You are Never Too Old to Start
Keywords: Wealth for Life, Ed Chan.
An excerpt from the transcript of Wealth for Life^™ presented by Ed Chan

Okay, what I'll show you now, is a client came to me and she was aged 60. Her name's Maria. Actually, two clients retired a couple of weeks ago and they had about 15 properties, Grace and Rob, I won't use their surnames. And Rob said to Kim, who's one of our accountants, client managers at work, Kim looks after him...

He had 15 properties, and he's 70 years old. And we're all here wondering, is it too late for me? And he was 70. And he said to Kim, "I only started buying my properties eight years ago." So he started buying his properties at 62, right.

And then, he had nothing. He had a little bit of superannuation at age 62, and when he got the size of his asset up by buying property, then I'll talk about that later on, how it's really not property that makes you money. What makes you money is the size of your asset, and getting the size of your asset up is what's important, all right. And I'll talk about that this afternoon.

But he was able to get the size of his asset up, so that if you've got assets that much, and at that size, and it works for you, then when it doubles, it doubles like that, all right? But if your assets are like that, and then it doubles, it doubles like that. So what Rob did was, at age 62, was to get his size of his asset up. And the only way to get the size of your asset up is to get into property. Because you can't get the size of your asset up through shares, right?

The only way you can get the size of your asset up is to borrow the money, right. You got to the bank, and three quarters of them won't lend you money on shares, and the ones that will lend you money on shares, may only do it to a 50% LVR. A very few banks may go to 80% of the LVR, but they won't lend you $2 million or $1 million.

Right, there's a restriction on how much you can borrow to invest into shares. And I'll show all that to you this afternoon. But Rob got the size of his asset up at age 62 for us, in our 40s or 50s who are thinking, oh, this is too late for me, I'll do this for my kids, well it's not.

An excerpt from the transcript of Wealth for Life^™ presented by (Disc 1, Chapter 1)

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Why investors have only 2 years to truly maximise the opportunities available - Tony Melvin
Keywords: Investors, Tony Melvin, Maximise

Feedback from the attendees at the Brisbane Power of Choice Event ...

Feedback from the attendees at the Sydney Power of Choice Event ...

There are still seats available for the Brisbane and Melbourne seminar so don't miss out...

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Take a look at this video where Tony explains why investors have only 2 years to truly maximise the opportunities available ...

In these new series of seminars, called the Power of Choice, you'll be shown ways to:

1. Increase your cash flow
2. Make big profits from Property Development sites (without having to build anything!)
3. Create regular monthly income from the share market (that is safe, easy and simple to implement)
4. Build a solid financial foundation over the next 2 years that can set you up for life

These things and more will be shared by Tony Melvin and our experts at the Power of Choice one-day event. more>

What happens to Property after the Stock Market Crash?
Keywords:
by Michael Yardney, director Metropole Property Investment Strategists.

The fall out from the stock market crashes around the world will affect everyone in the short term, and in lots of different ways, but the common question I’m getting asked is, “What happens to the property markets now?”

To help answer this question it is worth learning lessons from the past. In particular from the stock market crash of 1987 when a similar fall occurred on the stock market. At that time prices crashed 23% but all on the one day. At the time of writing this article, Australian stock values have dropped 24%, but they have done this over almost 3 months.

It is interesting to note that Australia’s biggest property boom occurred in the late 80’s following the stock market crash of 1987. In fact every time there has been a stock market crash in the last 50 years, Australian residential properties increased in value, but there was always a lag before this happened.

Why this crash is different from the past?

As we try and learn from the past, we should try to compare this stock market fallout with previous ones.

At the time of writing the Australian S&P index had fallen 24%. Interesting in America the S&P index had only fallen 12%. This suggests that the Australian stock market may have over reacted.

Looking back, previous major share crashes were at the end of speculative booms.

In 1987 when stocks were driven to unrealistic levels and again in the dotcom crash early this decade people were buying internet based stocks based on future potential earnings. They paid inflated prices for shares in companies that were never going to make any money.

I remember as a teenager a similar thing happening in the speculative mining boom which ended in the spectacular Poseidon crash. People were paying hundreds of dollars a share for mining companies that were never going to make any money.

Sure this time round some shares were a little overpriced. But in general our financial fundamentals are strong and our economy is sound. Share prices were not in a “speculative bubble” this time round, like they were in previous share crashes.

It is important to remember that our markets and particularly the share markets are driven by fear and greed. Currently the investors are exiting the market in fear of what “may” happen in America.

Investors have lost confidence in the future.

