“So you knew that I harvest where I have not sown and gather where I have not scattered seed? Well, then, you should have put my money on deposit with the bankers, so that when I returned I
would have received it back with interest.” Matthew 25
“For the kingdom of heaven is like a man traveling to a far country,who called his own servants and delivered his goods to them. 15 And to one he gave five talents, to another two, and to another one, to each according to his own ability; and immediately he went on a journey.16 Then he who had received the five talents went and traded with them, and made another five talents. 17 And likewise he who had received two gained two more also. 18 But he who had received one went and dug in the ground, and hid his lord’s money. 19 After a long time the lord of those servants came and settled accounts with them.
20 “So he who had received five talents came and brought five other talents, saying, ‘Lord, you delivered to me five talents; look, I have gained five more talents besides them.’ 21 His lord said to him, ‘Welldone, good and faithful servant; you were faithful over a few things, I will make you ruler over many things. Enter into the joy of your lord.’22 He also who had received two talents came and said, ‘Lord, you delivered to me two talents; look, I have gained two more talents besides them.’ 23 His lord said to him, ‘Well done, good and faithful servant; you have been faithful over a few things, I will make you ruler over many things. Enter into the joy of your lord.’
24 “Then he who had received the one talent came and said, ‘Lord, I knew you to be a hard man, reaping where you have not sown, and gathering where you have not scattered seed. 25 And I was afraid, and went and hid your talent in the ground. Look, there you have what isyours.’
26 “But his lord answered and said to him, ‘You wicked and lazy servant, you knew that I reap where I have not sown, and gather where I have not scattered seed. 27 So you ought to have deposited my money with the bankers, and at my coming I would have received back my own with interest. 28 Therefore take the talent from him, and give it to him who has ten talents.
29 ‘For to everyone who has, more will be given, and he will have abundance; but from him who does not have, even what he has will be taken away. 30 And cast the unprofitable servant into the outer darkness. There will be weeping and gnashing of teeth.’ Matthew 25: 14-30 NKJV
My stepfather, Jim, used to say, “Money is for spending and giving away.” He wasn’t big on hoarding money. He was generous with money, but when he died, he left my mother in a mountain of debt with nothing invested. God is obviously for doing something with your money other than sticking it under your mattress. Although you can’t take it with you when you die, you can invest your money wisely for the purpose of providing for your family, your inheritors, and for spreading the gospel to the nations. It takes money to preach the word, and if you are content with your little salary to provide for just you and your immediate family, well, that’s fine, but it is a little on the selfish side. You should be concerned with your neighbor as well. Investing money to prosper others as well as
yourself, is what God would have you do with your money. Sowing your money seed into the kingdom of God to spread the gospel is the best investment you can make with your money. After that, there are some things you can do to see your bank account never go empty again. I’ll start by saying that first and foremost in order to reap a harvest of money, you must be a giver. It is a simple law of God. Secondly, in order for that law to be effective, you must walk in love towards your fellow man and be in obedience to God. Now, let’s get to some nitty-gritty shall we.
The following information is a summary of the notes I took from several books I read and audio-books I listened to. Anywhere you see italicized words, those are my personal thoughts, they did not come from the books. I hope this information will be helpful to you in your quest to get out of debt, not live from pay-check to pay-check and even set some money aside for tomorrow.
Rich Dad, Poor Dad
• Rich dad was a giver; he gave money; he knew that in order to receive money, you have to give money; the most important law of money is-
you have to give first
• Attitude: say “How can I afford it”, not ” I can’t afford it.”
