Money Questions - answered

Best investments in 2021 and beyond

Hello our money-making, and money-loving friends. Today we will be staring a young bright start who teaches Personal Finance, Productivity and Minimalism. He is also an investor himself and always giving great investment advice.

He is Nate O’Brien, and here is what he says about himself:
For as long as I can remember, I’ve had a passion for personal finance, productivity, and personal development. In 2017, I started one of my first YouTube channels from my college dorm room at Penn State University. The goal was to teach as many people as possible about the inner workings of personal finance while keeping the content 100% free.

Nowadays his channel subscribers are over 1 million and he is producing invaluable content. And here are Nate’s advice for best investments in 2021 and beyond.
(Disclaimer: all the advice are just opinion and are not meant to be taken as a professional advice. Be careful, you may lose money when investing!)

Nate O’Brien:
Hi everyone! Today, I'm going to share five investments that I'm holding for life and maybe you want to consider as well. A quick disclaimer: I’m just a random guy on the Internet so just use the info for entertainment purpose.

Let's start with some of the things that we take into consideration here when I think about investments that I might want to hold for 20 or 30 or 40 years. One of them is the potential longevity of certain industries or companies. What you're going to find is that these five different types of investments it's probably going to be comprised mostly of different types of funds like exchange traded funds or mutual funds. It's not so much speculative penny stocks or companies that I think are going to go to the moon tomorrow or something, it's more about companies that I see a lot of long-term growth potential with.

I. Investing in healthcare
The first one that I've invested into, that I'm probably going hold for a long time is the Vanguard healthcare ETF (VHT) and there's a couple of reasons why I like investing into the healthcare industry. Some of these are obvious, like the fact that healthcare is always going to be something important to most people but also - thinking about different types of industries - the healthcare industry has the best chance of surviving for a long time. In terms of priorities for most of the people healthcare is certainly up there. I like investing into healthcare companies more than energy companies because I feel like there's less of the possibility of becoming totally decentralized in health care industry.

As a contrasting example, if I'm investing into an energy industry ETF or an energy fund that owns a lot of different types of energy stocks, I don't really know where this is going in the future. I don't know how oil and gas companies are going to be looking in 20 or 30 years, but also it could be something that I could see being totally decentralized, where people just have their own solar panels, and there's no massive energy companies that are sort of making money of it.

That’s why I think that the healthcare industry has a lot of growth potential for it but also when we consider the aging population not just of America, but in most of the world - most of the world is getting older – and those are all healthcare consumers.

Also, if we look at one of the largest demographics it's baby boomers in America. Turns out baby boomers have some money and when they get older, they also have a lot of money they're going to be spending on health care. They're going to be opening their wallets and making sure that they are in good health which is going to cost money whether it's physical therapy or different types of medicine. There's a lot of money in health care overall and I can see that trend continuing in the future.

Another reason why I like the healthcare industry and invested in something like this Vanguard healthcare ETF is because it does offer a decent amount of stability. Looking over the last year
And thinking about what happened with the recession and the economy, healthcare was still very prioritized on our list among everything else.

Some of the companies within the Vanguard healthcare fund are
Johnson & Johnson, Pfizer, and Merck. Companies who made vaccines for COVID-19 but also several different biotech companies. We have over 400 companies that are within this ETF. An ETF is an exchange traded fund, it's basically just a big basket of stocks.

Let’s look at different criteria within this healthcare ETF, one of them being that the expense ratio is 0.1% so it's one tenth of one percent. This is what I would consider to be a very low expense ratio. You always want to take these into consideration when you are looking at different types of funds or investments that you are getting into. With the one tenth of a percent expense ratio – it means that if you had one thousand dollars in this fund over the course of a year you would probably be paying about one dollar to Vanguard as their fee to manage the fund for you.

Also looking at overall performance over the past 10 years or so and we can see that it's done well since 2004. Just remember that past performance does not mean future performance just make sure you don't see something and think it went up 20 so it's going to go up 20 next year too. That's not how the stock market works, but overall, I think the Vanguard healthcare ETF has lot of stability.

II. Real estate investment
The second one that I wanted to discuss is investing into real estate. Look, I don't really want to be a landlord, I figured this out for myself. I don't want to be somebody who owns properties, I don't want to have to deal with tenants, but also, I don't want to have to deal with property managers if I buy a property and then somebody else is running it and taking care of it. There are still things that come up that I have to deal with, so I though how to get into real estate without actually having to own a physical property and this is when I looked into something like the Vanguard real estate ETF (VNQ).

Real estate is very much a tangible asset. And something I really worry about a lot in the economy, especially in today's world is inflation. There is always a possibility to have hyperinflation. Think about the fact that more than 22 percent of US dollars were printed in 2020. What's happening right now in the economy is the government is saying ‘hey let's make more stimulus packages it's going to get us more approval’ right it doesn't matter

The problem is that those money are just pulled out of thin air. There is no balance of the budget, e.g. ‘to get the 1.9 trillion dollars, maybe we should cut defense spending or cut different types of spending’. The government is just making more money out of thin air and
If you are holding cash in US dollar in 10 years that's going to be worth a hell of a lot less.