Of course there is another group of speculative investors who are exiting the markets because they borrowed against their shares and have to either sell these shares or pay for margin calls now that the value of their portfolio has dropped dramatically.

Another difference is that this time round Australia’s economy is more insulated from the United States economy. But as the USA economy does slow down it will affect our main trading partners China and Japan. This in turn may decrease the demand for some of our resource and products.

What will happen to interest rates?

The Reserve Bank has a difficult path of reining in inflation (which is still rising) and at the same time sustaining our economic growth. It does this by controlling interest rates.

There will almost certainly be one or two further interest rate increases in the coming months to bring inflation back into the RBA’s 2 to 3 per cent target range.

At the beginning of this year most economists suggested that next interest rate rise was going to occur in February. This prediction has now been down graded and maybe the next rise will occur in March

While there is a case for tightening interest rates, considering our inflation rate has jumped again in the December quarter, there is also a strong case for doing nothing at present as there has been a major downshift in global “prospects”.

Another interesting factor to watch with regard to interest rates is that the banks recently made some commercial decisions and increased interest rates claiming their costs of borrowing in overseas funds increased. Now that interest rates have dropped in America (the US Fed had lowered its interest rates by three quarters of a point from 4.25% to 3.5%) it will be interesting to see if these same banks now lower their interest rates.

What does all this mean for the property market?

It is important to remember that house prices are not as volatile as the share prices.

The property market is the only investment market where the majority of players are not investors. This means that as a home owner or a property investor, we are underpinned by the fact that 70% of properties are owned by owner/occupiers. And they don’t sell their houses just because share prices are falling or because of the problems overseas.

Having said that, it is likely that for a short time demand for homes and investments will drop. People just don’t like making important buying decisions at times of uncertainty.

The properties that outperformed over the last year or so were premium properties - homes in our more exclusive suburbs. Many of these increased in value by 30 -40% last year. These sales are closely linked to the state of our economy and to business sentiment and it is likely that high end sales will suffer this year.

All this means that if you have “money in the bank” or your line of credit ready to draw down on, the property markets will provide opportunities not seen in the last decade.

As a home owner or property investor you should be in the market for the long term - property is a long term play and Australia’s economic and property market fundamentals are still sound. This means that any slow downs in the property market will offer great opportunities for those with a long term view to buy their new home or investment property.

The fundamentals that will push our property markets forward have not changed from the beginning of the year. Let’s look at them briefly:

1. Supply and Demand –

There is still strong demand for properties from our growing population, our increasing immigration and our demographic changes. Yet there is a severe undersupply of dwellings around Australia. The ANZ Bank predicts that by 2010 we will have an undersupply of 200,000 dwellings.

Currently the cost of construction is too high to allow new development to take place and this has created a marked undersupply of dwellings.

To bring a new medium density development out of the ground today costs 25% to 30% more than the market will pay. New development will not take place until the market values move up to close to this level. Of course the fact that new apartments will cost more in the future means that the prices of existing houses and apartments will also increase.

2. Rising rents –

Rents are rising due to our very low vacancy rates. This means yields are rising for investors. This will draw new players back to property and will underpin our property markets.

3. Our economy-

Our Australian economy is basically sound and will continue to remain so, which will underpin our property markets.

In summary:

We have not seen the end of the crash – there are always aftershocks as new information surfaces. Once the fall out is over investors will put their money into the property market as they will see it as safer and less volatile than the share market.

This means that our property markets will continue to perform well in the long term.

In the meantime we won’t see a continuation of the mini boom conditions that occurred in many east coast capitals last year. And this is good for our markets – growth rates of over 20%, as was seen in many affluent suburbs last year, is unsustainable.

As a property investor or home owner take a long term view and remember the big picture. Australia’s fundamentals are sound and the price of well located property has doubled every 7-10 years since 1920.

Give it a few years and the stock market crash of 2008 will be a distant memory.

About the Author:

Michael Yardney is Director of Metropole – Property Investment Strategists, and a leading property commentator and publisher of Property Investment Update. Subscribe for free at www.PropertyUpdate.com.au

He is also author of How to Grow a Multi Million Dollar Property - in your spare time and co author of All You Need to Know About Buying and Selling Your Home

Click here to view Michael's books, DVDs and upcoming events

The Key to Booming a Business
Keywords: Business, Tony Melvin

I have often been asked, “How do you do so much, you must be exhausted?” The question is prompted by the fact that over the past 2 ½ years I have written 3 books, run 2 companies, delivered close to 100 seminars and during that time my wife and I had our first child.

Is it because I have more hours than the average person? I only wish!