• Don’t work for money, let money work for you
• Stop blaming (society, your boss), start taking risks
• Stop hoping for that “big break” to solve your problems
• Cycle (rat race) is run by two emotions- fear and greed; we work out of fear of not having enough money; greed is to obtain and spend
money unwisely and unjustly
• A job is a short-term solution to a long-term problem
• Don’t choose the illusional carrot (as a farmer holds in front of a donkey to get him to move, but he never reaches it); envisioning what “toys”
to buy because the toys only get bigger and more expensive the more money you have
• Know the difference between an asset and a liability and then buy assets
• Money so often puts a spotlight on our flaws or strengths
• Wealth is determined by how long one can survive without actually working
• The poor- middle classes by luxuries first (car, house) while the rich pay cash for luxuries that their assets paid for
• Find missing opportunities
• Hire people smarter than you
• Focus- put eggs (money) in few baskets, not a few eggs (money) in many baskets
Assets
• Own a business that you don’t work at
• Stocks, bonds. Mutual funds, notes, IOUs
• income generating property
• royalties
• scripts, pattens
Types of investors
• Stocks/ Bonds
• Real estate (need more knowledge on this subject)
• It isn’t how much you have to start, it’s knowledge
• Know a little bit about a lot (be well-rounded) not a lot about a little
• Get a job in another skill- like sales
• Corporations spend as much as they can on expenses, then they only pay taxes on what’s left; the rich actually own nothing; the corporation
(a separate entity) does, therefore, they control everything but are protected from lawsuits
• Grasp the idea that money is not real and you won’t work as hard to get it
• Losers are afraid of losing, so they don’t take risks. Winners aren’t afraid of losing, so they do take risks
• Failure is a part of success; those afraid of failure will not have success
• Specialization is a trap, that is why there is a need for unions; don’t overspecialize, be broad and take different jobs for deeper learning
• Selling and marketing is the most important skill; people don’t do it for fear of rejection and set backs
• Fear- of losing money; don’t bury your fear of failure/ losing- get inspired by it; winning is being unafraid to loose
• Synicism/ skepticism: fear and doubt- the “what if” mentality (chicken little); don’t talk doom and gloom
• Criticism: winners analyze, losers criticize
• Laziness- keeping too busy is a form of laziness because it is an avoidance to take care of something important
• Habits: pay yourself first (after the tithe), not after bills; this actually puts pressure on you to earn more
• Arrogance: arrogance = ego + ignorance
Getting Started
• The power of spirit (ambition): the reason/ purpose to have money is to do what I want to do with my life (or what God wants us to do with
our lives); you need a strong purpose/ motivation or else the drive won’t be there
• The power of choice: choose daily to be rich and good stewards of money; choose what you do with your time and what you put into your
head; arrogant people rarely read books or buy tapes such as this (Rich Dad, Poor Dad)
• Invest in your mind first- your greatest asset; take action, classes, buy books/ tapes
• Choose your friends wisely, don’t listen to a poor person, they always tell you why it won’t work; don’t run with the masses; buy when it isn’t
popular, then wait patiently
• Master a formula, then learn a new one; you become what you learn, so choose what you study cautiously
• Self-discipline is the most difficult feat
Skills for Managing Your Own Business
• manage cash flow
• manage people
• manage time
• pay yourself first
• minimize your income so as not to pay the government
• let other people (tenants) pay for your liabilities
• If you work for money, the government will take it
• Don’t get into debt
• Don’t dip into savings to pay bills
• Let assets buy your toys
• Pay professionals well (lawyers/ brokers)
• Find out about your own broker’s wealth and how much they pay in taxes
• Manage and pay well people who are smarter than you
• #1 rule- tithe first, give what you want and it will come back to you; God doesn’t need to receive, people need to give
• Assess what you are doing and stop doing what is not working
• Make lots of offers, its a game, so have fun
• Keep an eye out for change in neighborhoods
• Buy stock when its on sale/ at a low
The Laws of Money, The Lessons of Life: by Suzi Orman
• Money has no power of its own
• Do not buy: variable annuities; whole/ universal or variable life insurance; mutual funds with commissions; intermediary bond funds
The Neatest Little Guide to Mutual Fund Investing: by Jason Kelly
• Vangaurd: 1-800-662-7447: largest MF Co; maintains low expenses
• Mutual Fund: the gathering of money from investors with a common (mutual) objective or common money
• NAV: Net Asset Value- if you put $100 in a MF (mutual fund) on a %10 gain = $110; the NAV is $10
• Open-end funds: buy shares at the current NAV and can sell them back to the fund at any time for that current NAV
• Closed-end funds: buying private shares on stock market from someone who already owns them
• Load: sales commission which can be as high as 8.5% (invest $100-$8.50 for the 8.5% load = $91.50 actual investment)
• No-load funds: there is no sales commission, other fees are charged; usually a better deal than load funds because all of your money is Invested
and working for you
• Liquid: MF are liquid- you can get your money out at any time
• Don’t rely strictly on age to determine how to invest, it’s your goals that matter. Goals should be exhilarating and important.