That’s why I love investing in real estate or have some exposure to real estate. Real estate will
probably keep up with inflation (that’s not certain fact), historically it had, because we're not making any more land and there's a lot more people coming onto this Earth every day.

There are a couple of different ways you can invest in real estate. For me, as I mentioned, I just like to go for the Vanguard real estate ETF, but maybe you want to buy physical properties yourself and be a landlord. I have lots of friends who do that, and it is especially good if you have some time on your hands too, and maybe you have a job but you're looking for something extra to do on the side.

You could also get into specific REITs, and REITs are Real estate investment trusts, and you could get into specific REITs that focus more so on specific areas. You might want to buy a REIT for a company that is specifically focused on maybe apartments in Texas or apartments in California or New York apartments. You can invest into those specific companies as well if you think those are going to boom or do well long term.

One thing that I will caution you on is about the future with office buildings and even with retail. I try to focus on some type of residential real estate, people always need a roof over their head, they always need a place to sleep and so. For me that provides some level of stability

The Vanguard real estate ETF hold several different types of real estate, so they own residential they have a lot of different other properties too, and the expense ratio on is 0.1% – 0.2% so also what I would consider to be a very low expense ratio. The fees on it are low and as usual you can buy this on Robinhood or anywhere else.

III. Invest in the most successful US companies
The next I would like to share with you, and it is a great way to get a lot of exposure to the thousand largest companies in America that are publicly traded is the Schwab 1000 fund (SNXFX). It is probably my favorite one and I think this is probably the largest one that I own. It contains the 1000 largest US companies, and you can check that it covers approximately 90% or more of the total US stock market cap so I feel safe being in something like this. Sure, there are times when this fund goes down, if you look at it back in March ’20, it went down just like the rest of the stock market did. It is something that of course I'm holding for a very long period.

Let's just check their top 10 holdings within this fund. It's Apple, Microsoft, Amazon, Facebook, Tesla, Alphabet (which is essentially Google and all their holdings), Berkshire Hathaway, Johnson & Johnson, and then J.P. Morgan Chase so they do own, or more precisely they are kind of having hands in a lot of different types of companies throughout America, and this gives us an overall just kind of broad way to invest into American companies.

IV. Invest in markets outside of US
But let's say that maybe you don't have too much of a bullish feeling about American companies, and maybe you think that America is on the downfall, and there's not a lot of growth left in America, or maybe you don't want to be so exposed to American companies.

So lately I've been shifting outside of American investments and looking for some ones in emerging markets in different parts of the world and that's why the one that I'm going to share with you is what is known as the Vanguard emerging market ETF (VWO). It is going to hold a lot of companies from different areas in the world like China, Brazil, Taiwan, and South Africa. So, a ton of different areas. This is what would be known as an international or global ETF and the expense ratio on it is also 0.1%. Again, very low, that’s what I like about Vanguard funds as you probably already noticed.

Let's check some of the different holdings that this ETF owns. You might notice some of these companies and you might recognize them especially looking at their top 10 holdings here like Alibaba, and maybe you recognize jd.com or Neo which is the popular stock that a lot of people have been investing into so just looking at these you can see probably a good amount of these are based in China, but there are ones from other countries here as well.

The fund is comprised of 5048 different companies, it's one of the largest most diversified ETFs that I've seen out there. Most other ETFs that I'm investing into might have 400 or 500 companies, but this one has over 5 000 which is a lot. And it is both good and bad. The good thing about a fund that holds 5 000 different companies is that maybe there's some companies within there that can really boom and really take off and be the next Amazon, and the bad is there's also going to be kind of not-so-good companies in there as well.

It gives us a lot of exposure, and it gives us some level of stability. Historically thougt these
emerging markets haven’t been performing as well as some different US ETFs that I've checked in the past 10 or 15 years. Nonetheless I still think that there's a lot of room for growth for the next couple of decades, especially in areas where maybe their GDP per capita is still 1/3 of America’s and they still have a lot of room to run to catch up to the GDP per capita in some of those countries. So maybe their growth rate will be a lot faster. Look at a place like india for example, where their growth rate seems to be a lot faster with their GDP growth.

V. Investing in bonds
And the last one I want to mention here it's going to be brief because it's not my favorite but maybe for people who want to be a lot more risk-averse and they're worried about maybe valuations of certain companies we have something like the Vanguard total bond market ETF (BND).

As you can see, I'm kind of a fan of Vanguard funds, I don't buy them through Vanguard though. And this one isn't my favorite, but I still wanted to include it on this list because like I mentioned not everybody wants to be exposed so much to stocks and maybe they want something that's seen as traditionally safer than the stock market. And those are bonds.

