3 ways for getting rich


If you read all the articles on this blog you might conclude that there are mixed messages. One minute the message might appear to be anti-money and then the next it might appear to be pro-money. Which is it to be? Certainly the point is not one intended to be anti-money, quite simply because no one can get by without money today. And a goal of achieving financial freedom makes a lot of sense too. There’s nothing wrong with getting rich providing money does not become an obsession.

Getting rich is easier said than done of course. Actually it’s easier than it might first appear to be. Here are three ways for getting rich which are available to anyone and will help you achieve financial freedom.

1. Solve problems for people:

Working for someone else may make you a living but having your own business can make you a fortune. The only way most people can become seriously rich is by setting up a business of their own. It can be done and people do, very successfully, and it’s possible for you to do it too.

Essentially business is about solving problems for people in exchange for money. Businesses create products which solve problems for customers. The customer buys the product and the business makes money. Obviously you need to ensure that your revenues exceed your overheads but in essence business is that simple.

If you want to make money in business just look for problems to be solved and there you’ll find commercial opportunities. One person’s problem is another person’s business opportunity.

However do make sure that every product you offer does actually solve a problem for your customers. That means understanding the needs and wants of your target customers and always asking the question, “What problem does this product solve for my customers?”

2. Risk leads to reward:

If you want to make serious money you cannot avoid an element of risk. Entrepreneurs have to be risk-takers by definition. However that doesn’t mean you taking crazy risks. It means taking calculated risks by doing your homework; proper planning and market research; and using your business skills to weigh up the pros and cons of every opportunity.

Risk is simply the possibility of you getting an outcome you don’t want. However it’s a fact that risk and reward go hand in hand. The greater the reward on offer the greater the risk you must take potentially to achieve it.

Obviously your attitude to risk is important here. If a given risk makes you very uncomfortable then it’s not worth taking. It will just lead to too much stress for you. Some people have the ability to live with huge risks, whilst others cannot cope with that much pressure.

Either way it doesn’t matter. If you can’t cope with large risks don’t let it bother you. Just look for something with a lower risk and with which you can cope. Even small risks can lead to great riches.

Remember we all need a mix of certainty and uncertainty in our lives. Business requires you to live with the latter, at least to some degree.

3. The magic of compounding:

Once you’ve made some money it’s important you put it to work for you if getting rich is your aim. And putting money to work is all about taking advantage of the magic of compounding. Compound interest can have a powerful effect on your money.

For instance if you invest £1,000 at 2% for 10 years with annual interest reinvested and it will be worth £1,219 at maturity.

However if you invest that same £1,000 over the same period at 10% then you will get £2,594, assuming annual interested is re-invested. That’s over 100% difference over the 10 year period.

Over 20 years at 10% your £1,000 would have turned into £6,727, assuming annual interest had been reinvested.

So remember, the interest rate and the longevity of your investment both matter if you’re trying to build a capital sum.

So if getting rich is your aim then start by investing as early as you can, be disciplined and make regular contributions to build that nest egg.

Further Reading:

Obviously a single blog post can only scratch the surface of all you need to know about money. If you’re wise you’ll buy some books on the subject to get your financial education moving in the right direction. Here are some I can recommend:-

Think and Grow Rich by Napoleon Hill

Think and Grow Rich is a classic of the genre. Originally written in the 1930s but still around and still very popular. And it’s still around for a reason. It’s exceptional and definitely worth adding to your personal reference library.

The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon is another classic of the genre. Simple but inspiring. You can read this book in a few hours but it will provide you with a series of powerful lessons for acquiring money, keeping money and making money. Again well worth adding to your personal reference library.

Rich Dad Poor Dad by Robert T. Kiyosaki

Rich Dad Poor Dad is an excellent starting point for anyone seeking to improve their financial knowledge and improve their financial future. This is modern compared to the previous two but it has also become a classic and is well worth the cover price.

