How to protect yourself from hyperinflation

And another question from the FB page. Jane is asking ‘with all this money printing that's been happening already, how can we make sure that we are protected from inflation or even worse – hyperinflation?’

And we will be presenting a couple of points to help you guys be protected from hyperinflation.

1. Put yourself close to the raw materials
Stay close to land or anything that could be transformed like lumber. If you look at lumber - you need to have land, you need to cut down the tree it goes through a process and is transformed into standardized logs. Then it goes into producing furniture, then into storage and then you buy the final product at your store.

If you look at it there's a lot of added value that goes through the process of just taking lumber and selling it. And if you can get closer to the lumber then hyperinflation will have less of an impact on you because what you will do essentially is you will cut your own trees down, you will buy the machinery to cut it and make it and you'll learn how to process.

You'll get it at a lot cheaper price and it's the same with everything other raw material. If you can get closer to land transform it, sell it - you can protect yourself from hyperinflation. It's an easier way to protect yourself. The same goes for agriculture, forest, oil commodities, etc.

2. Learn new skills in high demand
In case of hyperinflation - all service in high demand will increase quickly. For example, the maintenance on your car - an essential service that you need it's going to be in high demand, because if people need it, they'll pay a lot more for the service

And if you can learn how to do maintenance on your cars, oil change, construction on your house, etc. this will have a lot of value.

Let’s say that right now it costs about $100 an hour – car maintenance and $65 an hour for construction. In case of a high inflation or hyperinflation - this is going to go a lot higher, and if you learn how to transform your time into value, then you can protect yourself.

All those skills that you learn you essentially can transform into money then or you can do your own house, you can do your own floors, you can buy your own product and work with it.

All of these decrease the impact of hyperinflation when you learn something, when you transform, when you look at doing the oil change. It takes 15 minutes to do your old change and you save about 30 to 40 USD.

And you multiply that by 4 - that's a lot of value in a little bit of time, that you can transform your time into.

3. Use debt to your advantage
So, the  inflation devalues the value of currency. This is something that a lot of wealthy people utilize. They use debt to get richer, because if you're saving money then that currency is being devalued at a very fast rate.

And if you're investing and you're using debt and if you can have long-term fixed debts, you could use that debt and use inflation to pay it off. But make sure that interest rates are lower than inflation if inflation is at 5-10%, make sure that your interest cost is lower.

Hyperinflation destroys the value of the currency by like 50% a month. That’s the worst-case scenario, if you have $100000 in the bank what's going to happen it goes from 100k to 50k, than it goes down to 25k and then 12,5k in just a couple of months.

When you use debt, that inflation will devalue the value of that long-term debt.

4. Invest in hard assets
invest in real estate, invest in gold, in silver, invest in land and commodities.

The only thing you need to be careful with gold and silver right is the huge premium when you want to buy it. There's not a lot of people that are selling it and if they're selling it, they're selling it with a huge premium.

And you would need insurance to store that gold so if you have it at home. There's a lot of companies that insure all your assets at home.

So gold, silver and land commodities, real estate are the best to invest in when hyperinflation or even high inflation hits.

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So, those 4 points cover at least the basics on how to protect yourself from inflation or hyperinflation, let us know in the comments which one is your favorite.

Top 10 money questions asked online

Dear money-making friends. Today we would be focusing on the ten most often asked money questions online and some short answers or points for each of them.

Many of those questions will probably be no surprise for you, and it is interesting what people are looking for and what their needs are in terms of financial information and queries online.

So here we go with the top money questions list

1. How can I make money online?
It is obvious the majority of the population nowadays read stories about people getting rich online every day. And it is understandable that people don’t want to work for somebody and try their luck in the online business.

The straightforward answer is -> you can make money online, the same way you make money everywhere else. You need knowledge, skills and good business sense in order to get rich and out-compete the others. It doesn’t matter if you do e-com, marketing, ads, affiliate or simply sell products and services online – the foundation of making money online is to create a niche, difficult to penetrate by the competitors, and to serve your users better and more efficiently. Then you can charge percentage of the volume and make money.

