Investment Articles

What a Real Estate Investment Program’s Passive Income Does for You

Let’s talk about what a real estate investment program’s passive income does for you and what you’ll see in year one verses year ten.

A real estate investment program is a great vehicle for creating passive income that increases with every year because all the work that goes into the set up and maintenance of the system is managed by the program and is paid for out of your monthly rental income.

Even after paying all the monthly expenses from your real estate investment a cash flow will continue to grow from year to year just from having rent and increasing those rents. So even if you don’t take into account tax benefits, the growing cash flow of passive rental income makes a real estate investment program an ideal way to secure future income that will keep on growing.

Let’s take a look. When you start off in year one your monthly cash flow will be $200 or more a month. In order to qualify for our real estate investment program, all of our properties are guaranteed to have a cash flow of at least $200 a month. So what that means is, with a property that brings in $100 a month in rental income, total expenses, including mortgage payment and property management, would equal $800 a month. Therefore, your total cash flow is $200 a month. Now this is actually $200 plus a month because a property must have a minimum of $200 a month cash flow or it doesn’t qualify for our program. So $200 a month above expenses is typical and many are $250 to $300 a month. Now this is year one.

Let’s just take it to year five. In real estate, when you rent, do you expect rents to go up or go down? You expect rents to go up. Just like death and taxes, the one thing guaranteed to go back up is your rent. So, in five years, let’s just say rent has gone up $25 a year. Which is not a huge rent increase. So in five years, you’re looking at an income of $1125, while your total expenses are still $800 dollars. And why is that? It is because you have a thirty year mortgage. Your principle, interest, taxes and insurance are all going to be the same. That doesn’t change; It’s a fixed cost now. So the only difference here is that you’ve increased your cash flow by $125 a month.

Just by increasing the rent $25 a year, you’ve increased your cash flow to $325 a month, which is an increase of approximately 60 percent of real cash flow in your pocket. Now, imagine doing this more than once. Imagine having four to six properties. This would be a monthly increase of $1600 to almost $2000 a month for you. You can see what the difference in just year 5 this is going to do for you. By year ten this would be almost $500 a month in monthly income just for one property. That is a tidy nest egg of almost $5,500 additional income dollars a year without working harder for it. Using a real estate investment program to establish future passive income is a smart investment and working smarter, not harder is what passive income is all about.

Investing isn’t just about heading to Wall Street anymore. Today, there are so many different investment opportunities that it can actually boggle the mind. While it’s certainly out of some price ranges, reviewing a bit of information could help you see that investing in hydro-power is a good option for your investment dollars. There are plenty of reasons to think about doing so, and few drawbacks. If you’re serious about investing then you may want to look beyond just buying stock in a company and consider the benefits of investing in this energy source. It may very well manage to surprise you.

Hydro-power provides over twenty percent of the world’s energy, and makes up seventy percent of the renewable energy generated in America. While wind and solar are certainly being looked at, the fact is that this source of energy has been around for decades and investing in wisely into this market has been one of the most profitable moves major investors can make. The reasons are obvious when you think about it. Nearly everyone in the nation uses electricity, and a good portion of that energy – particularly in rural areas – comes from hydro plants and dams. Few investing opportunities can deliver the same level of dependable returns that you’ll get from investing in hydro-power.

There’s another reason that investing in hydro-power makes sense beyond just the profitability. Simply put, there’s a huge push today to ‘go green’. While this source of energy has been around for years, the fact is that simply investing into this source can help your organization look even better in the public eye. You’ll show that you’re serious about the planet and about our place in it when you invest in green energy, and that can go a long way towards improving public image. You’ll get a boost in your bank account and a boost in image, all from making a smart investment.

Of course, investing in this market usually isn’t cheap. You may be able to make some small purchases but to accomplish anything of major consequence you’ll have to make a serious effort. But few things can be as profitable as this investment, and as oil restrictions keep tightening there’s never been a better time to look into alternative energy investments. Wind and solar are great, but hydro-power is a proven commodity. Placing your cash into it is a smart move that very few people will end up regretting. Take the time to take a closer look and you’ll likely come to the same realization.

