How To Become Wealthy

A guide from MAKEONLINEMONEYINFO.NET

CONTENTS 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

Shock Warning«««««««««««««««««««««««« 2 Income is not wealth«««««««««««««««««««« 3 No debt is a good debt««««««««««««««««««« 4 Do things differently«««««««««««««««««««« 8 Find out what your boss earns«««««««««««««« 9 Make sure you love what you do for a living«««««« 10 Recognise the value of time«««««««««««««««« 11 Ideas are the new hard graft««««««««««««««« Invest from your surplus«««««««««««««««««« 13 Get a good broker«««««««««««««««««««««« 15 Be tax smart««««««««««««««««««««««««« 16 Invest in money-­makers, not flashy pipe dreams««« 17 Diversify, Diversify, Diversify««««««««««««««« 18 'RQ¶W LJQRUH JOREDO PDUNHWV«««««««««««««««« 19 Invest for income«««««««««««««««««««««« 20 Understand how to recover from losses««««««««« 25 Avoid Investment/Trading Seminar Scams««««««« 27 Understand that conflicting advice may all be correct« 29 Investing on news«««««««««««««««««««««« 30 Understand the jargon and the charts«««««««««« 31 Do not under-­estimate your life-­expectancy«««««« 32 'RQ¶W IRUJHW JRRG ROG-­fashioned saving««««««««« 32 Enjoy without addiction««««««««««««««««««« 33 All bulletin boards are positive««««««««««««««« 34 Aim for multiple income streams««««««««««««« 35 You never know enough«««««««««««««««««« 36 $QG ILQDOO\««««««««««««««««««««««««««« 37

1

Please turn over...

SHOCK WARNING

This Guide is not going to make you rich overnight (at least not tonight, unless you are extremely lucky).

This guide is not for those who are hoping for a µget rich quick¶ VFKHPH because, although it is unfashionable to say it ± there is not really any such thing.

No, this guide is different. You have not just wasted money on yet another scheme or system which will ultimately fail despite the claims made in the advertising.

What is it then?

Well this is a guide to help you accumulate wealth steadily and sensibly.

You may indeed have great rises in financial wealth in short periods of time. You may also have to take some losses. That is all part and parcel of this experience. What we are aiming for is that in the long term, your gains will outweigh your losses by some considerable distance. You should also avoid some of the mistakes that many people make.

In fact, you should be able to avoid making the mistakes that MOST people make.

<RX KDYH KHDUG LW VDLG WKDW ³NQRZOHGJH LV SRZHU´

In the wealth building game that is certainly true. Those who have the knowledge are able to capitalise on how the system works. The rest are simply going about their daily lives hoping that somehow things will be different next year, without actually doing anything about it.

Well ± now is your chance to do something about it!

2

Secret Number 1

³Income is not wealth´

Your biggest barrier to attaining wealth is yourself. It is no use blaming everything and everybody else if you are actually living your life in a way which is not helping you to build your wealth.

Ultimately, you will only become wealthy if you spend less than you make each month. Most people think that you need to have an enormously high monthly income to be considered wealthy. Actually ± there are many people who have lower level incomes but act more sensibly with their money and so overall are wealthier. Any fool can get a high income ± but the same fool will spend it all so that there is nothing left when that income ceases.

Please understand ± Income is NOT wealth.

In financial terms (for there are other types of wealth), your wealth is the part of your net worth that makes you money (either income or capital growth) without you needing to work hard for it. So for example, whilst a teacher may work hard each week to get their monthly salary, somebody with a property portfolio can be paid each week in terms of rental and capital gain on their houses, for doing relatively little. If they were to add to this some high dividend paying stocks, and maybe some regular returns on sales of a book they wrote some time ago, you can see how they would be considered wealthier than the teacher. They could actually continue to live in the manner they have become accustomed for as long as their portfolio paid out ± which would normally be longer than a normal salary. Even better, they would not have worked themselves into an early grave in the process!

Ask yourself this question.

How long could you continue with your normal spending habits, if your regular monthly pay were to be stopped? Your aim should be to make it so that a regular monthly salary from an employer becomes a nice bonus! ,I \RX GRQ¶W -­ you will forever be bound by the lie that it takes a high income to become wealthy, and it requires working all the hours in the day and night to achieve that salary. Believe that -­ and financial independence and security will always be just out of reach.

3

Please turn over...

Secret Number 2 ³1R 'HEW LV D JRRG 'HEW´ Although most of us will go through life needing to borrow money at some point or other, be it to ease cash flow by the use of a credit card, or by taking out a mortgage on a family home ± the paying of interest will of necessity mean that we have paid back much more than we borrowed.

This is a sure fire way to eat at your wealth. The more debt you take on, the more difficult it will be to get out of it. It is like a drug, and it can destroy you in the same way. Any debts you take on need to be targeted and cleared as soon as possible ± Yes, even your mortgage.

What should I do first ± clear the debts or invest?

As I said, we all have some debts at some point in our lives. It may be that we are still faced with a student loan after university. It may be that we needed to take on a loan to buy a new car (more on that later), or it PD\ EH WKDW ZH KDYH VRPH IXUQLWXUH RQ D µEX\ QRZ SD\ ODWHU¶ GHDO $OPRVW without exception, we will have a mortgage. And then comes the quandary: If all my money is pumped into paying off the debts, I will not be doing any saving for a rainy day or for my life when I have retired.

Thankfully, this dilemma can be solved with a fairly simple calculation.

The answer depends on two variables: 1. How much interest you are paying on your debt, after tax.

2. How much interest you expect to earn on your investments, after tax.

Please note that there are two types of debt. At one side we have the worst kind -­ very high-­interest debt that comes from things like credit cards and store cards. This kind of dead is lethal and should really be avoided unless absolutely necessary. It should only really be used to aid cash flow, and it should be paid off each and every month if at all possible. The second kind of debt is the lower interest variety;; things like the mortgage or student loan. Often, the interest on this kind of debt is low enough that it may worth holding onto the debt for its full term.

The bottom line is: If you can guarantee a higher after-­tax return by investing than the after-­tax interest rate you would pay on your debt, you should go ahead and invest. If not, you should clear the debt first.

4

Here are some examples for you: Example 1 Imagine you have a 30 year, £150,000 mortgage with a 4 percent rate. If you expect to earn an after-­tax return higher than 4% on your investments (the odds are reasonable that you will if you have a long-­ term view), then you should invest rather than pump additional funds into the mortgage.

Example 2 Imagine you have a £10,000 credit card debt with a 22% interest rate.

You should only invest if you think you can earn a 22% after tax return on your investments. The average return on the stock market has been somewhere around 11-­13%, so this seems a risky proposition. In this case, it would be foolish to invest and you should instead work on clearing the debt first.

KEY POINT: You need to do what is best for building wealth long term. Many people cannot see that paying off a debt is actually saving them more money than they would be able to make any other way. Do the calculation and work out what is best for you.

Credit Card Debt is Deadly How to find the money get out of credit card debt Many people struggle to pay more than the minimum balance off each month, and as such, they never eat into the debt. Here are a few tips about how to get rid of the most deadly debt of all. Until this has gone, \RX GRQ¶W VWDQG D FKDQFH RI EHFRPLQJ ZHDOWK\ 1. Do you have any investments you can use at this stage?

As you will have seen from the last calculation about whether to invest or pay off the debt ± with credit cards it is always better to pay it off first.

Therefore, if you have money in savings accounts or invested in bonds or stock, it is more than likely in your best interests to use that investment to clear your debt at this stage. Remember, if your investment is not inside an ISA, it is taxable. It is subject to capital gains tax and you will pay tax on the dividends. As pointed out earlier, it is debateable whether you will ever beat the 25-­29% needed to make it worth keeping the investment rather than paying off the debt first (even if it is inside an ISA). Cash in the investment and use it to lower your debt.

5

Please turn over...

