Money Management Contd

3. KNOW THAT YOU ARE THE KEY TO YOUR FINANCIAL FREEDOM
You must learn how to put your money into profitable investment such that it will bring in multiple streams of income into your pocket. A true investor is able to evaluate his or her possibilities of making or losing money in an investment. Using all his or her knowledge available, he or she can tell. Investing successfully is by no means a complex issue, it requires time, financial knowledge (literacy), experience and a large amount of self restraint. Anyone can consistently make money from any invest market if he or she sticks to the above mentioned parameters.
To make successful investment trade, an investor has to take into account technical and fundamental data and make an informed decision based on his perception of the investment market sentiment and expectation. However, timing is the most important variable in making successful investments. An investor is an asset to his investments when his decision brings in profit on consistence basis and he is also referred to be a liability, when his decision affects his marginal productivity of his investments which brings in little or no profit. Thus, for an investor to be classified as an asset, he requires the following;

Investment Plan
Unless you have taken time to write down a set of rules that you can and will follow, its likely you will remain unfocused and directionless. Make a plan, have rules, follow them, set goals that are realistic and you will achieve them. In your investment plan, you must categorize which investment is a long term investment and which is a short term and stick to them. Your investment plan serves as a yardstick to measure if you are making progress or not in your investment portfolios.

Investment literacy and education
Increasing your investment knowledge and literacy through attending of seminars and reading of books on specific investment portfolio you are into or about going into is also a vital requirement for any investor. Money invested wisely will diligently produce more money. Like I said, when you invest money, you are sending it to do some work for you whether in your presence or absence. Money will always work for you if you invest it in a good opportunity. For you to invest your money wisely, you need to know in detail about the investments you are about to put in your money, how you will get back your money if things don’t go as planned. This is why financial education serves as the first step to entering into your financial freedom, because when you know how money works, you will definitely know where it works best.

Donating 10% of your income
You may wonder why this is necessary in the investment market but the truth is, it is applicable to every facet of life. It is a pre-requisite of making and keeping wealth. The most important thing in life, if you want to generate wealth, is to donate at least 10% of your income regularly and the keyword here is regularly.
Since I started donating 10% of my income, I would not say I have never been faced with situations that require finances but somehow, I have always found a way around solving it. I can tell you from the experiences of some very wealthy people that I have read about, unless you practice donating at least 10% of your income, life is a lot more difficult. Donating 10% is like a magic trick of attracting financial ease and luck into your life. I urge you to visit bookstores or log onto the internet and search for your favorite wealthy men and women, read their profiles and you will see that the secret to their lasting wealth is in donating at least 10% of their income. Personally, I believe that if you donate at least 10% of your income is the number one principle to your investment success. If you do it, you will attract the right sources of information at the right time, to help you make proper investment decisions and your instinct will become sharper.

Conversely, an investor is considered to be a liability if he has;

Knowledge deficiency
Most investors do not take their time to learn the basic fundamentals of every investment they are into or about to go into. This makes them take the wrong decision at either the right time or the wrong time, thus, losses money and put their blame on the government or the economy. Recent statistics show that 96% of all investors in the investment market do not understand the investment basics of their portfolio. This is why, for most of them, their odds for making money in the investment market are slim to none. Never invest your money in a business or in an investment you don’t know or understand its basics or follow the advice of an unskilled and inexperienced person in that line of business or investment. Money invested under the careful advice of people who are already succeeding in your line of intending business or investment will be cautiously protected. Even, the scriptures urge us to follow those who through faith and patience obtain the promise. When you seek for advice on a particular business or investment venture before you put in your money, you reduce the chances of losing your money.

Lack of investment plan
Lacking of planning is the number one reason many investment business fail. Investing without a plan is like investing for wrong reasons. Most of these investors invest solely to make money. I know every investment is supposed to put money in your pocket but that is not enough reason to invest. It is the investment plan that carries your goals, target and reasons. This makes you understand what you are really going into. Before you start any investment business, you need to know what you are going to do and how you are going to do it. If you don’t, your new investment business will run into trouble as soon as you begin allocating your limited resources. You will wind up spending your time and money on those things that seem to need immediate attention but have no real bearing on your long-range business will suffer because you will not have the groundwork to address them and your available funds will have been depleted.