• Objectives: growth- buy low, sell high; income- dividends paid yearly; stability- U.S. Government bonds (your money is protected, but stays the
same)
• Dividends: shareholder’s are entitles to company profit in the form of dividends: a dollar amount/ share
• Index: provides a point of reference to gauge the relative performance of different investments
• Modern Portfolio Theory: MPT- higher risks bring higher rewards over time; Up the risk when using a lesser investment as opposed to Lowering the
risk if dumping a lot of money into it/ month or year
• Volatility: the up-down fluctuations of a MF; the more volatile the better- losses are offset by gains
• Beta Coefficient: how the MF measure volatility
• Alpha: how the MF performed- 0 is as expected; more than 0 means it did better than expected given its beta
Example: Beta is 1.25 (25% more than the S&P 500); this week it was 1.35; it had a 10% better than expected Alpha
Ideal: low beta/ high alpha or high beta/ very high alpha
How much to invest and where
Make a chart of the items you are saving for and the time frame in which you will need the money for the item.
• Stocks: Average Annual Return (1926-1993)- 10.3%; are high risk; growth; long-term: 11+years (retirement, house, college); represents
ownership in the company
• Bonds: Average Annual Return (1926-1993)- 5%; medium risk; income; medium-term: 6-10 years (car, vacation); the obligation of the
government or company to pay back borrowed money- your money; Mortgage-backed (Fannie Mae); Municipal Bond Funds- not federally
taxed; Junk bonds- risky business with weak credit
• Money Market: Average Annual Return (1926-1993)- 3.7%; low risk; stability; short-term: 0-5 years (emergency money)
• Re-balance your MF annually: as time goes on, less stock- more money market (sell high, buy low)
• Invest monthly: make it a habit even just $100/ month ( you usually spend less/ share; is better than guessing the best time to buy/ invest)
• Compound your interest: example- if you invest $100@10% then the interest is $10; re-invest that $10 in the same account rather than
spending it or putting it in another account. After 40 year the compounded interest will = $4526 as apposed to the investing
elsewhere = $500 and spent = 0
Mutual Fund Categories
• Growth: large companies (Coca-Cola, Microsoft); long-term/ med-term
• Aggressive growth: small companies, risky; long-term
• Sector: very specific, stocks form a market; long-term
• Income: bonds and high dividends; med/short-term
• Growth and Income: stocks and bonds; long/med-term
• Money Market: money market instruments; not federally insured but still safe; stable, like cash w/ little interest; short-term
• International and Global: international and U.S. Securities; ; can be politically unstable; long-term
• Asset Allocation/ Balanced/ Life-Cycle(as you age, asset classes change): all asset classes; long-term
• Index: stocks and bonds; long/med-term; can be tax-free
• Precious Metals: precious metals and related stocks; only invest when already have established investments; long-term
• Social Conscience: “responsible” company stocks; long-term
Information needed from a MF company
• Past performance for 3, 5, and 10 years compared to rates of other MF companies and specific categories
• Get no-load funds
• Look for 12b-1 fee form the Co. and CDSL fees for withdrawing before time is up
• The average expenses fees are around 1%- keep them low
• Look for: funds objective, minimum investment amount, fee table, total operating expenses, special services (like check writing)
• Have your bank transfer the fund directly
When to sell (redeem your shares)
• when you have reached your goal
• when the fund’s returns continually lag behind its peers
• when the fund doesn’t do what you thought it would
• when the fund manager leaves
Taxes
• reinvested money is still taxed; deduct the tax cost from the proceeds
• switching funds is taxable
• tax-deferred retirement funds are compounded tax-free until a certain date, but you can’t touch it until that date
Investing for Dummies
• Invest for children in pre-tax retirement funds in your name
• Discount brokers: Fidelity (1-800-544-8666), Price, Charles Schwabb (1-800-266-5623), Jack White & Co. (1-800-233-3411 (get an account
application package and a retirement kit)
