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Smart Money Hedges Bets In Tough Times

February 15, 2019 by  
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We’ve had quite a few very good years, economically speaking, and we may very well have a few more to come. There are, however, some warning signs that things are starting to change but it’s a slow change. Here are few things the so-called experts are predicting that, in my opinion, are very likely to happen:

  1. European expansion will slow down.
  2. Japan’s recovery will remain weak.
  3. China’s economy will keep decelerating.
  4. The rate of inflation will stay around 3%.
  5. The Feds will raise interest rates 3 times in 2019.

The experts, however, are predicting that changes will take maybe 2 or 3 more years, and will no doubt happen slowly. Regardless, many of us investors are thinking about hedging our financials that’s right now. You might ask why wouldn’t anybody or everybody hedge their bets if they knew tough times were coming? Of course, many people would, but the average person doesn’t know that tough times are ahead.

Smart money –money that is invested by people with expert knowledge – does not always do well either, but there are indications that give the smart money people a head start on everyone else. No, they are not always right, but they are more often than not.

A very important part of the formula is to be an independent thinker. The overall economy is like a gigantic river. Sure, you can swim upstream, but it is very difficult. What smart money does is watch the general direction of the flow of that giant stream. Smart money people know that the flow doesn’t suddenly turn around and run the over way.

So even though some of the experts are saying our markets and economy is ready to turn around and go down, it most likely will not happen fast. So, these days, I am advising people to do two things to hedge their money and investment bets:

#1 – Save cash. Build up a cash reserve to be invested after the economic pull back.

#2 – Even though you are building your cash reserves, keep making low ball offers to highly motivated sellers. Granted, there are not a lot of motivated sellers right now because the economy has been in an uptrend for quite a while and many people think it will continue. Still, there are always some motivated sellers out there that need to sell for various reason and some of these people need to do it now at under market prices.

Finding those motivated sellers and making those lowball offers is still smart money, especially if you can do so while building up your cash reserve. So, you might as well keep throwing you net out there and see what you can find. That kind of smart investing and saving is the kind of thing that will get you through the tough times, whenever it is they get here.

 

 

The 100% Return Goal

January 18, 2019 by  
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As we begin a new year it’s a very good time to remember the basics, specifically the basics of financial independence through which you make and keep your own fortune.  It’s so easy to forget the basics, especially when we are all caught up in the details of our daily lives, even those details that are involved with building our wealth. For example, if you have a big problem with the plumbing at a rental property or the property taxes just got bumped up, it’s easy to focus on just that, but that can get you frustrated or make you kind of space out on your overall plan.

What you should not forget is that you have to continue to look at the big picture, looking for ways to take advantage of leverage whereby you could earn as much as 100% of your money due to compounding. I’ve certainly been there and done that. Even on the very property that is giving me fits, I many times have failed to step back and realize that my equity on that very property has already exceeded a 100% return on my money and I should be motivated and reminded to keep doing that.

There is a simple example that I used in my fist book, How to Wake Up the Financial Genius Inside You, where I showed how 1 single penny a day compounded at 100% a day turns into just over $339 million on the 35th day alone. Now I know there is no way you can compound your money at 100% per day, but it is possible to compound your money at 100% per year, especially in the first few years. The key to those huge numbers is using other people’s money (your leverage). So, maybe only 10, 20 or 30% of the price you pay is with your own money and then the rest is in a loan from the bank or the seller for the balance. It’s not only possible but many people are doing just that, every day, including myself and many people that I know and have helped.

I do know that finding beat up properties these days can be a bit more difficult, depending on where your market is, but things change and prices go up and down and you and I need to always be looking for those bargains, especially those properties that need fixing up, the ones I like to call “dirt bag properties”. Then, always remember that good ole leverage formula:
If your down payment is only 10%, and you improve the property enough to increase the value by 10% you have made a 100% return on your money. That formula is a little simplistic since it doesn’t take into account your expenses, but you can keep those pretty darn low if you do most of the work yourself. Just don’t let the goal of a 100% return on your investment scare you away because it seems too difficult. If you can get even part way there, say just a 30% return on your money per year on only $10,000, that fraction of the big goal will still add up to over $1,124,000 in just 18 years.

