Ten Decisions You Need To Make To Get Rich
Building Wealth, is just like building a house it begins with a plan.
The plan starts with an Idea. Wealthy people know and Think Wealthy.
The secret to building wealth begins with:
Building Wealth....Inside and Outside
Thoughts are things. How you think shapes your circumstances. So to
live a life of unlimited abundance,you need to have the mindset that
continually attracts wealth known as (prosperity consciousness).
That's your inside game plan.
The rich got to where they are not only because they have the right
mindset and attitude, but also because they have certain knowledge and
skills that help create money (wealth building). That's your outside
game plan.
From today,daily we will look at each of these 10 Decsions
Step One: Decide to Be Rich
Step One: Decide to Be Rich The only difference between the rich, poor
and middle class,is the kind of lifestyle they want and the words they
use. Poor people often say "I just want enough money to pay the rent."
"I need a few thousands to get to the next pay day". People who used
words such as these, often focused only on financial survival.
The middle class used different words because they have different
ideas about how to use their money: "Our home is our most important
asset and our largest single investment." "We're setting a few
thousands aside every month, so we can afford the down payment on our
dream home." "We're saving money for our children's college education
and our retirement." The middle class focused on comfort. That is why
so many of them say, "I don't want to be rich. I just want to be
comfortable."
The rich are rich because they are not focused on day-to-day short-
term survival, or the expense column as the poor are. Nor are the rich
focused on comfort and the acquisition of liabilities using credit, as
the middle class is. The rich are rich because they focus on wealth
building assets.
Think on what stocks/real estate are you adding in the wealth building
column.
Step Two: Decide What Kind of Money Problems You Want
Decide What Kind of Money Problems You Want.There are only
two kinds of money problems: not enough money or too much money.
Unfortunately, the kind of money problem most people know is not
enough money."Most people know how to work for money, but they do not
know how to have people and money work for the
Think for a moment the shares/real estate/other assets which are
working for you
Fooled by percentage: into catching a falling knife
If you put something sweet in your mouth immediately after tasting a
lemon, it will taste much sweeter than it really is. The contrast
between sweet and sour gets accentuated if one experiences one taste
immediately after the other.
If you meet someone very attractive at a party, and immediately after
that you are introduced to someone who, in contrast, is merely average
looking, then the average person would appear to be more unattractive
to you than would have been the case had you not met the very
attractive person beforehand.
The brain, operating at the subconscious level, is often influenced by
the presence of false "anchors". Anchors are pieces of information to
which a mind tends to latch on to while making a decision. And the
human mind will often latch on to false anchors created by various
influences like availability or contrast.
A stock may have fallen 50 percent from its all-time peak in a market
crash, may have gone below its 52-week low price, may have fallen
below the price at which its shares were offered in a hot IPO, or may
have fallen below par value. None of these things mean that the stock
is cheap. A stock is cheap only if its price has fallen well below
than what the company is rationally worth on a per-share basis.
In contrast with underlying value which is the right anchor to latch
on to, all time peak prices, 52-week low price, IPO price, and par
value are all false anchors. If you blindly buy stocks merely because
they have fallen well below some false anchors, thereby allowing
contrast effect to make you feel that they are much cheaper than they
really might be, then you are functionally equivalent to the man who
is trying to catch a falling knife.
Step Three : Write Your Plan and Follow It.
After choosing between being rich, poor or middle class, and then
choosing between too much money or too little money, it's time to
write your plan.
Think on what strategies do you adopt for investing in shares/real
estate.Have you been blindly buying or sticking to a disciplined
approach.
5 tips on how not to be misled by your advisor
Mis-selling and poor advice continue to plague the domain of
investment and insurance products. To make matters worse, a section of
advisors/agents vociferously claims that the aforementioned don't
exist; others choose to justify the same by shifting the onus onto
investors. Such trivialities notwithstanding, the ground reality is
that mis-selling and poor advice are `clear and present' menaces that
investors routinely encounter.
