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Golden Goose Nest Egg or Syndrome: which one are you applying? July Ono along with her husband Steve Cain own and manage a $30 million real estate portfolio and are the founders of On The Beach Education® Corporation, an ongoing coaching and mentoring program designed to take the fear out of real estate investing. Between 2006 and 2008, their mentees purchased over $38 million in investment properties, making July’s program, The Power of Real Estate, a foundation for achieving financial independence sooner rather than later. Recall the story of the farmer who owned a goose that laid a golden egg every day. Blessed with such good fortune, they soon became impatient. The goose must surely be made of gold inside so they decided to kill it and get all the gold. Alas, when they cut it open they found no gold; no goose and no more golden eggs. The moral of this story is that short-sighted goals may produce instant results but at what cost. The financial markets have been a rollercoaster of activity; income trusts plummet, oil prices surge, TSX record high, Canadian Dollar up and down and up and down, and the same for gold. The one certainty in the stock market is that when someone loses money, someone else is making a lot of money. All investments have a measure of risk and its how you manage your risk that determines the speed and return on your investment. Recently, I have encountered a spate of investments that hold the promise of fantastic returns and the opportunity to diversify my portfolio. However, these are high risk investments and the returns should reflect it. I don’t even consider investments that offer high risk with moderate to low returns. I am concerned about the growing number of unsophisticated investors who believe they have made a wise investment choice when I hear the answer to this question: Do you have an investment plan and are you following it? The singular answer is … “? Um, what plan? No.” Every investment you purchase must have an entry strategy and an exit strategy before you buy. Yes, I must admit it is tempting to use the profits from my real estate holdings to buy investments that I don’t quite understand and might generate a profit one day. When I do, I use my play money (the golden egg). I keep my eye on the prize (the golden goose) and ensure my real estate portfolio continues to generate consistent passive income. Over 80% of my portfolio is vested in real estate and within this 80% I continue to diversify geographically. In my plan, 80% of my investment portfolio must generate seven profit centers of income and provide positive net cash flow. The other 20% of my investment portfolio can then generate one profit center of income and cash flow is not a prerequisite. All investment opportunities are considered within the context of my overall investment plan. And I’m bullish on real estate. If an investment does not fall within these criteria, it is a pass. Remember that real estate yields are not comparable with stock yields. I simply do not understand why stock analysts like to compare the two investment vehicles. A stock that yields a 6% return is not the same for real estate. Most people who invest in stocks use 100% of their money with the exception of margin purchases (you’re borrowing money from the brokerage house). Most people who invest in real estate use 25% of their money with the exception of joint venture partners (you’re using investors to fund the down payment and the bank to finance the rest). In this case the 6% yield is only applicable on the 25% down which is really a 24% yield when you compare apples to apples. And if you successfully negotiated zero down on your part and used investors to fund the entire down payment, then any yield you make is infinite. All I’m saying is know what your plan is before you start purchasing investments. You be in control of what to buy and when, instead of at the mercy of promoters. I also have a policy not to invest in anything that requires me to sign a non-disclosure statement. There may be legitimate reasons to protect proprietary information but it is also a red flag. Is the company hiding something? Or perhaps it is an idea that I’ve been considering and have not yet implemented. If you have no plan of your own, you are going to follow someone else’s plan. Unless you’re doing your due diligence, you are letting someone else control your decisions. You know the saying: If you fail to plan, then you are actually planning to fail. Immunize yourself against the Golden Goose Syndrome and take control of your Golden Goose Nest Egg.