2. Do  you  need  all  that  stuff?  A  life-­laundry  is  a  useful  way  of  cutting  down  our  debts.  When  was  the  last  time  you  read  those  books  or  rode  that  bike?  Are  you  likely  to  use  the  tent  again?  Why  not  sell  it  all  on  eBay  or  Amazon  Marketplace.  Making  a  few  hundred  pounds  at  a  car-­boot  sale  could  also  help  to  cut  down  your  debt.  3. Ditch  the  subscription  lifestyle  Many  of  us  subscribe  to  Sky  and  to  a  daily  newspaper,  or  a  monthly  magazine.  We  also  pay  for  extra  insurance  plans  on  our  mobile  phones  and  electrical  appliances.  We  love  the  fact  that  we  can  use  900  minutes  of  talk  time  and  3000  texts,  with  unlimited  data  download  on  our  mobile  plan.  However,  all  this  adds  up  and  we  need  to  decide  whether  we  want  to  become  wealthy  or  not!  When  was  the  last  time  you  exceeded  the  data  download  of  the  mobile  package  below  yours?  What  about  the  talk  time?  'R \RX XVH DOO WKRVH ÂľIUHHÂś PLQXWHV" 'R \RX QHHG FKDQQHOV RQ \RXU TV?  How  often  do  you  actually  read  the  paper?  Could  you  pick  one  up  on  your  way  to  work  instead  of  having  it  delivered?  Small  changes  in  your  monthly  subscriptions  can  actually  save  hundreds  of  pounds  which  can  be  channelled  to  paying  off  debts.  4. 'RQÂśW pay  for  the  brands  whHQ \RX FDQÂśW WHOO WKH GLIIHUHQFH  We  are  all  suckers  for  advertising  (otherwise  companies  would  not  invest  PLOOLRQV LQ LW +RZHYHU IRU D ZKLOH WU\ VRPH ÂľKRPH-­EUDQGÂś RU FKHDSHU alternatives  in  the  super-­market.   Fill  up  the  car  with  fuel  from  the  supermarket  rather  than  paying  the  premium  price  of  the  named  brands.  Go  to  the  local  cafĂŠ  rather  than  the  big  brand  and  big  price  COSTA  or  STARBUCKS.  All  the  money  you  save  will  help  you  to  cut  down  on  your  debt.  5. The  Snowball  effect  The  idea  behind  getting  rid  of  your  debts  is  that  once  gone,  you  will  have  more  disposable  income  available  to  put  towards  your  goal  of  becoming  wealthy.  People  often  wonder  whether  they  should  attempt  to  target  the  largest  debts  first,  because  they  are  accruing  the  most  in  terms  of  interest.  However,  it  is  quite  demoralising  to  see  how  little  difference  you  are  making  to  a  large  debt.  Meanwhile,  your  smaller  debts  are  also  growing  and  you  end  up  standing  still.  You  should  pay  the  minimum  balance  on  each  debt,  and  channel  all  the  extra  money  you  have  made  by  following  steps  1-­4  above,  into  clearing  the  balance  of  the  lowest  debt.  Â

6 Â Â

Once that debt has gone altogether, you take the money you were paying to that and channel it onto the next largest debt. Now repeat the process until you have only one debt left. All spare income can now be targeted at removing the final debt. In effect, you have gradually increased the amount of spare money simply by knocking off one debt at a time. This is FDOOHG WKH µVQRZEDOO¶ Hffect.

Remember, even small amounts will make a difference. It only takes a handful of snowflakes to make a snowball ± this will get the ball rolling.

And in the long run ± even a few pounds a week extra will save a thousand pounds over the year on a credit card bill.

KEEP AT IT ± it is really worth it and will unlock all the other secrets in this guide.

7

Please turn over...

Secret  Number  3  ³'R 7KLQJV 'LIIHUHQWO\´  Most  people,  believe  it  or  not,  will  continue  to  do  the  same  things  that  they  have  always  done  and  the  same  things  that  their  parents  have  always  done  ¹  even  when  they  know  it  has  not  brought  them  success.   If  you  look  at  your  parents,  and  discover  that  they  worked  extremely  hard  all  their  life  to  earn  a  reasonable  salary,  and  then  had  to  cope  with  a  reduced  income  upon  retirement  ¹  do  you  want  to  be  in  the  same  boat?   If  not,  check  yourself.   Are  you  doing  anything  differently?   Are  you  planning  at  the  moment  on  relying  on  your  company  pension  (or  even  your  state  pension)  to  get  you  through  your  retirement  years?  Are  you  hoping  that  things  will  just  be  alright?  Well  wise  up.  If  their  method  GLGQÂśW ZRUN IRU WKHP LW LV QRW JRLQJ WR EH DQ\ GLIIHUHQW IRU \RX   You  have  made  a  good  start  by  buying  this  guide.  This  will  help  you  to  think  differently.   But  remember,  you  will  also  need  to  DO  things  differently.    Â

Â

8 Â Â

Secret  Number  4  ³)LQG 2XW ZKDW \RXU %RVV (DUQV´   OK  ¹  So  I  said  that  income  is  not  wealth.  That  is  true.  However,  whilst  you  are  working  on  building  your  wealth  you  will  be  relying  on  your  income,  and  a  high  income  is  a  much  easier  starting  point.  Now  whatever  your  line  of  work  is,  it  is  important  to  aim  for  a  job  in  which  you  can  rise  up  the  ranks.  It  is  also  important  to  recognise  that  with  each  promotion,  you  should  be  getting  a  rise  in  pay.  Now  here  is  the  thing  that  most  people  simply  do  not  consider:  ,I \RXU ERVV GRHVQÂśW HDUQ PXFK PRUH WKDQ \RX ZK\ VKRXOG \RX H[SHFW much  of  a  pay-­rise?  You  will  find  that  in  offices  and  schools  all  over  the  country  people  take  on  new  responsibility  at  work  for  what  amounts  to  a  token  gesture  ¹  more  a  badge  of  honour  than  a  pay-­rise.  People  convince  themselves  that  they  are  doing  it  more  for  the  experience!  However,  in  other  offices  and  schools,  people  are  doing  the  same  jobs  for  much  more  money.  The  reason  for  this  is  simple  ¹  the  Top  Earner  is  on  a  great  salary. Â

If  the  top  man  or  woman  has  a  very  healthy  salary,  there  is  more  scope  for  those  under  that  boss  to  be  paid  well.  If  your  boss  earns  £60,000  and  his  or  her  second  in  command  earns  £50,000  why  should  you  be  offered  much  more  than  £40,000  for  simply  running  a  department?  Instead,  apply  to  run  a  department  at  another  firm  where  the  boss  is  on  £150,000  and  you  should  find  that  your  salary  has  risen  in  the  same  way.  ,I \RX FDQÂśW PRYH WR D QHZ ILUP Âą  GRQÂśW  take  on  the  post  of  responsibility  LI WKH SD\ GRHVQÂśW PDWFK WKH LQFUHDVHG ZRUN-­load.  All  it  will  do  is  drain  your  time  and  patience,  for  little  financial  reward.  There  are  better  ways  of  using  that  spare  time  to  make  money  (more  of  that  later)  instead  of  investing  time  in  a  company  that  will  not  invest  its  cash  in  you.   Â

Â

 9  Â

Please  turn  over... Â

Secret  Number  5  ³0DNH VXUH \RX ORYH ZKDW \RX GR IRU D OLYLQJ´  All  over  the  developed  world  there  are  people  who  are  in  the  rat  race,  and  FDQÂśW ZDLW WR JHW RXW RI LW EHFDXVH WKH\ KDYH SLFNHG WKH ZURQJ SURIHVVLRQ   It  may  well  pay  them  handsomely,  but  it  gives  them  no  joy.  This  is  a  sure-­fire  way  to  eat  at  your  wealth.   People  who  hate  their  day-­jobs  end  up  spending  all  their  money  trying  to  find  ways  of  improving  their  lives  and  bringing  some  joy  back  in  to  an  otherwise  dull  and  frustrating  existence.  This  will  ultimately  leave  nothing  left  for  the  time  it  is  most  needed  ¹  that  is,  when  the  job  finally  stops  at  retirement  and  you  are  able  to  enjoy  it.  At  this  point,  your  lifestyle  would  have  to  change  because  there  are  no  funds  left.  The  job  has  taken  all  the  best  years  away  from  you.   The  best  thing  is  to  find  a  job  you  love  ¹  and  then  you  will  be  paid  every  day  for  doing  something  you  actually  enjoy.  In  fact,  it  could  be  said  that  you  never  actually  work  at  all!   Â

Â

10 Â Â

Secret  Number  6  ³5HFRJQLVH WKH 9DOXH RI 7LPH´  Many  people  who  strive  to  be  wealthy  have  little  understanding  of  the  value  of  time.  They  work  all  the  hours  under  the  sun  in  order  to  gain  just  a  few  more  pounds  on  the  pay  slip  each  month.  However,  they  have  neglected  to  notice  one  important  fact.  They  are  not  finding  the  time  to  enjoy  their  income.  In  fact,  they  have  no  time  to  enjoy  their  income  because  of  the  hours  they  are  working!   You  know  you  are  truly  wealthy  when  you  have  the  ability  to  control  your  time  and  use  it  as  you  see  fit.  You  are  only  wealthy  if  you  are  able  to  spend  your  time  doing  the  things  you  really  love  doing.  It  may  well  be  that  you  do  really  love  your  job,  and  that  is  absolutely  fine.  The  key  thing  is  to  be  able  to  have  the  freedom  to  do  it  when  you  want  to  and  not  do  it  when  you  GRQÂśW 7KLV LV WUXH ZHDOWK   <RX QHHG WR EH DEOH WR VD\ Âł5LJKW ,ÂśYH KDG HQRXJK QRZ DQG , DP QRW JRLQJ WR ZRUN DQ\PRUH´ $W WKH VDPH WLPH \RX QHHG WR EH DEOH WR KDYH the  confidence  that  you  will  be  able  to  continue  to  live  in  your  current  house  and  with  your  current  life-­style.  You  need  to  be  able  to  enjoy  the  same  holidays  and  eat  the  same  kinds  of  foods.   If  there  is  a  need  to  cut-­back  and  tighten  the  belt  immediately,  this  will  mean  that  your  free  time  is  not  as  enjoyable  as  it  could  be.   Sadly,  this  is  the  situation  most  retired  people  find  themselves  in.  Despite  working  hard  all  their  lives,  their  pension  and  investments  simply  do  not  provide  them  with  the  lifestyle  they  had  dreamed  of.   Right  now,  then,  you  need  to  work  smarter.  Enjoy  your  life  whilst  you  can.  Value  your  time.  Â