The key to doing a lot is to know firstly, what it is that YOU are responsible for. The second thing to know is what others around you are responsible for.

This seems rather obvious and a little too simple for an answer to the above question. Nevertheless it is the key to success. When it comes to organisation, a lot of people are left in the dark as to what others in the business are truly responsible for.

The Dominos of Confusion

Here’s an all too common scenario: A new staff member doesn’t know who is responsible for what and will tend to ask anyone “How to I get my pay organised?” or “How do I login to my computer?” such questions, if then not known by the person being questioned, results in another being asked. If that person doesn’t know then all 3 people will go and ask a 4^th person and you get your domino effect. Lack of knowledge about who is responsible for what leads to more confusion being spread around the organisation – the result is little or no work being done.

Time Vampires

Another way this concept rings true is your time vampire. The person doesn’t know (or doesn’t care) who is responsible for what, all they know is that if they come to you – you’ll fix it. This might include such things like major strategic decisions (your actual job, lets say) and extends to questions like, “ Hey have you seen my pencil – you know the yellow one with the pink fluffy bit on the end?” This person is sucking your valuable time away with such a question. Why? Because it has nothing to do with your job – it is not part of your responsibility.

Therefore the key to doing a lot and achieving a lot is to know what YOU are responsible for and doing that no matter what. And when your staff or those around you try to get you to do their job, by all means help but once you’ve done that, make sure you get them trained on their role in the organisation and where it fits in with everything else. By doing so you’ll reduce a lot of confusion and increase productivity.

It’s a simple tip but well worth knowing. Hope it helps.

All the best,

Tony Melvin

Tony Melvin is a Director of Chan & Naylor Australia, which was recognised as the fastest growing accounting firm in Australia by BRW Magazine. He is also the author of 3 best selling books.

Take the Free Business Analysis and get more help with your business.

The First Step to Becoming a Property Developer
Keywords: Property Developer, Carly Crutchfield, CCorp
by Carly Crutchfield Property Developer and director of CCorp

One of the most frequent questions that I get asked is “How do I start…how do I become a property developer?”

So I thought I would dispel some of the myths and tell you EXACTLY how to start.

First of all, you need to understand that property development is possibly one of the most misunderstood investment strategies out there. There seems to be a general consensus that property development is something that only the “big boys” or “serious players” can get involved in or that you need millions of dollars before you can ever start.

That just is not true. In fact the first development I ever did, I used absolutely none of my own money. I thought outside the box, got creative and entrepreneurial and used my knowledge of negotiating to structure a great deal.

That is the fantastic and consistent thing about property development, there are no rules and the sky is the limit. You are only limited by your knowledge of what is possible, your ability to think creatively and structure smart opportunities that benefit all involved.

I have also heard of people going to University for 4 – 8 years to study property development. In most cases this seems to qualify people to work for someone else in property development, but still not become a property developer!

However, education is one of the most important ingredients to get started in property development. You need to understand how property development works, what it is, how they are structured financially, how the profits and cash-flow work and how the legal aspects are structured.

These are all quite straightforward and easy to understand, but without this knowledge property development can seem like an unreachable goal or an unplayable game.

In fact property development is a game that can be played by anyone willing to learn how it works and get involved. And if you do get involved, you will soon discover that property development can help fast track your personal wealth and personal property portfolio faster than you ever thought possible.

The power of property development lies in the fact that you become an ACTIVE property investor rather than a PASSIVE property investor. There is nothing wrong with being a passive investor, but you are effect to the market. As an active investor you are taking control and becoming cause over the market, your own profits and future.

So, what is the first step to becoming a property developer? Answer: Education. You need to learn the basics of how it works. Once you have the basic education you need to start looking for deals that you can get involved in that have a profit margin of at least 20%, however you really want to push the profit margins to 30 or 40% to make a deal really worthwhile.

And once you find a deal it is all about how you structure it. Development is not about construction; it is about finding the deal and putting it together. It’s about using as little of your own money to generate the biggest return on investment as a whole.

Some strategies and tools that developers use to do this include vendor finance, joint ventures, property options, and more.

By using these strategies you can get involved in property using none of your own money, you can own a house debt free in just 12 months, you can create a cash flow for yourself and much more.

Sound like something you would like to do? Then take the first step, get educated.

See Carly LIVE at the Power of Choice Events with Tony Melvin

Sublime Sub-prime - Part 3 of 3
Keywords: Tony Melvin, Sub Prime.