One Hour Investor: The Beginner’s Guide to Investing in the Stock Market by Russell Ellroy

One Hour Investor: The Beginner’s Guide to Investing in the Stock Market is recently published and so it’s right up-to-date. If you want to learn about stocks, bonds, mutual funds and much more, then this could be the book for you. Written in a very accessible style and aimed at the absolute beginner.

I have all of these books in my own personal library and I dip in and out of them frequently. You will be inspired by them all I am sure and I recommend you purchase your own copies now. You can check them out by clicking on the links above.

Other Articles:

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© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

3 things you need to know about money

We all dream of being rich. We all dream about being able to buy what we want and go anywhere and everywhere we’d like to go. The attraction of having a pot of gold is why people chase every rainbow.

However, whilst money is necessary to sustain life, there are some things you should really understand about money. Here are three of them:-

1. Having money brings its own pressures:

A great fortune is a great slavery. Seneca, Roman statesman

It’s reasonable to want to create wealth and build a fortune. As indicated above, we all want to feel financially secure don’t we? Why wouldn’t we?

However being financially secure doesn’t mean you will have a life without problems and worry. You’ll just have different problems and different things to worry about. No one goes through life without problems. That’s the real nature of the human condition.

Put simply, having money brings its own pressures.

Once you’ve got money your biggest concern will be to ensure that you hang on to it. Inevitably that means you can become a slave to managing your money, preserving its capital value and protecting your fortune.

Being wealthy may be the nice problem to have but it’s no less of a problem for that. So keep it all in perspective.

2. Money can never be more important than people:

We love to earn money, who doesn’t? It gets you things. ~Katie Price

Earning money is great and it does allow you to buy the things you want and the things you need. However money won’t take care of you when you’re ill.

Yes, it might enable you to buy in some hired help. However that’s not the same as having someone around who genuinely cares about your wellbeing. That someone for whom you matter much more than money.

In my experience, whilst money is important, nothing in our lives matters more to us than our friends and loved ones. Human beings are social animals and only people matter to us really.

So never focus on money to the point where you neglect the people who should matter most to you. Forget about them and eventually they will forget about you.

You can have all the money in the world but without friends and loved ones you will have nothing at all.

Go out and earn your money by all means and enjoy it too. However always maintain a sense of balance in your life and make sure you allocate some time for the people who matter most to you.

An investment of your time in the people you love is an investment that will pay dividends.

3. Money is a precious resource so use it wisely:

A penny saved is a penny earned. ~Benjamin Franklin

I make no apology for repeating Benjamin Franklin’s money mantra frequently repeated by generations of well-meaning parents to their profligate children. It’s as valid today as it was in his day.

Whether Franklin was referring to money saved when making purchases or money saved from income is not obvious in his statement but that doesn’t matter.

The underlying point is that you have to be careful with your money because saving money is the key to building wealth and becoming financially successful. No one ever got rich by wasting their money.

Money, like time, is a precious resource so use it wisely.

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© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

Why living without money is a problem, or is it?

It is a kind of spiritual snobbery that makes people think they can be happy without money. ~Albert Camus

Money is the root of all evil, or so they say. Some people think we’d be better off living without money. Certainly money will not make you happy. If you’re not happy now then that’s unlikely to change much if you were to win the lottery. You’d simply swap one set of problems for another.

Does that mean living without money is a good idea? No is the simple answer. In the modern world, to survive in any meaningful way you need three things; oxygen, water and money. Those three things are all necessary to sustain life. Admittedly money will not get you very far without oxygen and water, nevertheless it’s still important.

We all need at least some money to be able to put bread on the table and a roof over our heads. We don’t necessarily need an enormous amount of money but we do need an income.

Our children need warmth and clothes, as well as a decent education. It all costs money. So money is as important to have as the air that we breathe. So we must take a realistic, as well as a balanced, view.

Having money definitely will not make you happy but not having money will certainly make you miserable. Only people who have plenty of money could possibly suggest that living without money might be a good idea. People living in poverty know that without money life is awful.

