For years, people have been socking away lots of money into investments they hope, in the long run, will be of greater value than … [...]]]> What goes through your mind when one says “forget retirement”? We’re not inferring that you’ll be working till you’re 70 years old or that you should stop investing in your future years, but, how about this for a change in thought. What if you could invest in your retirement; and be able to enjoy the returns from those investment dollars today? We’re actually suggesting that you can have your cake and eat it too – right now!

For years, people have been socking away lots of money into investments they hope, in the long run, will be of greater value than today. Take a mutual fund for example…buy it today for $10.00 and at some future date, sell it at $15.00.

Retirement strategy used here – buy low sell high.

But what we experienced and learned since 2007, with the credit crisis and financial recession that followed, many investments did not fare so well. Many of those retiring during this period likely had to rethink their strategies as their retirement portfolios dropped some 30%, 40% or more! In fact, some even decided to continue working to make up for the shortfall in portfolios – ouch!

This was and still is challenging for those whose strategy was strictly relying on the appreciation factor to fund their retirement years. Sure, their investments have recovered somewhat, but that is no consolation when you wanted to draw an income and now find that you can’t withdraw as much as you thought before.

A better strategy could have been investments that provided a positive cash flow – today – like real estate for example. The cash flow from such assets would replace your income earned prior to retirement. You wouldn’t want sell these income producing assets because, even if they depreciated in value – the income still continues.

The point here is this… cash flow is King! Consider mixing up your investments to include some or all of it, to provide you a flow of income now. The cash comes in whether you’re working or not – this is where having your cake and eating it too comes into play!

Had the asset mix for many of these retirees, generated a positive monthly cash flow like real estate or even a good dividend stock or fund would, the decision to retire during one of the most severe recessions in recorded history would have been a little easier to cope with.

Cash flow vs. Appreciation

The Q’s definition of the Financial Balance Point™ is this: “When the income from your investments equals or exceeds your work-related income.” This is simple enough, when you have the discipline and determination to stick to a plan.

If you began to accumulate assets for the sole purpose of producing predictable, positive cash flow, would you redefine your investment choices? Clearly, you would begin amassing assets that provide positive cash flow today as opposed to appreciation tomorrow. Don’t get me wrong…appreciation is a good thing…but not the only thing.

A recent discussion with a friend illustrates the point. He purchased a property in 1999 for $57,000. By 2006, the property appreciated in value to a whopping $235,000 – an obvious real estate market gone wild! Lets fast forward to 2009, that same property swung back to be worth $60,000 – a market’s knee jerk reaction to oversold real estate.

Asked if he felt he lost by this swing, his reply was, “Nope!” He went on to say, “These are cycles with no predictability, I didn’t care as much for the appreciation – it’s a bonus – and I am sure through the coming years it will slowly climb up again.”

His original intention was not to purchase the property for its appreciation potential, but rather for its cash flow opportunity. “My cash flow went from $625 a month to now $975”, he remarked. “On paper, it seems like a massive loss of capital, but that was equity the market created in its frenzy and doesn’t impact me whatsoever. My actual cash in hand does affect me and increased through the years as the market itself adjusted for inflation. Now imagine multiplying the extra $350 in cash flow, times many properties, and you’ll see it becomes a very healthy financial situation.”

The property has long since been paid for, and it continues to provide positive cash flow for him each and every month no matter what the market condition is.

How many of your investments are doing this for you right now? They may have gone down in capital value, but are they producing positive cash flow for you today?

Sit down and review your portfolio. Think about including some positive income producing assets – like real estate. You can always re-invest the cash flow to buy more assets and free up your earned income to take care of immediate needs – like paying off your mortgage or other non-productive debts. Maybe even take a nice vacation and experience a trip of a lifetime!

Either way, what’s great about this is…you’re eating a nice slice of cake – now – not only when you are retired – enjoy!

The expression once said by Dave Ramsay, a financial radio talk show host and best-selling author, means “God Only Knows” fund, or also more affectionately known as the Emergency fund.

We try so hard to set goals, but it’s the unexpected curve balls life throws at us that ruin our perfectly well thought out plans, like:

• The car has to be repaired
• Our furnace just died
• I just lost my job
• Little Johnny needs braces…

What’s with that?

That’s why so many people don’t follow through with their life plans, because life happens! Nissan’s ad expression says it all, “shift happens”. Although a more colorful … [...]]]> Some of you might wonder what a G.O.K. fund is…

The expression once said by Dave Ramsay, a financial radio talk show host and best-selling author, means “God Only Knows” fund, or also more affectionately known as the Emergency fund.