By Tony Melvin, founder and Author

In this final part to this 3 part series we answer the question: Why did this happen? (so we can learn from it)

Having looked at the possible repercussions of the sub prime crash and how the investor can proof themselves (see part 1 and part 2) let’s look at why this happened.

Doing my own research I’ve discovered that there is no definite answer to this question. There are plenty of theories but there’s no definite reason.

To explain the global financial market in the most simplest way - lending institutions pool funds together, loan them out to investors and then sell the “loans” so that they can repeat the cycle.

Sub prime loans were once easy to sell as a collective fund. Slowly however they became harder to sell. The key point here is to realize that this happened slowly.

Although the market appeared to suddenly crash this was not the case. Early warning signs appeared in 2007. In fact I read an article in a finance broking industry magazine that talked about a possible sub prime crash in as early as 2007.

It’s safe to assume then that for those in the know, it was imminent that the financial markets were heading for disaster.

So why did it happen, or should I say, why was it allowed to happen?

Rising interest rates are a sign of a poorly managed economy. And the US has been very poorly managed in recent years pouring more money into war than almost any other endeavour. It is no surprise that they are in such financial turmoil.

But while I have my own theories on why this has happened (and they make for good party talk) it serves no real purpose discussing them unless you can do something about it.

It short the investor can learn a lesson from the sub prime crash by realizing this one fact: You are the only one who will look after your best interests in the long run.

Keep well informed and seek professional advice from a range of experts (not commission sales people but from people who have actually done it or are doing it) and then make your own decisions.

The one thing you can count on is change and the only way to keep up is to keep on learning.

As the world gets smaller with the internet and information is more easily obtainable the investor now has a wealth of resources available, more than ever before.

Money has become the benchmark we use to rate a person’s success. But this is a very fickle measuring system. It is possible to lease a fancy car and as you drive it around people think “success”. But now that loans are harder to get and many are being “called-in” those with apparent success are being exposed as people with little or no real wealth. This lesson is a little late and provides no consolation for the Mums and Dads who work hard and are finding it difficult to meet the interest repayments on their home.

However it is a valuable lesson.

Let’s summarise the lessons from the sub prime market:

1. Separate fact from fiction and realise that media tend to sensationalise the “bad news”.
2. Statistics show that less than 5% are truly wealthy so be prepared to go against the majority.
3. Work out your own investing goals.
4. Decide on your own strategy to achieve those goals.
5. Learn the strategy from someone who has done it.
6. Remember it is a game and it should be fun – if you get serious there’s something wrong!

These 6 points apply in any economic environment – booms and busts.

And remember what Warren Buffet said:

"We simply attempt to be fearful when others are greedy
and to be greedy when others are fearful”

Author & Founder

books by Tony Melvin

Sublime Subprime - Part 2 of 3
Keywords: Tony Melvin, Sub Prime.
By Tony Melvin, founder and Author

To refresh your memory, part 1 of the Sublime Sub Prime Series isolated the 3 most important questions regarding the financial catastrophe in the USA. These are:

1. What are the possible repercussions of the sub prime crash?
2. What can the investor do to proof themselves for any future repercussions?
3. Why did this happen? (so we can learn from it)

While part 1 answered question 1 above, this second article will focus on question 2 – “What can you as an investor do to proof yourself from any future repercussions?”

The last article ended with a quote from the worlds’ most successful investor, Warren Buffet who said:

“We simply attempt to be fearful when others are greedy and to be greedy when others are fearful”

This should give you a hint of the answer to “what should you do?” The first step is to not get fearful!

Right now a lot of people are concerned and worried about what is going to happen. And the media fuel this fear based on the false idea that it helps them sell more newspapers or get more ratings. As part of the first step, what you should do is take a look at what is really happening, as an investor. Here are a few things you can get the facts on:

1. Are property prices rising?
2. Are properties still selling?
3. Is the population growing or shrinking?
4. Are wages increasing or reducing?
5. Do people still want to live in a property????

If you read the book How to Achieve Wealth for Life you’ll know that the value of any investment is driven by Supply & Demand. To get an idea of what is likely to happen over the next few years simply look at the current trends of supply and demand. All the questions above relate to supply and demand.

Australia, unlike the USA, has a strong economy. It also has a growing population and strong immigration with people coming from all walks of life to live here. And in the places where people want to live and need to live because of work, we are not building enough dwellings. This means there is demand and little supply. This will increases prices over time.

But as mentioned in the first article, don’t take my word on it. Get the facts yourself and do your own research on questions 1 to 5.

Understanding the dance between supply and demand sets the investor apart from the masses who act on fear and greed alone. Another important factor which puts the investor into the realm of our friend Warren Buffet is having and following a strategy.