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How Relying Upon Experts Can Hold You Back Rory Sutter is a highly regarded real estate consultant, certified coach and investor who carries the Associate Broker's License in British Columbia. He is a member of both the Residential and Commercial Divisions of the Greater Vancouver Real Estate Board and has held senior positions with leading companies such as Colliers International, Concert Properties and Sutton Group. Rory is committed to adding massive value to the lives of others through his knowledge and passion for coaching and real estate. There are hundreds of reasons to wait, to delay taking action. For you it might be the news that is scaring you, or a friend that has strong opinions. It could be a relative, bank, newspaper, economist or blog giving you information that helps shape every decision that you make and whether you wait, step forward, or retreat. Never before in history have we been surrounded by so many ‘experts’. Everyone is calling themselves an expert and we are being bombarded with predictions and forecasts foretelling our futures. And this information comes at us so fast. I just launched my new iPad and I have access to more news than anyone could desire. But let’s not forget our smart phones, computers, televisions, radios and a myriad of blogs, web sites and newsletters. In fact there are so many ‘experts’ telling us what to do the masses are becoming paralyzed through over-processing and conflicting opinions. Personally I can’t help but ask who is writing any article or blog post that I read and what is their motivation and how did they acquire their so called expertise? Is it a title they gave themselves, or does it allow them to sell more papers, have me buy something, or lock-me-in to a mortgage for five years? A definition of an expert is a person who has a comprehensive, authoritative, or high degree of knowledge of or a skill in a particular area. We live in a culture where expert’s opinions, beliefs, ideas, hypothesis, or theories are relied upon by virtue of their credentials, training, education, profession, publication, position or experience. Expertise is also understood as a form of power as the experts have the ability to influence others and they do in every way imaginable and many elite university professors sold their expertise to the financial service industry in order to influence governmental policy and deregulation prior to the U.S. financial meltdown. Doctors, scientists and lawyers are considered to have knowledge that is specialized to the point that it is inaccessible to normal people who must accept their prognosis or opinion unreservedly as fact. We have a friend whose well-being is threatened today resulting from her physician who told her that the lump in her breast was of no significance even though there was a history of breast cancer in her family. Precious time was lost but what happens when the experts are wrong? Absolutely nothing, although in biblical times if a prophet was wrong one time they were considered false and were stoned to death, which kept expert’s predictions for the future to a minimum. But today our ‘experts’ are free to say whatever they wish and what’s missing is accountability and no one knows their track record. So why do we rely upon and believe the opinions of experts so readily? It’s because we have an aversion to uncertainty and want to eliminate it. We want to know what is happening now and in the future and we acknowledge our inability to determine it in a world that is too complicated to be predicted so we look to experts who display confidence and make it all look so easy to understand. Mark Twain defined an expert as an ordinary person from another town. Niels Bohr, a Nobel laureate, said an expert is a person that has made every possible mistake within his or her field. Tom Hopkins says that an expert is someone who knows a lot about the past. It has been said that an economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen. For when it comes to the future their crystal balls work no better than those of fortune tellers. After all what does it mean when an economist tells us that growth was ‘better than expected’? It means that there was an earlier forecast and by issuing a new one they were conceding that the original was wrong but why should we believe the new forecast if the first one was incorrect? Is there any wonder that so many people are stuck? Jame’s Callaghan tells us that a leader must have the courage to act against an expert’s advice. David Ben-Gurion the former Prime Minister of Israel said, “If an expert says it can’t be done, get another expert.” Paul Newman warns us, “Who’s to say who’s an expert?” The bottom line is that you need to choose the experts you listen to and rely upon carefully and learn to ask the right questions to get the right answers. It is best to do a little research on their track record and determine their biases and motivation. If you need to hire an expert ask for a recommendation from a successful investor in the market you are investing in. Never subordinate your own decision making capacity to another person and don’t be afraid to seek additional opinions. If you find yourself in a state of confusion you may wish to filter out some of the noise coming into your world from different experts as it may be holding you back. In addition, be mindful of the risks of thinking that you are the ‘expert’ for in the beginner’s mind there are many possibilities and in the expert’s mind there are few. The trick is to continue to gain expertise, but to avoid thinking like an expert. It is best to view your life, investing and business as a continuous learning experience. Always know what you’re getting into by doing your due diligence but train yourself to recognize opportunity that always hides behind problems, ugliness and the failure of others. Every challenge or obstacle you come up against may be an opportunity in disguise that the experts could easily miss.
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Stages of Evolutionary Learning - Part Three Albert teaches you HOW TO uncover your talents, turn those talents into value, leverage that value by enrolling resources, and connecting those resources with opportunities. This is the exact resourceful process that Albert himself used for decades running his successful global businesses. Last month, you may recall, I shared with you, my own understanding of the manner in which we, as individuals, learn our evolutionary path and growth. It left me wondering, how I could describe this evolution in the context of a team of people…aka…a community of enterprising people. Again, at the risk of putting psycho babbling labels onto the different ‘stages of human growth’….let me tackle it from an information-flow perspective. I have an imaginary group of four people…I will assign four particular roles with which you may or may not be familiar. Mr ‘Why’…Mr ‘How’…Mr ‘What’…Mr ‘Who’. First in Line, in as far as the evolutionary journey goes is Mr/Mrs ‘Why’? He/ she is very easily distracted