Bonds have not been a favorite for most investors in the past couple of years and this is because yields on these bonds have been low, sometimes these yields can be below 1% so it's not that attractive, especially when I factor in the fact that they also have the risk of defaulting on those loans.

Is it even worth that 1% when you average it out, especially when you get some of these different bond market ETFs fail and they can't pay, then you end up losing money? You won’t get your money back. For example, that’s what happened with Puerto Rico back years ago, when they defaulted on a lot of loans.

Don't just think that bonds are totally safe and are like deposits. It's one of the biggest misconceptions.

People mostly believe that bonds are guaranteed money, that it's safer than stocks. And it's not always safer and it depends on who's issuing the bond. If it’s apple or a highly reputable company that’s a good indicator but it also could be a company that's a small cap company with bad reputation. Those are risky because if they're issuing a bond the yield usually would be higher, but also riskier.

The Vanguard total bond market ETF is comprised mostly actually of government bonds, so this is probably just what I would mention is like a kind of a safe bet if you want to just park some money in there but you're not going to really see a lot of growth there.

it's kind of almost fixed like you're getting 2% percent yield, and in the worst-case scenario you may end up losing a lot of that money so I included it only for people who might really want to play it safe with minimum return on investment.

Well, thanks for reading all those thoughts and advice, I appreciate your time and if you found any value make sure you share the article and drop a comment below.

How to manage your money

Let’s talk about what personal finance is, and more specifically about the 50/30/20 rule.

Your full income of money is 100%. And 50% of those will go to your needs. This is all about budgeting and understanding where all your money is going in an ideal, personal budget portfolio. So, 50% are ‘needs’, 30% will go to ‘wants’, and 20% will go to ‘savings.’

Now, let’s dive deeper to understand each one of those categories. Keep in mind we would be giving examples in after tax income – which means net income, you will have some gross pay, but in the end what matters is the money you take home – your net income.

1. So - 50% of the income will go to ‘needs.’ Those are:

Groceries
Housing
utilities
Health insurance

Literately – ‘need’ means something you really can’t live without or something that will greatly inconvenience you, and even the lack of it harms you.

2. The next area is ‘want.’ Let’s see what we consider as ‘wants’, as we will put 30% of our income there. There is a great difference between ‘need’ and ‘want’, and you should always try to understand it. Simply put – ‘want’ is everything you desire but can live without it. Or something that causes mild inconvenience in your life. It’s not necessarily a matter of survival if you give up on something you want.

Shopping – e.g., new pair of shoes, or modern clothes.
Dining out – it’s easier for most of the people in the US to buy dish, than cook themselves
Hobbies – everything you do for fun and not earn money with it

3. The last 20%, although it sounds basic, should go to ‘savings.’ Or paying off debt. Examples:

Emergency fund (6-12 months of living expenses).
Credit cards
Student loans
Deposits
Retirement plan
Investments

You might be thinking, you know all of that but until you sit down and write down the 3 categories and track monthly your spending – you will not be able to get the full picture and make corrective adjustments in order to be able to save more money and achieve your financial dreams.

How banks create money

Today we will explain how banks create money out of thin air. Yes, you might not believe it, banks create money out of thin air.

To explain how this is possible let's talk about what a bank does. A bank accepts deposits from the customers but doesn't just hold that money. If all banks did was holding other people's money, there would be no profit in that. Instead what a bank does it takes that money and it loans most of it out. You might wonder, why can't it loan all of it out? And the answer is because sometimes customers come back and they want to withdraw some of that money.

So, if you and I and everybody else goes to the bank the same time to get our money out, the bank does not have that money. They wouldn't be able to pay us, and the bank would default. That's called a bank run and it's bad.

In the United States there is a Deposit Insurance to make sure bank runs don't happen, but the point is the bank doesn't hold all those deposits. They loan it out. The amount of deposits that the bank needs to hold by law is called a required reserve. In the United States it's 10%. This means that the other 90% is something called excess reserves and they're free to loan that out.

Let's say someone goes into a bank and deposit a hundred dollars from their pocket into the bank. This won't change the money supply because money from your pocket is part of money supply, so is demand deposits inside banks. So far there's been no change in the money supply but here's where the magic happens - the bank is going to hold a certain percentage by law let's say 10% so they're going to hold $10. That means they are going to loan the other 90 out.

The person who deposited $100 has $100 in the account but the person who borrowed the 90 also has now $90. That $90 is money that was created from thin air and did not exist until the loan occurred.

If that person's going to spend that $90 and eventually that $90 can make its way back into another bank that other bank is going to take that $90. It's going to hold 10% and require reserves so 9 dollars it holds, and it's going to loan the other $81. Out of that 81 new dollars is new money supply - it was not created until the loan occurred.