Make  your  income  work  for  you,  rather  than  simply  working  for  your  income.   Â

Â

Â

11 Â Â

Please  turn  over... Â

Secret  Number  7  ³,GHDV DUH the  new  KDUG JUDIW´  Gone  are  the  days  of  needing  a  trade  in  order  to  support  yourself.  Gone  are  the  days  of  the  protestant  work  ethic,  in  which  we  are  told  to  feel  JXLOW\ LI ZH DUH SDLG IRU WKLQJV WKDW GLGQÂśW WDNH XV PXFK WLPH RU HIIRUW   Because  of  the  internet,  ideas  and  products  can  be  presented  and  marketed  by  every  man  woman  and  child  on  the  planet  (well-­almost).  And  yet,  people  still  fall  into  the  age-­old  trap  of  assuming  that  the  only  way  to  live  is  to  give  up  all  their  energy  and  time  to  a  company  in  exchange  for  being  paid  at  the  end  of  the  month.   What  you  need  to  do,  whilst  doing  your  day-­job,  is  to  experiment  on  finding  your  own  marketable  product.  It  could  be  something  you  make  and  sell.  It  could  be  a  service  you  offer.  It  could  be  something  you  buy  and  sell  on  for  a  profit.  Or,  it  could  simply  be  the  smart  use  of  the  pay  yRX UHFHLYH ,ÂśOO H[SODLQ ZKDW , PHDQ   You  get  your  pay  each  month  ¹  what  do  you  do  with  it  then?   'RQÂśW WHOO PH LW DOO JRHV RQ SD\LQJ WKH ELOOV ,I WKDW LV WKH FDVH \RX QHHG WR go  back  to  my  advice  on  how  to  free  up  some  additional  income.   What  is  left  over  will  be  enough  for  you  to  start  a  business.  Yes,  I  am  absolutely  serious.  You  can  start  a  business  on  the  internet  for  as  little  as  £5.00  a  year  ¹  it  just  takes  the  setting  up  of  a  website,  and  of  course  a  product.  Now  that  is  where  you  use  your  time  and  energy.  Be  creative.  What  would  YOU  buy?  What  would  your  friends  buy?  What  do  YOU  know  that  others  would  be  interested  in?  Which  service  would  YOU  pay  for?   Give  it  a  try.  You  only  need  to  make  a  small  amount  of  money  to  have  more  than  you  have  now.  Once  you  have  that  small  amount  of  money  coming  in,  you  can  put  it  to  good  use  by  investing  it.   Money  is  like  a  seed.  It  will  only  grow  if  you  plant  it  wisely.    Â

Â

12 Â Â

Secret  Number  8  ³,QYHVW )URP <RXU 6XUSOXV´  Building  wealth  takes  time.  You  may  make  small  amounts  relatively  quickly,  but  using  these  amounts  to  make  the  serious  money  is  where  the  ULFK EHFRPH ULFK DQG WKH UHVW GRQÂśW   The  way  to  lose  money  quickly  is  to  invest  from  money  you  cannot  afford  to  lose.  There  are  always  losses  in  investing  and  if  you  invest  money  you  cannot  afford  to  lose  and  subsequently  lose  it,  so  begins  a  downward  spiral  of  loss  chasing.  This  is  an  emotional  roller-­coaster  which  eats  away  at  funds.  Each  new  investment  becomes  more  risky  as  an  attempt  to  recoup  the  previous  losses,  and  wherever  emotion  is  involved  in  investing  there  is  likely  to  be  disaster.  All  investment  portfolios  need  to  have  a  spread  of  different  types  of  LQYHVWPHQW LQ WKHP 7KH\ QHHG WR EH ÂľGLYHUVLILHGÂś.  This  way,  if  one  area  (manufacturing,  for  example)  is  hit  hard  and  drops  in  the  market,  your  ZKROH SRUWIROLR ZRQÂśW VXIIHU ,Q IDFW RWKHU DUHDV LQ \RXU SRUWIROLR PD\ bounce  to  compensate.  I  will  show  you  how  to  create  such  a  portfolio  later.  However,  on  each  and  every  day,  the  markets  move  up  and  down.  Three  out  of  four  stocks  will  follow  the  direction  of  the  market  in  the  long  term.  This  means  that  if  there  is  a  big  reason  for  the  market  to  take  a  tumble,  the  chances  are  your  portfolio  will  also  drop  down.  This  is  no  use  if  you  were  hoping  to  use  some  of  this  money  to  pay  your  weekly  shopping  and  food  bills  or  mortgage.  You  should  be  aware  too  of  what  is  called  the  BID/OFFER  spread  (or  BID/ASK).  This  is  essentially  the  difference  between  the  asking  price  that  you  have  to  pay  to  buy  a  share  and  the  selling  price  that  you  will  get  if  you  sell.  At  any  fixed  point,  the  selling  price  is  always  less  than  the  buying  price.  For  this  reason,  as  soon  as  you  purchase  some  shares  (and  assuming  the  price  stays  the  same  for  a  while)  you  will  have  lost  money.  Factor  in  the  stamp  duty  (Tax)  you  have  to  pay  on  your  purchase  and  the  commission  you  have  to  pay  your  broker  for  carrying  out  the  deal  and  you  will  have  lost  even  more  on  the  deal.  In  fact,  the  price  of  the  shares  will  have  to  rise  considerably,  just  for  you  to  break  even.  As  soon  as  you  sell  the  shares  you  will  have  to  pay  a  commission  charge  and  potentially  some  capital  gains  tax  too,  so  to  really  make  money  the  rise  has  to  have  been  worthwhile.  Â

Â

Â

13 Â Â

Please  turn  over... Â

Trading  too  frequently  (a  temptation  if  you  are  desperate  for  the  money)  is  a  sure-­fire  way  to  see  your  gains  eaten  up  in  bid/offer  spread  and  commission  losses.  With  this  in  mind,  you  should  see  that  you  simply  cannot  expect  to  make  money  easily  and  quickly  and  it  is  therefore  beyond  stupid  to  invest  money  that  you  need  for  other  purposes  like  paying  bills. Â

ÂľOnly  invest  what  you  are  prepared  to  loseÂś  This  is  a  psychological  state  of  mind,  but  a  very  important  one.  Emotion  has  no  place  in  investing.  Nobody  is  happy  to  see  money  go  down  the  drain.  However,  with  investing,  you  simply  have  to  be  prepared  to  see  it  GR MXVW WKDW RU \RX VKRXOGQÂśW HQWHU LQWR WKLV JDPH DW DOO 7KH SODQ RI course,  is  to  win  more  than  you  lose,  so  that  in  the  long  term  your  portfolio  grows  and  your  net  wealth  increases.  It  is  simply  a  fact  that  you  will  have  to  take  some  losses  along  the  way.   So  is  it  worth  it?   Yes.  The  growth  of  money  is  exponential.  By  that,  I  mean  that  it  grows  at  a  faster  rate  as  the  size  of  the  sum  increases.  This  is  because  of  the  beauty  of  compounding.    Earning  a  10%  return  on  £10,000  is  only  going  to  get  you  £1,000  before  tax.  However,  10%  return  on  a  £1,000,000  portfolio  is  £100,000.  This  is  naturally  far  more  impressive,  despite  needing  no  more  effort  or  work  on  your  part.  Once  this  return  is  compounded  every  year,  the  larger  sum  will  grow  at  a  considerably  faster  rate.  Â

With  compounding  (assuming  just  a  10%  return  per  year),  even  £10,000  can  turn  into  £44,402  over  15  years!    Â

Â

14 Â Â

Secret Number 9 ³Get a good broker´ There are countless good brokers out there who can purchase and sell your stock for you. They offer many different levels of service and you need to decide what it is you want and need.

You can get a fully managed portfolio whereby you pay your broker a fee and a percentage of your gains. They will discuss with you and advise any major decisions to buy or sell and will then make the transactions for you.