Your investment strategy is the key to riding the ups and downs of the economic cycle. The definition of the word strategy is: a systemic plan of action. And I would add to that definition “that gets one closer to their goal.” So a strategy is a systemic plan of action that gets one closer to their goal. Systematic means carried out in a methodical and organized manner or a step-by-step approach and the success of your strategy depends on how well you follow and do each step of your strategy.

In our book How to Achieve Wealth for Life we explain a buy and hold property strategy that enables you to build your property portfolio over time using your equity. This is a different strategy to property development as covered in our recent seminar tour with Carly Crutchfield (who’ll be visiting Perth and Newcastle next month, for more details click here). There are thousands of strategies you can follow, the key is to decide which one suits you, taking into account your available time, experience and personality. Once you find which strategy suits you, then do all you can to learn about the strategy and follow it.

This is the answer to our initial question at the beginning of this article - What can the investor do to proof themselves for any future repercussions? The answer is: follow your strategy. If you don’t have one, then you better deicide on one quick regardless of any current economic turmoil, for investing without a clearly defined strategy is like driving a car with no destination in mind. If you find that your strategy is harder to follow now because of tight economic constrains or inability to get finance, this is where you need to start thinking outside of the square. How can you get it to work? Don’t use it as an excuse to stop, rather use your challenges as a means to improve yourself and your strategy.

I hope this article has given you some insight. I’d be pleased to hear your feedback and feel free to ask any questions. Please email news@knowledgecentre.net.au or simply reply to the newsletter email.

The next and final chapter in this Sublime Sub Prime series will answer the question: Why did this happen? I consider this one the most important question of all!

Until next time – don’t get distracted, just follow your strategy and get closer to your goal.

Author & Founder

books by Tony Melvin

Sublime Sub Prime - Part 1 of 3
Keywords: Tony Melvin, Sub Prime.
By Tony Melvin, founder and Author

Just what is the sub prime mortgage crash anyway? Let’s look at the word “sub prime” – “sub” means less than or lower and “prime” means the first or the best of something. So the word means “less than the best”. In the mortgage industry it is “not the best type of loan” or a “riskier loan than a normal loan”. And to make sure you follow our drift, while sublime means “inspiring awe” it also means "to vaporize something!"

Such loans were approved with little or no requirement as to how the person taking the loan could repay it. The ability or proof to be able to repay the loan was not as strict as a normal loan (the ‘prime’ loans)

This means that it was easier to get a sub prime loan. The upside for the lender was that it allowed them to charge more interest because of the additional “risk.” Furthermore, this type of loan required less administration (less paperwork to stift through and checking of actual income) – plus it was a more profitable type of loan with a higher than average interest rate. It was good for the lender and good for the borrower – it was sublime (inspiring) for both!

As money became more readily available so too did easy finance and competition brought the “easy loan” into a similar realm to the ‘prime’ loan market or what is commonly known as the full documentation finance.

This opened up a whole new market to the lenders – people who couldn’t get finance the old way were now able to.

Driven by the underlining market factor of demand (or Greed) the markets remained strong and continued to grow. Until one day when the nemesis of Greed reared his ugly head and some people got scared and FEAR began to dominate. With so many businesses and financial transactions built upon a foundation of debt the whole lot has come crashing down like a house of cards. The sub prime literally vaporized overnight.

An event such as this that affects so many people generates a lot of questions and uncertainty. The most poignant questions that should be asked and answered are:

1. What are the possible repercussions of the sub prime crash?
2. What can the investor do to proof themselves for any future repercussions?
3. Why did this happen? (so we can learn from it)

This 3 part series is dedicated to answering these questions. In this article, part 1, let’s look at the first question and discuss the possible repercussions.

The possible repercussions of the sub prime crash

There are several main areas of society that will be affected, each creating further repercussions over the long-term; these are:

1. Scarcity of Money

With money made less available it will inevitably become more expensive (higher interest rates) at least for the short-term. The alternative for the government is to print more money (to make it more available) but this will lead to higher inflation and is not an option in our current environment.

2. Financial Chaos spread by the media

To further their own aims media will tend to focus on doom and gloom and total disasters. While there will no doubt be some casualties, remember this point: just because it is in every news paper or media headline does not mean it is happening to everyone, everywhere. It’s only because the media have the loudest voice (in print and TV) that it appears so.

The truth is, those stories that make the media headlines (such as stockbroker Opes Prime) were balancing a concrete boulder on a tooth pick. Very risky stuff indeed. This is not the same as buying residential real-estate in sought after areas and renting it out! So keep that in mind – its not happening to everybody, everywhere.

