Archive for the ‘Wealth 101’ Category

Plan for Success: Protect your Assets

October 22, 2008

Warren Buffett has said the time is ripe for buying into the stock market. Fear has driven prices low and we can buy now and wait for time to play its game again. Some companies are valued less than their cash value. Houses are available for cheap as mortgagee sales.

So if you are thinking of making the most of this time, then think ahead and plan for success. You want to protect your assets, ensure your returns are channelled in the most tax efficient manner and ensure you can pass the wealth onto your children (as wealthy, successful people plan to do). 

If you buy shares or property, what name are you buying them in? 

Your own name?  joint names? a company name?  a trust name?  
Do you know the ramifications of buying in each of these entities? (The laws differ by country so be careful with this).

You will need to talk to a professional about your situation, but here are some things to consider. What is the best entity to buy in for these situations?  

  • If your shares rise in value and you sell in 10 years time, you may have to pay capital gains tax 
  • You receive dividends on the shares over 10 years and you have to pay income tax – whose total income is being taxed? 
  • You receive investment property rental income which is liable for income tax, you also have capital gains if you sell it, and who would benefit if values do go up and you want to releverage?

Planning for success means planning for the life of your investments.
Think now about the best way to grow your wealth, and how your changing financial situation will be affected by growth in income and asset base. It is much easier to set structures up at the beginning and grow into them, than try to sell assets into them later (possibly triggering a tax event in the process). 

Wealthy, successful people plan their wealth. So even if the news looks dire at the moment, go see a financial planner about your financial future.

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Successful people don’t watch TV

October 20, 2008

Successful people don’t watch TV. They don’t fill their brains with junk, but use the time productively. 

“American children and adolescents spend 22 – 28 hours per week viewing television, more than any other activity except sleeping. By the age of 70, they will have spent 7 – 10 years of their life watching TV” 

The Kaiser Family Foundation 

What do you remember from a night’s watching TV? Do you want to waster 7 -10 years of your life doing something you don’t remember? Here are 8 reasons you should turn off your TV (in fact, get rid of it). 

  1. Wealthy people have big libraries, not big TVs. Who do you want to be like? Your mind is an amazing instrument, picking up information from all the input sources. Do you want to fill it with Idol, Desperate Housewives/other trashy drama? 
     
  2. TV is filled with the same old junk every day and it screws with your mind. I used to be a news junkie, but the news is the same every day as well. There are always wars, always violence, always awful things happening in the world. If you don’t watch it, you won’t suffer from lack of knowledge because people will tell you what’s going on. Or just Google news it. But don’t obsess about reading news or watching TV all the time. You don’t need to see murders, rapes, violence and misery on TV. It is not enriching your life. You have a certain amount of attention span daily. Fill it with information that will improve your life. 
     
  3. Spend that time on self-improvement. Reading, audio programs, videos and internet courses. You could even try university correspondence courses and work towards a particular goal. If you count the hours you spend watching TV in a year, you could have done half a degree by now. 
     
  4. Spend that time with your family improving your relationships. Success is about all areas of life and your emotional health is as important as your financial health. Instead of watching TV with the family, do something where you actually get to know each other better. It may sound wierd in this age of online entertainment, but board games are great. Or just eat a meal around the table instead of having TV dinners. 
     
  5. TV gives people a false view of what life is really like. It feeds insecurities, makes you think you are not good enough, that your life is not enough, that you want more. It can affect your body image, your self-confidence and make you question how happy you are. 
     
  6. Spend that time visualising your dreams and goals. Instead of watching TV tonight, write down your dream life, you dream job, your dream house, how much money you earn, your perfect day. Use your imagination instead of being anaesthetised by the tube.  
     
  7. TV makes you fat. People eat more in front of the TV, and they are exposed to junk food advertising that makes you want a burger in the middle of your sitcom. If you don’t watch TV, you could always use the time for exercise. [And no excuses about cycling in front of the TV, I’ve tried that and it doesn’t work for long!]
     
  8. TV has adverts that make you want to buy more stuff. Stuff you don’t need. Stuff that you don’t want to buy in this financial climate. [or in fact any financial climate]. If you don’t know about it (and your kids don’t know about it), you won’t want it. So no TV, means less excess spending on things you don’t need. 
     