Eventually the person who borrow the money is going to take it and spend it and that's going to make its way to a new bank and the same thing is going to happen again and again, and again, and again.

Now it turns out that the Initial deposit of $100 is actually going to become $900 of new money created.

The way you could calculate it is by looking at something called the money multiplier, which is one over the reserve ratio. In this case when the reserve ratio is 10% that meant the money multipliers 1 over 0.1 so it's 10. If you are asking yourself ‘if the initial amount deposited was $100 and the multiplier is 10 why didn't a thousand dollars of new money get created?’ And the reason why is - because the initial hundred dollars was actually part of the money supply to start off with, so the only amount of new money that was created was from the initial loan of $90. The calculation is $90 times 10 equals $900 of new money created.

And that explains the whole idea of fractional reserve banking! Banks hold a portion of deposits and they loan the rest out and whenever they loan it out, they create new money.

Change yourself to make more money

Hello dear money-making friends. Today we are presenting you with 4 steps by John Assaraf, on how to change yourself to make more money.

A lot of people ask me: Can train the brain to help you make a lot of money or not? And the answer is Yes. Maybe I can share a technique with you about how I started training my brain to help me make more money.

Step 1.
It starts with setting some goals for the lifestyle I want to live. And my advisor, Walter Schneider, many years ago is a very successful businessman. He say: to achieve your goals, first you have to know what they are. So, let's say you set a financial goal, say $ 100,000 a year. That's about $8,000 a month, or about $2,150 per week that you want to earn. And let's say you don't earn it right now.

One of the things you can do is to start training your brain to help you earn that money is first and foremost to be clear about the amount of money you want to earn, whether it be a week, a month or a year.

Step 2.
Make a simple assertion like this: "I'm very happy and it's wonderful I make $10,000 a month” - simple affirmation. Now, I want you to read that affirmation every morning 5 to 10 times, and every night before you go to bed, 5 to 10 times. And when you read that affirmation, I want you to close your eyes, and I want you to practice mental repetition. You receive that money in the form of a check, either cash, or through your bank account, and see that money goes into your bank account. I want you feel how does it feel when continuous each month has 10, 000 dollars gets transferred into your account every month

And you can choose whatever amount you want this way. and when you close your eyes, and you imagine that money is going into your account, what I also want you to visualize is the impact of that money will be in your life, in the life of your family and friends, in the community in which you live and the charities you are trying to support. Totally like in a movie about psychology add to the emotions, as if you were a Hollywood actor or actress are pretending that is actually happening.

So, you read your affirmation ‘I am very happy and feel great for the fact now I make 10,000 dollars per month’ and when you do it and repeat it, your brain exercise visualization - what does it look like.

And that means use your brain to look and feel as if it were real right now. That activates different parts of your brain, namely left frontal cortex. It's the genius, CEO, Einstein - part of your brain. That might really help you out how to achieve that goal and dream. So, if you do it every morning and every night before bed, in the morning while walking, at night before going to bed, you will start to master your brain with an affirmation, with a mind exercise, and you will be aware of your brain.

Step 3.
And if you want an extra step, what I want you to do is take a vision board, or create one on your computer, or a physical table, and cut out some images of what lifestyle earning 10,000 dollars per month allows you to live.

What kind of car do you want to drive?
What kind of places do you want to go on vacation?
What house would you like to live in?
What kind of charity would you like to support?

Get pictures of the results when you earn 10,000 dollars per month or $100,000 per year (or more) and begin to see yourself in that scenario and act as if it were real right now, and then

Step 4.
Every day ask yourself one question:
‘What can I do today to make that money REALISTIC’

And do one or two action steps to make it happen. Hence the physical activity in addition to mind training, with affirmations and mental exercise, visualization, is one of the best to start training your brain to achieve financial goals you have.

‘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.

Success mindset

Today we will focus on the teachings of one great leader, teacher and author - John Maxwell. Let's reflect on how successful and rich people think compared to the unsuccessful and poor.

I would teach you how to think correctly. The largest gap between successful and unsuccessful people in life is the thinking gap. I'm not talking about being smart, I'm not talking about an IQ, I'm talking about 'how you think', 'how I think'. Successful people think differently than unsuccessful people.

Wise thinking leads to wise living stupid thinking leads to poor living. If you want to have a fulfilled life you have to fill your mind correctly. Right now, you need to focus on today and what I realized so many leaders don't understand is that truly today matters, and we overestimate what we could do tomorrow we over exaggerate what we did yesterday, but we underestimate what we can do right now. The only time you have, the only time I have is now. So, the question for all of us is ‘what am I doing with now?’.

The great leaders they're present in the moment and because of that they maximize the moment so if you're attempted to take that far away glances, well, glance… but get right back to the present moment because today you're preparing to make tomorrow a success.