We try so hard to set goals, but it’s the unexpected curve balls life throws at us that ruin our perfectly well thought out plans, like:

• The car has to be repaired
• Our furnace just died
• I just lost my job
• Little Johnny needs braces…

What’s with that?

That’s why so many people don’t follow through with their life plans, because life happens! Nissan’s ad expression says it all, “shift happens”. Although a more colorful colloquialism comes to mind, I think you get the point.

So why have a God Only Knows fund? Job loss is one of the big reasons to have an emergency fund. More than ever before, one should have as little as three months or as much as nine months of income socked away - that is a good strategy in today’s reality.

Some believe if you have access to an unused credit card for emergencies it’s the same thing…well it’s not. As soon as you use the credit card for emergencies, you put yourself into a debt spiral you may not get out of so easily and will regret later on.

Let’s face it, having an emergency fund gives you breathing room between life experiences and allows you to weather through the storms of circumstance - or “God Only Knows” events.

Ten percent per pay - keeps the debt collector away

The best place to start is with an achievable goal of saving $1,000. As “The Richest Man in Babylon” so wisely recommends, put away 10% of every pay BEFORE paying for any expenses like your mortgage, car payments etc. - take the 10% right off the top. It is a small enough amount that won’t have a huge impact on your quality of life; yet big enough to add up significantly when you stick to the plan. Once you have achieved your first goal, set your next target, say $2,000, and so on. Make it a habit and it’ll become second nature to you - you won’t even miss the money! Remember though, this is not investment money for retirement.

Yes…you’ll be tempted to access that money - especially when it reaches a sizable sum. Think of all the great things you could buy with that money just sitting there! Let’s be clear. Once you reach the amount you want in your G.O.K. fund, stop putting more money in it - you’re done…you’ve reached your goal.

So let’s say your $5,000 goal was accomplished. Now your new mission is to re-direct cash flow to pay down debt as fast as humanly possible. Once you have completed the debt dump, put some money aside for fun stuff - like a vacation!

See how, in a short period of time, you have money for a rainy day, paid off toxic debts, and cold hard cash for those times you just want to have fun. Little victories like these make it easy to eventually reach your Financial Balance Point™.

There are do’s and don’ts to a healthy and wealthy lifestyle and by repeatedly committing one or several common mistakes, individual investors often prove to be their own worst enemy. It doesn’t matter if … [...]]]> The average person wants to find ways for their hard earned money to work for them, to build their retirement savings, to build up their savings account, to have a profitable investment portfolio and in many cases, they have the best intentions, but it boils down to knowing the facts. Knowing exactly how, what, when, where and why you should restructure, prepare, and grow your finances.

There are do’s and don’ts to a healthy and wealthy lifestyle and by repeatedly committing one or several common mistakes, individual investors often prove to be their own worst enemy. It doesn’t matter if you are a seasoned or novice investor, there are some common mistakes that you should watch out for.

1. Avoid - Thinking Investing is only for the Rich

   Even the rich started somewhere. A person that is able to put away $650 per month (this amount is after all the monthly expenses are paid) could attain a portfolio or nest egg that would yield half a million dollars in 4.8 years, when correctly invested and managed. The key is to obtain the financial know-how needed to reach your financial goals, objectives or results and begin setting aside money to reach those goals sooner. For so many people, time is a valuable commodity wasted without an efficient plan or the required knowledge on how to achieve your end result.

2. Avoid - Investing without an Investment [Time-tested] Strategy

   Many students that come to The Q Institute have haphazardly gone “out there” trying to make investments. They have often been intrigued by the latest stock tip or latest real estate tip and if you don’t have a plan to follow, you end up taking these tips and blowing your financial brains out. We see it happening all the time, people come to us to correct the problems they “fell” into - the cost of correcting a problem compared to avoiding it from the onset is so much more valuable. Trying too many things [investments untested] at once without the proper plan to guide them causes an ill-result.

   Part of the solution is to first take a deep look at your financial past, present and future to determine your investment thinking, your investment knowledge base, your investment habits and your personal philosophy around finances. This deep introspection will give you many clues as to how you arrived to where you are (financially speaking) and how to make the required change or the necessary correction without costing your life savings in the process of learning from the school of hard knocks, a costly school to attend to say the least. In essence, be proactive - proactive - proactive.

   Your current financial situation also determines where within the Four Stages of Wealth you currently are (a fundamental building block in all of The Q education programs): Acquisition, Diversification, Asset or Capital Preservation and Asset Transference or Succession. Following these stages one after the other, not rushing ahead too quickly and instead making sure you have the knowledge of each stage before moving on to the next, makes obtaining wealth a natural, successful process.