2. How to invest in stocks?
The second question is also obvious. The majority of the people are just lazy and would like to simply put their money ‘somewhere’ and start earning – easy, with small hassle.

Investing in stocks is not difficult. But if you are going to win or lose out of it depends entirely on the timing. Did you know that, in order to be successful with stocks, in the last 10 years, there are about 20-30 days which you wouldn’t miss in order to make money (remember those March days in 2020, do you?). All the other days are close to irrelevant. If you missed trading on those ‘special’ days – your investment will barely make you any money (in the best possible case scenario). So, the answer is – to be successful on the stock market you need to learn and keep a close eye on your investments. Analyze, calculate, and look at the trends daily, not to miss the ‘special’ days.

3. What sort of a house can I afford?
A very reasonable question, as people intend to borrow money from the banks in order to buy their homes.

Let us give you a different perspective. What if we tell you that it is not a good idea to borrow money from the bank, unless you already have most of the funds to cover for your home. Let’s say you would like to purchase a $200 000 house. The worst thing that could happen is to go to the bank with your savings of $10 000 and ask for $190 000 mortgage plan. The bank will offer you an expensive and lengthy plan, and the risk for something bad happening and for you losing your home is big. Instead, you should be aiming to have at least $110 000 or even close to $150 000 before borrowing the rest of the money.

Now, I know what you are thinking. Are you crazy? There is no way I can save $110 000, and besides even if I am able to – the house will be more expensive by time I manage to come up with the savings. On the first point – how then you expect to repay the bank – and keep in mind you would probably need to pay twice as much (if not more) than what you borrowed? On the second point - well, the housing market also has it’s ‘special moments’ (years). Do you remember 2007 – all the markets are cyclic, which means that when the market goes up, you should be saving money (and avoid buying), only to buy when the market crashes. Smart renting while you wait, and low mortgage are usually the better decisions.

4. How to pay for my college without going broke?
Another very important question. Nowadays the college costs have risen dramatically, and many students are either left out of the system or broke with enormous debt.

The other perspective is not to be in a hurry with your college degree. It is perfectly fine, and often advisable to skip college in your teenage years and go for some experience gathering, e.g. working in an area you would like to specialize and learn the trait from a master and make some invaluable connections. This would usually be much more beneficial, and also let you save some money for the future to get your degree.

5. Should I pay off my credit card or save money?
This is a very good question. As a general rule – you would like to get rid of any debt as quickly as possible in order to stop generating interest on it and pay much more in the future.

As a general rule of thumb, always try to have savings enough to endure 6 months without income. Those would help you survive, without going broke in case anything bad happen to you or (God forbid) your family.

6. How to get my student loan forgiven?
Student loan could be an enormous burden. In some cases, people might qualify for their loan being forgiven. The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your direct loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

7. What is the best bank for college students?
Before committing to a bank, analyze well. Many of the banks offer quite good offers, especially for students, and special discounts and low rates on all services and loans for students. So, don’t be shy – dedicate a couple of days and research all the banks in the area, do all those calls and gather the information. This will also test and improve your soft and negotiations skills to try and find the best offers for you and your financial needs.

8. How much do YouTubers make?
Another topic, which shows that many people are after quick money in the entertainment business.

Do you know that less than 1% of the YouTubers actually make some meaningful amount of money from their channels? It again, depends on the niche, on your style, experience, and most importantly on the timing. In order to be a successful YouTuber you would need a terrific amount of traffic in an area easy to monetize. If you would like to be one of those successful and rich people – start analyzing niches, and start thinking ‘what problems can you solve for your audience?’ and ‘is there anybody who would pay for you to solve those problems?’

9. When should I retire?
Retirement stories of young chaps living in luxury at their late 20s or early 30s are all over the net.