Let Inquest advise you the best path to invest in the market with confidence.

Having some amount of savings gives you a good level of security given the turbulence in the financial markets and in many of the world’s economies. However, the uncertainty will inevitably affect you, your choices and perhaps your money in one way or another. That is why you have to be extremely careful and ensure that you will make smart investment decisions. This should minimize risks and provide for good returns.

Adopt an investment plan especially tailored for your needs. You know your spending habits best and what major expenditure you will have in the near future. You have a precise idea about your income and the value of the assets that you have. This should be enough to help you come up with a plan for your investments.

Diversify the assets that you are holding. This is particularly applicable to financial products. This is the most effective method for minimizing risk so you should definitely use it. However, given the shaky markets at present, you have to be extremely careful about the choice of stocks and bonds. In general, government bonds were considered to have the lowest risk for investors. However, with the recent events in Europe – more countries becoming unable to repay their debts – this is not necessarily the case. Experts recommend that you put more time and effort in research and in managing your portfolio. Holding stocks and bonds in the ling term is no longer considered a low-risk strategy with good returns.

Be realistic in your expectations and do not increase risk too much. The reality is that you can expect between 5% and 10% return on your investment when keeping risk low. For many people this seems insufficient. However, increasing the risk is certainly not recommended given the extremely shaky markets that are affected by literally every rumor.

Do not mix investment and personal affairs. Lending money to friends and investing in a relative’s business may seem good ideas when you have relative financial stability. However, these are the riskiest of investment decisions even in a stable and well-performing economy, according to experts. Avoid them if you do not want to lose money.

Use the services of a financial advisor, but always take the major decisions yourself. An experienced professional should help you come up with an investment plan suitable for your needs and assist you in starting and managing a portfolio. However, many advisors seem to offer things that are too good to be true. That is why you should always evaluate each proposal carefully before making a decision.

As investors, you are concerned about the outlook of the economy. You mostly rely on yield curve data to provide you awareness on the activities in the economy and the changes in interest rates. The yield curve’s slope is among the best indicators of future recessions, inflation and economic growth. By interpreting the slope of the curve you are able to make wise and smart investment decisions. To assure security on your investment you need to be resourceful as well as equipped with tools that will provide you with accurate data.

Imagine a tool that has the capability to provide analysis on all the yield curve’s components. And a tool that will provide you with signs on upcoming recession and economic transition. A tool that will conveniently provide the data that determines the interest rates you pay on your house, cars and boats. These tools exist and you can find and acquire them online.

Numerous yield curve data software providers are already being sought after all over the world by traders and sales personnel in various financial institutions. They are well-known with back office and middle office employees and it comes at a reasonable price yet they are an amazingly powerful way to view market trends in financial data or to get open access to reference data using their own add-ons. Various banks, buy side users, financial service providers and hedge funds are the software’s range of users.

You won’t have difficulty anymore in making a decision on whether to invest in a real estate or not. The slope of the curve will help you in your decision on your investment. Timing is everything. While the economy is experiencing some slow-down which provides negative effects on the current prices of real estates and the yield curve shows you a steepening curve then you’ll know that the prices will increase in the future.

There are sites that offer yield curve data software that have features that can aid in your financial decision-making. You can have a clear view on the bond market’s levels of inflation, economic activity and interest rates. We are living in a very competitive market so we’ll need an advance, quick and effective tool that can quickly provide us with accurate data that can aid us in making investment decisions. These tools can help us react faster to market changes and acquire an advantage over our competitors. By predicting future recessions and growth you can make better decisions on your investments.

My experiences in trading and investments have taught me how vital data and information are in providing higher success in my transactions. I believe that we should be constantly updated in the changes in the market in order to react faster. I wish to inform everyone how effective yield curve data in providing us forecast on future recession and growth. I want to share about the tools I used offered at Derivative Trading System that helped with my analysis of the yield curve data.