Well we all want to be motivated and yet so many times we fail to find the secret of motivation and so let me give it to you quickly. JUST DO IT! Motivation is not the cause of action it's the byproduct of action, and there's a lot of difference. If I think motivation is the cause of my action then I'm going to wait to be motivated before I do something but if I realize it's the byproduct of my action than I'll start doing something. Then guess what? Motivation will come and zap you and all of a sudden you feel good, and you're glad you're doing it. You're saying, ‘Wow this is truly wonderful’. So, let it be the byproduct to your life, let it be the foundation for the actions that you take.

Nothing comes to you until you commit yourself. Nothing comes to you if you're just going to try but you're not committed. Nothing comes to you if you're just thinking about it. It's not until you take the action step. It's not until you take the direction, ‘do the thing’ starts to flow through you.

But I'm saying don't cheat yourself out of the possibility of the potential that's on the other side of commitment. Stay with it long enough to find out if there's any fruit in it. You can do goal-setting with a pencil but you have to do go-getting with your legs. You got to take action and it's the action that separates us. The greatest gap in this world is the gap between knowing and doing. Knowing is goal-setting, doing… now that’s goal achieving.

People that are knowledgeable about habits say that it takes 30 days for an action to become a… habit. And habits can be good, and habits can be bad. So, over a period of time you can either be developing habits that are going to help or habits that are going to hurt you. People that grow develop habits that help. The great value of a good habit is you don't have to think about it. That’s why it's a habit. In other words, once you began to, over days and times and periods, begin to practice something that’s good - after a while it becomes automatic to you. It becomes who you are. In fact, I always tell people ‘practice a good habit long enough to make it yours’ and once it's yours now it's automatic. Every day you'll do what you should do.

Often, I have the expression that everything worthwhile is up the hill. That's a fact. You've never heard someone talk about accidental achievements. You've never heard someone that got to the top of the mountain and somebody asked him ‘how did you get there?’, kind of look confused to say ‘I have no idea’. The reason they know how they got there is because they had to walk all the way up the mountain. Nobody lifted them. There were no shortcuts. There's not an elevator, there's not an escalator. It's all effort to get you to the top of the mountain.

What I want you to understand is that inspiration does a lot better when it's coupled with the perspiration. There are a whole lot of people they want to be inspired in great things, but they don't want to do the hard work to achieve those great things. It's not either/or it's both/and. So, I really trust today that you will just kind of roll up your sleeves, look at something you haven't tackled for a while, and dive in! You'll be amazed that once after you do the work you will get inspired. Don't wait to get inspired before you do the work!

How many digits is a bank account number?

We will be answering a question coming from our FB page. A lady is interested in ‘how many digits are there in a typical bank account number?’

And straight to the answer.
In the US the number of digits in a typical bank account number is between 7 and 16 digits. Yes, those numbers depend on the country, the bank, and the type of account you might have with that bank.

The typical account number usually have 10-16 digits. The number is specific to your personal account. If you use a checkbook – the digits will be printed on the bottom of the checks as a second set of numbers, just next to the bank routing number. Another option to find your bank account number is to look at your monthly statements – the number should be printed there.
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In the UK – the bank accounts are usually made of 6-digit sort code and 8-digit account number. The sort codes' purpose is to identify the bank branch and are usually in the form of 11-11-11. The sort codes usually do not have a check digit. The account numbers have an 8-digit number and contain a specific bank check digit.

All UK bank accounts also have IBANs (International Bank Account Number(s)). IBANs are mandated by the European Union to facilitate international bank transactions. British IBANs have 22 characters mix of digits and letters. IBANs start with ‘GB’, then the 3rd and 4th digits are a pair of modulo-97 check numbers, 5th to 8th positions are reserved for the bank-specific code, positions 9 to 14 consist of the bank sort code characters, and in the end (15th to 22nd) there is the bank account number.
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In Canada, the basic account info is represented in about 7-digits number. Some banks might use more digits – up to 11. The bank number itself is usually 3 digits, the branch name is about 3 digits, the branch number is 5 digits. And then you have the account number itself (3 digits), branch number (5 digits), and then the bank account number which is about 7 digits.

As usual, you can check those numbers on the bottom of any account checks the bank provided to you. Also, you should be able to check your bank account number digitally, by logging into your bank account online and checking your account information.

The bank account numbers are used by any bank to electronically deposit your payroll or charge your regular payments, etc… If you are trying to transfer funds internationally, there will be some additional numbers to be used to make that possible, to identify your bank on the international payment system.

As a bottom line - banks distinguish between savings, checking, and time deposits by altering the number of digits in any specific account number. As mentioned above, some of the digits will represent the branch of the bank it was opened at, and the others will represent the account holder. the number of digits is important internally to the teller processing the bank account number.

The dark side of a company bankruptcy

Nowadays, in the full unstableness of the market and the economy as a whole, some companies declare bankruptcy, and those are good examples of what is going to happen with your stocks, in a case of any company declaring bankruptcy.