The reality is there is no better source of income than ‘the active source’ of income, where you actively solve problems to users and customers and charge for it. Nevertheless, a good formula is to multiply your monthly spending by the number of months (years) you expect to live up to, to check if you have enough money. Then add at least 30% on top of that for any emergency or family needs, etc...

10. How much should I spend for my wedding?
It’s an understandable question, for all of you with traditional relationship.

Keep in mind, though, nowadays a lot of couples prefer to just stay in relationship, without getting married to save on all those wedding costs, rings, etc… And there is a good point in it. Statistically, most of the marriages end up in a divorce anyway, so why spending huge amount of money getting married on the first place, then spend thousands of dollars in a divorce trials, etc… it’s much better to have a contract with your partner, related to rising your kids and move forward, without the unnecessary complications and spending.

‘Rich’ vs ‘Poor’ mindset

We continue delivering you great articles about successful financial mindset. This time the brilliant ideas are shared by Robert Kiyosaki. Enjoy.

The most obsolete idea is - go to school, get a job, work hard, save money, get out of debt and invest for the long-term in the stock market.

Why would you save money when they're printing trillions of dollars? The gap between the 1% and 99% is massive. It's not just money, you have to step back and look at the bigger picture.

So, what do you do?
In every one of us there's a poor person, there's still a poor person inside me. There's also a middle-class person, and the middle-class person wants security they want that steady paycheck. And there's a rich person. And they're all inside of us except that... It's not taught.

You're taught to go to school, get a job and get a paycheck. Not taught how to get rich. If you've read Rich Dad Poor Dad, my rich dad refused to pay me. He said the paycheck was one of the most damaging things you can take in your life. He says the moment you take a paycheck you're an employee and that's the mindset. So, my rich dad never paid me. It drove my poor dad, you know, a government employee nuts. "You got to pay people, you got to pay people", he used to yell. And rich dad was not saying that the paycheck was bad, he says he didn't want to be a slave to money.

So, as an entrepreneur, you know, if rich dad folded – ‘I just try another company. I don't need a paycheck. I don't need anybody to take care of me. If my government doesn't like me. I move to another country, because they need entrepreneurs there.’

The entrepreneur is not so much the business, the entrepreneur is really the mindset and the skill sets and the different set of rules. You see, I don't operate small business. As it does not operate in the same rules as big business.

Entrepreneur is a mindset first, a skill set and rules. And depending upon whether you're an employee or small business the rules are different, the mindsets are different, the skill sets are different.

If I could say one thing to somebody whose never been an entrepreneur and they're thinking about making the leap of faith into becoming an entrepreneur, well, I'll just tell them the same thing that happened to me. You know, my last paycheck, I still remember it clearly, it was one of the worst and the best days of my life and I was in Puerto Rico, I was working for Xerox and my boss gave me my last… it wasn't a paycheck, it was a bonus check. I think it was about 30,000 bucks… taxable, that's the only problem with that. So, I get this check and I went, "Holy mackerel." You know, I mean, so I was excited, but I was also disturbed. And so this other guy comes up to me, his name was John, and John says to me says to me "you're going to be back." I asked "Why?", and he says, "because you're going to fail." I looked at him and I said, "look... few expletive words… because that's what he did, he left Xerox, failed and he came back. I said, look... you fail and you came back but I'm going to fail and I'm never coming back… and that's the attitude.

If you say, well, if I fail, I'll go back to mommy and daddy, then that's what you'll do. So, if you fail, that's when I became an entrepreneur because I had no money. I had no money for years. Yeah, I didn't have a paycheck. But that's what my rich dad encouraged me to do. He says, when you don't have this paycheck you get hungrier, smarter and it's a test of your character.

Will you become a crook?
Will you become dishonest?
Will you cheat and steal?
… Or will you become a better human being?