This kind of service can be useful for people who do not want to make the effort of getting their feet wet and doing the research themselves. It tends to be for the more risk averse people. The problem with such a scheme of course is the additional cost of the brokerage and the loss of money in commission.

You can also go to brokers who will let you make all the decisions, and will simply act as executors of your decisions. They will charge you a flat fee per trade. Some will charge a quarterly or even monthly fee for the privilege of having the account and there will often be an additional fee IRU µLQ-­DFWLYLW\¶ ± meaning that you have not made enough trades in the month. These brokers can act by telephone and many now have platforms where you can do it all yourself on-­line.

Personally, I recommend the newest breed of broker ± the online investment platform. There are some great deals out there and depending on your trading frequency, you can get considerably lower execution fees than with traditional telephone brokers. Some do not charge for the account or have any inactivity fees. The best will have a portfolio manager section on the website which enables you to see all your stock holdings, and their current position in terms of price, profit and loss. You can action buys and sells in real time, or as regular subscriptions. You can choose to purchase (or sell) a set number of shares, or a set cash value.

I like to use the Interactive Investor platform (www.iii.co.uk) and I tell you that without prejudice or any commission. As I said, there may be better deals out there for you at any given stage, so do shop around.

15

Please turn over...

Secret Number 10

³%H 7D[ 6PDUW´

Most people know very little about their tax entitlements, possible reliefs, and the ways in which some of their money can be allowed to grow tax free.

1RZ GRQ¶W JHW PH ZURQJ , DP QRW DJDLQVW WD[DWLRQ XQOLNH VRPH , QHHG to have my bins emptied, the roads mended, emergency services and the like provided. I should pay my fair share. I even believe the wealthy should pay more than those in relative poverty. That is only fair. But the key thing here is that I should pay my FAIR share. I should not pay more than that simply because I am unaware of the rules.

The wealthy know all about how to play the system to their advantage.

They are not cheating (well not the decent upright ones). They are doing nothing illegal. It is simply that they are better informed.

So your first task is to investigate whether you are paying more in tax than you should. You can do this in one of two ways. The easiest is to book a tax accountant to come round and go through all your paperwork and advise you. This will cost, however, anG LW GRHVQ¶W FRPH FKHDSly. The other route is to go online to the government website for the Inland Revenue and read all the help guides. Take your time. It is inertia that prevents people doing this, and they end up paying thousands of pounds more than they should every single year. Many do this for their whole working career and never know about it.

The second thing is to make sure that you use your ISA allowance for saving and investing. ISAs are tax free wrappers for your money. Any capital gain inside the ISA wrapper is tax free. Any dividends paid as income inside an ISA wrapper are µWD[ IULHQGO\¶ (reduced tax) and income tax is not charged. A little bit of advice on investing tax-­efficiently from an Independent Financial Advisor will go a long way.

7KLV µWD[-­VPDUW¶ DSSURDFK ZLOO KHOS \RX WR EHFRPH RQH RI WKRVH ZKRVH wealth grows at a faster rate, because you are not constantly giving it away again ± in particular, you are not giving MORE than your fair share.

16

Secret  Number  11  ³,QYHVW LQ PRQH\ makers  ¹  not  flashy  pipe-­GUHDPV´   Too  many  people  are  wooed  by  the  latest  technological  advance  and  assume  that  because  it  is  new  it  must  be  set  to  make  millions.  Well,  just  occasionally,  they  are  right.  However,  very  often  these  technological  ideas  fail.  7KHUH DUH PLOOLRQV RI ÂľPXVW-­KDYHÂś SURGXFWV WKDW SHRSOH VLPSO\ GR QRW need  or  want  and  therefore  do  not  have.  If  you  invest  in  the  company  that  makes  these  things,  your  portfolio  is  likely  to  go  down-­hill  fast.   Instead,  you  need  to  think  about  true-­value.  What  do  people  really  need?  Yes,  the  technology  to  listen  to  different  music  in  every  room  in  the  house  all  controlled  from  your  phone  sounds  like  a  great  idea  and  it  may  sell  ¹  EXW LW ZRQÂśW VHOO DV RIWHQ DV 3L]]D 'RPLQRHV 3L]]D LV FXUUHQWO\ RQH RI WKH most  recession  proof  companies  in  the  UK.  It  has  achieved  year  on  year  profits  despite  not  being  a  trendy  company  with  any  new  technology.  And  what  about  refuse  processing  companies?  These  are  very  un-­trendy  but  are  absolutely  necessary  and  will  ride  out  a  recession  happily.   Again  I  say  ¹  keep  emotion  out  of  your  investment  decisions.  Go  for  the  investment  that  is  going  to  give  you  the  best  return  on  your  money.  Ask  yourself,  is  the  product  essential?  Is  the  demand  rock  solid?  Is  the  need  for  this  product  going  to  continue?  Is  the  company  going  to  pay  the  shareholders  well?   ,I \RX JHW VWURQJ Âľ<(6Âś DQVZHUV WR WKHVH TXHVWLRQV WKHQ \RX DUH RQ WKH right  track.   Of  course,  it  is  worth  taking  a  punt  occasionally  on  a  few  new  and  trendy  companies  hoping  to  create  a  new  market.  The  returns  can  be  phenomenal  when  they  come  off.  However,  you  must  remember  what  I  said  about  a  diversified  portfolio.  There  should  be  a  predominance  of  regular  companies  in  necessary  sectors  ¹  even  if  they  are  boring.   You  will  be  interested  to  know  that  if  you  look  at  the  careers  of  people  who  can  afford  to  send  their  children  to  independent  education  you  are  MXVW DV OLNHO\ WR ILQG WKH FKLOGUHQ RI WKH PDQ ZKR UXQV D ÂľVNLSÂś ILUP DV \RX are  the  children  of  a  doctor.  You  are  certainly  more  likely  to  find  the  children  of  builders  and  plumbers  than  you  are  the  children  of  cutting  edge  technology  developers.     Â

Â

17 Â Â

Please  turn  over... Â

Secret  Number  12  ³'LYHUVLI\ 'LYHUVLI\ 'LYHUVLI\´  Not  all  investments  are  the  same.   Some  are  the  kind  that  will  grow  (hopefully  rapidly)  in  terms  of  their  capital  value.  Others  are  the  kind  that  are  fairly  static  in  terms  of  capital  value,  but  pay  a  dividend  (an  income  per  share).  You  should  invest  in  different  types  of  company  and  in  different  markets  For  example:  A  Mining  company  and  an  Oil  company  A  Telecommunications  company  Something  in  the  Financial  Services  area  ¹  like  Insurance  A  Biotech  company  (like  a  drug  manufacturer)   You  should  also  look  to  diversify  in  terms  of  growth  and  income.  The  balance  of  this  depends  on  your  time  of  life.  What  I  mean  is  -­  if  you  are  young  you  should  favour  growth.  If  you  are  nearing  retirement  you  should  aim  for  income.  The  companies  that  are  likely  to  have  the  greatest  growth  are  usually  the  most  risky  in  terms  of  the  possible  loss  of  the  investment.  For  example,  if  you  invest  in  a  speculative  oil  company  you  have  two  outcomes.  Either  they  will  strike  oil  and  your  investment  will  go  through  the  roof,  or  they  wonÂśt  and  it  will  gradually  dwindle  away  to  nothing  until  the  company  runs  out  of  money  and  goes  bust.  Always  edge  of  the  seat  stuff!  It  is  foolish  to  have  all  your  money  in  such  companies,  of  course.  On  the  other  hand,  there  are  companies  which  over  ten  years  may  not  really  change  much  in  terms  of  their  capital  value.  This  means  that  you  are  not  going  to  lose  on  your  investment  (although  nothing  is  absolutely  certain).  If  you  choose  wisely,  you  should  be  able  to  pick  a  company  like  this  which  also  treats  its  shareholders  well  by  paying  dividends.  This  is  a  share  of  the  profits.  If  you  get  it  right,  this  kind  of  investing  can  be  the  one  which  brings  you  an  income  for  life.   Â

Â

18 Â Â

Secret Number 13 ³'RQ¶W LJQRUH *OREDO PDUNHWV´ ,W LV DOVR YLWDO WR UHFRJQLVH WKDW \RX VKRXOG DYRLG µKRPH FRXQWr\ ELDV¶ It is usually the case that private investors favour the country in which they live in terms of their investment decisions. For some reason, people tend to believe, for example, that because they themselves are British, their money will perform better if invested in British companies. It is as though they think they understand the business better and have some input.

This is dangerous thinking though. If all your investments are in one country, then the basic economic performance of that country will influence the growth of your portfolio. Government decisions on interest rates or on corporation tax rules (for example) could have a massive effect on your whole investment, rather than just a part of it.

Just as it is important to diversify into different types of stock, it is also important to spread your investments into different countries.