After all, a true investor is not only after getting money from his investments but in building a large investment empire by converting his earned income into passive and portfolio income generating investment.
For instance, in the stock market, you might want to take into consideration which sector/industry a stock trades in. if you trade a smaller subset of stock from the list, you may want to avoid trading stocks that all trade in the same sector, because we know on certain days all storage stocks or all chip stocks will move together as a sector. By mixing your sectors, you have a less chance of getting caught on those days when one whole sector moves against your trades. By this I mean, trading one particular type stocks of a sector, you are exposing yourself to unforeseen danger. Let’s say, you buy shares in the banking sector. The shares in the banking sector are all influenced by the same factors thus, a change in one of those factors positively will lead to a positive return and vice versa. If these factors influence the sector on the negative aspect, you could have a little or no returns from your stock. I call this situation a win it all or lose it all principle. It is equivalent to gambling in a casino.

You must understand that the odds of one sector favors another sector in a stock market as such, a true investor does not invest in only one sector of the stock market but in two or more sectors. Thus, he/she has already stroked a balance against the odds of the stock market. When one sector is down another is up. I am not here to talk about stock market, but I only used it to explain this basic rule of investment.
So, this is one of the reason true investors do expand their portfolios to cover different sectors of the economy. Remember, an investor who diligently follows the plan always catches the run. To know more about the fundamentals of trading the stock market, follow the link below
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4. BE PREPARED AT ALL TIMES FOR OPPORTUNITIES
A true investor focuses and keeps in mind what others are already looking for. The difference between a true investor and a non-investor is that a true investor is always prepared for what and when things will happen. If you want to buy stocks, then attend classes on how to spot bargains in stocks. Being prepared begins with training your brain to know what to look for and being prepared for the moments the investment is presented to you.

OPPORTUNITIES – HOW TO RECOGNIZE IT
The word opportunity means favorable time, occasion or set of circumstances. Many people in life lose a lot of good opportunity that comes to them. They do not only waste their money but also waste their lives, resources and opportunities. One way that people lose opportunities that comes their way is by being extravagant. When you live beyond your means or spend money in excess, you have an extravagant lifestyle. This is a waste of opportunity.
When preparation meets opportunity, people call it luck. Opportunity waits for no man. The first step towards meeting an opportunity is always a difficult step but if you do take this step, it becomes your most important step in your journey towards financial freedom. Just like in chemistry, where the rate limiting step of any reaction is the first step, once this step is overcome, the reaction will definitely yield the required results. Likewise, your first step towards taking a financial opportunity (investment) while determine your financial life.
Your first step in taking up a financial opportunity changes you from one who works for money to one whom money works for. A man who does not step quick when an opportunity comes is a very big procrastinator. Procrastination is the fertilizer that makes difficulties grow, it is an opportunity’s natural assassin. It steals a person’s time, productivity and potential. To attract good luck to yourself, it is necessary to take advantage of good opportunities. Action will lead you forward to the successes you desire, thus men of action are favored by good luck.

MONEY MANAGEMENT SKILLS

For you to be a good investor, you must learn first how to manage your income. This refers to how you allocate your income to bring to you maximum productivity and satisfaction. Money management is all about risk management. The essence of it is to make a logical decision on where and how you spend or invest your income. It is this decision that determines the risk of the investment you want to go in to. When you have a good knowledge of money management, you will be able to analyze an investment if it is a profit making venture or a money taking venture. Proper money management is a function of finding the point that yields maximum returns on investments within acceptable risk parameters. Improving your money management skills involves;

1. KNOW WHAT KIND OF INCOME YOU ARE WORKING FOR.
There are four types of income that you can potentially earn. The first is from being an employee; the second is from being a self-employed individual. The third is from being a business owner and the revenues that owning a business would generate. The fourth is from being an investor, generating income from investments of all kinds.

The categories are self explanatory. You obviously know which category you fit into at the moment by the type of income that you receive. However, the reason for sharing this is to bring to your attention not only which category you are in, but to think about which category you should be in, the goal is to try and get you from being an employee or self-employed to that of an investor.
Doctors, lawyers are self-employed, but if they don’t go to work that week or month, they typically will not receive their pay check. Unless, they have a system in place that allows them to continue earning money without having to do much work in exchange for it, they have to show up and perform some task.

You must understand that there are 3 basic kinds of income. Earned income which is an income derived from a job or some form of labour. It is the highest taxed income and also the hardest you can use to accumulate wealth. Your salary is an example of earned income. Portfolio income is an income derived from paper assets. It is the most popular form of investment income and it is easier to manage and maintain than other investment portfolios. Examples include stocks, bonds mutual funds etc.

Passive income is an income derived from real estate, royalties from license agreements. For instance, if you write a book to be published, after the first publication, the money you receive from subsequent publication of that book is a passive income or income you receive from properties you have sold or rented. However, most passive incomes are earned from real estate.