by the next shiny bauble. Very quick to detect and desire relief from fear, stress or guilt. Typically described as visionary, always ponders potential alternatives and wondering ‘why’ everything works in such, or such a manner? He, or she, is the manifestation of a social influencer, always reaching out, looking out for support systems…networks and so on. Typically has a clear Purpose for his or her goals. Mostly driven by clarity of accomplishment and sense of obligation. Second in Line is Mr/Mrs ‘How’? He or she is very analytical…almost the opposite of the visionary. Analysing and doing diligence and deep discovery to try and understand ‘How’ it all works. It is a phase during which he/she tries to identify with a particular situation. They ‘lack’ adequate information, and are sceptical of any guarantees offered…always reviewing in an analytical format against their own Values, Beliefs and Mindset. It is also here where we see Mr /Mrs ’How’ suffering from analysis paralysis. Mr /Mrs’How’, cautiously, look out for opportunities for learning about how they can Add Value as they continuously feel that the ‘quality of anything is just not right’ for them. Life is too confusing and perfection is sought…education becomes the greatest cause/excuse for procrastination. Third, Mr.and Mrs. ‘What’ in his or her particular phase of life start packaging all that they ‘know’ and have come to learn about a productive initiation as a way of life. They rely a lot on the perceived ‘certainties’ of rules. By and large, they associate with past unpleasantness, yet the ‘Ugliness and unpleasantness in Life’ propels their desires to make a difference. They are ready to Value Exchange. Drawing on their internal Mr ‘Why’, they still realize the power of natural mutual exchange and co-operation. Some of them become ‘Value Givers’ out of their sense of trust and find that this way of doing things ‘works for them’. By contrast, drawing on their current and internal Mr ‘What’, they opt to become ‘Value Takers’ and rely on the strength of procedure, revering the laws of exclusion and ‘ownership’ (arising from a sense of insecurity and inadequacy) of everything. In this manner, human resources are for ‘extraction’ and ‘mining’ NOT for co-operation and natural mutual exchange. Mr./Mrs ‘What’, seemingly want to overcome any sense of ridicule, boredom and confusion. They want to be both movers and shakers in Life and to direct the world in accordance with the illusionary ‘One Right Way’ and a plethora of ‘legal procedures’ Fourth, in line we find Mr and Mrs Who. These folks have entered into a life of gay abandon. They have the radiant self confidence that comes from experience and show their total acceptance for vulnerability. No longer attached to anything materially, they ‘know’ Who they are and don’t seek definition of their identity by way of ‘toys’ ‘possessions’…. ‘cars and stuff’. They continue to yearn for synergy amongst people in a Value Creating Manner even as the events of ageing…take their toll. The ‘average guarantees’ in Life are good enough….and seeking perfection, they have learned, is the greatest drain of human energy ever. Next month there will be more as I keep on learning and growing myself! Until Later
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Why Getting Out of Debt Can Sabotage Your Financial Success Tracy Piercy is the founder and CEO of MoneyMinding, a wealth building system that turns conventional money wisdom into possibilities for results beyond conventional. Tracy is a passionate, committed advocate for the application of practical financial knowledge that integrates the softer, emotional side of money to help both consumers and financial professionals to achieve financial results never thought possible. Her mission is to help you make sense of financial uncertainty in a way that expands your options to live a life free from financial anxiety, limitations and burdens. Contrary to conventional wisdom, financial freedom doesn’t happen when you have no debt. In fact, the road to debt freedom and the process of maintaining it will actually halt your progress. That’s not to say that you should run out and rack up your credit cards and abandon your debt – that’s just irresponsible. It’s to say that the missing key to financial success; to reducing financial uncertainty; to experiencing financial peace – doesn’t happen when you have no debt. When you have access to credit you have access to an incredibly powerful wealth building tool. If you use it incorrectly, you don’t get the results you’re looking for. When you appreciate it for what it can do, and you take the time to know how to use it effectively, you can experience its full potential in ways you didn’t previously know existed or were too fearful to act on. The problem is that this powerful tool called credit has been provided easily without adequate instructions. Sure, there are the basic operations such as how to make purchases and payments, and what the interest charges are and the consequences of not making payments. These are the just the basics. Unfortunately because the more advanced operational instructions haven’t been taught, or have been misused, we have millions of people using the tool who don’t even know that they don’t know that there are better ways of using what they already have. Think about it. Do wealthy billionaire tycoons like Donald Trump make financial decisions about how to pay off the mortgages on their skyscrapers? Not likely. They have learned to use credit to acquire an asset that creates income which pays for the expenses of the building as well as the credit that was used to make the purchase in the first place. The bigger problem we have with this focus on getting out of debt is that far too many people have been given access to credit and have used it to acquire the lifestyle they want, rather than using it to earn that lifestyle. They know how to work for a living and how to access credit, but then they listen to scarcity minded teachers who haven’t fully grasped the concept of how our economy operates. For some strange reason, many people seem to think that by taking money out of the economy by stopping spending so they can get rid of debt that they have been told is ‘bad’ that somehow they’re going to be able to live happily ever after. This is partly because they haven’t received the proper instructions on how to maximize the tool they have in the form of credit but also because they have lost the ability to understand how to create income. Haven’t we heard from some great success teachers about the concept of ‘what you focus on expands’? If you focus on what you don’t want then aren’t you really telling yourself that you’re not worthy of the desires you have been acquiring with this tool called credit? Does negative reinforcement really inspire confidence to learn and to develop new skills? Does cutting back and denying your interests ultimately help you learn how much money you really want to earn so you can live the lifestyle you really want to live?
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