You can do this either by going through a broker who allows you to purchase stock in a foreign exchange directly, or by investing in funds which focus in overseas markets. Once this psychological barrier has been crossed, you will find that you are fishing for investments in the ocean rather than a small lake. There are far more opportunities to find some bigger fish!

19

Please turn over...

Secret Number 14 ³,QYHVW for income´ This secret is dynamite. What many investors are simply not aware of is that investing for income can actually also lead to capital growth in two different ways, as I will explain. Therefore, it is actually a very sensible idea to invest for income almost entirely, and leave only a small amount of your portfolio for speculative growth.

Time and time again, this has been shown to provide a lower risk investment, which actually grown in the longer term. You will not have the white-­knuckle ride or the overnight riches. But nor will you have the obvious and real danger of losing the lot! You will have the possibility of financial freedom and true wealth that you dream of.

How can these companies grow?

Well putting it bluntly, companies that are able to spend some of their profits on the share-­holders are by and large the companies that are doing well enough to have no financial worries. This means that they are generally safer bets. This means that over the long term, they will grow at least in line with the stock-­market (an average of 12 ± 13%) and often better. In addition to this, you have the dividend payments and using them wisely will make you even more money.

Dividend Paying Stocks You need to check what is called the Dividend Yield of a stock. Generally, if it is paying upwards of 4%, this is considered good. If you can get over 6% this is considered excellent. However, some companies seem to pay out exceptional dividends (at about 12%) but on closer inspection this is seen to be unsustainable for the growth of the business.

The best companies will only give 40-­50% of the profit back to shareholders in dividends. The rest is reinvested into the company to ensure growth. Companies which give much higher dividends are in danger of being excellent payers for a few years and then either going bust or having to stop the dividend altogether. Neither of these is good for an investor.

20

Remember I spoke of how compounding interest gives ever increasing UHWXUQV" :HOO WKH VDPH LV WUXH RI GLYLGHQGV ,¶OO H[SODLQ Imagine you own 1000 shares in a company, and for the sake of ease, the share price is £1.00. That company pays you 10 pence per share as a dividend. Obviously, you would earn £100.00 from this dividend issue.

Now you have a choice, you can spend that money on a treat, rather like an unexpected bonus (choice 1). Or, you can reinvest the dividends VWUDLJKW EDFN LQWR WKH FRPSDQ\ FKRLFH /HW¶V ORRN DW ZKDW KDSSHQV now.

Assuming the share price is still £1.00 (it may not be, of course). At the next dividend payment (still at 10p per share) there is an obvious difference depending on whether you took choice 1 or 2.

Choice 1 would mean you still had 1000 shares and would be paid a dividend of £100 again.

Choice 2 would mean that you now have 1100 shares and would be paid £110.

If this cycle were repeated exactly again, choice 1 would have received £300 in total. Choice 2, with dividend reinvestment would have received £321.

With each new reinvestment of the dividend, the growth of the next payout becomes larger. Growth is exponential.

Now, I have not factored in dealing costs or stamp duty. Neither have I factored in the rising and falling dividend payments. Neither have I taken into account a rising and falling share-­price. Nevertheless, even with all this taken into account, the brute fact remains ± dividend reinvestment will make a portfolio grow exponentially, whereas taking the dividend as a cash withdrawal will leave it on capital growth alone. <RX VKRXOG DOZD\V XVH D µ'LYLGHQG 5HLQYHVWPHQW 3ODQ¶ WKLV VKRXOG EH offered by your broker). This will automatically purchase more stock with the dividend payment, and commission will be much reduced in comparison with organising a separate trade yourself.

21

Please turn over...

There are other important things to remember regarding dividends.

Declaration date: The declaration date is the day the Board of 'LUHFWRU¶V DQQRXQFHV that they will pay a dividend. Once this has been done, the company now must pay that money to the stockholders. At this point, the Board will also announce a date of record and a payment date. It is usually about the same time each year, but there are fluctuations Date of record: This date is usually DV ³H[-­GLYLGHQG´ GDWH This is the day on which the company checks its record of shareholders and sees who need to be paid a dividend. If you bought shares after the ex-­ dividend date, you would not be entitled to the next dividend payment.

In fact, the investor who sold you those shares would, despite no longer being a holder! This is the dividend trap. Buying a dividend paying stock once it has gone ex-­dividend means that you actually miss out on that dividend (although you do get any subsequent dividends if they are paid and you are holding at the next date of record).

Payment date: This is the date the dividend will actually be given to the shareholders of company.

Some dividends are paid four times a year on a quarterly basis. Others DUH SDLG WZLFH \HDUO\ DV DQ µLQWHULP GLYLGHQG¶ DQG D µILQDO GLYLGHQG¶ 6RPH companies pay dividends only on an annual basis.

Tax on Dividends The best place to invest in dividend paying stocks is, as I said earlier, inside an ISA. If you are a basic rate tax payer in the UK, you pay a low rate of tax on your dividends which is taken as a tax credit before you receive the dividend. If you are a higher rate tax payer, you would normally pay above 32% (at current rates) on dividend income and then get back the 10% tax credit, but inside the ISA although losing the 10% tax credit you will not pay any additional tax. In addition, any capital gain on your investment inside your ISA is capital gains tax free. Very beneficial to your investment!

22

Bonds There are many types of bonds that you can buy. Unlike a share, you GRQ¶W RZQ D SDUW RI WKH FRPSDQ\ ± you have loaned money to it (or the government). Basically, a bond is an investment that promises to pay a certain level of interest if the investment is held for a set period. There are variations, of course, and some will promise to pay a set amount only if a few conditions in the market are met. This means that some bonds are higher yielding in interest than others, but are also higher risk. You should also remember that your capital is tied up in the bond for the set period of time. You either cannot withdraw it at all, or will lose all the accrued interest if you cash it in early. It is best not to tie up money for more than 5 years in a bond. Interest rates can fluctuate a great deal in this time and it is impossible to know now whether the bond will still be the best place for your money in five years time.

In terms of how many bonds or bond funds to invest in ± you should typically stick to the rule that the percentage of your portfolio in this type of investment should equal your age. For example, a 40 year old ought to have around 40% of their portfolio in bonds. Any more than this will hamper the potential growth of the portfolio and any less will probably mean that the portfolio is too risk orientated. You will see that as you get older, the risk level needs to drop to guarantee income and capital growth is less important.

Property Investing in property can be done in several ways. The most obvious (although costly to start up) is to purchase the property directly. Once being the rightful owner of a property (even with a mortgage) it is possible to let it and take a rental income. This has the advantage of helping to pay off the mortgage (if a repayment mortgage deal is taken) and then eventually being an income for doing next to nothing each month. In addition, there is likely to be a rise in the capital value of the property, which can be released at a future date.

This cannot be put inside an ISA, of course, so is subject to capital gains and income tax.

23

Please turn over...

The second approach is to purchase shares in a property based fund. This is essentially the same thing, as you then get a share of the capital gain in the properties the fund owns, and a share in the income of those properties that are let.

This kind of fund can be wrapped in an ISA. This is a cheaper way of investing in property, but unlike the first, you do not actually own the property itself. For this reason, if the value of property falls dramatically, the investment can become almost worthless, whereas in the first case, the House (or commercial building) can still actually be used by the owner. It therefore has a practical value and is also inflation busting.

What this means is that as inflation erodes the value of the currency, the property itself still exists. This is why some people have mortgages which were once difficult to afford each month, but now many years later cost them less per year than having their daily newspaper delivered!

The danger with investing in property is that there are additional costs, such as legal costs, void periods when the property is empty, refurbishment costs and the like which do not occur in stock market investing. In addition, over the long term, the stock market has always out-­performed the property market. However, having some property is essential in a diversified portfolio and when in the right area can bring in a good and regular income.