That said having an income beyond a certain level will make little or no difference to how you feel about your life. Your level of income dictates the lifestyle you can enjoy of course. So the actual income-level you need with depend on your lifestyle preferences. Nevertheless chasing money for its own sake is never a good idea.

Living without money is not a good idea but nor is an obsession with the pursuit of money. Life needs balance and whilst you need some money you also need to take the time to enjoy the fruits of your labour.

You’ll be a long time dead, so don’t waste your life obsessing about money. Have enough to get by and then concentrate on enjoying what you have with family and friends because in the end only people matter really.

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© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

5 questions to help the buying decision process

Readers frequently ask how they can be expected to save money when they don’t earn enough to makes ends meet as it is. Whilst that might be true in a few cases, in my experience far too many people squander their money buying items they don’t actually need and probably will never use. Their buying decision process is usually limited to whether they still have enough credit left on their credit cards.

Let me tell you, the mantra “Have Plastic; Will Purchase” is not a good one if saving money is one of your goals.

You can have an excellent salary but a lack of money management skills and a poor buying decision process will result in you never achieving financial freedom. So learn to manage your money properly.

Avoid the ‘I’ve got to have it’ approach:

Now be honest, how often do you buy things you didn’t really need? Stuff that you weren’t even looking for but it was there and it looked nice and you thought I’ve got to have it. Out comes your flexible friend and the item is yours. A brief period of gratification follows and then the item is largely forgotten.

How often do you buy things you never use? Take a look in your wardrobe. I’ll bet there are a few items in there which still have the store tags on them? Never used and they’ve probably been there for quite some time I suspect? Would I be right?

Weapons of mass wealth destruction:

How often do you buy things you can’t afford with money you haven’t got? Credit cards can be a convenient means of payment of course but they can also be weapons of mass wealth destruction. That is a fact.

When it comes to the buying decision process most of us are driven more by a desire for gratification then any sensible approach to managing our money carefully. Most of us are guilty of buying more than we need too. Many of us are guilty of buying items we never use or use very little. If you’re like this dear reader you’re not alone I can assure you.

The disciplined approach:

However with a bit more discipline you could hang on to more of your own money and then build capital which, eventually, will start generating an income all of its own through interest payments on deposits and dividend payments and capital growth on stocks and shares.

Still we’re getting ahead of ourselves. Today’s underlying message is having a personal buying decision process that allows you to control your expenditure.

Essentially before you buy you need to ask yourself a series of tough questions to gauge whether a purchase really makes good sense.

The questions to ask before you purchase:

There are in fact five questions you should ask yourself, as follows:-

    1. Do I really need it? Honestly?
    2. Will I really use it? Honestly?
    3. Can I really afford it? Honestly?
    4. If I didn’t have it would it really matter?
    5. Does is represent value for money?

If you answer ‘No’ to the first four questions, then the fifth question is irrelevant. Don’t buy the item. Simple!

And even if you do think you need it, never buy anything if you do not have the money to pay for the item right now. It’s better to do without than to run up debt on a credit card to pay for discretionary purchases.

The ‘value for money’ question is only relevant when you can answer every other question in the affirmative. Nevertheless you should never buy something that’s not also good value for money. That is, you should never overpay for anything.

Let the questions guide you:

To ensure your buying decision process is sound you must always ask these questions. Let them be your purchasing guide and you’ll be in a better position to save your money and start watching it grow.

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© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

How to achieve financial freedom

Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this. ~Dave Ramsey

Statistics suggest that most people these days are heavily in debt. Debt is a burden that enslaves us. Knowing we have debts can be stressful. Unsecured debt built up through the excessive use of credit cards is also very expensive. That means even a small sum outstanding on a credit card can very quickly become a large debt due to the effect of compound interest. Are you affected by debt? Are your finances out of control? Would you like to achieve financial freedom?

Often I hear people say things like, if only I could increase my income I could pay off my debts. In fact those same people, if they did increase their income, would probably just spend more. And financial freedom would remain a distant dream.

If financial freedom is your aim then it’s essential that you take control of your finances. It all starts with spending less than you earn. If you spend less than you earn you can work on becoming debt free and then start to build capital.