An employee works for money, a self-employed works for money even though he owns his job. A business owner owns a system and has people work for him. An investor has money working for him. The goal is to become an investor and a business owner and have money work for you instead of working for money.

It’s not something that can happen overnight. It’s a progression and it takes some time, some commitment and a little skill. But ultimately this is where you want to; own your own business or investing or both. The main aim of this book is to show you why you must be an investor and how you can start.

Thus, with these differences, if you want to accumulate wealth you must work to earn mostly portfolio and passive income and not earned income. The major difference between portfolio and passive income with earned income is that the former have more tax break advantages than earned income. i.e. in portfolio and passive income, you pay your tax after spending while in earned income, you pay before spending.

2. KNOW HOW TO SECURE YOUR SAVINGS/INCOME
Secure your savings/income by purchasing or investing in a security. Before you put in your money into any investment, study and carefully carry out an extensive analysis on the investment you want to go into. You can attain training classes on it if necessary. Better still, you can seek for advice from a trained and experienced professional in that field of investment you want to go into.

Convert your earned income into portfolio and passive income
Why you must do this is because income from portfolio or passive is not based on your effort. You only leverage your effort by allowing your money work for you, and the returns on investment will be far better than that received from earned income. Also, income from passive or portfolio income is not a fixed income, as such cannot be completely taxed compared to earned income which is always fixed. Moreover, you cannot work for money all your life because you will one day get to a point where you are no longer strong to work for money, so you must start now to convert your earned income into passive or portfolio income so that your money will start now to work for you thus, taking care of your future.

Another reason you should convert your earned income into passive or portfolio income is because, passive and portfolio incomes are relative incomes while your earned income is an absolute income. Relative Income is more important than Absolute Income. The difference between absolute income and relative income is that, absolute income is measured using one only and unalterable variable, money while relative income uses two variables, time and money. Let’s consider these two hardworking gentlemen. Man A works for 80hrs per week while Man B works for 10hrs per week, both make a total $50,000 annually. Who will be richer when they pass in the middle of the night? If you say Man B, you would be correct. When you invest, you are not just earning money but also time. It is this time that separates the rich from the poor because the rich create time for themselves while to the poor there is always no time.

How to convert your earned income into passive or portfolio income
You can only convert your earned income to passive or portfolio income by purchasing a security. Your money will be of no use if it cannot be exchanged for something. Buying a security help secure your money from inflation, but not all securities do protect your income from inflation. The two kinds of securities which are; an asset and a liability. From rich dad definition of asset as a security that puts money in your pocket and liability as a security that takes away money from your pocket.

A security is something you hope will keep your money safe and secure. The safety measures of these securities are tightly regulated by the government. A very clear example is the organization that watches over much of the world of investing called Securities and Exchange Commission (SEC). The main reason a security is not basically an asset is because it only secures your money but does not guarantee that you will make money.

Let’s consider a security like shares. A share is a unit value of a company which the public can buy. When you buy a share from a company, you become a shareholder in that company such that when the company declares its dividend, they pay you also. Now, when you buy shares, you have actually secured your money. The shares you bought can become an asset if it brings in more money into your pocket (when the dividend is paid to you) and can also become a liability if it takes money away from your pocket (when it value price fall below the price you bought). Hence, this is why securities are not necessarily assets. Therefore, for you to secure your earned income by purchasing a security, you must know which securities are assets and liabilities.

Save your relationship

Do you know that out of every 10 couples courting, only 6% ends up getting married and after marriage, only 2% stay together forever. The key a long lasting and enjoyable relationship with your spouse is communication. Communication is more of a body language than spoken words. A very clear example is a heart touching story a friend shared with me. I would appreciate your comment after reading this story. It is often the most overlooked aspect of in most relationship. When this happens, couples start seeing their weaknesses in each other and instead of focusing on what brought them together, they start criticizing each other on what the spouse has not done for him or her. Their choices of words changes from “us” to “I” or “you”. This creates more tension between the couples and widens the gap between them. Is this the ideal relationship you want? The most important things they used to value starts fading away slowly and the intimacy between them goes likewise. There is no problem in life without a solution. If your situation looks similar to this or your relationship is at the brink of collapsing, don’t give up yet because I have some great news for you. The only way to achieve your enjoyable relationship you once had is to go back to the basics. If your question is how? Then this book is just for you. Follow the link below and get a copy of this book, save your relationship and thank me later. Click Here!<\a">Save your relationship! Click Here!<\a">Relationship Secrets