3. Big Corporation collapse

As I’ve alluded to already there will be some casualties, the bigger they are, the more geared, the more volatile the underlying asset, the harder (and faster) they’ll crash. As this happens (and I think they will be more to come) it will affects those directly involved with such businesses, but don’t think that it will happen to you directly with your own investing.

The Answer

The investor must keep themselves well informed and be able to separate fact from fiction.

It such an economic climate any bad financial situation can be easily blamed on the “sub prime crash” – it will become the scapegoat for bad business decisions, bad management and outright stupidity. The “sub prime scapegoat” will become the reason for certain sections to ask for handouts because of their inability to manage their finances leading to further duress upon the economy of the country. All manner of financial difficulties which would have happen regardless of the sub prime crash, will simply be blamed on the crash.

Therefore the investor needs to weary of this factor which will be fueled by the media. It will appear that it is everywhere and everything is being affected (which is happening now isn’t it?) The bottom line of any financial disaster is bad financial management, period. To proof yourself keep on investing and building your own portfolio (your asset column).

Lastly I’d like to leave you with this wonderful quote from one of the world’s most successful investors:

“We simply attempt to be fearful when others are greedy
and to be greedy when others are fearful”

Warren Buffet.

Until next time, don’t be fearful, separate fact from opinion and become wealthier.

Definitions

Nemesis: unbeatable opponent: a bitter enemy, especially one who seems unbeatable

Scapegoat: a metaphor, referring to someone or something that is blamed for misfortunes, generally as a way of distracting attention from the real cause.

Property Deals
Keywords: Property Deals, Development

If you fully understand property development, you’ll know that a key to putting a deal together is getting the finances in place. This principle actually applies to investing and business in general.

Quite often property developers are required to get a certain number of apartments sold before the project is financed and started. These are often called “pre-sales”.

When a developer is put in this situation they sometimes sell the “pre-sales” off to investors and marketing companies at a discount or with added benefits.

Understanding this we’ve come up with a unique service to off our members. The Property Deal VIP Membership is a FREE service that will notify you of any special property investment opportunities. The criteria for such investments is that by getting in early you receive more benefit than if you were buying the property when complete.

To get access to the latest property deals join below. All information kept confidential.

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How the W4L Strategy is affected by Interest Rate Rises
Keywords: Wealth for Life, Tony Melvin, Ed Chan, Interest Rate Rises
An excerpt from the book, How to Achieve Wealth for Life by Tony Melvin & Ed Chan

Order your copy today See Ed Chan Live in March 2008 book now! Order the Wealth for Life DVD today

Most investment advisers look at the opposite side of safety — they look at the risk! “How does the investor reduce risk?” is a very different question to, “How does the investor make it safe?”

You have most likely heard of the theory of diversification, which is spreading your money over a broad range of investments so that if one or two don’t perform or lose money, the loss is manageable because you’ve spread your money around. Diversification is the answer to “How does the investor reduce risk?” it doesn’t make it safe, it simply makes it less risky.

Most investors are trying to reduce risk which presupposes that risk must exist. Making it safe doesn’t reduce risk, it removes it.

And because safety is a personal thing, the amount of safeness required is different from person to person. As you’ll discover, it’s you who determines the safety level of this strategy, not us. It’s you who decides how fast you want to go. To use an analogy of rock climbing, to feel absolutely safe you might want 3 or 4 safety ropes, in addition to the main rope. Our view is — use as many ropes as you need to feel safe. With W4L it provides such variations.

How can you buy an investment property and make it safe from day one? How do you factor in such things as economic ups and downs, bad tenants, interest rate rises or possibly losing your job? Most of these factors above are either ignored or explained “not to be a problem anymore.” Professionals selling investments will often provide the investor with statistics and graphs to show how such things as “no tenants” is very unlikely to occur because of the current economic environment. While such information is important to have (because more knowledge improves the safety factor) it doesn’t provide total peace of mind. Until now, no one has really provided the investor with a solution to these things.

We liken this to the weather. We know that in summer the sun shines and in winter it’s cold and it rains. We also know that the weather changes and storms occur. And storms can do damage to the unprepared. How does the investor weather the storm and survive such difficulties?

The step towards finding a solution is realising that these thing do happen, things can and do go wrong, the economy goes up and down; some tenants don’t pay and can be a real pain to get rid of. Despite being the best employee, you can still suddenly lose your job through no fault of your own. Interest rates do go up and down. Like all human beings on this planet, the investor can have a bad day, a bad week and even a bad year – these experiences are part and parcel of life!