You must also pay yourself first. What does that mean? It means that when you get paid each month you take 10% of what you earn and put it away. Don’t wait until the end of the month to see what you’ve got left. If you do that you’ll never save anything. If you take 10% upfront it will just be another debit on your income like taxes and pension contributions. You’ll quickly get used to having only the remaining 90% to live on.

And what do you do with the 10% you’ve put away? Initially if you have debt then it makes sense to use it to deal with that first because the interest you’ll pay on the debt is always greater than any interest you’ll get on savings.

To pay off your credit card debt it’s essential that you find a way to eliminate the interest element each month so that any payments you then make go against the outstanding balance. And how is that done?

When you take out a new credit card account it often comes with a period of zero interest, usually six months. These accounts also allow you to transfer in outstanding debt from another credit card account. So by moving from one card provider to another and transferring the debt across to the new account, you then have a period of six months to make payments against the outstanding balance. Don’t use this card to increase your debt. Use it only for reducing your debt. At the end of the period of zero interest repeat the process. Once again, you move to another card account offering you a zero interest period. By focusing only on the outstanding balance it will be paid off quicker.

Eliminating the burden of debt is the first step on the road to financial freedom. Freedom from debt will give you peace of mind. And peace of mind is a good reason for spending less than you earn.

Learn to live within your means. If you live modestly and spend your money wisely, you can ensure that you have enough money when you really need it. You can also build that nest egg for your retirement and give a little back to those less fortunate than yourself. And you will feel so much better about yourself too.

Conversely, gathering too much clutter through excessive spending on things you don’t really need can become stressful, as well as wasteful. The choice is yours.

Conclusion:

Financial freedom is achievable and it will give you peace of mind. You will sleep better knowing you’re debt free. So spend less than you earn; pay yourself first; eliminate expensive credit card debt; and start building capital. Your older self will be grateful you made the effort I can assure you.

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© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

Why an investment in knowledge pays dividends

An investment in knowledge pays the best interest. ~Benjamin Franklin

We get paid for the value we add. The more value we add the more we get paid. It’s that simple really. If we can solve problems for people with the skills we’ve got then we can earn a very good living. The question is what underpins our skills? That would be knowledge of course.

Knowledge comes from learning and learning is a lifelong process. The quote at the top of this post from the venerable Mr Franklin reminds us of the importance of learning. Essentially through learning we invest in ourselves. We all have enormous capacity to consume and retain knowledge in our heads and that knowledge is then a currency we can trade.

When it comes to investing, nothing will pay off better than making sure you have a good education. And it’s not about whether or not you go to college or university. It ‘s through reading books; listening to audio and video tutorials; and challenging yourself that you’ll master anything to which you turn your hand.

In particular, if you want to master the game of money and all matters financial then you need to become a seeker of financial knowledge and know-how. You need to become a reader and a keen student of finance. To be successful in investing you really do need to know what you’re doing.

Ignorance can prove to be very costly indeed. And that’s true in every aspect of your life. Education may seem expensive but it’s nowhere near as expensive as ignorance. So, if you’re not already, become a reader. The investment in yourself is well worth the effort and it will pay a handsome dividend.

As the great Jim Rohn once said, “Work harder on yourself than you do on your job.”

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Looking for investments with high returns?

In investing, what is comfortable is rarely profitable. ~Robert Arnott

Looking for investments with high returns? That’s natural because we all want the best possible return on our money. However, with investing, most people are keen to play it safe whilst still hoping they’ll achieve high returns.

Now whilst a play-it-safe strategy might still result in a decent return occasionally, mostly that will be a matter of luck. Occasionally the cards might fall in your favour but that never happens consistently. To win consistently it all comes down to skill. Let’s face it, money is a game. And if you want to win at the game of money you need to be as skilful as the best investors.

So if you’re looking for investments with high returns the first thing you must consider is risk. It is a fact that risk and reward go together. The biggest rewards tend to go with the greatest risk. By risk I mean the possibility of getting an outcome you really don’t want.