My big point here is that we must keep the big picture in mind and remember that those potential returns are there. If you do, it becomes easier to not be deterred or discouraged by those plumbing issues, property tax increases, or other relatively minor problems.  Keep your eye and your dreams focused on the big prize, because it is all together very possible to achieve that big goal.

My Words Out Loud

January 11, 2019 by  
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I have something very special for you today. Please take a listen to this pod cast I was on recently. There are a few things I share on it that I think can be very helpful to most people. I hope you like it and, if so, please share with others. Thank you so much for taking time to listen. This kind of thing is part of what I am doing to really try to be of help to others. Maybe it’s my age but I am all about sharing and helping these days!

 

The interviewer is Michelle Brown, a fellow Salt Lake City resident who teaches Life Story writing workshops. Get a nice warm beverage and sit back for a really interesting conversation. I hope you find it helpful and motivating!

 

The Eve of a New Year List

December 21, 2018 by  
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As you may have noticed, especially if you followed my advice from my blog post about the subject matter a couple months ago, it can be very helpful and profitable to set your daily goals the night before. Sometimes this list making even influences your dreams in a very positive way. You see, by setting your next day’s goals the night before, you will notice that, most of the time, you wake up thinking about those goals and are so much more likely to act on them and make them happen. Of course, I’m talking primarily about your small daily goals or tasks. These are usually the kind of things you expect to, or hope to, accomplish that day. However, this can be applied to bigger goals as well.

Being that we are so very close to the end of the year, it can be, and usually is, the best time to begin to set your big yearly goals for what you are going to do, achieve, accomplish, or earn, in the new year. It is certainly a good time to set your mind on the direction of your new year, and so why not write them down? You would be writing them down at the end of the year rather than at the end of the night but it’s the same kind of list – preparing you to get going on your goals once the new day – or new year – starts.

As you know, when you set those goals and write them down, your brain can, and usually does, take over and persuade, coax, cajole, and even force you to get to work to accomplish those objectives that you have set for yourself. So, take time in the next few days to thoroughly think through what you want 2019 to be for you and what you are going to get done. Include both financial and nonfinancial objectives like helping others, spending more time with family, world travel, etc. Do it! You won’t be sorry!

So, what are my personal goals for my 2019 year? Yes, I have some financial goals, but for me I would like to do more writing and get my autobiography done. Also, on my list is the giving of time and assistance as well as money. I have already started in on this list. Just in the last few weeks I’ve given my time at an elementary school, assisting a 3rd grade teacher and, oh wow, what a great feeling that gives me!

Physically, for my 75th year on this planet, I want to get in, and stay in, super physical shape. I want to look like, act like, and have the energy of a 35-year-old. I know that is not going to be easy, but I do believe it to be possible and, besides, the rewards that I have heard about through other people are fantastic. Those who do aim for super physical fitness, and stick with it, are shown to have a much longer life. And I have to tell you, I do love beating those much younger people on the tennis court, something which happened a lot in 2018 and I plan to repeat in the coming years!

Give Big, Live Big

December 14, 2018 by  
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Have you ever noticed that with my blog I am never really trying to sell you a product? Well, I guess I’m selling something, or more accurately I’m trying to give you something and hoping that you’ll snap it up. What I’m “selling” is information and ideas and, hopefully, inspiration and motivation. It’s not that I’m against selling stuff such as books, seminars and, oh yes, an old beat up piece of real estate that I’ve fixed up and increased the price – and value! – substantially. But at this point in my life, I feel so much more like giving rather than selling.  As I’ve said before, “If you want to live big, give big.” And, of course, we are now in that wonderful giving time of year and I think you will agree with me that it feels so very good to give.

What’s amazing about giving is that it can be somewhat selfish. That may sound odd but when I give a lot it makes me feel so very good inside so wanting to feel that good is kind of selfish but in a very positive way. I love to share with others what I’ve learned about making tons of money and expanding the possibilities and experiences of one’s life and most of us need help and assistance to lift up our lives to higher levels. I mean who among us has a perfect life and doesn’t need some motivation and help in at least in at least a couple parts of our lives? Every single person that I’ve ever met that have been super successful, whether it was with money matters, business, sports, family, or love, have been helped by someone. Sometimes it is in person through work, networking, friends, people met at clubs, etc. Sometimes it is more indirect such as the things we learn from someone through books, seminars, or even blogs. We all have others to thank and appreciate.