24

Secret  Number  15   ³Understand  how  to  recover  from  lRVVHV´  The  stock  market  can  be  an  unfriendly  place.  There  are  days  when  hundreds  or  even  thousands  of  points  are  wiped  off  the  value  of  shares  in  one  day  -­  the  famous  ¾&UDVKHVÂś ,W FDQ KDSSHQ IRU D QXPEHU RI UHDVRQV and  the  thing  you  need  to  know  is  that  it  is  almost  impossible  to  predict.  Equally,  it  is  almost  impossible  as  a  private  investor  to  do  anything  about  it.  When  trying  to  sell  out  to  limit  losses,  you  find  that  your  broker  simply  cannot  get  you  a  price,  and  yet  at  the  same  time  you  can  see  the  price  falling.  It  is,  as  I  said,  a  frightening  place  to  be.  However,  if  you  follow  the  secrets  I  have  given  you  so  far,  you  should  be  protected  against  some  of  this.  A  diversified  portfolio  will  help.  Investing  in  good  dividend  paying  stocks  will  also  help,  as  these  tend  to  be  GHIHQVLYH DQG UREXVW LQ ÂľEHDUÂś RU UDSLGO\ IDOOLQJ PDUNHWV  It  must  be  expected,  however,  that  there  will  be  losses.  They  may  not  be  as  dramatic  as  a  complete  stock  market  crash  ¹  but  nevertheless,  you  may  wake  up  one  day  to  find  a  large  percentage  fall  on  your  portfolio.  Thank  fully,  whilst  it  is  certainly  not  a  comfortable  place  to  be,  and  whilst  what  I  am  about  to  tell  you  seems  counter  intuitive,  there  is  a  stack  of  research  and  experience  which  will  back  up  the  fact  that  it  works.  The  basic  trick  here  is  to  purchase  more  of  the  same  stocks,  even  as  they  continue  to  fall.  I  will  say  that  again  ¹  as  the  price  goes  down,  buy  more  of  the  shares.  There  is  a  psychological  state  of  mind  you  need  to  get  into.  If  you  believed  the  stock  was  worth  purchasing  at,  for  example,  £4.00  a  share.  And  then  the  price  slides  down  to  £3.05.  You  need  to  ask  yourself  a  TXHVWLRQ Âł+DV WKH FRPSDQ\ DFWXDOO\ GRQH DQ\WKLQJ WR  make  it  worth  less,  RU LV LW MXVW LQ D IDOOLQJ PDUNHW"´ ,I LW LV WKH FDVH WKDW WKH ZKROH PDUNHW LV falling,  then  what  you  are  now  seeing  is  that  the  price  of  your  share  is  now  at  even  better  value  than  on  your  first  purchase.  It  therefore  stands  to  reason  that  you  ought  to  be  buying  more  at  such  a  bargain  price!  If  the  price  falls  again,  you  should  then  buy  more  for  the  same  reason.  Now  many  people  will  point  out  to  you  that  it  can  sometimes  take  years  for  a  stock  market  (or  even  an  individual  sector  or  share)  to  get  back  to  SUHYLRXV OHYHOV VR VXUHO\ WKLV LV ÂľJRRG PRQH\ DIWHU EDGÂś +RZHYHU WKH\ are  simply  completely  wrong.  Â

Â

25 Â Â

Please  turn  over... Â

As  the  markets  recover  ¹  even  if  it  is  10  years  later,  the  value  of  your  investment  is  now  going  to  be  considerably  more  than  it  was  when  you  first  bought  in  at  that  level.  In  fact,  if  you  have  consistently  and  regularly  invested  into  the  stock  during  that  low  period,  then  when  the  bounce  back  ILQDOO\ FRPHV \RX ZLOO KDYH ORZHUHG WKH ÂľEUHDN HYHQÂś SRLQW E\ VRPH considerable  margin.  This  LV EHFDXVH \RX ZLOO KDYH ÂľDYHUDJHG GRZQÂś WKH price  of  your  share  purchases.  You  will  be  able  to  see  outstanding  growth  LQ \RXU LQYHVWPHQW LQ FRPSDULVRQ ZLWK WKH SHUVRQ ZKR ÂľERXJKW DQG KHOGÂś  I  have  already  mentioned  dividend  reinvestment.  This  is  particularly  important  during  a  bear  market.  Consistent  dividend  reinvestment  will  also  average  down  a  share  price  purchase  level  and  the  bounce  back  will  again  be  all  the  more  profitable.  6R WKH VHFUHW EHKLQG WKLV VHFUHW LV Âľ'2 127 3$1,&Âś ,I \RX NHHS HPRWLRQ out  of  investing,  you  are  likely  to  have  more  success.  Investors  (particularly  inexperienced  ones)  are  likely  to  either  attempt  to  sell  a  stock  and  take  a  loss  (sometimes  a  huge  loss)  or  to  simply  hold.  As  I  have  shown,  neither  of  these  is  a  good  recovery  plan.  An  Example  Imagine  you  bought  105  shares  of  a  dividend  paying  company.  You  paid  £27.29  per  share  and  the  total  cost  including  commission  and  stamp  duty  was  £2,900.  Thanks  to  reinvested  dividends,  in  four  years  you  would  own  perhaps  124  shares,  almost  20  shares  more  than  you  started  with.   If  we  imagine  that  the  market  is  a  bear  market,  and  the  stock  has  crashed  (along  with  everything  else)  to  £23.62  -­  despite  a  drop  of  13%  in  the  price  you  would  actually  show  a  slight  gain  on  the  investment.  In  bear  markets,  where  50%  losses  are  not  uncommon,  you  will  agree  that  this  is  pretty  impressive.  Also,  the  dividends  would  continue  to  be  reinvested  buying  more  shares  as  the  stock  price  falls.   Here  comes  the  best  bit:  Imagine  that  now  the  price  begins  to  get  bullish  and  the  stock  gradually  rises  up  to  previous  levels.  Well,  if  it  were  to  reach  your  original  purchase  price,  you  would  now  be  showing  a  gain  of  nearly  18.5%!  Naturally,  this  will  only  work  if  the  company  is  robust  and  does  not  go  under  in  the  falling  market.  This  emphasises  again  the  importance  of  choosing  decent  dividend  paying  companies  who  are  likely  to  be  around  a  long  time! Â

26 Â Â

Secret  Number  16  ³Avoid  Investment/Trading  Seminar  Scams´  We  all  want  to  be  better  investors.  There  is  always  the  dream  that  out  there  somewhere  is  the  system  which  allows  you  to  pick  perfect  stocks  and  perfect  funds  every  time.  We  would  love  to  have  insider  information  which  would  enable  us  to  time  the  markets  perfectly,  jumping  in  at  the  start  of  a  bull  market  and  out  at  the  top  of  a  bear  market.  It  is  this  desire  which  is  then  exploited  by  others,  who  claim  to  be  able  to  give  you  the  skills  you  need  to  become  stock-­market  millionaires  in  next  to  no  time  and  with  no  understanding  necessary.  Unfortunately,  these  people  are  skilful  scammers.  They  have  the  funds  to  produce  glossy  leaflets  and  book  top  London  conference  centres  to  add  to  their  appeal.  They  are  able  to  offer  free  meals  with  their  conferences,  and  even  free  conferences.  However,  the  cost  of  buying  into  their  schemes  could  be  enough  to  set  your  investment  profile  back  by  several  years  and  in  some  cases,  it  can  lead  to  financial  ruin.  In  addition,  it  can  be  very  difficult  to  avoid  buying  in  as  the  sales  pitch  is  extremely  persuasive.  Remember  ¹  these  guys  are  pros.  ALWAYS  RESEARCH  THE  COMPANY  OFFERING  THE  SEMINAR  There  are  some  alarms  that  you  should  listen  out  for  when  investigating  such  schemes.  1. Does  it  require  a  big  up-­front  payment?  The  dodgiest  scams  demand  a  large  up-­front  payment  as  this  enables  them  to  cover  all  their  costs  and  then  some.  They  can  also  be  long  gone  and  have  disappeared  completely  (call  centres  and  everything)  when  their  recent  victims  try  to  return  the  schemes  or  ring  for  support  when  WKLQJV FOHDUO\ GRQÂśW work.   2. Âł+LJK \LHOGV ZLWK PLQLPDO ULVN´.   Remember  my  mantra  ¹  there  is  always  risk  and  you  should  never  invest  what  you  cannot  afford  to  lose.  When  these  guys  try  to  sell  you  the  pot  of  gold  that  will  pay  out  in-­perpetuity  and  never  lose,  you  should  get  out  of  there.  When  WKH\ RIIHU D PRQH\ EDFN JXDUDQWHH GRQÂśW EH IRROHG 7KHVH JX\V DUH pros  and  they  can  disappear  into  thin  air.   3. Âł<RX PXVW VLJQ XS WRGD\ DV WKHUH DUH OLPLWHG SODFHV´  This  irritates  me  beyond  belief.  I  have  seen  systems  advertised  which  claim  they  will  only  take  200  people  on  to  ensure  that  they  can  provide  good  customer  service.  In  fact,  they  are  taking  200  every  day  that  week  and  every  week  and  providing  nothing  at  all.  Always  take  your  time.  Â

Â

27 Â Â

Please  turn  over... Â

4. Whatever people tell you, it is highly unlikely that you will miss the boat on a share or scheme. There is always fluctuation up and down in prices and steady rises take years of up and down movements (just look at some charts) in most cases. Taking a week to think about it could well save you your whole investment pot.

5. ³:H WUDGH LQ RYHUVHDV PDUNHWV DQG RII-­VKRUH LQYHVWPHQWV´ Scammers love to say such things as the average punter who is seeking their golden ticket to financial freedom is less savvy about such things. Off-­shore investing and hidden markets in China or Brazil are often used as a way to make it all seem plausible. They may even tell you they spend half the year out there getting to know the way things work ± VR WKDW \RX GRQ¶W KDYH WR 7KH\ DOVR love to tell you that investing overseas means you can avoid paying tax (which is not true).