Never Balance Your Checkbook on Tuesday: by Nancy Dunnan
• Handle your money in the manner in which you’d like your children to handle theirs
• Get a will, a living will and a power of attorney
• Put a named sell amount on stocks in case they drop to prevent further loss
• Make sure your home-owners insurance is “replacement cost” not “cash-value”
• Invest in Real Estate Investment Trusts (REITS stocks)
• Negative information about a solid company is a good time to buy stocks, unless it lost more than 50% in a short time
• The longer you own stocks (12+ months) the less you will pay in taxes when you sell
• Buy stock of a company being taken over
• Call 1-212-768-7277 to get your name off of a catalog list
• Buy floor models on furniture and appliances to save up to 50%
• Use CFL- Compact Flurescent Lightbulbs instead of 75 watt incandescent light bulbs, they use a lot less electricity and last longer
• Set up a POD- payable on death for your bank accounts to avoid probate costs
• Get a record of stock broker’s disciplinaries @ 1-800-289-9999 The National Association of Securities Dealers to check up on your broker
• When investing, go by your age: Take 100% and subtract your age = the amount to put into riskier stocks
• Insist on itemized bills, look for mistakes and undo the fees
• Call teh National Foundation for Consumer Credits for debt advice 1-800-682-9832
• For forfeited property call 1-800-699-8989
Think Like a Billionaire: by Donald Trump
There are 587 billionaires in the whole world
1-800-366-3722 for financial advisers
Top ten dos/ don’ts
• don’t take vacations
• have a short attention span, you have a big imagination, use it
• don’t sleep any more than you have to
• don’t depend on technology, it can be expensive (e-mail is for wimps)
• think of yourself as a 1-man army
• it’s often to your advantage to be underestimated/ misjudged in smarts, then you exceed expectations
• success breeds success; it is easy to get deals when people see results; start with something small and build on it
• friends are good, family is better
• treat each decision like a lover; act on instinct and don’t over-analyze; remember your first shallow reaction
• be curious
Real Estate
• buy in low income areas and wait for them to improve
• always negotiate a broker’s fee, starting at the beginning
• never accept a first offer when buying a house/ mortgage
• know the tax history
• always have the house inspected
• look for hidden costs; get a cost analyses of the utilities, etc…
• renovate the important things; use cheap paint; landscape with low maintenance plants
The Best- #1s
• Car- Mercedes Bendz
• Suit/ shirts/ ties- Brione
• Shoes- High End
• Jewelry- Graff, Harry Winston, Aspree, Tiffany
• Antiques- High End
• Credit Card- Visa/ Mastercard
• Shampoo- Head & Shoulders
• Book- The Art of a Deal
• Movie- Citizen Cain
• Album- whatever suits you (Sinatra, Benette)
• Broadway Shoe- Evita
• Painting- finger paints by kids
More Dos and Don’ts
• give to romance/ love as much as you do your business; use it as an incentive to be the best you can be, women are great motivators for
growing and the basis for decisions
• don’t “TGIF” – value every minute
• don’t balance work with pleasure, make work pleasurable
• romance should propel you to work harder
• loyalty- who will stand by you when you are down
• make sure your gifts are thoughtful, not cheap, and reflect the person interests
• avoid altercations, say “you may want to check into that, I heard differently
• to criticize, use silence
• compliment people
• how to say no: say “in other words, you want me to_________?”; weigh the plus and minuses
Travelling
• don’t check your luggage
• press your suits
• stay in a nice, clean hotel
• tip well and you will be taken care of
• negotiate and upgrade the rates
• complain to the manager, not staff, if the room are unsatisfactory
• expect hospitality
• if you want good restaurant service, get to know the owner; always tip 20%
Parties
• show up a little late, leave a little early
• know what you are talking about
• ask questions during conversations, especially if you are introverted, to get out of a conversation, say “nice talking to you, have a nice day.”
“Good and evil both increase at compound interest. That is why the little decisions you and I make every day are of such infinite importance.” C. S. Lewis