So really that's the benefit of becoming an entrepreneur, you really find out who you are when you don't have anything. So, you always have to look at the big picture. Too many people look at, well, what's, what's going to happen to me? When you look at the big picture, you're also going to know that when something bad happens something good is going to happen too. But you got to prepare for whatever is coming. If you think the next 20 years will be like the last 20 years, you're going to get creamed.

You know, when you and I go to the supermarket and we buy a carton of milk we always check for the expiration date. But most people do not check for the expiration date on their brains. Instead of getting out of debt I get into debt. I just refinanced 300 million in debt I went from 5% to 2.5% interest - I made a fortune.

Every month more money comes in because my cost of money has gone down. So, while some financial experts are saying get out of debt, I'm saying learn how to use debt. See when I came back from serving in Vietnam in January of 73 and the first thing my rich dad said to me was, Go to school to learn how to invest in real estate.

It wasn't real estate; it was how to use debt and taxes debt and taxes make the rich richer. Debt and taxes make the poor and middle class poorer. So, all the rich guys who are doctors and lawyers or... you know, those guys, they're getting creamed - and they don't know why. Doctors for examples - they're making more money but the take-home is less.

You know, my doctor just yelled at me, he's happy, he says - Oh, guess what I finally made a million dollars. And I said - well how much you pay in tax? He says, $750,000 in taxes. So, his net was about $400,000. That's not bad, but when I make a million bucks, I keep a million bucks. And the reason is because I don't make it by working for money.

If you work for money your taxed. So that's why lesson number one in ‘Rich Dad Poor Dad’ is the rich don't work for money. What we do instead is we create businesses as entrepreneurs. We acquire real estate. I don't invest in the stock market, and the reason is because as entrepreneur I have more control over my income, how much I make and how much I pay in taxes. And because I'm an entrepreneur as well as an investor in real estate. I pay zero tax.

Every time I make let's say a million dollars as an entrepreneur, I immediately invest it in real estate, and I have a 4 to 1 step up. So, I put a million dollars in real estate, I get four million from the bank. That's why I love banks. But the banks are screwing everybody else you know, terrible but it's good for me.

When money is printed it's good for me, and when money is printed it's bad for people that work for money. This is because, when they print, savers get creamed and people who work for money get creamed. When they print debtors get rich. You see, debt and taxes make the rich richer and debt and taxes make the poor and middle class poorer.

When we have obsolete ideas, we get obsolete results. So, what's happening for most people the idea of going to school, getting a job, working hard, saving money, getting out of debt, buying your house because you believe it's an asset and investing for a long term. It's obsolete.

The world has changed, the world changed in 1971 when President Nixon took us off the gold standard and money became debt. On top of that, the education was more important years ago. Nowadays, it's just obsolete.

You know, there's Moore's law… Moore's law states information doubles every 18 months. In other words, everything is obsolete after 18 months. And this is a recent phenomenon. When you come out of school, you're already obsolete, and that's why I'm the old guy. I meet my friends; I went to Harvard… like what - 50 years ago?"

Today the banks are charging you interest to keep your money. In other words, the banks don't want your money because they've printed too much of it. And that's why there's bubbles and stocks and bubbles in real estate and all this. People are dumping the cash, because as I said in here, ‘Savers are losers and cash is trash’.

And yet people are like: ‘Well, I want a high-paying job.’ Well, that's an obsolete idea. Get out of debt, it's an obsolete idea. You should learn how to get into debt. How to you use debt to get rich. And they'll never teach you about taxes. The reason the 1% is way up there and the 99% are going down is because when they print money - two things happen - inflation and taxes.

And any entrepreneur that thinks ‘I'm just going to make money and start a business and make a lot of money’ they really should smell the roses instead. You know, that's not what the real entrepreneurs are doing. Do you know, there's 28 million small business owners in America and 24 million are one person entrepreneurs? They're called non-employee entrepreneurs. That's what happens when people don't really understand what an entrepreneur does and how money works nowadays.  Most people are self-employed, but they're not really entrepreneurs. The self-employed pay the highest taxes of all and nobody tells them that!