The assets that might give you the greatest return might also have the potential to give you the greatest loss. And that’s where skill comes in. The better your financial education the more skilful you will be at judging risk. You will also be better equipped to find ways to mitigate risk.

It is a fact that if you want to make significant financial gains then you have to take risks, which means that you have to step out of your comfort zone. Baron Rothschild famously said that the best time to buy is when there is “blood in the streets.” However holding your nerve is not easy when everyone else is running for the hills.

Nevertheless fortune favours the brave. If you’re an inexperienced investor then proceed with caution, of course. You need to understand your attitude to risk and, ultimately, you should never do anything unless you know what you’re doing.

If you’re taking risks, they should be calculated risks. That’s why a good financial education is essential. Take every opportunity to educate yourself and develop your financial know-how and then start by taking small steps. Then watch out for those moments when it makes sense for the contrarian to act.

Many of the great investment luminaries through the ages have reaped enormous rewards from adopting a contrarian strategy.

Conclusion:

In the quote at the top of this post, Arnott’s point is to remind us all that risk and reward go together. You can’t have one without the other. That’s not to say, take crazy risks. It means that finding investments with high returns involves risk and dealing with risk requires great skill. And developing great skill requires you to educate yourself. By that I don’t mean go back to college, I mean start reading books and learn from for all the most successful investors.

Recommended Reading:

If you want to improve your financial education then buying some books on the subject for your personal reference library is an important step. Here are four excellent books I can recommend.

One Hour Investor: The Beginner’s Guide to Investing in the Stock Market by Russell Ellroy

One Hour Investor: The Beginner’s Guide to Investing in the Stock Market is recently published and so it’s right up-to-date. If you want to learn about stocks, bonds, mutual funds and much more, then this could be the book for you. Written in a very accessible style and aimed at the absolute beginner.

Think and Grow Rich by Napoleon Hill

Think and Grow Rich is a classic of the genre. Originally written in the 1930s but still around and still very popular. And it’s still around for a reason. It’s exceptional and definitely worth adding to your personal reference library.

The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon is another classic of the genre. Simple but inspiring. You can read this book in a few hours but it will provide you with a series of powerful lessons for acquiring money, keeping money and making money. Again well worth adding to your personal reference library.

Rich Dad Poor Dad by Robert T. Kiyosaki

Rich Dad Poor Dad is an excellent starting point for anyone seeking to improve their financial knowledge and improve their financial future. This is modern compared to the previous two but it has also become a classic and is well worth the cover price.

I have all of these books in my own personal library and I dip in and out of them frequently. You will be inspired by them all I am sure and I recommend you purchase your own copies now. You can check them out by clicking on the links.

Other Articles:

Encourage kids to fail if you want them to succeed

Visibility: Does it matter?

Life is short and it’s later than you think

Powerful words change lives

11 tips for improving quality of life

© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

When is cheap online clothes shopping a bad idea?

Buy less and pay more. ~Lily Cole

You know the feeling, don’t you? You’re feeling a little bit bored and there’s nothing on the television. So you pick up your iPad and start surfing the web. All too soon you’re on some cheap online clothes shopping website and you see something that looks like a real bargain. So before you can say ‘flexible friend’ you’ve pulled out that trusty piece of plastic and you’ve bought the item. And so the process goes. Before you know it you’ve bought several items.

However, ask yourself this question; could it be a bad idea to buy your clothes via the activity of cheap online clothes shopping? The clothes may be cheap but do they offer genuine quality? Usually the answer is No. In my experience when stuff is cheap it is cheap for a reason.

Online clothes shopping may be convenient but it does not necessarily improve your wardrobe. Yes, the result might be a wardrobe bulging with dress options but if they’re all of poor quality then you’ll still look cheap.

Then again even in the local shopping mall buying clothing cheaply these days is very easy. And again as long as you have a flexible friend you can buy whatever you like within your credit limit. Wherever you live there will be stores where you can buy clothes at bargain basement prices. That’s the way it is now.