Typically, by the time an investor realises that he has become a
victim of mis-selling/poor advice, the damage has already been done.
We thought it would be interesting to come up with a checklist of
warning signals that can caution an investor of an impending
investment/insurance disaster.
Now, we aren't claiming that this list is an exhaustive one. Perhaps,
it wouldn't be possible to create an exhaustive list, given the
numerous instances of poor advice rendered and the innovative mis-
selling techniques deployed. But this can serve as a starting point
for sure.
So here goes. It's time for you to be cautious if your advisor
1. Only peddles forms and fails to offer advice
If your advisor is the kind who only approaches you for getting you
invested in various avenues and offering advice doesn't feature in his
scheme of things, then there is a cause for concern. An advisor's
primary responsibility is to offer advice.
He is the one who should help you translate your investment objectives
into monetary terms, lay out plans to help you achieve the same and
get you invested in line with those plans. The advisor is also
required to periodically review your plans and incorporate changes
therein, if required.
While offering prompt and reliable service is important, offering
accurate and unbiased advice is certainly an advisor's core
responsibility. And dealing with an advisor who doesn't make the grade
on the latter, could spell trouble for you.
2. Frequently churns your portfolio
Churning the portfolio is a term that investors in the mutual funds
segment should be able to easily identify with. It means frequently
buying and selling funds, especially of the equity variety. You can be
sure that you are at the receiving end if most of this buying and
selling is in NFOs (new fund offers).
Equity investing is essentially about investing for the long-term and
if the advisor's recommendations were correct in the first place,
there should be little need for a churn. So an advisor who frequently
churns your portfolio is either incompetent or has an ulterior motive
i.e. to make more money by getting you regularly invested in NFOs.
For the uninitiated, NFOs fetch higher commissions vis-a-vis
investments in existing funds, thereby making them more popular among
advisors. While you bear the burden of the churn in the form of entry
and exit loads, the advisor makes a quick buck at your expense.
The good news for the investor is that SEBI (Securities and Exchange
Board of India) has taken concrete steps to curb mis-selling in NFOs
and indications are that we are likely to see fewer equity NFOs going
forward.
3. Attempts to entice you by offering rebates/kickbacks
Offering rebates/kickbacks is a practice wherein an advisor
`compensates' you for investing through him. For this he offers you a
part of his commission earnings. The rebate/kickback offered is linked
to the sum of investments.
Incidentally, the practice of offering rebates is explicitly
prohibited in both mutual fund and insurance offerings. Without a
doubt, if offering rebates is your advisor's forte, then something is
amiss. He is doing so to cover up his incompetence and it is in your
interest to steer clear of such advisors.
4. Only emphasises on returns and ignores risk
It is not uncommon to find advisors, whose arguments (to convince
clients about the merits of any investment) revolve only around
returns with the risk aspect being conveniently ignored. Any advisor
worth his salt will vouch for the fact that while evaluating the
worthiness of an investment avenue, the risk-return trade-off is of
paramount importance i.e. both risk and return need to be accorded
equal importance. Furthermore, the suitability of the investment
avenue for the investor in question needs to be determined. This in
turn entails understanding the investor's risk profile, needs and
investment objectives. Clearly, there is much more to making an
accurate recommendation than just evaluating the returns aspect. And
any advisor who fails to do so, deserves a thumbs down.
Incidentally, a similar view was recently echoed by SEBI in the
context of mutual fund advertisements. The regulator was of the view
that the rapid fire manner in which the standard warning is recited in
advertisements makes it unintelligible. Apparently, the practice of
side stepping risk is not restricted to advisors alone.
5. Offers ULIPs as a staple offering for all your needs
This one's for insurance advisors. Don't get us wrong, we have nothing
against ULIPs (unit linked insurance plans) or even with advisors
selling ULIPs for that matter, so long as proper disclosures are in
place i.e. the client is made adequately aware of the costs involved
and other implications of buying a ULIP. In other words, the advisor
should enable his client to make an informed decision.