It's also called the entrepreneurial spirit but what we're talking about was there's no such thing as a bad economy. We all have an external economy, but we also have an internal economy, and the will power is to change our internal economy.

I can see the good, and I can see the bad. I don't really give a damn. Because I'm going to be rich anyway.

But a poor person with a poor personal economy. All they're going to see is a bad economy. Because they don't know how to make money in any economy. And a middle-class person, they have a middle-class economy. You know what they want is a nice house, a steady paycheck and the job and the car. And when you take their job away to them that's disaster. And since an entrepreneur doesn't have a job anyway, it's no big deal.

All I'm saying to people is what Bucky Fuller taught me. There’re always two sides, and if you think the economy is bad, it's because your economy is bad. If you think that steady employment is important - then you'll see an economy without jobs. It’s always about your economy versus the external economy. Where you control vs where you can't control. And you can control it - it's called an internal focus vs an external focus.

The real entrepreneur has an internal focus but if they fall, they say, ‘Oh, this is good because I'm going to go up higher.’ You know, the average person will fall and say ‘Oh, I'm going to take some Prozac’. Or, they just claim that mistakes don't matter. Mistakes matter, it means you didn't know something.

A real entrepreneur whether they fall, or they just go, they always can go up. They can stand back up and go higher. That no matter what happens to them they got stronger and better, and smarter and happier.

On the contrast - a person with a weak internal mindset is that they're so afraid of what happens, and it generally happens. Like, people who are afraid of losing their jobs they generally lose their jobs.

The entrepreneur first job is control inside here, not outside there. The moment you take that paycheck you're an employee. You've got to be stronger than that. It's about inside control.

How debt could help you generate money

Yesterday we got an interesting email from a guy named Tom. He challenges our articles and ideas about saving money and investing savings. Tom is sharing the idea that rich people never save money – they make money out of the money of the others. Borrowing money with low interest and investing them into profitable assets.

Tom really has a good point so in this article we will cover how and why debt could be considered something good and could earn you a fortune.

1. Not everyone has enough capital to start their own business
If you have a brilliant idea or discovered a profitable niche waiting for your savings to grow until you invest in it might be not so clever. In the best-case scenario, somebody might get into the niche or simply steal your idea and make it true, benefiting from it. Timing and execution are the primary reasons behind each success story.

Also, if you have a working business model and you want to expand on it, then basically debt could be a better option to go and get capital instead of waiting for your savings to grow up. This is true, especially if you don’t want to give away equity. A lot of business owners prefer to keep most of the ownership to themselves and build the business from the ground up. After all, it’s their idea, their dream, and their sweat and tears.

2. Borrowing money to invest in real estate
Real estate is thriving most of the time, and although it might be slow and dependent on the country or region, as a rule of thumb a property nowadays cost much more than 20-30 years ago. In some countries and regions, it could be more than 300% increase in the value.

If you want to invest in property, make sure to do some analysis to make you can use it as an investment. So, when you borrow money the tenant or if it is a commercial property then the business owner who is renting it is going to pay you a monthly rent. Using this income, every month you would be able to cover the payments on your debt and probably even have a little bit of cash leftover.

3. Borrow money only if you will be generating wealth out of it
If you know how to use and invest money correctly, by any means debt is your friend. It is important to remember - every time you borrow money you need to understand that you have to have the money to pay for it. Therefore, it's important not to borrow money if you just want to go and buy presents for your family, but only if you are going to invest and make more money out of it. The only time that you should borrow money is if you know that you can create enough cash flow from that debt to pay off the debt.

4. Borrow money when your business has a minimum 30% return out of it
If you own an Amazon business or Shopify, or even a regular convenience store and you know that whatever money you put into the business - you can make a minimum of a 30% return on your capital, so you should be able to pay back your debt with that money and be able to grow faster your investment, than debt is the best way to go.