So rather than hope they don’t happen or try to work out the possible risk of it happening and being happy with that risk, let’s take a different approach and make it safe!

We don’t like risk. We prefer that come hell or high water it will be okay and our families will be okay too.

And we create real wealth for life, safely.

The Player ensures they can weather the storm.

Summary

Interest rate rises affect those who have not planned their investing and don’t have a buffer in place. On the flip side, if you have equity or recently had an increase in property values then you should look at locking in your buffer to make it safe.

What is a buffer exactly? It’s a loan approved by your bank that gives you access to your equity if you need it. Line of credit type loans provide you with the ability to draw down on your equity. Using equity to buy toys (like boats and cars) should not be its first use. Equity should be used to either a) buy time by helping you fund your property portfolio during difficult times (instead of having to sell your properties) or b) help you buy more property.

This reiterates the principle explained in How to Achieve Wealth for Life, that it is the size of your assets that matter. The bigger your asset base, the better!

Ed Chan Live in March 2008 | How to Achieve Wealth for Life | Wealth for Life DVD

Click here to view Michael's books, DVDs and upcoming events

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How Do You Know Who Will Rip You Off?
Keywords: Gareth Jekel, Performia
by Gareth Jekel, Managing Director Performia Australia

The answer to this question is like finding the Holy Grail for business and life in general.

Anyone who has employed more than five people has found someone that has cost them money or ripped them off. At Performia Australia we’ve found the following statistics to be true:

1. One in 40 staff in an organisation will be intentionally trying to stop or slow the organization down, cost it money, undermine others and the management.
2. One in 5 will cost you money due to making mistakes, damaging things or causing unnecessary confusion for clients, suppliers or work colleagues.

These statistics are rather sobering, but it is not all bad. There are simple and easy ways to know if someone will rip you off before you do business with or hire them. At Performia we have many different methods that we use (and that you can use too) to know beforehand who is trustworthy and who isn’t with 99% accuracy. The following is one method that you can put into action straightaway.

Every person you meet has a behaviour pattern they live by and it has to do with what they believe is right and wrong. Some people believe stealing a car is wrong and there are others who think it is ok. This is called ethics. On a day-to-day basis individuals are actually making an ethical decision probably every second.

Getting out of bed early enough to make it to work on time is an ethical decision, pressing the snooze button and rolling over for another quick nap when you know it will make you late is an ethical decision. Whether it is wrong or right depends on the person making the decision – some see nothing wrong with that, other thinks it’s very bad indeed.

The interesting thing to observe is that people form habits with regards to certain ethical decisions in life. These “habits” add up to the person’s overall “Ethics Level” and this is a wonderfully accurate yardstick you can use to determine how they will react in dealings with you. Are they likely to make more right decisions or more wrong decisions?

It is quite easy to see if someone has a good Ethics Level (meaning they have made more right decisions and less wrong decisions). In general they are able to achieve things despite obstacles put in their way. This can be seen by the results they have achieved in life.

So when assessing people you’re dealing with, be it a business transaction, your staff, or prospective employees, what you should be finding out about is their level of production in the workplace, family life, business etc, that has added value for themselves, their group, organisations and those connected to the person. A person who has achieved something has made enough right decisions to help themselves and others around them. And at Performia we have a process of finding this out by asking certain questions (which takes less than five – ten minutes) to know if the person is productive, which means they have a good level of ethics and will be unlikely to rip you off.

This process is very valuable not only for the workplace, but can also make it very easy to know who to take advice from, who is really your friend and who is best to associate with in life.

We will cover this topic and process in detail at our upcoming breakfast seminar (Knowledge Members save $140 per ticket) where you will leave with some valuable tools to ensure you drastically reduce the chances of being ripped off again.

I hope to see you there.

Gareth Jekel

Managing Director

Performia Australia

To book your seat at the next Performia Breakfast click here and save $140 per ticket.

Four Types of Entrepreneurs: Which one are you?
Keywords: Entrepreneurs, Dale Beaumont.
By Dale Beaumont

Entrepreneurs possess certain characteristics that distinguish themselves from other people. Ambition, drive, clarity, knowledge, and resilience are some of these qualities. However, while these traits are important in defining an entrepreneur, it is also important to note that there are various types of business owners.

It's impossible to be all things to all people, and therefore there is a great need for entrepreneurs to recognise which type they are. Why? By understanding what category you fall into you are essentially assessing your style and acknowledging where your strengths and weaknesses lie.