However, all is not in order, if the advisor recommends ULIPs as a
standard offering for all your insurance needs. It's a well chronicled
fact that term plans are the cheapest form of insurance; a term plan
should ideally be the first insurance product that you must add to
your insurance portfolio.
More importantly, the latter can play an important role in helping you
achieve a cover that is in line with your Human Life Value. Of course,
offerings like ULIPs and endowment plans can be added at a later
stage.
So why do insurance advisors display a penchant for ULIPs? Maybe it's
the higher commission earnings in ULIPs vis-a-vis term plans that are
driving the insurance advisor i.e. mis-selling.
On the other hand, maybe the insurance advisor just doesn't know
better i.e. he lacks proper knowledge. Anyway, being associated with
such an advisor is an unenviable proposition for you.
As always, while this article has been written for the benefit of
investors, there is no reason for advisors who go about conducting
their business in an ethical and righteous manner to feel annoyed. We
can only admire them for their resolve in the face of intense
competition and tempting commissions.
Step Four:
Decide on Where You Want to do Your Banking.
You can tell
the difference between the rich, poor and middle class simply by where
they go to get their money or do their banking. A poor man's bank is a
pawn shop.The middle class use banks, savings and loans, or credit
unions for their lines of credit. A popular form of credit for this
group is the credit card, which is easy to obtain.
The rich also use banks. They use the services of investment bankers,
private capital from wealthy individuals and money from investment
institutions.
The rich get their money to work for them.
The middle class work for their money.
There's a great story about steve wynn, one of the sharpest casino owners in Las vegas and macao. When he came to vegas as a young 21 yr old, he met an old las vegas hand who asked him what he was doing in Vegas. Steve promptly replied that like everyone else, he was here to make his fortune.
The old las vegas hand told him:
Son if you're here to make a fortune, my advice is don't go play at the casinos, go buy one!
And that's what steve did.
The result: he now has the fortunate problem of too much money!
rgds
Rohit
Taken from internet/Yahoo groups...
Building Wealth, is just like building a house it begins with a plan.
The plan starts with an Idea. Wealthy people know and Think Wealthy.
The secret to building wealth begins with:
Building Wealth....Inside and Outside
Thoughts are things. How you think shapes your circumstances. So to
live a life of unlimited abundance,you need to have the mindset that
continually attracts wealth known as (prosperity consciousness).
That's your inside game plan.
The rich got to where they are not only because they have the right
mindset and attitude, but also because they have certain knowledge and
skills that help create money (wealth building). That's your outside
game plan.
From today,daily we will look at each of these 10 Decsions
Step One: Decide to Be Rich
Step One: Decide to Be Rich The only difference between the rich, poor
and middle class,is the kind of lifestyle they want and the words they
use. Poor people often say "I just want enough money to pay the rent."
"I need a few thousands to get to the next pay day". People who used
words such as these, often focused only on financial survival.
The middle class used different words because they have different
ideas about how to use their money: "Our home is our most important
asset and our largest single investment." "We're setting a few
thousands aside every month, so we can afford the down payment on our
dream home." "We're saving money for our children's college education
and our retirement." The middle class focused on comfort. That is why
so many of them say, "I don't want to be rich. I just want to be
comfortable."
The rich are rich because they are not focused on day-to-day short-
term survival, or the expense column as the poor are. Nor are the rich
focused on comfort and the acquisition of liabilities using credit, as
the middle class is. The rich are rich because they focus on wealth
building assets.
Think on what stocks/real estate are you adding in the wealth building
column.
Step Two: Decide What Kind of Money Problems You Want
Decide What Kind of Money Problems You Want.There are only
two kinds of money problems: not enough money or too much money.
Unfortunately, the kind of money problem most people know is not
enough money."Most people know how to work for money, but they do not
know how to have people and money work for the
Think for a moment the shares/real estate/other assets which are
working for you
Fooled by percentage: into catching a falling knife
If you put something sweet in your mouth immediately after tasting a
lemon, it will taste much sweeter than it really is. The contrast
between sweet and sour gets accentuated if one experiences one taste
immediately after the other.