The recent Arab Spring shook the Middle East. However, the UAE remains stable and safe, with business activities at a normal level. There as been no such uprising in the region and the country has become a default refuge from unrest. These aspects lead to a trend slightly different then the usual: more traffic from Arab countries to the UAE and more business. Europe’s growing sovereign-debt crisis and the unstable US economy could well be the cause of this “regionalization” – Arabs investing their petrol dollars in other Arab countries, the UAE being the center of such activity.

Dubai has seen none of the violence that has destabilized the region. Its hotel, retail and residential real estate sectors are enjoying a boost from general stability of the country. According to Reuters, anecdotal evidence suggests that Arabs, middle class and above, are buying Dubai property to hedge their risks in other countries.

Similarly in India, a weaker currency is encouraging Indian expatriates in the Gulf to invest in domestic markets. According to the Economic Times, non-resident Indians, especially those living in the Gulf, have invested about Rs 75 crore in August and September of this year in the region, the largest pay-in in over 2 and a half years.

Recently, Russell Investments classified the UAE as an emerging market as opposed to the frontier market designation given by MSCI (Morgan Stanley Capital International) and Standard and Poor’s. The UAE is the first Gulf Cooperation Council (GCC) country to graduate from frontier to emerging market status within the Russell Global Index series. The market in the UAE seems to be welcoming investments. In addition, articles say that those willing to invest in the UAE, have a longer term approach to investing and are not phased by short-term market fluctuations. This clearly demonstrates the relatively higher comparative value of investing in the UAE over other parts of the world.

According to the UAE Investor Attitudes Index as published in UAE daily – The National, about 60 per cent of the investors surveyed said it was a good time to put money in gold, and half said fixed-rate bank deposits were smart investments. The survey was based on interviews with over 750 people in the UAE, who are market investors, majority whom were expatriates. Dubai’s roar and rumble has always been connected to the real estate market. There is still over-supply in the market and investors seem to not want to invest heavily in real estate. Though there are still a number of challenges to overcome, it seems stability is on its way up.

Supporting that, Kabir Mulchandani, UAE real estate veteran says that pessimism is just in people’s minds. “I transfer property every day. My optimism comes from real demand and real purchasers with real money. I see a steady growth in prices until 2014 but then I see a significant jump between 2014 and 2016. Then probably in 2017 and 2018, when suppliers are against us to come back, hopefully we will have some stabilization.”

Once pending infrastructure projects are near completion, more investors are likely to look into investing in the property market which is certainly taking an upturn. According to a recent survey of the industry by PricewaterhouseCoopers (PwC) and INSEAD Abu Dhabi, the private equity industry in the Middle East and North Africa (MENA) has emerged stronger from the global financial crisis and the recent political turmoil in the region. In addition, the survey showed the small-and medium-sized enterprises (SMEs) sector has emerged as new investment target for the regional private equity players.

All in all, there seem to be enough good reasons to invest in the UAE in the long-term. The rest, time will tell!

Kabir Mulchandani Skai Holdings Dubai-UAE

My writings are to share my thoughts and opinions, and to engage in a conversation about the property market, entrepreneurship, new books and new ideas about how to change things for the better.

The whole idea behind making financial investments is to get a good return on your investment. Making smart investments should be your goal. Not researching your options can possibly be the biggest mistake you can make. You want to learn as much as you can understand. Taking the time to find the most lucrative investment strategy can make the difference between you losing or winning.

How you choose to invest your money will most likely be based on how much risk you’re willing to take. As with all investment endeavors, there is a loss risk. Having a good financial plan from the start is essential. Researching the various investment strategies can help you figure out what you feel safest with.

Buy Long

Buying stock long is not a lucrative investment strategy. With this particular strategy, you can only lose what you have put into it. It may sound good to know that it offers minimal risk; it also offers the least return.

