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There is nothing more powerful than an idea whose time has come
Dont be late to the party. Someone who tells you that their stock went from $2 to $35
has already made their money. Dont take the risk on such speculative ventures.
Chapter Seven Investor Lesson #5 Are You Planning to Be Rich or Are You Planning To
Be Poor?:
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If you want to see a persons past, present, and future, just listen to his or her words.
It takes a rich persons vocabulary to earn more and more money increase your
vocabulary on the subject you want to know more about.
Chapter Eight Investor Lesson #6 Getting Rich is Automatic If You Have a Plan and
Stick To It:
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What Works on Wall Street: A Guide to the best performing investment strategies of all
time James P. OShaughnessy.
Most investors prefer complex rather than simple formulas (intuition over reality)
Professional institutional investors tend to make the same mistakes that average
investors make (emotional)
The path to achieving investment success is to study long-term results and find a
strategy or group of strategies that make sense. Then study on that path. We
must look at how strategies, not stocks, perform.
History repeats itself, yet people want to believe that this time, things will be
different
Look for stocks that have performed well over the longest period of time
There is a chasm of difference between what we think might work and what really
works.
Find a simple formula as part of my plan and stick to it until my financial goal is reached.
Chapter Nine Investor Lesson #7 How Can You Find a Plan that is Right For You?:
Members of financial team may include:
1) Financial planner
2) Banker
3) Accountant
4) Lawyer
5) Broker
6) Bookkeeper
7) Insurance Agent
8) Successful Mentor
Chapter Ten Investor Lesson #8 Decide Now What You Want to Be When You Grow Up:
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Ask your financial advisor to help you write a financial plan for lifetime financial security.
Find another advisor that will help you write a lifetime plan to become financially
comfortable.
Chapter Thirteen Investor Lesson #11 On Which Side of the Table Do You Want to Sit?
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Earned
Passive
Portfolio
9) You can become rich by begin generous (Build large systems that serve many).
Chapter Nineteen The 90/10 Riddle:
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How can you create assets in the asset column without buying them with money?
You must be able to turn great ideas into assets.
You get rich by creating assets, not buying them.
Categories of Investors:
1)
2)
3)
4)
5)
Accredited Investor earns a lot of money and/or has high net worth.
Qualified Investors knows fundamental and technical investing.
Sophisticated Investors understands investing and the law.
Inside Investors creates the investment.
Ultimate Investors becomes the selling shareholder.
Small caps (caps $25M) tend to produce greatest returns over time.
Chapter Twenty-Eight Keep Your Day Job and Still Become Rich:
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You build a business because its exciting, challenging, and will require all of you to make
it successful.
Employee Security
Self-Employed Trust
Business Patience
Investor Control of Emotion
Chapter Thirty-One The B-I Triangle:
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One strategy is not to make a purchase if it were not justified by increased sales.
Delay taking a salary until the business is generating cash flow from sales.
Invoice customers quickly upon shipment of goods or when services are provided.
Require payment upfront until credit has been established. Require credit applications to
be completed and check references.
Establish late-payment penalties as part of your terms and conditions and enforce them.
As your business grows, to speed up the receipt of cash, you may want to have your
customers pay their bills directly to lockboxes or directly to your bank.
Make sure you pay your bills promptly, ask for extended payment terms up front.
Have an investment plan for your cash on hand to maximize its earning potential.
Establish a line of credit wit your bank before you need it.
Keep an eye on ratios (assets / liabilities > 2:1, liquid assets / current liabilities > 1:1).
People who record cash receipts on the bank deposits are different form those who post
it to the accounts receivable and general ledger.
People who sign checks should not prepare the vouchers or record the disbursements
and post the accounts payable and general ledger.
The person who reconciles the bank statement should have no regularly assigned
functions related to cash receipts or cash disbursements.
Marketing Systems:
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Managing the accounting process with daily, weekly, monthly, quarterly, and annual
reports.
Managing cash with future borrowing needs secured and available.
Budgeting and forecasting.
Reporting payroll taxes and withholding payments.
It is important to seek legal protection for your intellectual property, only then does it
become an asset.
Real Estate:
1) Does the property generate a positive cash flow?
2) If yes, have you done your due diligence?
Cash on Cash Return = Positive Net Cash Flow / Down Payment
Due Diligence Checklist:
1) Current rent roster with paid to dates
2) List of security deposits
3) Mortgage payment information
4) Personal property list
5) Floor plans
6) Insurance policy, agent
7) Maintenance, service agreement
8) Tenant information: leases, ledger cards, applications smoke detector forms
9) List of vendors and utility companies, including account number
10) A statement of structural alterations made to the premises
11) Surveys and engineering documents
12) Commission agreements
13) Rental or listing agreements
14) Easement agreements
15) Development plans, including plans and specifications and as built architectural,
structural, mechanical, electrical and civil drawings
16) Government permits or zoning restrictions affecting development of property
17) Management contacts
18) Tax bills and property tax statements
19) Utility bills
www.richdadgold.com
What % of the money going out your expense column winds up back in your income
column in the same month?
They use their expenses to make them poor instead of rich