Once you have done this, you can then emphasise you strengths and compensate for your weaknesses in your efforts to grow your business and move it forward.

Based on my experience and observations, there are four types of entrepreneurs with styles that influence the state of your business.

1. Creator

Do you love creating concepts? Are you an inventor? A dreamer? Creators are entrepreneurs who are stimulated by ideas and concepts. They are usually inventors or people who enjoy challenging convention, look at problems and ask themselves: how can we do this better? What needs to improve for this problem to be solved?

Creators come up with the great ideas and let them be taken over by someone else. Therefore they may not make as much money as other types of entrepreneurs, but they do it, because it's what stimulates them.

Strengths:

• Efficient problem solvers.
• Can kick-start businesses with great ideas and concepts.

Weaknesses:

• Have difficulty operating a business at maximum potential.
• Compelled to move from project to project.

Examples:

Bette Graham (Liquid Paper); Miuccia Prada (Prada); Sergy Brin & Larry

Page (Google); Phillip Mills (Les Mills International); Ed Catmall (Pixar).

2. Implementers

Know how to take an idea and formalise it? Concerned with making things happen? Implementers take an idea and make it happen - they create forward motion. Implementers are able to take a whole, big idea and break it down into smaller details that are manageable and will put the idea into action. They will not only say what needs to done, but will then implement it also.

Implementers achieve satisfaction from seeing an idea, putting it into action and making it happen.

Strengths:

• They are doers and can ensure imaginative ideas will work within a realistic structure.
• They create initial momentum for a business.

Weaknesses:

• Once they have implemented a project, they will seek out further stimulation in the form of other projects that require building and growing.
• Their nature also limits their businessÕ optimal performance.

Examples:

Andrew Mandrides (Kettle Chips); William Kellogg (Kellogg);

Tim Pethick (nudie); Jeff Bezos (Amazon); Enric Bernat (Chupa Chups).

3. Drivers

Not too concerned with ideas? Appreciate consistency? Once an idea has been established and implemented, Drivers will maintain it. They have consistency and longevity and will keep the business moving. Unlike the Creator and the Implementer, the Driver is happy with repetition, but also appreciates forward motion.

Strengths:

• Efficient business operators.
• Can execute and monitor systems.

Weaknesses:

• Inclined to reject or resist change.
• Get too attached to systems and can fail to see its faults.

Examples:

Art Fry (3M); Dietrich Mateschitz (Red Bull); Ruth Handler (Barbie); Bill Bowerman (Nike); Ray Kroc (McDonalds).

4. Closer

Are you an impact player? Someone who likes to see dollars? Closers are capable of taking a solid, thoroughly-tested business and turn it into a multi-million dollar company. It is able to acknowledge a great business, but understands that it can do so much more. Closers are all about growth and expansion. They are concerned with getting in, exerting maximum effort for 6-12 months and getting out. They don't want to be involved in the everyday running of the business. They go in fast and hard and make the difficult decisions. What's going on? What's wrong? I'm going to fix it. They turn the business around and make it work.

Strengths:

• Provide hard-hitting solutions for tough decisions.
• Ensure a business reaches its full potential.

Weaknesses:

• Make decisions based on the best interest of the business and not the individual.
• Can lack emotion.

Examples:

Akio Morita (Sony); Robert Pittman (MTV); Alan Forage (Guinness); Hugh Hefner (Playboy); Steve Jobs (Apple).

In Summary

Entrepreneurs are likely to demonstrate qualities from all of these areas, however, they are likely to excel in one area over another. You need to recognise what type of entrepreneur you are and identify your strengths and weaknesses. You then need to decide whether you are willing to work against your inherent nature in order to focus on areas that you are weak in.

For example, if you are great at coming up with ideas and implementing them, but not as good at closing them, then you need to force yourself to make tougher decisions, force yourself to commit with an idea until it's running at its optimum.

While traditionally Closers reap the financial rewards (because they eventually make the deal and make the hard decisions), it is important to know that if you do things right, you can make money in all areas. That will require you to go against your natural personality or hire someone to do it for you.

Now that you are aware of the different types of entrepreneurs, take some time to work out which one you are? Reflect on your business history, on your individual circumstances and your goals. Are you reaching your potential? If not, perhaps it’s time to make changes and bring in people who can help your business reach its full potential.

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Dale Beaumont is a young entrepreneur and the creator of the 'Secrets Exposed' series. Having now released over 15 best-selling business books (click here to view). Dale has been featured in all forms of the media and has become a sought-after speaker. To discover more about Dale's books, read his blog or to download other free articles and resources, please visit; www.DaleBeaumont.com.