Buy short, sell long

This strategy has a little bit of risk attached to it but can be lucrative if it’s used properly. With this particular type of investment, the assets or securities that are being sold have been borrowed from a third party; intending on buying the same assets later on. The seller unloads the assets at a higher price. When the price of the assets drops, is when they pay the original owner. The seller is simply profiting from the drop in price. This strategy is profitable as long as the drop in price is substantial enough.
Buy and Hold

A passive technique, the “buy and hold” can be considered a lucrative investment strategy. The investor buys the stock and holds onto it, no matter what happens with the market. Equities to yield a higher return than assets do. This strategy is also beneficial tax wise because long term investments are taxed at a lower rate than short term investments.

Set triggers

This is not an investment technique but can also be considered a lucrative investment strategy. Set triggers for yourself. For example, a downturn in the market can be used as a trigger to buy stock that may have been too rich for your blood before. This strategy can aid in you acquiring very lucrative assets. However, you should set guidelines and limits and be sure to stick to them.

These are only four investment strategies among many. Only a professional truly understands how any of them work. Before you make any investment decisions, it would be wise to seek counsel. Let them guide you on how to make your money grow. Keep in mind however, that it is your money being invested. Just because they recommend it, doesn’t mean you have to do it if you’re uncomfortable with their suggestions.

Finding a lucrative investment strategy is a key factor in making your investments worth anything. The idea is to yield a return that is noticeable. As was stated before, with any investment there is risk. The right strategy should decrease the risk factor for you.

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With high inflation, we need to take control of our finance and plan for our futures nowadays. Living within one means reduce the risk of debt but is it sufficient to secure your future? Why do we need to be financially free and have financial control?

We need to invest to build up a source of income, which will continue to grow and be able to provide a secure future for ourselves and possibly our next generation.

The reasons to invest include:

1. Let your money work for you: Learn to save money and invest the rest so that it grows even when you are sleeping.
2. Cope with inflation: If you have wise investment that surpasses the inflation rate, you have a sound future finances. You have no worries of the prices of dairy expenses.
3. Business owner: Business needs to invest, whether small or big small sized business. Investing not only grow the capital and expand the business but also teaches one to become a successful businessman.
4. Dependents: Money generated from investment can help to pay bills, buy accessories and pay expenses for holidays.
5. Education: Education fee is increasing with inflation. Investing in an education plan helps to support someone’s studies.
6. Assurance: By making long term investment, you can be assured of sufficient money if you plan to retire. Start investing young and you can have a higher return before you retire.
7. Attaining things you want: The returns from investment can be used to get those things that you dream off, such as cars, houses, etc.

Investment return has to be a source of money unrelated to our regular wages, but money from income producing assets. We have to invest in income producing assets so that they will grow and we can be financially independent.

The investment risk level that you take depends on your needs. If you are interested to make fast money, you would be interested in investment which involves high risk. If your plan is for retirement, you would prefer something that is safer and can grow over time.

The main objective in investing is to create wealth and security with time. It is always impossible to earn an income as one will want to retire. Hence, smart investment helps to insure your financial future. The earlier you gain the investment knowledge, the more successful you will be. Longer time in investment means higher return and you can retire earlier.

To get more free tips and advice on making money and business opportunities Click here to download my free ebook Or visit my website @ www.savemoneyoffer.com

You have likely heard the old saying, ‘Don’t put all your eggs in one basket.’ This summarizes the entire philosophy of a diversified investment portfolio. The idea is to spread out the risk. You do not want to have 100% of your investment capital riding on a single investment. For example, you would not want to have your entire investment portfolio allocated to commodities. This might represent very slow growth and/or improper risk allocation. Likewise, you would not invest 100% of your capital into penny stocks that may go up and down in value just as quickly as the wind blows. Maintaining a diversified investment account will allow you to reap the benefits of multiple investments while at the same time protecting yourself from a single catastrophic loss if one of the investments happens to tumble.

Stock Market Investing Is A Fundamental Element Of A Diversified Portfolio

The United States stock market has increased in value, on average, about 11% since the 1920’s. This includes the time of the Great Depression, the stock market dive of 1987 and the dot-com crash of more modern times. Over time, the stock market increases in value. Those who invest in the stock market are in a position to benefit from this slow increase in value. Those who invest for the long-term are most able to capitalize on the growth of the stock market. It is a fundamentally sound investment when done properly. There are number of ways to invest in the stock market including mutual funds, spider funds, and stock indexes, to name just at few of the methods. Individual stock purchases can also be profitable if done correctly. As always, talk with an investment adviser about your options and how stock investment fits into your overall game plan.