6. ³, KDYH PDGH P\ PRQH\ DQG QRZ RXW RI WKH JRRGQHVV RI P\ KHDUW ZDQW WR KHOS \RX WR GR WKH VDPH , GRQ¶W QHHG WKH PRQH\ , FKDUJH IRU WKH V\VWHP RU VHPLQDU´ If this were the case ± they would offer the whole lot for free with no charge EVER. These guys make money by selling the system only. They probably never trade at all.

Do some internet research on them, Find some bulletin boards dedicated to discussing investment systems and investment scams. Ask a few questions. Have others been stung or are these people legitimate?

Again ± TAKE YOUR TIME.

28

Secret Number 17 ³8QGHUVWDQG WKDW FRQIOLFWLQJ DGYLFH PD\ DOO EH FRUUHFW´ At the moment, I am hearing advice to invest only in funds, and to pick the best fund managers irrespective of the area in which they are investing, as statistically they will out-­perform the market. I am also hearing advice to ignore funds as the commission paid to the fund manager will kill your profits. Instead, people are advised to attempt to mirror the fund managers or pick the stocks themselves.

I am hearing advice that the only safe way to make money on the markets at the moment is to stay out of them altogether, and instead to HQJDJH LQ µWUDGLQJ¶ RU VSUHDG betting which way the markets will go. This enables a win from a rising and falling market. I am also hearing advice that spread betting is a dangerous game likely to bring some hefty losses of more than the original stake.

I hear advice that the way to go is to stick to penny shares on the alternative investment markets, as this is where the big growth potential is. I also hear that people should avoid the risky penny shares and stick WR WKH ODUJH µEOXH FKLS¶ FRPSDQLHV ZKR SUHVHQW OHVV ULVN So which way is a private investor supposed to go?

Well the answer will take you back to Secret Number 12. Diversify.

You should have some funds. Leave these to boil over the long term.

Subscribe to them regularly. Treat them as your buy and hold investments.

You should also have a diversified range of other stocks. Some of these you will treat in the same way as your funds, with reinvested dividends and regular subscriptions. Others, you may trade more frequently ± even taking advantage of some large swings in the price occasionally by buying in and out on the same day or several times a week.

You should have some µhigh-­octane¶ and risky penny shares. You may lose the lot, but you may have a massive growth in share price. You should also make sure that there are some defensive stocks ± the dividend payers who remain fairly static in the market.

And yes, you may engage in some spread betting of the markets as this may be a very lucrative thing to do, whatever the market is doing ± providing you engage in some careful money management and that you minimise your risk with stop losses. This takes you back to my mantra again. ,I \RX FDQ¶W ORVH LW ± GRQ¶W XVH LW IRU WKLV

29

Please turn over...

Secret Number 18 ³,QYHVWLQJ RQ 1HZV´

Many private investors read the bulletin boards and press releases about various companies. They subscribe to tipping services which will advise about what a company is about to do, or the new breakthrough they are soon to launch. The mistake they make at this point is assuming that somehow as a result of the news the share-­price will go higher from that point and therefore buying in.

In fact, it is usually the case that when there is good news from a company, the share-­price rises a little for a short period and then falls rapidly for a longer period. This leaves the new private investor with a loss on their recently bought share.

Why does it happen?

Well all this information is in the public domain. If you have heard about the share tip or the news (or even the likelihood of good news) so will others. Pro-­traders will certainly have heard about it. The share price you are seeing is in fact one which has anticipated the news already. Any spike after this is where inexperienced private investors are buying in.

Once this spike has happened, the pro-­traders all sell either all or most of their investment in large volumes, causing the price to drop like a stone.

Once it is low down, they buy in again ± perhaps, or they may go to another share which is also expecting news and repeat the action there.

Unfortunately, this causes the poor private investor to own shares which they bought at the top of the spike. Worse than this, some will panic and sell out as the share drops, taking a loss along the way.

Thankfully, because of Secret Number 15, you know what to do in this scenario. Simply buy more on the way down. If you have no spare capital immediately available for such an additional investment, never mind. Hold on to it until you do. It will rise again.

So, the trick is to understand what it is that drives a share price.

Remember the rule of supply and demand. The price goes up as more demand the share. They do this in anticipation of the news. Once the news is out, demand has gone and so they sell again. Please note that technically it is investor sentiment that is driving the price and not the news at all! Investors behave like a herd. Bizarrely, people spend more money investing as a share price rises, and then sell again as it is falling.

It is all about greed and fear. Try to remove your emotional response and WKLQN UDWLRQDOO\ DERXW ZKDW LV EHVW DQG \RX ZRQ¶W JR IDU ZURQJ

30

Secret  Number  19  ³Understand  the  Jargon  and  Charts´  ,W LV FHUWDLQO\ WKH FDVH WKDW VPDOO WLPH ÂľQHZELHÂś LQYHVWRUV RIWHQ MXPS LQ with  both  feet  and  then  have  to  learn  by  their  mistakes.  Unfortunately,  this  is  a  costly  way  of  doing  things.   It  is  also  the  case  that  inexperienced  investors  become  over-­confident  in  their  own  ability.  Psychologically,  it  is  easy  to  see  a  few  gains  and  think  that  you  therefore  know  what  you  are  doing.  This  is  compounded  by  the  fact  that  we  do  not  like  to  think  about  and  dwell  on  financial  losses  as  they  are  painful.    It  is  true  that  a  little  knowledge  goes  a  long  way.  It  is  truer,  however,  that  a  lot  of  knowledge  goes  a  long  way.  Understanding  some  of  the  fundamentals  of  investing  (that  you  do  now  because  of  this  guide)  will  be  UHDOO\ KHOSIXO +RZHYHU \RX VLPSO\ ZRQÂśW JHW E\ ZLWKRXW XQGHUVWDQGLQJ some  of  the  jargon  and  having  a  rudimentary  understanding  of  chart  technical  analysis.   You  can  study  for  weeks  and  weeks  and  still  be  only  scratching  the  surface  of  technical  analysis  (TA).  However,  some  basic  understanding  of  charts  is  quick  to  gain.  I  would  say  that  you  need  to  understand  the  fact  that  the  direction  and  trend  of  the  price  is  shown  by  the  chart,  and  the  volume  of  shares  purchased  is  also  shown.  The  higher  the  volume  on  any  rise  or  fall,  the  more  momentum  there  is  behind  the  move.   Basic  indicators  should  also  be  known.  Simple  moving  averages  (usually  the  20,  50  and  200  day)  can  be  used  to  see  where  the  current  price  is  in  relation  to  its  average  over  time.  If  the  price  crosses  a  moving  average  with  any  momentum,  this  is  often  a  signal  that  the  direction  of  the  price  has  turned  for  more  than  a  short  term.   Using  Google  to  searFK IRU Âľ(OOLRW :DYH 7KHRU\Âś DQG Âľ6WRFN 0DUNHW )LERQDFFL /HYHOVÂś and  reading  around  a  bit  will  also  give  you  a  good  grounding  in  some  of  the  more  complex  aspects  of  TA.  Again,  knowing  these  in  a  rudimentary  way  will  actually  put  you  miles  ahead  of  most  private  investors  who  know  only  that  the  price  is  going  up  or  down.   Spend  some  time  searching  the  meanings  of  investment  jargon  in  order  that  you  can  engage  fully  in  what  advisors  are  saying.  It  is  no  use  thinking  that  it  is  time  to  buy  in  a  bear  market  or  when  people  are  UHFRPPHQGLQJ WKDW \RX ÂľJR VKRUWÂś    Â

