Fortune Watch

I read with amazement a story by Gary Simpson this morning. It concerned a couple in their early 30’s from Western Australia who won AUD $793,151.87.

Their lotto dream was realized just two years ago. Lucky people huh?

OK. Nothing too amazing about that – so far. Reading on I was shocked to learn that this story is news now because, despite their massive windfall, this couple had never stopped claiming social security benefits. Greedy huh?

That welfare money is meant to be available to disadvantaged people who are in financial difficulty. Essentially it is “survival” money.

But the story gets worse, much worse…This couple spent ALL that money in just seven weeks! Gone. Vanished. Seven weeks! It hardly seems possible. So, what does that tell you?

The first thing that struck me was how utterly irresponsible this pair was. How do you spend $113,307.41 each week for seven weeks? I have great difficulty comprehending that.

What if this pair had spent just the $93,151.87 having “fun” and put the $700,000 into an interest bearing term deposit for three months at 6.00% interest while they got some decent financial advice? At the end of the three months they would have accumulated another $10,500 to play with (less tax, of course).

So many stories abound like this – people with no financial skills suddenly find themselves in possession of a large inheritance or a lottery win and zap! Just like these two, it is gone. How would you have handled it?

For anybody wanting to learn basic financial skills “The Richest Man in Babylon” by George S Clason is a great start. Had these people bothered to read such a book then they would still have a significant chunk of that money left. Maybe they would have even more. As it is they have nothing to show for it and there is a strong possibility of either gaol or massive fines for defrauding the Government.

It pays to educate yourself.

INVESTMENT is the placing of capital for the purpose of getting some income return and/or an increase in the invested principal. Return in the form of interest constitutes a rental for the use of the money and as such has been socially acceptable for thousands of years; indeed, tablets and inscriptions from ancient Egyptian and at a specified rate was a common business transaction even in those days. The modern world contains many investment media; among them are real estate, commodities, bonds, stocks, and savings accounts.

All forms of investment have in common the following characteristics:

1. The amount in-vested, called the principal.

2. The rate of re-turn, usually stated as an annual rate in per cent.

3. The degree of risk.

4. The liquidity, or how quickly the investment may be converted into cash.

5. The capital gain, or increase in the value of the principal, sometimes termed the grown factor.

Assuming a certain principal amount, the other four factors vary widely with the nature of the investment.

In order to achieve high safety and high liquidity, growth and rate of return must be sacrificed. On the other hand should high return or growth be desired, it is equally apparent that some degree of safety and liquidity must be sacrificed. No investment will combine high safety with a high rate of return; these are always in inverse relationship, and it must be borne in mind that this is a basic fact of both savings and investment in general.

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Make a Fortune in the Stock Market
Investing for Beginners is a Tough Challenge
Bulls and Bears – Primary Market Trends

Losing money never feels good, but keep your cool and you can boost long-term returns.

Last Tuesday The Dow Jones Industrial Average had its biggest one day point drop in around six years on surging volume at the New York Stock Exchange. In this single trading session, all of the market’s gains year-to-date were taken back and actually turned negative. Don’t panic! It takes nerves of steel to shake off a stock drop like the one that came Tuesday – even conservative index-fund investors are more than 3 percent poorer. But the world’s best investors not only shake them off – they thrive on them.

They know sell-offs are common, perfectly normal, and even healthy. When stocks go way up in a hurry, their prices become unrealistically high. Only by falling occasionally (and even sharply) in the short run can stocks continue to rise in the long run – without the agony of today’s drop, the ecstasy of tomorrow’s good returns becomes impossible. If ever there’s been a good time to panic, that had to be it. But as the old saying goes, things are darkest before the dawn. If you’d sold out of stocks at the end of a depression, you would have missed the returns that followed.

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The financial media constantly reports about momentum stocks that are achieving tremendous gains during the same day. And even when you can see online investors that make $5000 on a single trade, it is also not unusual to watch beginner stock investors lose a great deal of money because of a series of unwise decisions.We all know that in the stock market is always possible to watch certain stocks go up more than 100% within a few hours to days. This is especially true in the 4th quarter of the year where the buying frenzy starts in Wall Street.

The financial media constantly reports about momentum stocks that are achieving tremendous gains during the same day. And even when you can see online investors that make $5000 on a single trade, it is also not unusual to watch beginner stock investors lose a great deal of money because of a series of unwise decisions.The problem is that if you don’t know how to pick among stocks & how to properly approach them you could end up wasting dollars instead of making your wallet happy. You can’t just trade stocks like if you where gambling.

The first step in becoming a profitable trader is to start learning how to pick and trade stocks. There are many “ultimate” trading systems out there, but you need to test them in order to discover which ones help you the most. That’s part of your homework as a stock trader. Test several strategies and then test them again until you are able to produce consistent winnings.

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Sometimes, teaching people how to get rich gets me a bad rap. “You just want to make money,” I’ve been told. Or “money isn’t everything.” These gems, while not particularly eloquent, do have a point. Actually, I’d prefer that these people ask me why I teach people to be rich. It’s important to ask yourself, too: Why do you want to be rich?

Take a second and think about it.

Do you want to have a luxurious lifestyle? Do you want to travel? To eat at nice restaurants? Maybe you want to start your own business.

I believe it’s really important to consciously think about why you want to be rich. If you don’t, it’s easy to get caught up in a race to get more and more money without ever knowing why.

“But Robin,” you might say, “I’m really smart. I got a 4.0 at Stanford and I don’t really want to take the time to think about this. I just want some cash, playa!!”

After I point and laugh at you, I’ll actually get serious. Trust me–take an hour to write it down and compare your long-term goals to what you’re actually doing on a day-to-day basis. It’s easy to say and harder to do, so I’ve taken my own advice below. And hopefully, I can use these things to explain why I teach people to be rich. It’s not just money–far from it.

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