Penny Stock

A more specific type of stock market investing revolves around penny stocks. These are stocks that have a small price tag and potentially a significant return. However, the potential also exists for significant losses if prices go against you. For this reason, penny stocks are generally considered to be a risky investment and are not suitable for all investors. The appeal of the penny stock is to ‘find the next Walmart.’ What this means is that the investor (or perhaps in this case the speculator) is looking to buy a company stock for a very small amount of money (perhaps just a few pennies) in the hopes that it may soar to be worth several dollars per share in the future. This is generally the fundamental game plan with a penny stock.

Mutual Funds Investing

Mutual fund investing is another one of the ways to invest in the stock market. Mutual fund exist for the purpose of spreading out risk. By their very nature they are designed to help increase overall portfolio returns while at the same time reducing overall risk to investment capital. The way this is achieved is to spread out the mutual funds overall portfolio into a number of different stocks. This diversification can help with risk reduction. People enjoy investing mutual funds because it allows them the opportunity to invest in a number of different companies all at the same time. It also allows for their money to be managed by a skilled professionals so that as individuals they do not have to do the decision making themselves. For these reasons it is easy to see why mutual funds have a very broad appeal and are one of the most popular investment opportunities available. Bear in mind that just because a mutual fund has done well in the past does not necessarily mean that they will continue to do well in the future. This is one of the challenges common to mutual funds.

Value Investing

Value investing is generally a broad definition of investing done by purchasing companies that have fundamentally sound value. In other words, a company that displays consistent earnings and offers a good value for the price of the shares offered would represent a company fitting into the category of a value investment. A number of fundamental investors organize their portfolios according to a value investing approach. Buying stocks that are of good value can represent a fundamentally sound investment strategy.

Bonds Investing

When you talk about bonds investing you generally think of safe and secure investments, and for good reason. Bonds generally represent one of the safest investments available. A bond is something like a promissory note. A company or government might issue a bond in order to raise funds for a particular project. When raising the funds, the entity will offer a bond containing a specific investment return which is to be repaid to the investor according to the term and length of the bond. It is something like lending money to a company and then giving you a specific return on your money. This can represent one of the safest forms of investments and likewise is popular for many people.

Commodities Investing

Commodities can represent one of the more confusing types of options available for investors. It is best to consult with skilled professionals and financial advisers when it comes to the topics of commodities. Commodities can be viewed as both a high risk opportunity as well as a safe and secure opportunity for financial returns. It depends on the approach first and foremost. Many investors view commodities as a hedge against their other investments-designed to provide a counter-cyclical approach to investing that can help diversify overall risk and returns.

Consult With An Advisor

Consulting with the skilled investment adviser is one of the best options that any investor can take before allocating their money. It is a good idea to diversify, but if the diversification is done without a systematic game plan than the results can be less than spectacular. A solid game plan, rolled out over a long period of time can be one of the best approach is to systematic, long-term investing that will yield fruitful financial returns. Long-term investing should be the goal of almost every investor looking to double and triple their capital in the years ahead. Begin first by talking with your investment adviser about a systematic game plan for your investment blueprint.

For more great tips and expert advice on investing for a bright and secure future, please visit us at http://www.elementaryinvesting.com.

Investing is such a complicated field that there are literally tens of thousands of books written on the subject. Investing can be quite difficult, depending on the strategy, though it and can also be simple and straightforward if done properly. One of the best pieces of investment advice ever given is to diversify your portfolio into several different investment vehicles. This can help you spread out the risk and achieve a steady return on your investment capital. This is the goal of most investors. This type of investing can be categorized broadly as value investing and with a diversified investment strategy that holds a goal of long term positive returns.