If you meet someone very attractive at a party, and immediately after
that you are introduced to someone who, in contrast, is merely average
looking, then the average person would appear to be more unattractive
to you than would have been the case had you not met the very
attractive person beforehand.
The brain, operating at the subconscious level, is often influenced by
the presence of false "anchors". Anchors are pieces of information to
which a mind tends to latch on to while making a decision. And the
human mind will often latch on to false anchors created by various
influences like availability or contrast.
A stock may have fallen 50 percent from its all-time peak in a market
crash, may have gone below its 52-week low price, may have fallen
below the price at which its shares were offered in a hot IPO, or may
have fallen below par value. None of these things mean that the stock
is cheap. A stock is cheap only if its price has fallen well below
than what the company is rationally worth on a per-share basis.
In contrast with underlying value which is the right anchor to latch
on to, all time peak prices, 52-week low price, IPO price, and par
value are all false anchors. If you blindly buy stocks merely because
they have fallen well below some false anchors, thereby allowing
contrast effect to make you feel that they are much cheaper than they
really might be, then you are functionally equivalent to the man who
is trying to catch a falling knife.
Step Three : Write Your Plan and Follow It.
After choosing between being rich, poor or middle class, and then
choosing between too much money or too little money, it's time to
write your plan.
Think on what strategies do you adopt for investing in shares/real
estate.Have you been blindly buying or sticking to a disciplined
approach.
5 tips on how not to be misled by your advisor
Mis-selling and poor advice continue to plague the domain of
investment and insurance products. To make matters worse, a section of
advisors/agents vociferously claims that the aforementioned don't
exist; others choose to justify the same by shifting the onus onto
investors. Such trivialities notwithstanding, the ground reality is
that mis-selling and poor advice are `clear and present' menaces that
investors routinely encounter.
Typically, by the time an investor realises that he has become a
victim of mis-selling/poor advice, the damage has already been done.
We thought it would be interesting to come up with a checklist of
warning signals that can caution an investor of an impending
investment/insurance disaster.
Now, we aren't claiming that this list is an exhaustive one. Perhaps,
it wouldn't be possible to create an exhaustive list, given the
numerous instances of poor advice rendered and the innovative mis-
selling techniques deployed. But this can serve as a starting point
for sure.
So here goes. It's time for you to be cautious if your advisor
1. Only peddles forms and fails to offer advice
If your advisor is the kind who only approaches you for getting you
invested in various avenues and offering advice doesn't feature in his
scheme of things, then there is a cause for concern. An advisor's
primary responsibility is to offer advice.
He is the one who should help you translate your investment objectives
into monetary terms, lay out plans to help you achieve the same and
get you invested in line with those plans. The advisor is also
required to periodically review your plans and incorporate changes
therein, if required.
While offering prompt and reliable service is important, offering
accurate and unbiased advice is certainly an advisor's core
responsibility. And dealing with an advisor who doesn't make the grade
on the latter, could spell trouble for you.
2. Frequently churns your portfolio
Churning the portfolio is a term that investors in the mutual funds
segment should be able to easily identify with. It means frequently
buying and selling funds, especially of the equity variety. You can be
sure that you are at the receiving end if most of this buying and
selling is in NFOs (new fund offers).
Equity investing is essentially about investing for the long-term and
if the advisor's recommendations were correct in the first place,
there should be little need for a churn. So an advisor who frequently
churns your portfolio is either incompetent or has an ulterior motive
i.e. to make more money by getting you regularly invested in NFOs.
For the uninitiated, NFOs fetch higher commissions vis-a-vis
investments in existing funds, thereby making them more popular among
advisors. While you bear the burden of the churn in the form of entry
and exit loads, the advisor makes a quick buck at your expense.