I am not anti-media. You can watch other media if you want a particular series or movie or documentary. I absolutely think DVDs are a fantastic way of learning. The key is choice. Choose what you watch wisely and question whether it is adding to your life experience.

Is it improving your brain or killing some cells? I download “House” (love it) but with no adverts so I have viewing pleasure and no TV pain. I hire DVDs, but I haven’t had a TV for 2 years and I love it. I sound pretty militant actually, but this blog is about wealth and success. The people who have the most wealth and success do not watch TV. So do what they do. Turn it off. 

Check out loads of articles on this at http://www.turnoffyourtv.com/

    Talking about money

    October 5, 2008

    Talking about money is difficult for many people, especially those of us brought up NOT to talk about it. It seems these days that talking about sex is easier than talking about cash. People also seem to be happier talking about how much debt they are in, than discussing their money-making ideas and investments.

    Studies show that money is one of the main areas of friction in relationships – couples, marriages, friends and family. If you are not on the same level about money, talking about it is even more difficult. People bring a lot of baggage when they think or talk about money. How their parents talked about money (or didn’t) will have a big effect, as will their current level of financial education.

    Here are some things to think about – compare your answers to those of your partner/ friends.

    •          What are your financial goals? Do you have any? In what timeframe will you achieve those goals?
    •          What is your financial personality? Are you a saver or a spender? Are you interested in investing? Are you a risk-taker or do you like slow steady investments? Do you want to get rich quick or are you content with a slow, steady approach?
    •          How do you manage money day to day? Do you know how much you are worth? Do you buy budget in the supermarket and save? Do you pay the bills early to get the discount? Do you have a lot of items on credit/ hire purchase? Do you have car repayments?
    •          What is your level of financial education? Compare that to your partner/spouse or friends. Are you interested in learning more?
    •          Do you want to invest in your financial education? Will you be able to spend money on seminars or programs that will improve your financial future, or do you have to explain the reasons why to your partner? Would they rather spend the money on entertainment or a holiday?
    •          “You are the average of the 5 people you spend most time with” Jack Canfield. Are all your friends broke? Do they inspire you to want to earn more, create more wealth? Do you talk about business opportunities or investments? Do you want to hang out with some other wealthy people?

    If you want to be wealthy, then these are questions you have to discuss with your partner. If you have different wealth goals, it makes it that much harder to get there.

    So, stop reading and go talk to your partner/ flatmate / friend… what do they really feel and think about money?

    Why is it important to be wealthy?

    October 2, 2008

    This blog centres around learning about wealth and success, but why is it important to be wealthy anyway?

    •          Freedom and choice. Working every day for the money to pay the bills stops most people from doing something they love. Being wealthy enables choice of lifestyle and choice of work, travel and fun. People don’t want to stop working completely, they just want to do something enjoyable.
    •          Ability to provide. We all want to be able to provide for our families, especially in times of need. Wealth enables us to have the choice to help our family. Do you want to pay off your parent’s mortgage? Pay for their healthcare? Put your children through college?  
    •          Ability to give. Very wealthy people give a great deal of money to charity. The Bill and Melinda Gates Foundation now has an endowment of approximately $37 billion, after Warren Buffett contributed his wealth to the cause in 2006. Even if the average person gives a high percentage to charity, they can never match the giving of the super-rich. If you want to give a great deal, make a lot of money and then give it away!
    •          No one else is going to look after you. The financial markets are currently wiping out government investments as well as private ones. The baby boomers are followed by the smaller X and Y generations who cannot earn enough to pay taxes to fund the government pensions. The truth is – there will not be a government pension for most of us. What little is available will not be enough to live on. It is your own responsibility to look after yourself and your future, so you owe it to yourself to become wealthy.
    •          Become the best person you can be. If you consider wealth to be in all areas of your life, then you will become a better person if you pursue it. Emotional, relational, health, financial and spiritual wealth are all important in your life, and in a lifetime of learning, you can improve on all these areas.  

    What are your reasons for wanting to be wealthy?
    If you don’t have a good reason, it is unlikely that you will get there. 
     

    This blog is dedicated to learning about wealth and sharing it with you.  Please do let me know any topics you would like to learn about.