Companies like JCPenney and Hertz and are declaring bankruptcy and you wouldn’t believe what happened to the shares price… It skyrockets instead of crashing down. So, in case of not aware of what usually happens when a company declares bankruptcy, there it is...

There are two options for a company to declare bankruptcy – using Chapter 7 or Chapter 11. If a company declares Ch.11 bankruptcy, what basically happens is – the company is asking for a chance to reorganize and recover. It asks protection from the court from the creditors. If the company survives, your shares may also survive too. But there is a very small chance of that happening. The company may cancel existing shares, making yours worthless. This is what happens in most of the cases. If the company declares bankruptcy under Ch.7, the company acknowledges the inability to function anymore. Rarely, any shareholders get something, as the creditors of the company are served first.

So essentially when a company announces bankruptcy the shares have zero value or close. You might be thinking – what if the company survives bankruptcy in the future and manage to cut costs and reorganize and survive somehow? You might think that the value of the shares will rise significantly. But, in reality, it turns out that the shares are almost always deleted during bankruptcy. The existing shares are just completely wiped out, most of the time. And if the company does survive the business owners, who credited the company in the past just create new shares for themselves. The new shares are not shared with the old shareholders.

A good example of the dark side of a company bankruptcy is the case with United Airlines. They went bankrupt in 2002. And four years later in 2006, the company managed to stabilize, and new shares went public. The same shares are still trading today but none of these new shares were given to the old shareholders. The people who held shares before and during bankruptcy lost everything. For them, it doesn't matter that the company survived.

So, nowadays, as an investor - you buy shares in Hertz, hoping for the company to survive, keep in mind that it probably won’t even matter as if the company does really survive, the business owners will most probably simply issue new shares and none of those will be shared with the old shareholders.

The stock exchange usually delists such shares and tries to stop them from trading. But some companies are fighting the delisting, as they would like to squeeze the most out of the market and the naïve investors.

The bottom line is that owners of common stock often get nothing when a company enters bankruptcy. Those shareholders are usually the last in line for compensation.

The Stock Market is a bubble - and it will burst

During the last decade, the investors have come to believe that no matter what - the market only grows, in a long term. Long-term investment in index funds (like S&P 500) has somewhat proven to be the most profitable strategy. But do you know that the nature of the stock market is to grow as a bubble and eventually burst?

We are currently in a pandemic situation. The economy is struggling, unemployment is rising, and there is a lot of uncertainty. On top of that the S&P 500 recovered so quickly from the mini-crash in Mar 2020, and it looks like it have entered a bubble.

Let’s quickly explain the nature of the stock market. There are consistent patterns that emerge in every bubble in history and these consistent patterns are emerging again right now. Unfortunately – every time the investors believe in “but now it’s different” mantra, repeating the same mistakes again and again.

Above you see a chart representing the life-cycle of the stock market. This chart shows the stages of every bubble in history. It starts with the early stealth phase. Next comes the awareness phase as the investments begin to attract attention. Followed by the mania phase – where the bubble grows extensively. Finally the blow-off phase or the so-called crash.

The chart shows perfectly well - how every single bubble in history has grown and burst.

Above is an example of the dot-com bubble. Notice how the charts are pretty much identical. Did people learn from previous bubbles? Well, not so much it seems, at least not enough to avoid it playing out the stock market in the same way again and again.

Above is another example. We have the notorious Bitcoin bubble. This time it's overlaid on the stages of our bubble charts and we can see how closely it does follow it. It is clearly the same pattern so whether it was the "dot-com bubble" or the "Bitcoin bubble" the truth is the majority of the investors never learn and the same patterns are repeated over and over.

Every now and then new technology is invented, it changes the world and the majority of investors think “this time is different”. It’s also important to note that the burst of the bubbles are not always the end. For example the Bitcoin is obviously very contentious as it has shown tremendous staying power since the bubble burst, and maybe hasn't had as much time as the others to prove its worth.

The key point is that many investors fall victim to the same patterns because they think “this time is different”. This mantra have caused every bubble in history to get out of hand, and it is a well-documented pattern with lots of analysis.

Finally, keep in mind that we have clear signs that (in Jun 2020) we are currently in the mania phase of the bubble chart and as the charts show - the crash usually isn't too far behind. So, if you are an investor – be careful and don’t get overexcited.

Investing tips by Tony Robbins

We will be presenting 3 key tips for beginner investors and everyone who would like to start investing in the stock market, presented by the greatest coach of all time - Tony Robbins.

Here is what Tony said about investing:

The average person thinks finance is so complex because frankly the industry tries to make it sound complex. They use words that you don't know so you don't know what to do... What happens is we just give them our money and say deal with it.

1. You need to know that you can't wait until you have a ton of money to start investing.
If you can invest in business, even a small amount, you can grow. It doesn’t matter how small it is, the important thing is to automate it.