3. Avoid - Diversifying your Investment Portfolio Too Soon

   Many investors diversify too soon their investments in their quest to become financially independent. People have been told, “don’t put all your eggs in one basket” and most people without the knowledge or training have taken this statement as their living financial mantra. It is vital during the first stage of the Four Stages of Wealth, Acquisition, that investment strategies you are employing have a chance to work or mature into a predictable return before moving to Diversification. Avoid putting investment capital into so many different and varied investment vehicles. This will ensure that the capital at work has time to “bite” into creating a return. The invested capital has a chance to mature, to produce results such as financial stability which will lead to financial control, leading to financial knowledge, leading to financial independence.

4. Avoid - Thinking that Your Investment Portfolio Cannot be Run Like a Business

   Many people treat investing as a part-time activity and do not pay close enough attention to it, often times giving up control of their money to some money manager, investment advisor or banker.

   Take all your investment activities and approach the “idea” of investing as a business and you will find that you are going to gain the knowledge of the correct strategies which will produce the most effective decisions as far as your investment capital is concerned. Your investments would be set inside of the correct legal structure, providing you with the most effective tax benefits, reducing tax liabilities, improving the performance of investments you might undertake.

   If you were to consider your investment portfolio as a business, you would set yourself up corporately (the correct entity is key) and as such you would immediately be able to take advantage of many different tax benefits, as an example; any time you spend on educating yourself would be considered a legitimate legal expense and perfectly deductible, the cost of setting up the correct entity would also fall under the category of an expense and therefore is deductible. Any trip you would take as part of your investment strategy would also (when the trip is positioned correctly) be an expense worthy of deduction.

   As the investments within your corporation start to produce a yield, these yields are returned or captured inside the corporation; as you now devise the correct and tax efficient strategies to effectively make use of those returns for your lifestyle needs.

   As an example, listed below from the worst types of investment returns to capture (within the entity) to the most tax efficient you want your investment portfolio to produce:

   • Interest Income (the very worst)
   • Dividend Income
   • Capital Gains
   • Gross Profits

   The bottom line is, people that treat investments like a part-time activity find the results are only realized part of the time.

But it doesn’t have to be that way. People are basing their decisions on ‘what if’ and not ‘what is’. Our governments want to stimulate the credit market, encouraging us to spend more. They’ve even considered bailing out entire industries of the plight they … [...]]]> There are four seasons to every year, but many people have an all around ‘wintery’ attitude right now concerning their financial future. They are freezing trying desperately to find ways of keeping warm! Others are hibernating waiting out the winter in hopes that the spring of a new beginning will fill the air…

But it doesn’t have to be that way. People are basing their decisions on ‘what if’ and not ‘what is’. Our governments want to stimulate the credit market, encouraging us to spend more. They’ve even considered bailing out entire industries of the plight they are in. Really the stimulus, spending and bailout will not come from the government per se but from the changed behaviour of its people…we have to change our attitude!

I’m talking about developing our mind to master our money situation – yes that’s it…to take back control…with a positive attitude!

A positive attitude is the key to your financial success!

It’s this same attitude that will help you take back control of your financial situation and not the other way around. “But how do I change my attitude?” you might ask. By changing the way you think about money. You need to learn to master your money-mind-attitude.

Yes…I know…we’re talking about money and you’re getting that anxious feeling inside the pit of your stomach again. You don’t feel in control at all…and you often feel paralyzed just thinking about investing what money you do have! Put another way, your attitude towards money is decidedly negative – and that my friend impacts your behaviour to take action. The fact of the matter is an amazing number of people – over 80% in a recent survey – stated that money is one of the top stresses in their lives (American Psychological Association’s 2008 “Stress in America” survey).

Does it have to be that way? Absolutely not! It all comes down to choices. Actually it comes down to making the right choices. The first one you need to make is to become more financially knowledgeable. Being financially educated is one of the first steps to taking back control. Once you apply this new found knowledge, you will see your attitude towards money change dramatically – your eyes will be opened wide to the many new possibilities available to you today – even in this dismal economy we are living through.

What’s stopping most people to change their attitude is all the “noise” they hear. We are inundated with so much information we can’t separate what is right and what is not…what’s positive or negative. Long gone are the black and white days of decision making – today we see many shades of gray. One expert says one thing while another will argue an entirely different point of view. Which one is right? That depends on your point of view. Remember the most important viewpoint is your own. It’s based on your values and what feels right and makes sense to you. Perception is reality – that is so true. What you perceive to be true and real is just that to you.