Value Investing
On the whole, value investing is generally defined as investing that focuses on buying investments that have good value. This is a fundamentally safe and secure type of investment strategy. The goal is for steady appreciation and consistent yields on capital invested. Value investing is a fundamental and lies at the base of a solid financial investment plan. Buying investments because they are a good value is a mark of a solid investment plan. If you buy companies because they are good value, then chances are you will be in a position to enjoy capital appreciation in the years to come.

Stock Market Investing
Stock market investing is one of the fundamentals of value investing. By diversifying investments into the stock market it is possible to spread out investment funds into a wide variety of different companies and their stocks. It is certainly very difficult to choose specific stocks that are going to go up in value immensely in the years to come. The Walmart-like stocks are few and far between and taking them at their outset is almost impossible. This certainly does not mean that you should not try. Buying fundamentally sound stock market investments can be a goal and ticket to a fruitful financial future ahead.

Penny Stock Investments
Penny stocks are those that bear their own name. These stocks are often valued very lowly and the costs are often quite low-often times ranging from a few pennies per share up to a couple dollars per share at the most. Some investors believe that there is great potential return in penny stock investments because you can buy for such a low cost a large amount of shares and if there is any appreciation in value this year value will likewise increase. An increase in the share value will yield an increase in the investment return as well.

Bonds Investing
Bonds are another core element of a diversified investment strategy. Bonds typically have slow and steady growth patterns and consistent yields year after year. This makes them the ideal investment for slow and steady capital appreciation. There are several different types of bonds available ranging from government-backed bonds to higher risk corporate bonds. Bonds remain one of the best ways of diversifying a portfolio with safe and secure investment returns. Talk with an investment adviser about the different kinds of bond ratings and how the different types of bonds will play an important part in your overall investment portfolio.

Mutual Funds Investing
Mutual funds are yet another way of diversifying investment risk and return. Some mutual funds specialize in high risk/high yield type investments, while others mirror segments of the stock market (as in Spider Funds, which buy the exact companies that appear on certain stock indices). Mutual funds are run by a board of directors and a management team in most cases. These individuals have the responsibility of making the investment choices for the entire fund.

Mutual funds are traditionally one of the most popular investments options and routes to take. Mutual funds are easier to become involved with than almost any other investment. They are often times the starting place for investors who are looking to have the potential for return while also curving the risks in spreading out the potential downside. One of the challenges with mutual funds, however, is the fact that there are so many and they can be difficult to choose between them. Out of thousands of different mutual funds, finding one that meets your investment requirements can be tricky. It also should be noted that just because a mutual fund has done well in the past that does not mean that it will continue to do well in the future. Very few mutual funds maintain a steady track record over time.

Commodities Investing
Commodities are another option for a diversified investment portfolio. Commodities represent certain items like corn, oil, gold, silver, and other such natural items classified as commodities. Commodities can often be used as a ‘hedge’ investment and have a safe and secure track record. Investing in commodities should be done with the help of an experienced investment adviser only or with much experience under your belt. They are not typical investments and should not be viewed as ones that are as easy to invest in as bonds or mutual funds. Typically, commodities investments can be used as a counter-trend type of investment, or in other words, as a protection against loss when other types of investments seem to be falling. Commodities will typically hold their value contrary to the stock market as a whole.

All of these different types of investment options should be discussed with a qualified investment adviser or broker. To venture into these investments on your own can be dangerous. It should be mentioned that with any investment there is the potential for loss. Anytime you have the potential for substantial gain, likewise you have the potential for substantial loss. Some of these investments are more secure than others. You should discuss your options and your long-term strategy with your investment adviser to determine the best plan moving forward. You’ll want to create a diversified plan that creates a steady return while minimizing risks.