You got to take a percentage of what you earn and pretend it's a tax. You should not waste that money. It automatically goes straight to the investment account and you never see it as money you can spend. When you save 20% and you compound it, the numbers are incredible. And then the problem is: If you do that first step, but you don't do the second step which is:

2. Become an insider and understand the rules of the money game. I'll give you 2 or 3 of the Myths, really fast:

2.1. One, the myth that someone says give me your money and I'm going to beat the market. Over any ten year period of time, 96% of the mutual funds will not even match the market.

Warren Buffet flat out used to confirm the same trend. 96% of his money, all that money does not go with any mutual fund, it goes straight into the index.

What the index is you get a piece of all the largest companies in the world but it costs almost nothing to get in. You hire someone because you are thinking "I have a family, I have a business, I have a life, I'm not an investor- I'm going to hire someone who's a professional, it makes sense they would do better than me."

Unfortunately that's wrong.

Only 4% of the mutual funds will beat the market. 4% chance of finding the right mutual fund, the chance is so slim that it will happen.

2.2. And, the second myth is after getting terrible performance, people think "Maybe, fees don't really matter" or they'll tell you it's only 1%. And on Forbes, it says the average fee is 3.12%,
1% versus 3% is a big difference. And it really matters - just like you grow by compounding, your fees also compound. If you have 3 people and one gets 1% fees, another 2% the other 3%, and they all get the same return. And, they start out with 100,000 dollars at 35, accumulating for 30 years until they are 65 years old. If it is average 7% compounded, they all get 7% return and when they go to retire, the person who had 1% in fees is going have 574,000 dollars. The person who had 3% in fees will have only 224,000 dollars. This is 77% less money!

If I said to you: "Here's the deal, let's do an investment. You put up all the money, you put up all the money, you put up all the risk, I'll put up no money and I'll put up no risk. If you lose I win, and if you win I win and if you win, over the life of the time I'll get 60% of what you earn." That's a mutual fund with 3%.

3. Instead, you could own the stock market – invest in the S&P500, you could own a piece of all 500 big companies through like the Vanguard 500 and you get the best of all the business - Apple, Exxon, etc… All these companies – you invest into and it cost you only .17%. And if you go to a normal mutual fund you might own the same companies for 3.17%. That's like buying a Honda Accord for $20,000 in the first scenario or $350,000 in the second for the same car.

That happens every day with finances because people don't know how to look at this so when they read the book Money Master the Game: 7 Simple Steps to Financial Freedom that will never happen to them again.

Top tips for Investing in the stock market by Warren Buffett

Sharing the 5 top tips for investing in the stock market, presented by not anybody else, but the one and only – Mr. Warren Buffett himself.

1. I don't know when to buy stocks, but I know whether to buy stocks. Some people should not own stocks as they just get too upset with the price fluctuations. If you're going to do dumb things because your stock goes down, you shouldn't own the stock at all. I mean that if you buy your house at $20,000 and somebody comes along the house and says I'll pay you $50 – well, just don't sell it.

2. The best thing with stocks is to buy them consistently over time you want to spread the risk as far as the specific companies you're in by being versatile and you diversify over time by buying this company stock this month, that company stock next month. Year after year after.

3. If you save money you can buy bonds, you can buy a farm, you can buy an apartment house or buy a part of the American business. And if you buy a 10-year bond now you're paying over 40 times earnings for something which earnings can't grow, and you know if you compare that to buying equities good businesses. I don't think there's any comparison.

4. You are making a terrible mistake if you say out of a game. Probably you think, it is going to be very good over time because you think you can pick a better time to enter the stock exchange market. The later you start, the worse you will be: in terms of knowledge, experience, and money.

5. I know what markets are going to do over a long period of time. They're going to go up, but in terms of what's going to happen in a day or a week or a month or a year, even I've never felt that I knew it and I've never felt that was important. Keep in mind that in 10 or 20 or 30 years, I believe, stocks will be a lot higher than they are now.

10 Money questions to answer by age of 30

As usual, we continue our never-ending mission to provide you with the best money-related answers to the top money questions. Today we will cover the top 10 most important money questions you need to answer by 30.

1. What is your net worth?
It is surprising how many young people do not know, neither care about their financial worth. Although it might be true that your personality worth cannot be measured in money, you need to be aware at every moment what is your financial stats. In terms of money – net worth means the monetary sum of all your assets (real estate, car, furniture, cash, saving accounts, investments, stocks) minus all your liabilities (debt, financial obligation, mandatory spending).

Precise calculation of your net worth is not an easy task. You need to consider the current market value of your assets, not the price you bought them for, but the price you can sell for. Calculating and understanding your net worth provides you with complete insight on how you are doing, and helps you elaborate your future financial goals.