However if you want to dress to impress then quality will always beat quantity. Buying clothes on the cheap can be a false economy if you really want to look smart and make an impression consistently. It is a fact that you simply get what you pay for.

Now I’m sure you’ll be saying, but I can’t afford clothes of top quality. Well you probably could if you bought fewer items of better quality. Whilst it is true that cheap clothes can look reasonable the first time they’re worn, the problem is that generally these items tend to lose shape once they’ve been washed a few times. They look very cheap, very quickly.

It is also a fact that you don’t need a lot of clothes in your wardrobe to look smart but you do need quality items. And if success is your aim and you want to impress people then you do need to look smart. Don’t be fooled by the modern trend to ‘dress down’. Mostly when you do that you just look scruffy.

So whether you’re online clothes shopping or browsing in the shopping mall, let quality be your guideline. And focus on having fewer items of much better quality.

The advice implied in the quote from the model Lily Cole on her method for sustainable fashion is very wise and you would do well to follow it.

Other Articles:

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Money and How to Get Rich

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© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

The Importance of Passive Income

Never depend on a single income. Make investments to create a second source. ~Warren Buffett

Do you work for an employer? Do you ever wonder what might happen if you lost your job? What would you do for income? Would you struggle to make payments on your mortgage, if you didn’t have a job? Then again, perhaps you’re one of the lucky ones who doesn’t depend on a single income because you’ve got passive income streams too? I say lucky but a better adjective might have been one of the ‘sensible’ ones.

Having all your eggs in one basket is a risky strategy. One mishap and you’ve lost everything. Where income is concerned it’s better to minimise risk by developing multiple streams of passive income. Income that you’re generating even when you’re sleeping. That’s what rich people do. They use their money to buy assets which in generate passive income for them.

An asset by definition is something from which an income is generated. For instance if you buy stock in a major corporation, essentially what you’re doing is becoming one of the owners of that business. Assuming that corporation is profitable then you get paid a share of the profit each year in the form of a dividend. Buy into the right companies at fair value and that will give you income streams from each company in which you own stock.

Property is another asset potentially. Buy a property with the aim of letting it out to tenants and again you generate an income stream. Similarly bonds are another asset class that generates income from the interest paid. All of this is passive income because it doesn’t require you trading your time in return for that income. Once you have the asset you have the income.

This is the underlying message in the quote from the great Warren Buffett, the world’s most successful investor, included at the top of this post. He is saying that you should build a capital sum and then invest it in assets that will generate a second income stream for you. For instance, invest in Blue Chip stocks and shares that are paying good and sustainable dividends and that will create a steady income.

Now you’re probably saying, well how do I build a capital sum? Manage your money carefully and pay yourself first when you get paid each month. What does that mean? It mean as soon as you get paid, take say 10% of your salary and put it away somewhere safe. Initially in a saving account. Once it starts to build into a decent sum then start thinking about investing for passive income.

If you like some more ideas on how passive incomes can be created, then the video included here could be useful to you. Think of it as a small step in your financial education.

It might seem almost impossible but it can be done if you work hard and use your money wisely. It will take financial discipline but it can be done.

Recommended Reading:

You will of course need a good financial education, so start by buying a few books on the subject and start reading as much as possible. There are some excellent books on the market and here are some suggestions you might consider adding to your personal reference library:-

Think and Grow Rich by Napoleon Hill

Think and Grow Rich is a classic of the genre. Originally written in the 1930s but still around and still very popular. And it’s still around for a reason. It’s exceptional and definitely worth adding to your personal reference library.

The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon is another classic of the genre. Simple but inspiring. You can read this book in a few hours but it will provide you with a series of powerful lessons for acquiring money, keeping money and making money. Again well worth adding to your personal reference library.

Rich Dad Poor Dad by Robert T. Kiyosaki

Rich Dad Poor Dad is an excellent starting point for anyone seeking to improve their financial knowledge and improve their financial future. This is modern compared to the previous two but it has also become a classic and is well worth the cover price.

