A Beginners Guide To Investing That Will Put You Ahead of The Pack!

This brief beginners guide to investing is written to give you some basic knowledge and to steer you to some information sources that will help to build your confidence in these areas. 

As has been the theme for many of the pages at books-empower.com, knowledge is the most important weapon in your arsenal.  We'll begin with what I feel is the most important thing you need to remember.

In Robert Kiyosaki's first book, "Rich Dad Poor Dad", he presented this very important lesson.  It is so important but yet so simple that it is often missed.  He reinforces this most important point in his latest book, "Why "A" Students Work For "C" Students And "B" Students Work For The Government." 

The Finest Financial Literacy Book

Early Lessons In The Beginners Guide To Investing

That first lesson in your beginners guide to investing is the true definition of assets and liabilities.  I've met so many people who have had careers in financial services and real estate who cannot answer this question.  They give responses loaded with technical terms, but it is clear they don't really know.  If you cannot explain it to a six year old, you really don't understand it yourself.  Here it is...

Assets put money in your pocket.  Liabilities take money out of your pocket.  There you have it.  Lesson one.  If you can keep this one key truth in your mind, you are ahead of most of the people trying to grow retirement accounts.  You will also be ahead of many people making home purchases.

“Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I'm the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.”   Robert Kiyosaki

I did understand this most important rule about assets and liabilities before I read "Rich Dad Poor Dad."  During my time as a mortgage broker I was often confronted by a real estate agent chasing a commission who gave me a list of "assets" his client had accumulated which he wanted me to use in qualifying that person for a mortgage.  Usually a mortgage that I could tell right away he could never afford.  I lost a fair number of loan opportunities by not going along with agents of that nature.

I never included a car in an asset column.  Cars don't put money in your pocket.  Unless you are using it for a cab service.  In the case of a vacation home or rental home mortgage application, I also didn't include a primary residence in that asset column.  I knew even long ago that a personal residence is not an asset. 

Robert Kiyosaki highlighted the truth that your home is not an asset in his book.  To say he was skewered by the real estate community is an understatement.  He was absolutely correct of course, but by stating the truth he took the air out of any commercial calling your home your biggest investment.

Lessons Two And Three

Rule number two in your beginners guide to investing is....

Your primary home in not an investment.  It is also not an asset for you, but it is an asset to the banker who holds the mortgage.  Or to the municipality that collects property taxes or the company insuring your home. 

Next in your beginners guide to investing is a brief understanding of income statements and balance sheets.  Much of this is about having the correct mindset.  If you are chasing hourly income or a weekly salary your focus is on the income statement.  There are two sides to that statement.  Income and expense.  If your focus is on this page, you will see income going in one side and expenses taking out much of it on the other side.

For the investing part of your life, you'll need to change your mindset to the balance sheet.  This page also has two sides.  The asset column and the liability column.  Your plan will be to put investments into your asset column.  An asset will continue to pay you over time.  If you stop working your income statement will reflect that lost wage.   But your asset column will not suffer.

As we finish your beginners guide to investing, you should realize that the biggest difference between truly wealthy people and other people is mindset.  Wealthy people focus on collecting assets until that column is paying them solid passive income every month.

Many of the people who earn high incomes, focus on buying "things."  Things fall into the expense side of their income statement and the monthly payments they shell out for those things fall into the asset column for a lender.

So the difference between the income side of an income statement and asset column on a balance sheet is the third big lesson in your beginners guide to investing.  Click the short video below for a great wrap up on this basic knowledge part.

Choosing The Right Investment Vehicle

So what do choose as an investment vehicle?  I'll give you a few examples, but the decision will be based on your interests and amount of risk tolerance.  The key is become a student of your prospective investment options.  Learn all you can.  But remember to seek that knowledge from people who won't be making a big commission by selling that investment to you. 

Please take the time to visit our resource library.  In it you'll find a multi-part video series from Mike Maloney.  He gives a tremendous presentation about the history of money.  The videos are about thirty minutes long.  About the time it takes to watch one mind-numbing sitcom rerun.

I posted a page a while back on self directed IRA possibilities.  I would highly suggest you explore this option.  In that page I mentioned what you should look for and how many investment choices are open to you. 

If you like real estate, check the page on passive income opportunities.  Then also read the two pages about investing in real estate.  These will give you good starting information.  I really like real estate and have renovated homes in the past.  I do feel another big housing value drop is coming.  I might be wrong, but I'm not seeing true indications of the problem being fixed.  It still comes down to full time jobs.

But there are some good buying opportunities out there.  Just know that right now, the job market makes the other side, renting or selling a bit tougher.

Silver coins are an option.  They can be held within your self directed IRA as can real estate. Mike Maloney's "Guide To Investing In Gold And Silver" is a great book to teach you about this opportunity.  Markets change.  As I write this page, the mainstream "money experts" would laugh at the idea of buying silver coins.  That may be the very best reason to consider it for part of your investment plan. 

You always have the choice of sending your money to a mutual fund.  Personally I think this is the worst pick for you.  A great one for that mutual fund.  But not for you.

I gave you three excellent books to start the learning process in your beginners guide to investing.  Click on the pages I've highlighted in the earlier paragraphs and check out the pages in the directory in the left margin about business and investing.

Knowledge is the most important part.  That includes keeping an eye on current events.. We are a global world more so now than ever.  Things will be changing very quickly as the largest transfer of wealth in our history unfolds. 

This could be your time.

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Just below is a quote from "Don't Sweat The Small Stuff" by Richard Carlson.  The chapter title is "Open Your Heart To Compassion." 

"Every day we are given hundreds of opportunities to practice compassion in action.  We can learn to be less reactive and live with more patience.

We can smile when others are serious.  We can drive our cars more carefully, pick up litter on the streets, recycle, and reduce our consumption.

We can resolve conflicts rather than create them, and we can become less judgemental and more inclusive.  When someone is aggressive, we can teach them to be more peaceful.  Instead of waiting for an example, we can be the example.

The more compassion that enters your heart, the happier and more peaceful you will become.  By knowing that you are doing your part to create a better world-whatever form that takes-you will fill any void that exists in your life, and you will begin to find the peace you are looking for."

What's New?

Just below is an article from Peter Schiff about passing the buck from one administration to the next.

Owning The Bubble

Just below is a link to look up your congressional representatives.   Let them know you expect accountability.

Congressional Representative Look Up