 31  Â

Please  turn  over... Â

Secret  Number  20  ³'R QRW XQGHU-­estimate  your  life-­H[SHFWDQF\´  Life-­expectancy  is  only  going  one  way  and  that  is  up.  Enforced  retirement  age  in  Europe  has  just  been  dropped  as  it  is  clear  that  people  are  living  longer  and  longer  and  are  obviously  still  capable  of  working  much  older  than  before.   When  planning  your  investments,  it  is  important  to  recognise  that  your  retirement  is  going  to  last  a  long  time  and  that  there  is  a  high  probability  you  will  need  to  have  money  to  live  off  for  longer  than  even  you  imagine.  Medical  breakthroughs  are  happening  all  the  time.  Our  understanding  of  the  need  for  exercise  and  a  healthy  diet  has  increased  or  life  span  hugely.  Standards  of  living  are  considerably  improved,  but  in  our  old  age  we  will  need  the  necessary  funds  to  keep  us  in  the  comfort  we  desire.  Secret  Number  21  ³'RQÂśW IRUJHW JRRG ROG IDVKLRQHG VDYLQJ´   Saving  money  and  investing  money  are  different  things.  With  investment  there  is  always  a  risk.  You  will  read  over  and  over  again  that  the  value  of  your  portfolio  can  go  down  as  well  as  up.  In  fact,  as  I  have  explained,  in  WKH HDUO\ GD\V ÂľGRZQÂś LV H[DFWO\ ZKDW \RX ZLOO VHH )RU WKLV UHDVRQ LW LV essential  to  remember  that  some  money  needs  to  be  saved  in  very  low  risk  ordinary  bank  savings  deposit  accounts.  This  will  be  there  for  a  rainy  day  (or  a  much  needed  holiday),  and  may  enable  you  to  siphon  off  some  of  it  occasionally  to  invest,  but  you  should  aim  for  a  certain  amount  to  be  saved  in  this  type  of  account  each  month.  As  a  general  rule,  and  this  is  not  always  easy,  you  should  aim  to  save  enough  to  cover  your  mortgage  and  any  other  regular  bills  for  a  few  months  if  you  suddenly  found  yourself  out  of  work.  This  gives  you  a  couple  of  months  grace  to  get  yourself  sorted  out.  You  cannot  rely  on  investments  to  do  that  as  the  volatility  in  value  and  the  illiquid  nature  of  the  money  (relatively  inaccessible)  is  too  great.   You  should  always  shop  around  for  savings  accounts.   Banks  rely  on  LQHUWLD 7KH\ KRSH WKDW \RX ZRQÂśW ERWKHU VKLIWLQJ \RXU IXQGV WR D competitor  because  it  is  easier  to  keep  things  all  under  one  roof.  They  hope  tKDW \RX ZRQÂśW QRWLFH WKH GHDO WKH\ DUH RIIHULQJ WKHLU QHZ customers.  BE  DEMANDING!  Ask  for  the  better  deal  or  you  will  take  all  your  accounts  elsewhere.  They  need  your  business  and  will  actually  bend  over  backwards  to  keep  you  on  their  books.  32  Â

Secret Number 22 ³Enjoy without addiction´

Once you start investing, you will find that it becomes extremely tempting to watch your investments going up and down all day every day. In fact, you can spend hours doing it. This is counter-­productive. You could find that you have spent three hours watching a £2.50 rise on your portfolio.

In terms of the use of your time, this is very poor. You would be better off spending that time stacking shelves in TESCO and it would give you more money to invest!

It is important to remember that there are always short term swings in the market. Watching every one of them will not actually serve any SXUSRVH RWKHU WKDQ WR PDNH \RX ZRUU\ 8QOHVV \RX SODQ WR µ'D\-­7UDGH¶ (and have the time to do so), I would advise only a cursory check of your investments each day. This will certainly allow you to top up your shares when they have fallen, but will not take so much time that it becomes a very poor hourly rate.

Remember also to have a clear strategy as to how much you are prepared to risk each month. Secret 8 was to only invest from your surplus. Too much portfolio watching can encourage you to invest beyond this amount as the temptation to buy new shares or top-­up others is very strong.

5HJXODU DQG SODQQHG LQYHVWLQJ UDWKHU WKDW µIRUFHG¶ DQG HPRtional trading is always safer in the long run.

33

Please turn over...

Secret Number 23 ³All Bulletin Boards are positive´

If you join an online investing community, you will see that each share has a group of investors who will watch the price rise and fall and regularly comment. Some are very experienced investors and others are very new to this game. The key thing to know is that the comments will be almost entirely positive.

People who comment on share bulletin boards are almost without exception holders of that share. ,W LV QRW LQ WKHLU LQWHUHVWV WR µGH-­UDPS¶ RU talk down a share as it will potentially damage their own investment. In fact, if people do post negative information or views about the share, these posts are often met with hostility and derision. This has the effect of making such posters tread carefully before considering giving any balance to the views on the board.

As a source of information about a particular investment, the bulletin boards can be very useful. Private investors are often very good at doing research into the fundamentals of a company. However, you need to be aware that negative comments will be few and far between and that almost every share will be portrayed as the share pick of the decade!

Using bulletin boards to make a decision on whether or not to invest is a dangerous game. The information presented should be only part of what you take into consideration. Remember also that all this information is in the public domain and was known by the pro-­traders long ago.

34

Secret Number 24 ³Aim for multiple income streams´ A poll of wealthy people would very quickly show that most of them made their money in more than one way. I have already mentioned that income is not wealth. However, this is particularly the case if your income comes entirely from one source.

What do I mean?

Well, if you have a good job which pays a very healthy salary ± but that job stops, your income will stop too. You will be left only with what you have managed to put by in the form of investments.

However, if you have managed to build up a group of income providers alongside your regular job and investments, then your income will be able to continue for longer without the regular salary.

What kind of income providers?

I have already explained about investing for income. This is a good place to start. However, you should investigate the possibility of generating other income on the side. There are plenty of part time and flexible working opportunities where you can make a small amount of cash for a small amount of time. Some of the best are the multi-­level marketing schemes. Providing the company is a sound one (like Telecom Plus PLC), these can generate a reasonable (or outstanding) income which goes on paying long after the initial work was done.

The other area in which to look is the service industry. Can you set up a EXVLQHVV ZKLFK ZLOO GR SHRSOH¶V unwanted jobs? Cleaning Homes, Washing Cars, Washing Windows, Doing Ironing ± the list is endless. The secret, however, is for you to act as a manager who sets up the deals and employs others to do the hard graft. This way, you get the profits only needing to do a minimal amount of work each week or month. You can expand the business as much or as little as you wish depending on your free time.

The beauty of such an opportunity is that once it is rolling it takes very little time to generate the income. Naturally there are some start-­up costs and effort, but beyond that not much.

Finally ± you could consider writing a guide on something you love and selling it!

35

Please turn over...

Secret Number 25 ³You never know enough´

It is always important to remember the value of education. We all continue to learn throughout life, but some will be more active in that learning than others. I am not suggesting that you should go out and do a higher degree (although you may, and it could be the best thing you ever did). What I am saying is that when dealing with the challenges that life brings your way and particularly when attempting to move into new areas out of your comfort zone, there is no substitute for education.

There are countless books, for example, on technical analysis of charts. It is worth reading some of these. There are weekly eNewsletters you can sign up to which will let you know what is going on in the markets and give analytical comment from experts. There are websites with discussions between opposing views. All of these things you should digest.

However, reading the manuals is not enough. You would not expect to be able to win the world snooker tournament simply by reading a manual about how to hold the cue and strike the ball. Nor would you expect to be able to play the violin by reading about the techniques. There is no substitute for practice and exposure to that which you are trying to learn.

Many brokers allow you to open virtual trading accounts and you can µSDSHU-­WUDGH¶ ZLWKRXW ULVNLQJ D SHQQ\ 7KLV HQDEOHV \RX WR PDNH PLVWDNHV before hurting your finances. It also enables you to put into practice what you have learned in theory. This part of learning is invaluable.

Once you have got the hang of what you are doing and you are familiar with the trading platform you have chosen to use, you can venture into the real account and put some real money in. Jumping in with both feet without any knowledge or practice is rarely a good thing to do.

Remember, there is always time to learn something new.

36

$QG )LQDOO\« Try not to lose sight of what you are doing all this for. What is it you actually desire? I began this guide by saying that it would help you accumulate wealth steadily and sensibly. However, you have to know why you want to be wealthy.

Those who seek money for the sake of money are actually following a blind alley. Those who seek riches in order to be rich will find their life ultimately empty.

Instead, you need to visualise what it is you will use the money for.

Perhaps you would like to take more holidays with the family.

Perhaps you would like to live in a bigger house with more space to unwind and entertain.

Perhaps you simply want to be comfortably off without having to give all your time to your employer.

Perhaps you would like to retire early so that you can see the world.

Perhaps you would like to give to worthy causes all over the world.

Perhaps you want to put your children through private education.

Perhaps you want security in old age.

Whatever it is ± try to focus on this when you are investing. Watching the pounds and pence grow is of no consequence if you have nothing to aim for. Once you have decided what it is you are working towards, fix that image in your mind and factor it in to all your decisions. You will be much more sensible in your approach if you know what it is you are risking.

I hope that you have found this to be a valuable guide. I wish you every future success.

U.K. Government Required Disclaimer ʹ The information in this guide is believed to be accurate and sound according to the best information available to the author. The past is not necessarily a guide to future performance. The value of any investment, and the income derived from it, can go down as well as up. You may get back less than the amount invested. Never invest more than you can safely afford to lose. There is an extra risk of losing money when shares are bought in some smaller companies including penny shares. Before investing, or if in doubt about the suitability of an investment please seek independent financial advice.

37

Please turn over...

Extra Bonuses!

Free EBooks

Stock Trading

Making money from Real Estate

Family Budget Demystified

Affiliate Marketing

Affiliate Disclaimer:

The writer of this guide may get a commission if you purchase any products from the links contained in these ebooks. Please note that the ebooks themselves are provided FREE.

38