I have all of these books in my own personal library and I dip in and out of them frequently. You will be inspired by them all I am sure and I recommend you purchase your own copies now. You can check them out by clicking on the links above.

Other Articles:

Money-Making Tips from the 50 Smartest People

Don’t fall for an easy money scam

How to save money with Amazon Refurbished

Money and How to Get Rich

How to save money

© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

Why you should be an investor not a speculator

What is the best way to make money? That is the best way to use your money to make money? Good questions for all you intelligent readers out there. Personally I think you should be an investor not a speculator.

We’ve all heard the stories about people making enormous financial gains by buying stocks and shares in companies and then selling them quickly to cash in on market movements.

Essentially these people are riding market volatility for profit. Nice work if you can get it. Dealers on Wall Street and in the City of London do it all them time and they get well remunerated for their efforts. And that can fool the rest of us into thinking that maybe we can succeed at this game too.

Don’t be fooled. Wall Street professionals have enormous experience in this game and they also have the benefit of sophisticated technology and software to help them. Equally they work for institutions that can take a few losses on the chin if they have to, safe in the knowledge that dealers should make more than they lose. Well that’s the theory anyway.

For ordinary mortals like us we cannot compete with the professionals. Speculators are important because they bring liquidity to the market. Meaning you can always sell stocks and shares because there’s almost always someone willing to take a punt. However if you take a punt, unless you’re very lucky, speculation is likely to cost you dearly. You may win occasionally but mostly you won’t, particularly once transaction costs have been factored in.

So I would suggest that if you want to build a sizeable fortune, then it’s better to be an investor not a speculator.

To be successful as a speculator you have to be able to predict the future. So ask yourself this question; am I confident that I can consistently predict the future accurately? If you respond in the negative then it would make little sense for you to become a speculator. If you answer in the positive then ask yourself this question too; is it possible that I am completely deluded? No one can accurately predict the future. Simple.

Speculation also means that you must operate on the ‘greater fool principle’. That means you must be confident that when buying an asset with the aim of selling it quickly for profit you’ll always be able to find a bigger fool to pay you more than you paid for the asset.

It’s true, if you speculate, occasionally you’ll get lucky. However you’re unlikely to get lucky consistently. So don’t try.

If you want to invest in stocks and shares, look for well-managed, quality companies offering good products that people will want to buy time and again. Look for companies with strong cash-flow which pay investors healthy dividends. Look for companies with good international exposure too. Buy shares in these companies at a fair value price and hold them for as long as dividends are solid and growing. And sell only when you have reason to question the sustainability of those dividends. Be an investor not a speculator.

Remember it’s not about timing the market; it’s all about time in the market and the miracle of compounding. There’s no easy money to be made. However if you’re a shrewd investor then steady money can be made. I know because I’m an investor and I’ve done very well with that approach. So I say once again, be an investor not a speculator.

However a good financial education is essential. By that I don’t mean go back to college, I mean read, read, read.

Recommended Reading

If you want to improve your financial education then buying some books on the subject for your personal reference library is an important step. Here are three excellent books I can recommend.

Think and Grow Rich by Napoleon Hill

Think and Grow Rich is a classic of the genre. Originally written in the 1930s but still around and still very popular. And it’s still around for a reason. It’s exceptional and definitely worth adding to your personal reference library.

The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon is another classic of the genre. Simple but inspiring. You can read this book in a few hours but it will provide you with a series of powerful lessons for acquiring money, keeping money and making money. Again well worth adding to your personal reference library.

Rich Dad Poor Dad by Robert T. Kiyosaki

Rich Dad Poor Dad is an excellent starting point for anyone seeking to improve their financial knowledge and improve their financial future. This is modern compared to the previous two but it has also become a classic and is well worth the cover price.

I have all of these books in my own personal library and I dip in and out of them frequently. You will be inspired by them all I am sure and I recommend you purchase your own copies now. You can check them out by clicking on the links.

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© Roy J Sutton and Mann Island Media Limited 2017. All Rights Reserved.

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