I certainly have lots of great books, friends, coaches, and leaders who have lifted so many parts of my life. At this juncture of my life, I feel stronger than ever and so it’s time for me to give back – it’s time to pay it forward. I want to be of great help to others and not just through my books and lectures. I love to give my time and money to charities. And no, I am not talking about those huge charities that pay their CEOs or presidents one or $2 million a year. Ugh. I’m pretty sure they could find an equally qualified person that is retired or semi-retired that would do the same job for free or a small salary. It’s just not going to be me.

So, in the spirit of the season, I’d like to challenge you, my readers, to give, give, give! And, yes, even though it feels a bit selfish, you will see, as I’m sure you have in the past, that when you give BIG, you really do begin to live BIG!

Pleasure and Production

December 7, 2018 by  
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Last week we talked about Authentic Happiness which is both a concept and the title of the great book written by Martin Seligman. In the book, the author continuously emphasizes how much of our happiness comes from inside our heads.

Most of us humans look at rich and famous people and think that they must be very, very happy and content because of all their fame and wealth. Well, guess what… if you look closely, you will find that many of these people are not particularly happy. I think a big reason is that most people think that once they attain great wealth and/or fame then it will automatically make them happy. Only it doesn’t. Then these folks, finding that their brains are not filled with great thoughts of happiness and contentment, start to wonder why. That doubt causes an internal dialog to start up which can work against them, quickly driving them and their mindset downhill. Also, money and fame don’t hold a candle to the kind of true and deep happiness we get from things like the love we give and receive from family and friends.

Although most of us are not rich and famous, we may still find ourselves falling into similar thought patterns. It is so very easy to let our internal self-talk persuade us that things are not going well which brings us down mentally.

There are lots of methods for overcoming this negative self-talk but one very big one is also a powerful antidote for depression – productive gratification. Striving for gratification is automatic but the way to use it so that it overcomes negativity and depression is through producing something truly meaningful to us and/or to others. What we accomplish when we produce meaningful things sends a powerful, purposeful message to our brains and makes us feel so very satisfied and happy.

Martin makes the very good point that “pleasure is a very powerful source of motivation but it does not produce change.” It also does not produce lasting authentic happiness. A simple example is the difference between the pleasure that we receive from watching a very entertaining television show versus the gratification, genuine happiness, and personal satisfaction that we receive from reading a particularly inspiring or informative book. Think back on how you felt after experiencing these two different activities yourself. The difference in how your attitude and your state of mind will probably be quite apparent.

The author suggests that if we really want true, deep and authentic happiness we should all create a list of activities, goals, and deep desires that produce for us, personally, a sense of gratification. Look for goals and things that you do that seem to make time stop and even has you thinking, “I don’t want this to ever end.”

Yes, it’s true that many pleasures take little or no effort to acquire and that the best kind of gratification takes a lot of work. But so be it. It is so well worth it, and I do think and hope you would agree!

 

Invest in a Basic Need

October 26, 2018 by  
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Just yesterday, I was on a conference call discussing options for doing a 1031 exchange as a big property that I’m a part owner of was recently sold for many, many millions of dollars. We did make a huge profit on this property and it had a great cash flow during the time we owned it, just like most of the income properties I’ve invested in, but it was time to sell. So, we were looking at our options to buy into other properties which would allow us to avoid paying a huge capital gains tax. We discussed several properties that looked quite promising when one of the partners—a guy much smarter than me—talked about the possible softening of the real estate market due to rising interest rates. Whereas he and others agreed that we are probably due for a pull-back of property values, the new acquisitions looked so promising that a pull-back in prices in the area would not likely have much effect on our possible purchase but it was still a risk.

I was faced with a similar dilemma many years ago and just recently happened to come across something I wrote back then when everyone was worried about a down turn in the economy and a pull-back of real estate prices. My headline was “A Basic Need”. In this piece I wrote, “Why is real estate such a good investment? Why do experts predict that the real estate market may slow down but will probably never fail?”

My answer to those questions is the reason why real estate is such a super great investment – real estate is an answer to a basic need. People always need a place to live, a place to work, a place to shop, a place to stay when on a vacation, and even a place to farm. Improved real estate is especially in demand and it is in demand most of the time. These include apartment units, single family houses, duplexes, etc. And, of course, one of the huge benefits of this kind of real estate is that even if the market softens and price come down, you still have someone else increasing your net worth since their rent payments are paying down your mortgage. Is that a great deal or what?

