Better Investing.  How Do We Crack That Code?

"An Investment In Knowledge Pays The Best Interest."  Benjamin Franklin

Better investing.  After the roller coaster of the past ten years, isn't everyone looking for that secret formula?  Or at least the ones who haven't thrown in the towel. 

Too often I hear people lament that they will never get to retire.  They feel as though they will never get ahead.  Or in some instances get back to even.  I think confusion has much to do with this sentiment.  I think it comes back to not knowing what to do.  I don't really believe it stems from lack of motivation. 

Better investing is an action step.  To take action steps we need to know the right direction.  We'll start that process for you by pointing out a major mistake many people make when they think they are "investing."

It isn't all their fault.  Supposed professionals tell them they are investing in assets, when in reality they are not.  Better investing means your money goes toward assets.  Here is the most important lesson regarding investor's intelligence.

Your Personal Residence Is Not An Asset

I know your real estate agent told you "this will be the biggest investment you will ever make."  They will tell you that your home is a great asset.  They are wrong on both counts. 

Here is that very simple way to tell the difference between assets and liabilities.  We've mentioned it before, but it is always good to review.  It is the core reality of better investing skills. 

* Assets put money into your pocket.

* Liabilities take money out of your pocket.

Were you expecting more?  If you can grasp that simple two line concept, you'll be far ahead of the pack.

We've noted in other pages when mainstream media finally begins to report on topics that should have been brought out long ago.  It seems in too many cases they have served as messengers of the various industries that profit from our lack of specific information.

A while back, I read a piece from a writer with the title "Economics and Finance Columnist."  He writes for a well known, very large website.  This column articulates the essence of lack of financial literacy that was a major cause of the bursting housing bubble.

His title was "Americans vs. Reality:  Why Your Home Is Not A Good Investment."  Here is his opening statement. "I've come to believe that for millions of Americans, a house is a large liability masquerading as a safe asset."  He cites a recent Gallup poll that shows Americans favoring real estate over precious metals or stocks when comparing potential investment vehicles.

The columnist goes on to report on information given to him during an interview with Robert Shiller.  Mr. Shiller is indeed very sharp when it comes to housing data.  In that interview he tells our columnist that housing prices may decline for many years to come.  Mr. Shiller correctly points out, "The housing boom in the early 2000s was driven by a sense that housing is a wonderful investment. It was not informed by good history,"

While I applaud this "economics and finance" columnist for now seeing that a personal residence may not be a good investment, I am alarmed that he ever considered it as such a thing.  Robert Kiyosaki taught us years ago that our personal residence is not an asset.  He was skewered by many "economists" for that statement.  Maybe they are slowly catching on to true economics.

Sadly, this columnist wasn't able to carry through on his new found investing acumen.  Later in the page he again refers to a personal residence as an asset.  Even after he very correctly pointed out that houses take money out of your pocket.

We all need a place to live.  And there is nothing wrong with wanting a nice place to live.  But unless you are renting out a room for more than it costs each month overall to stay there, you do not have an asset.  You have a liability.  Your house is an asset for the bank that holds your mortgage.  It is putting money in their pockets.  Here is a short video from Robert Kiyosaki that illustrates the points.

I do agree with Robert Shiller's estimates about future home values.  I don't think we've hit  the bottom of this housing crash.  But that isn't a bad thing.

Your kids could get a real bargain on their first house.  It will still be a liability, but a less expensive liability. 

Here is a link to that page.

Better Investing Requires Better Knowledge

Sorry about that that bold subheading, but truth is truth.  There is no way around doing the work.  If you choose real estate, do so with the expectation that values may not hold up.  You need to be sure you understand positive cash flow.  "Rich Dad Poor Dad" is an excellent book to begin the learning this process.  Robert Kiyosaki wrote a masterpiece that anyone can understand.

"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for."  Robert Kiyosaki

Investing in precious metals is another possible passive investment opportunity.  Much depends on how you think the future will shake out.  If you love very technical detail and many charts in books you read, grab a copy of "The Demographic Cliff."  Harry Dent wrote this book.  If you get bored or even lost in number details, you may want to pick another option.  This book has loads of information, but is a tough read.

Mike Maloney's "Guide to Investing In Gold And Silver"  will give you some basic direction into that category.  This area requires some real study. Precious metals are very volatile.  Some very smart people think the future holds soaring values for gold and silver.  Other very smart people see a collapse of that market.

I've read opinions from both sides.  And both sets of opinions have merit.  We are in such uncharted waters with these massive levels of fiat currency printing from nearly every country.  Both camps believe danger is ahead.  The question is the end result.  That will determine which direction better investing will take you.

Preparing For Any Contingency

Right now I'm preparing for any possible scenario.  As I said earlier, I do expect another real estate value drop.  Until the job situation is rectified, housing will not truly recover.  And I have no faith in government numbers that report "improvement" and then three weeks later revise those same numbers downward.  The first story is page one.  The revision is buried.  Do you remember my first paragraph and the words about media messengers?

I'm reading varied opinions from people who have actually done the work.  I don't read Paul Krugman when I look for business advice.  If I was seeking advice on academia, he would be a good source.  When it comes to hands on business skill, I go to people who have built successful business ventures.

I do know something about real estate investing.  I've done that and most likely will again.  When the time is right.  I learned long ago that emotion cannot enter into any real estate equation.  It is pure mathematics. 

Better investing begins with better knowledge.  I've already reviewed Peter Schiff's new book, "How An Economy Grows And Why It Crashes."  If you haven't read it, please do so.  You will understand it and you will learn about business and better investing.  I've given you three more books in this page to increase your knowledge. 

Here are three pages that draw from this excellent book.  There are more located in the page directory located in the left margin of every page.

* Financial literacy curriculum

* Middle class income

* Free market economy

It isn't that hard.  But it does take work.  Only you can decide if the work is worth the result. 

Return From Better Investing To Business Intelligence Tools

Return To List Of Classic Books

Return To Page Directory

Return To Resource Library

Return To Home Page

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