Bringing money in.
We know we need to bring money into our lives.
We know that working for it is not the answer because people who work aren't always rich.
We know that we don’t have to be smart to make money, because not all smart people are rich.
We know that we need to bring money to us with minmal effort. So what is the best way of achieving this?.
As I’ve said I’m going to show you how you can do it. No matter who you are. For this reason I’m going to eliminate some options of possible investment vehicles. Things like currency/commodity trading or stocks/bonds and other high risk investments. It’s true that those who know what they are doing can make good money in these endeavors, but it's both too risky and hard to teach.
The are also other ways to make money that simply rely on luck or fate. Winning the lottery, finding and marrying a rich person or a death in the family (we’ll call that fate not luck, depends on your in laws I suppose). But obviously I can’t recommend any of these because you have limited control over achieving them.
There are also ways to make money that are against the law. You wont find any of these here because they are unreliable and risky on many levels.
Here are the four most common (generalised) methods of making money:
Bank investments (savings).
Share trading
Owning a business
Property
Saving your money in a bank, is a secure guaranteed return on your investment. But there are problems with it:
1) You generally only receive a small return relative to inflation. At the end of you're investment, you'll have more money, but that money is worth less. It’s almost always worth only a little more then when it was deposited.
2) Time. It takes a long time for to become a millionaire (eg. 50 years at 100 dollars a month with 10% interest per annum) by saving.
3) You can’t do anything yourself to improve the interest rate and therefore the amount you will profit. In other words (aside from shopping for a better interest rate) you have no control over how much you can make.
For these reasons, I don’t recommend bothering with investing money in the bank except if you need to slowly accumulate capital (or “start money”). In this case only, you may as well save your money in the bank as put it under your mattress.
What about share trading. I hear “it’s too risky” a lot, but the reality is, trading in shares can be systemised to the point of a near guaranteed return. Of course I say “near guaranteed” because you can never eliminate the risk completely.
There are common methods for reducing the risk of trading in shares and still provide a far better return than any bank will ever give (systems like “dollar cost averaging” or ‘Dow Jones Top 10’). I could explain them here but I’m not going to recommend share trading for these reasons:
1) You can’t do anything yourself to improve the return (apart from buying and selling at the right time, but that’s called “speculating’ and is extremely risky. If you invest in Coca Cola or Microsoft for example and then bought 1000 bottles of coke or 500 copies of Vista, the share price wouldn’t rise because of it. It would cost you a lot for no gain whatsoever.
2) You can’t buy more than your moneys worth. How many shares can you buy for $1? That’s easy… $1 worth. End of story. But as I’ll show you, there are investments that you can buy for a fraction of their purchase price.
3) The value of shares is set. Shares sell for a precise amount at any given time. You can’t somehow purchase a share for less than market value. You can with other investments.
By far the greatest way (in my humble opinion) to make money is to be the owner of a successful business. Notice how I put that? I didn’t say the best way is “to run’ your own business, that implies working.
Problem is, most businesses fail in the first two years. It involves too many factors to get it right. As I don’t know you and don’t know if you’ve got what it takes to make money from owning a business, I can’t recommend it as the right type of income. Some people get trapped running their business and it ends up being like prison (as was my first business). I’ve said it before, but it can’t be overemphasised. Your income vehicle must require absolute minimal effort.
So now by process of elimination we come to the epitome of investments. Real estate (property). It has everything you need:
1) You can buy property for a fraction of the purchase price.
2) You can buy property for less than its value.
3) You can improve property to increase both its value and income potential.
4) Anyone can be successful with property.
5) Not a lot of work is required.
Before I start explaining each of these points, I want to say don’t worry if at this point you don't think your in the position to purchase property, we'll get to that. Later, we’ll look at how to get a loan, types of property with low entry cost and how to find an investment that’s so good on paper you won’t need much of your own money at all.
I ask the question before, what can $1 buy you in shares? The answer was of course $1 worth. With property, you can buy far more with your dollar because the back will lend you the rest. For ever dollar you have you can get tens or hundreds of dollars worth of property for your money. It simply depends on your lending institution (bank, mortgage broker etc) and the property in question.
Of course once you’ve levered your money to buy a lot with very little, how about buying something for less than its worth. There are a myriad of reasons someone will sell property for less than its worth.
I’m looking a buying a piece of land right now which is worth (according to a registered valuer) $96,000.00 but the owner is desperate to sell. That’s why I'm going to offer him $70,000.00 (I don’t think he will go less than that for reasons of pride). He wants the money because he just purchased a shop and his mortgage repayments are huge. He would like to pay of a lump of his mortgage to reduce his monthly repayments to a less stressful amount. I have also explained to him that if the restructures his mortgage he will save a great deal of interest. There are plenty of mortgage calculators and mortgage analysis programs on the net where one can show a large saving over the life of a loan by a large lump sum payment. This saving will make up for the difference in the value of the property and the purchase price (I’ll post a follow up at to what happens with this offer on this site).
There are in fact thousands different reasons why people sell property for less than it's worth. A death in the family can often results in urgent sale or perhaps someone who wants the cash urgently for whatever reason or doesn't even bother to find out what its worth in the first place.
If the seller is motivated enough to sell, they will meet your price. So, unlike shares, you can pay less than the properties actual market value. That’s instant money (because I’ll show you how to get it I cash)! Great!
Further more you have control over your investment and can actually do things to improve its value. If I do buy this piece of land (1500m2) I plan to sub divide it into 3 pieces of 500m2 each. Each one would be (currently) worth about $50,000 which would be a vast capital gain for very little money (and very little work).
You can also do something to improve a properties value. It may be you simply buy a house and have a new fence built, making it appear more expensive. This would increases the value. There are any number of things you actually can do with property.
I'm not suggesting you do the work yourself, tradesmen can take car of that for you. My wife and I are building a house with our own hands but its also our hobby.
Once you’ve raised the value of your property you can get more passive income out of it. The higher the value, the more rental income you can get from it. The more income the house brings in, the more you can borrow against it and the more property you can buy.
Real estate is the ultimate investment. I don’t recommend anything else. Investing in real estate is something anyone can do with a bit of knowledge and very little work
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