5. When you borrow money you leave most of your cash for emergencies
You are not depleting your actual cash flow and actual cash so in any case of unforeseen events, you would be able to stabilize faster and not lose your business to an unfortunate event.

If you ever have a down month, or you need to get more supplies or if you need some equipment it's best to have a little bit of money saved for your business. Most markets and environments are unpredictable, and there are always good months and bad months

A good example is the retail business. Usually, the Christmas season is strong, so November and December are usually profitable. At the same time in January the sale drop and then throughout the year they're more or less consistent, depending on the type of business. Some businesses have a strong summer, while others are growing over the winter season.

6. You can use debt when it comes to leasing
There are a lot of business owners who need better machinery or equipment for their business. They are usually expensive, and it is much better for some business types to consider leasing, instead of permanent purchase. Your business will save thousands of dollars if you just lease and will only be paying for the time that you're using the equipment and the machines and when you don't need them anymore, depending on your lease contract, you can return it or you can exchange it.

Very often that's a 100% tax write-off and when it comes to the debt you borrow to pay for the lease it's 100% percent tax write-off so you're getting a tax advantage and you're able to grow your business a lot faster. That’s why many business owners, as Tom mentioned, prefer  debt when it comes to growing wealth than anything else

7. You can borrow against the business
That's cool. It is a good idea to keep your personal and your business separate. This is a very strong foundation for your business so your business can borrow on its own merit. When you're borrowing against your business idea then it is possible to have the business as a warranty.

If you try to borrow money on a personal side, the bank will ask you about your credit score (we covered in the previous article). Your credit score needs to be good; you need to have low utilization rates, and you need to have enough income to support the monthly fees and taxes.

The other way to borrow money from the bank is through a balance sheet, from your business.
A balance sheet shows the bank your financial education and if you are borrowing from the bank, they want to check how much cash flow is coming in; what's your business model like; how much debt are you going to be taking on; who's going be paying for that debt.

Therefore, you need a financial statement and balance sheet and if you can show the bank that you did your homework and your financial IQ is good then they can lend you even more money.

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As a conclusion, it is true that the richest people in the world use debt to generate more money than anything else. After the gold standard removal, and the inflation rate skyrocket – many see money as plain pieces of paper already, without any value. So, having such a mindset helped the rich borrow huge amounts of debt, invest smartly in something more tangible, and generate huge amounts of profit. We would also like to warn you to be careful though. Make sure you have a good plan and profitable place to invest the debt, otherwise it will just be a liability to you and not bring you any benefit.

What is equity

We all know it has to do something with banks and properties. And in this article we will try to describe equity and answer your questions you might have about it:

* Simply said, equity is a financial term used to describe the value of money that a specific person would potentially be eligible to if they were to sell a property and settle all the mortgages, loans and money borrowed against this specific property.
* Equity is a financial term calculating the total assets left after subtracting the total liabilities.
* Equity is also the difference between property value and what the owner owes against that property in terms of mortgage or loans.
* Equity could be released if a person goes bankrupt. In this scenario, the property is sold on the market and the mortgage and the loans are subtracted from the total value received. The person is granted what is left from the money.
* Equity release could be done via IVA (Individual Voluntary Arrangement). In the IVA scenario a person will continue to do monthly payments that cannot go over the maximum that the person could afford to pay. The period usually stays the same and part of the debt/mortgage could even be written off.

What is debt

In this article, we will discuss debt and the definition of “what is debt”
* Debt is usually amount owned by an organization (company or NGO), the Government or any individual to cover funds or other goods borrowed.
* Debt is an amount of money borrowed by one person to another.
* Debt is also the amount of money borrowed from one party by another.
* A debt is usually used by companies and individuals to purchase something they could not afford normally.
* A debt is an amount of money borrowed by an individual or a company to be paid back at later date and usually there is a cost in doing this - called interest.
* Loans, commercial paper, bonds, and others are all examples of debt.
* There are different operations that could be done with debt, for example, debt sales or debt consolidation.