For more great tips and expert advice on investing for a bright and secure future, please visit us at http://www.elementaryinvesting.com

Most of what has been drilled into our heads about investing in mutual funds, CD’s paying down our mortgage and diversifying is nothing but smoke and mirrors. The financial services companies like Fidelity, Charles Schwab and financial planners are the ones making all of the money. The problem is that most people have very little financial education in order to invest for retirement properly so they hand over their money to someone they HOPE will have the right knowledge base to safely increase their wealth. The problem is that these investment types are HUGELY RISKY. These types of asset classes, paper assets, do not allow the investor control. Then during market crashes, all most can do is watch helplessly as their wealth gets whipped out along with their financial security. If you have more control over your assets then you are not affected as much by market crashes. For example, if you invest in assets like real estate that produce cash flow through rental income after all of your expenses are covered, if the real estate market and stock market crash you are still in great shape. While everything is crashing you are still receiving your rents and do not need to sell the asset. Investing in non-paper assets (i.e. not mutual funds or CD’s) allows you to use leverage as well which increases your wealth by making your money work harder for you. Most financial planners will tell you that using leverage increases risk. That is not always the case if you have the right financial knowledge to control the investment and enable safety controls on your leverage use.

They will also tell you that real estate is a risky investment. The reason for that is that financial planners typically lack the financial knowledge about how to control real estate and make it profitable. Most financial planners put people into paper assets where the investor does not have control and therefore it is hugely risky to use leverage. In real estate investments the value of the property should not be based on the “opinion” of an appraiser but on the income that it produces through rents. The value of the rental real estate is dependent on jobs, salaries, demographics, local industry, and supply and demand of affordable housing. In a housing crash, the demand for rental units often goes up, which means rents increase causing the value of your property to increase. You can control rental real estate and which geographic areas you invest in unlike paper assets that allow no controls. Financial intelligence is the key to increasing your controls over your investments. It’s extremely important to continue to increase your financial intelligence in order to protect yourself. Unfortunately, financial intelligence is not taught in schools because such a large portion of the population, including teachers and politicians do not have a very high financial IQ. When financial advisors say that an increase in returns means an increase in risk, they are right when speaking about the paper assets they recommend to investors that they make major commissions on BEFORE showing performance. They are wrong when speaking for all assets. Financial advisors are simply salespeople. Most people invest in paper assets such as savings, stocks, bonds, mutual funds and index funds because they do not want to take responsibility and control over their financial well being. All they want is to turn their money over to an investment advisor who hopefully does a good job. Out of sight, out of mind. If people want more control, the first thing they need to do is increase their financial intelligence and hopefully increase their financial controls and leverage ratios.

Most financial advisors recommend diversification but they do not really diversify. First they only invest your money in one asset class, paper assets. Second, mutual funds are already diversified investments which are invested in a pool of good and bad stocks which does not increase the value or decrease the risk of the investments. Professional investors DO NOT diversify. Warren Buffett put it perfectly when he said, “Diversification is a protection against ignorance. Diversification is not required if a person knows what they are doing.” So if diversification is a protection against ignorance then when you diversify whose ignorance are you protecting yourself from? Your ignorance and your financial advisors ignorance? Focus, not diversification, is the key to more sophisticated leverage, higher returns, and lower risk.

The point I am trying to make is that if you increase your financial intelligence about specific asset classes, like real estate, you will learn how to control your own financial security and wealth creation instead of relying on some financial advisor who probably does not know what they are doing. Look at the massive wealth transfer that just occurred when the market crashed while bailing out the banks (i.e. the top 1% wealthy individuals increased their wealth while the middle class and poor decreased in wealth). This happened because most people do not have the financial intelligence to protect themselves. Starting to get financially educated is the key to wealth creation. So get to the bookstore and start reading. Take classes on financial intelligence and ways to increase wealth. It is the key to your success and preserving your wealth so that financial predators (i.e. the government, financial advisors and the large mutual fund peddling companies like Fidelity and Charles Schwab) do not take all of your wealth away by investing it in asset classes that do not allow you any controls over those investments.

Owens Consulting Group founder Mathew Owens is a California licensed CPA and a full time real estate investor. Mathew has 8 years of experience working as a CPA, auditor and business advisor, and he has completed over 100 transactions in the past three years, representing approximately $10 million in real estate, most of which has been sold to cash flow investors. Read more of his blogs at http://ocgproperties.com