Even when the market softens a bit, eventually, these properties regain their value as the supply of units shrink and rents begin to climb again. I’ve seen this happen many, many times but investing in small rental houses, duplexes and apartment buildings, through all kinds of market conditions, was how I made my first million. I would keep buying as the market softened and prices and rents began to drop, but I was pretty darn sure the drop would eventually be over and, sure enough, the slump would end and put more millions in my pocket.

Bottom line here is yes, the economy will probably pull back a bit in the next year or so, but this can open up many opportunities for you and can bring you big profits in the long run. So, keep an eye out for good income properties and make offers to buy, whether the economy softens or it keeps on growing.

 

Prioritizing Your Lists

September 7, 2018 by  
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Last week’s blog challenged you to become the next Richard Branson. I’m still waiting for that invitation to jump in your hot air balloon and travel over the Atlantic Ocean! But, more importantly, I hope my words got you thinking about list making.

I ended my previous blog, which was all about how successful you can be when you make lists, by asking the question, “How important is it to prioritize your list?”

Of course, the answer is that prioritizing your lists are absolutely critical, that is, if you want to do much bigger and better things!  However, most of us humans after we’ve made a list, will often make the mistake of NOT prioritizing the items on them. You may be thinking, “Hey, everybody knows you should prioritize!” And that may be true, but most people simply don’t do it, even if they know it’s very important!

I’m acquainted with many bright and intelligent people who treat virtually situation – every business deal, and every contact – equally. Ok, I’ve been guilty of doing that myself from time to time. People will even let a very low priority phone call or even a walk-in salesperson interrupt a high priority project or meeting that they are involved in. They have no sense of priority. They often move from one small, easy item to another small, easy item on their “to do list”, simply because they are easy and to get them out of the way.

Once in a while, if there is still time in the day, they’ll finally get to some important items, or even a top priority item. I’m sure most of us have done this, on occasion, but we need to realize that leaving our top priority items until later will hurt our progress and productivity to a large degree.

If we give it some advance thought and plan our day, we are more likely to stop ourselves from “taking the easy way” and not be oblivious to the great power of doing the top priority items first. Probably the biggest reason all of us can, and do, too often leave the top priority items until later is that those are usually very challenging and very difficult, and people just don’t want to push themselves. They do the easier, lower priority and only moderately important items first so they can check them off the list. I guess it makes them feel good or feel like they’re getting more done that way.

Have I taken the easy road myself?  Yes, of course I have. Most of us are very human in that way and we slip up once in a while. Sometimes we slip up more often than that. But by knowing that’s the wrong way to approach my list, I can concentrate on giving the top priority items a top priority position on my list which will help me reach great heights in my life.

If you dwell on this idea and acknowledge the fact that doing the easy things on your list first can keep you from accomplishing great things, you are much more likely to prioritize properly. And when you do slip up, and am totally aware of that slip up, you need to admit that to yourself and take corrective action. I am sure you can do this because I can and I’m pretty sure, you and I are not that different.

Money Can Buy You Novelty

August 17, 2018 by  
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If you Google “Ignite My Life Now”, you will see “Investing in Real Estate” as part of the headline, so some people might wonder if this blog is about investing in real estate or igniting your life. I certainly believe that investing in real estate and making lots of money does not necessarily  ignite a person’s life, even if real estate investing yields millions and millions of dollars for that person. I clearly remember thinking, when I was young and didn’t have much money, that once I made a million dollars, my world would be perfect and I would be totally satisfied, content, and happy. I imagined that my life would be totally ignited.

However, when I arrived at my first million-dollar net worth goal, I was surprised and disappointed that I didn’t feel much better, so I figured I had to make another million or two, then I would be totally set in the departments of contentment, happiness and fulfillment. I was certain that my world would be pretty much ignited and perfect then. But surprise, surprise … when I arrived at my new goal my life still didn’t seem to be ignited.

I looked deeper and deeper to try to discover what the real key to fulfillment, contentment, and happiness in a person’s life was and whether money could play a part. As it turns out, there is a lot that goes into having a content, fulfilled, and happy life and, yes, money can be a part of that.

