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18
FEB
2013

7 Rules of Wealth Building

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Practical Keys to Amassing Investment Capital

Most parents want to teach their children responsibility – how to become self-sufficient and succeed in life (after all, no one plans on raising a dead beat). However, very few actually accomplish this task. Why? Because, as parents, we are limited to the experiences our parents passed on to us … the antiquated notion that “responsibility” is simply getting a job, saving a little money, and maybe purchasing a car or some equally important item. Hopefully these seven rules will open your eyes and help you teach your children to avoid the traps that have stolen financial success from so many people.

Wealth Building Rule 1: Put Off Marriage

Your biggest obstacle to attaining wealth is YOU. Too often, people live their lives in a manner that is not conducive to creating riches and then get frustrated at “the system” when they only really have themselves to blame. One of the most important financial decisions you will ever make is marriage (more specifically who you marry and when). By putting off the walk down the aisle for a few years, you can save a decade worth of frustration. Your first goal should be to become financially independent, with little or no debt, and have your investments in place. Once you have these three things, your odds of success are drastically improved by beginning your journey on a level playing field (after all, the number-one reason for divorce is financial trouble).

Wealth Building Rule 2: Debt is a Disease

With a few notable exceptions, debt is a form of bondage; a disease that enslaves the borrower. A few years ago, there was a young lady attending college who shot herself because she couldn’t pay back $2,300 in credit card debt. Although an extreme example, it is a testament to the power money has over peoples’ lives. Imagine your life without owing anyone anything … your car, your house, your education, all paid for in full. Like what you see? When you want it badly enough, you will make extinguishing your debt your number one priority.

Wealth Building Rule 3: If You Don’t Like Where your Parents Were at Your Age – Do Things Differently

The old cliché that “insanity is doing the same thing over and over expecting different results,” holds just as true today as it did when it was originally written. If you don’t like where your parents were at your age, stop what you are doing. During your childhood, they taught you all they knew about money. For many people, these early years established how they feel about their finances today. In order to become financially successful, you must do something different than they did. Otherwise, you will end up exactly as they are.

Wealth Building Rule 4: When you Begin a Job, Look at the Pay of the Highest Employee

Whether you are looking for employment now or are thinking about it sometime in the near future, one of the most important things for you to do is to look at what the top-dog gets at any company for which you are considering working. This will give you an idea of how high you can expect to climb in terms of earnings and promotion. If the CEO is making $30,000 a year, you have no chance to make six figures. Select a job accordingly.

Wealth Building Rule 5: Do Something You Love and Get Paid for It

A lot of students going to college want to be artists, scientists, and businessmen, but instead did what their parents or grandparents told them to do. There is no honour in being a doctor or a lawyer if you wake up every morning and hate your job. Pick a profession you love and you’ll never have to work a day in your life.

Wealth Building Rule 6: Understand the Money Myth

Money is nothing more than a piece of paper with the image of a long-dead person on it. When you understand that any power it has over you is derived from your relationship with it, you suddenly become free from the constant pressures and stress of thinking about it. Especially at times such as these, if you are putting money away for ten, fifteen, or twenty years down the road, stop checking your portfolio every day! There is nothing you can gain from it except stress.

Wealth Building Rule 7: Your New Commodity is Not Your Labour, It’s Your Ideas

With the advent of the Internet and other technological advances, you are no longer limited to supporting yourself or making a living by your physical labour. The only limit you have on yourself now is your own imagination – your ideas are the most valuable thing you possess. Every man, woman, and child is a salesman for a living … if you don’t own a business or investments, then you sell your manual labour to a company in exchange for a wage. Change your product. The gap between the rich and poor does indeed grow larger with each passing year, but not because of inequalities or any other such injustices. Instead, it is because the rich understand money and how to use it. Capital is literally a seed … learn how to plant it to produce the best harvest. When you do this, you will rule your finances, not the other way around.

Source: http://beginnersinvest.about.com/cs/personalfinance1/a/031001a.htm

17
FEB
2013

6 tips for buying investment properties

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Looking to buy an investment property? Here are six tips to consider first. It pays to do thorough research before buying an investment property to ensure you get the best return possible. Here are the 6 golden rules all buyers should consider before leaping into the investment property market.

1. Check out the total costs

There can be many ongoing costs when you buy an investment property.Consider are fees like strata payments and council rates that will reduce the return on the investment.

2. Factor in upkeep and repairs

All property needs to be maintained, so build it in to your outgoings. Look at how much is in the sinking fund and the work needed down the track like painting or whether the roof needs fixing in the near term.

3. Go where the vacancy rates are low

The old adage, ‘location, location, location’ still rings true for property investment, which means it’s also essential to consider the proximity of the property to essential services like public transport and schools. Don’t necessarily invest in a property close to your home – that’s not always the best way. Look at vacancy rates – state real estate institutes have good data on this – before you decide to invest. It’s been suggested as a rule of thumb … buy a property in an area where vacancy rates are less than 2.5 per cent.

4. Get into the right gear

It’s also important to consider whether the property will be negatively or positively geared.If it’s negatively geared, the return on the property will be less than the repayments on it, which produces tax benefits for investors on the top marginal rate. If it’s positively geared, the return will be greater than the repayments. Make sure you’re not haemorrhaging money each month if it’s negatively geared.

5. Decide between growth or yield

Another deciding factor in any investment property purchase is whether you are buying the property for capital growth or yield. For example … a property in Sydney’s western suburbs might produce a yield of 7 per cent, but have low capital growth. If this means the property is positively geared, it might not be as beneficial for a higher income earner. Investing for capital growth works if the asset is undervalued or unique.

6. Choose the right management

Once you’ve purchased your property, appoint a real estate agent to manage it. When your property is looked after you don’t have to worry about things like chasing rent or appearing at the Consumer, Trader and Tenancy Tribunal. And finally … Do your research before you pick an agent to manage the property and look for someone experienced or who has equity in the business because there’s often a high turnover of property management staff.

17
FEB
2013