2. What is your credit score and why is it important?
(we already deeply answered the money question in What is a credit score? article)
Your credit score number is a three-digit indication to potential lenders of your ability to repay money you borrow. The FICO score is the most commonly used, ranging from 300 (worst) to 850 (best) and is calculated based on the following factors: payment history, length of credit history, credit utilization ratio, the mix of credit types in use and number of credit inquiries.

You should aim for an excellent FICO score It includes anything from 750 to 850. The next category down is between 700 and 749. It is still considered good, but it might not get you approved for the best deal the lender offers Anything below 700 – you should consider fixing and improving before even consider borrowing money. Otherwise, even if you qualify for a loan, you might not be getting the lowest possible interest rates on that loan. Mortgage lenders and credit card companies usually reserve their lowest rates and largest loans for people who have exhibited a quality track record when handling credit.

3. How much money do you have, saved in your emergency fund?
It is advisable to have enough money in your emergency fund to cover your living expenses for you and your family for about 6 months. It might sound a lot, but you will be grateful to have access to the money in bad or even worst-case scenarios – losing your job, coping with emergency repairs, or even medical conditions.

Your first goal should be saving 100USD, then eventually growing the saving to 500-1000USD, until you reach the sum of your 6-months expenses. For some people this could be as low as 1000USD, for others it could go up to 10000USD and above. The worst case that could happen to you is the need to declare bankruptcy (we will cover extensively the disadvantages of bankruptcy, and those are not trivial), due to some extreme event.

4. Where do you put an excessive amount of money; you will need in 1 to 10 years?
Plan carefully your financial future. If you are going to need the money in 1 or 2 years, consider buying a Certificate of deposit. They provide a better interest rate than saving accounts (also have some disadvantages). If your timeframe is longer, consider investing in stocks, shares, and bonds. Just be aware that, while the stock market has historically gone up over time, it can go up or down in the short run. Keep in mind that past performance doesn’t guarantee future returns. While stocks may provide higher growth opportunities than Certificates of deposit and Bonds, you want to allow enough time to ride out the downturns and may consider relocating funds into more conservative options to cope with shorter periods of time. Investing in a mix of stocks and bonds is advisable as it lowers your risk.

5. What dividends and interest money do you get?
Interest money is usually paid by the bank on your deposited money, while dividends are periodically paid by companies to you as a shareholder. Dividends are typically paid in cash or additional stock shares. If you are an investor, this is a good way to collect some income while still investing for higher returns. Always keep in mind that dividends might be subject to taxes.

6. How do you diversify your financial assets?
Diversification means spreading your investments across a variety of assets. Those include cash (in different currencies), real estate, stocks, bonds, certificates of deposits, and so on. You don’t want to be putting all your eggs (erg… we mean ‘money’ :)) in one basket. An example of a good stock market allocation would be to invest in companies in the US and abroad, small, medium, and large, well-established (usually considered safer), and rapidly growing businesses. Ideally, you are aiming for a well-diversified portfolio, including deposits, cash, real estate, other properties, to cover for market fluctuations – when some go down, others go up.

7. When are you going to be debt-free?
Calculating your numbers is only one part of the equation. You also need a solid repayment plan with a solid end date. Create your schedule and include a plan for repaying mortgages, student loans, and other loans. If you managed to secure the best term loans and the rates are very low - you might not need to bother paying your debt faster.

On the topic of the credit cards – be very careful with them. If you only pay the minimums, you’re wasting a lot of money on interest and losing a lot of money you should not. Always be careful with credit cards and always pre-calculate how your financial balance change if you are up to paying more and faster.

8. How much money can you comfortably spend on housing and mortgage?
As a general guideline, experts’ advice is to limit your housing expenses to a maximum of 30% of your income. Many lenders obey that number and don’t even consider approving mortgages unless your proposed home expense compared to income ratio is 30% or less.

It doesn’t matter if you rent, lease, or own the place. Always try to lower your housing costs as upkeep and repayments could become huge and threaten your financial stability.

9. What types of insurance do you have and need?
Again, the experts suggest considering life insurance, home insurance, and automobile insurance as the minimum – in order to avoid sinking down in cases of emergency.

If you own your home or car, often you’re required to have insurance, and the minimum mandatory requirements vary depending on your location and specific case. Renters insurance may seem optional, but sooner or later you will realize that it is essential to protect your personal belongings, not to mention some modern buildings require it. Life insurance is a great way to ensure your relatives will be covered in the worst-case scenario. Consider it – especially if you have kids dependent on you.

10. How much do you save for retirement?
There is no golden money advice, as everyone has different goals for retirement finance, but most of the experts suggest you save between 10 and 20 percent of your annual income. Again, it depends on your vision and goals. Some people prefer investing, instead of putting money into retirement plans. Nevertheless, retirement plans are a good option. If you can’t afford much try to just save something there and increase a little with time when possible.

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