We all know that love and loving relationships with other people – a spouse, friends, children and others – lifts the happiness factor as does setting goals and reaching them. It also has been proven that unique and novel experiences can revitalize a person’s mind by boosting a brain chemical called dopamine, which makes you feel so very happy. But, what about money? What part can it play in lifting our contentment and happiness factors?

What I have found is that money by itself does not make a person much happier than when they did not have it. It can, however, buy more possibilities in a person’s world. You see, our brains want novelty and money can give you more time and resources to carefully and creatively design and go after these novel experiences. This is one of the best uses of your money.

I’ll never forget all the totally unique and novel experiences I had when my wife and I went around the world in 28 days, visiting dozens of new and different countries with so many totally different life styles, houses, huge castles, small villages and fascinating people of different cultures, religions and habits. On a smaller scale but also quite stimulating for the mind, is being in places like I am now.

As I write this blog I am sitting in a marvelous,  multi-story “cabin” in beautiful Big Sky, Montana, totally enjoying this very unique and novel place with most of my kids and grandkids. Ok, yes, I’m working, writing this blog as the some of the kids are running about, visiting Yellowstone, looking to go tubing, or taking the chairlift to the top of the mountain. But none of this would be happening if I hadn’t invested in the good ole real estate stuff and make some good money at it.

The big bonus to making money on my investments was that I really did enjoy the work and I got a ton of contentment along the way as I worked through each deal. I even broke a sweat back in the days when I did much of the hard labor to repair and fix houses and apartment buildings in order to increase their value. I’m not saying that I’ve always been perfectly happy and content, but I am saying that money has opened a much wider world for novel and unique experiences that have greatly enhanced and lifted my world.

The Grateful List

July 20, 2018 by  
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A few days ago, I walked down my very long driveway to get my newspaper. The walk down the drive and back is about 1500 steps which is a very good start towards my goal of 20,000 steps a day, a goal that motivates and drives me to always keep moving for better health and longevity.

But this day, as I walked, I was thinking about what I said in my last blog, about how most of us humans take so much of the good stuff in our lives for granted. That simple thought led me to begin making a list in my mind of things I am so grateful for but then I began to notice how many things on my mental list were things that I was totally taking for granted! So, I decided I should write them down and take a look at that list at least once a week and push myself to take time to appreciate the wonderful things in my life.

When I got back to the house, I began my list. Doing this simple little exercise has been a great motivator and has begun to make me more at ease with life.  I would encourage you to make your own list of 10, 15 or more things you want to better appreciate in your life and review them regularly. Constantly renew your vows to appreciate those great things in your life and not take them for granted.

Please, go ahead and do it and you’ll see how much it can enhance your life. And yes, why don’t you and I encourage our family and friends to do the same thing and spread the word. This is just another way of paying good stuff forward.

Here is the list of things that I do so much appreciate, and many times take for granted:

  1. My darling, kind, energetic and loving wife.
  2. My super wonderful kids and grandkids— there’s not a bad one in the bunch.
  3. My good and consistent health and the many people that dedicate their lives to be great doctors, surgeons and inventors of great medicines that help cure so many things.
  4. My fairly good game of tennis at age 74.
  5. My warm and supportive friends (especially the ones that let me beat them in tennis, ho ho!)
  6. Living in a great, free country that provides so many opportunities for growth and prosperity.
  7. My many great mentors that have enhanced my life–both in person and through some great books.
  8. The many very smart and hardworking inventors that have given us everything fromautomobiles to jet airplanes to heaters, air conditioners, and so many electronic products.
  9. My FitBit, a great invention that can give people great health and longer lives, that counts my steps and has motivated me to keep moving.
  10. An absolutely gorgeous sunset or star-studded sky.
  11. My great opportunities to travel the world and how easy it is with today’s jet’s, great hotels, guides, and services. Plus, the convenience of cell phones and computers to check up on the kids.
  12. The great, super safe pilots and operators of machines of all types.
  13. All that great music out there that motivates and inspires so many of us.
  14. My many wonderful financial opportunities and all the ambitious, energetic help and assistance I’ve had from employees and partners.

I’ve probably left off other things I don’t appreciate enough…but I think this is a good start for me to work on.  And I did go out of my way to begin by telling my wonderful wife how much I do sincerely appreciate her. I do hope my little list idea will push you a bit to start your own list and feel the same increased satisfaction for life and living as it has for me.

 

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