollars to throw at influencing individual players who don’t know any better. But the good news is there’s a way to fight back. And that’s by building your own team.
Choosing your team

If you want to be successful in life, you need to have experts that are on your side that you can turn to for advice.

Key players for your team include an attorney, a CPA to help with accounting and taxes, an objective and well-vetted broker, various experts in your chosen investment and business areas, mentors, and coaches. Additionally, it never hurts to have athletic trainers, life coaches, and a strong network of friends and family who keep you sane.
Be picky. Be wise.

The key is to choose wisely. Be picky. Don’t settle for people who you’re not sure if they play on your team or for other teams. At the end of the day, the person who chooses his or her team the wisest is the person who will win.

Robert Kiyosaki is a Japanese American investor and author of popular book 'Rich Dad Poor Dad' where he wrote of his two dads. His rich dad taught him to think differently, inspired and helped him get rich on his own.