The good news for the investor is that SEBI (Securities and Exchange
Board of India) has taken concrete steps to curb mis-selling in NFOs
and indications are that we are likely to see fewer equity NFOs going
forward.
3. Attempts to entice you by offering rebates/kickbacks
Offering rebates/kickbacks is a practice wherein an advisor
`compensates' you for investing through him. For this he offers you a
part of his commission earnings. The rebate/kickback offered is linked
to the sum of investments.
Incidentally, the practice of offering rebates is explicitly
prohibited in both mutual fund and insurance offerings. Without a
doubt, if offering rebates is your advisor's forte, then something is
amiss. He is doing so to cover up his incompetence and it is in your
interest to steer clear of such advisors.
4. Only emphasises on returns and ignores risk
It is not uncommon to find advisors, whose arguments (to convince
clients about the merits of any investment) revolve only around
returns with the risk aspect being conveniently ignored. Any advisor
worth his salt will vouch for the fact that while evaluating the
worthiness of an investment avenue, the risk-return trade-off is of
paramount importance i.e. both risk and return need to be accorded
equal importance. Furthermore, the suitability of the investment
avenue for the investor in question needs to be determined. This in
turn entails understanding the investor's risk profile, needs and
investment objectives. Clearly, there is much more to making an
accurate recommendation than just evaluating the returns aspect. And
any advisor who fails to do so, deserves a thumbs down.
Incidentally, a similar view was recently echoed by SEBI in the
context of mutual fund advertisements. The regulator was of the view
that the rapid fire manner in which the standard warning is recited in
advertisements makes it unintelligible. Apparently, the practice of
side stepping risk is not restricted to advisors alone.
5. Offers ULIPs as a staple offering for all your needs
This one's for insurance advisors. Don't get us wrong, we have nothing
against ULIPs (unit linked insurance plans) or even with advisors
selling ULIPs for that matter, so long as proper disclosures are in
place i.e. the client is made adequately aware of the costs involved
and other implications of buying a ULIP. In other words, the advisor
should enable his client to make an informed decision.
However, all is not in order, if the advisor recommends ULIPs as a
standard offering for all your insurance needs. It's a well chronicled
fact that term plans are the cheapest form of insurance; a term plan
should ideally be the first insurance product that you must add to
your insurance portfolio.
More importantly, the latter can play an important role in helping you
achieve a cover that is in line with your Human Life Value. Of course,
offerings like ULIPs and endowment plans can be added at a later
stage.
So why do insurance advisors display a penchant for ULIPs? Maybe it's
the higher commission earnings in ULIPs vis-a-vis term plans that are
driving the insurance advisor i.e. mis-selling.
On the other hand, maybe the insurance advisor just doesn't know
better i.e. he lacks proper knowledge. Anyway, being associated with
such an advisor is an unenviable proposition for you.
As always, while this article has been written for the benefit of
investors, there is no reason for advisors who go about conducting
their business in an ethical and righteous manner to feel annoyed. We
can only admire them for their resolve in the face of intense
competition and tempting commissions.
Step Four:
Decide on Where You Want to do Your Banking.
You can tell
the difference between the rich, poor and middle class simply by where
they go to get their money or do their banking. A poor man's bank is a
pawn shop.The middle class use banks, savings and loans, or credit
unions for their lines of credit. A popular form of credit for this
group is the credit card, which is easy to obtain.
The rich also use banks. They use the services of investment bankers,
private capital from wealthy individuals and money from investment
institutions.
The rich get their money to work for them.
The middle class work for their money.
There's a great story about steve wynn, one of the sharpest casino owners in Las vegas and macao. When he came to vegas as a young 21 yr old, he met an old las vegas hand who asked him what he was doing in Vegas. Steve promptly replied that like everyone else, he was here to make his fortune.
The old las vegas hand told him:
Son if you're here to make a fortune, my advice is don't go play at the casinos, go buy one!
And that's what steve did.
The result: he now has the fortunate problem of too much money!
rgds
Rohit
Taken from internet/Yahoo groups...
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