What is Money Flow and Why is it Important to your Investing Strategy?
My speciality for investing is watching the money flow. By watching this I am able to see where the next investment high or low is likely to be. As someone who has always worked in the money world, I started with Inland Revenue, UK, in 1977, moved to New Zealand and went into Banking and for the past 30 years have been an investor, understanding the way money flows ensures I can move into the right investments at the right time to get the best return on my investments.
What is Money Flow?
In a previous blog, I discussed how all money is loaned into existence. This results in the world having an economy which is based on debt. Governments create money through quantitative easing and bonds. They issue the money to pay for the services demanded by the citizens of the countries – hospitals, schools, roads, transport etc. There is never enough income from taxes to meet the demand and since 2008 we have seen more and more quantitative easing being used to prop governments and banks, and to pay interest on the money that has been created. This has caused governments to have high debt.
Coronavirus lockdown resulted in trillions of dollars; trillions of pounds; trillions of euros and whatever currency a country uses, being loaned into existence. Debt levels for governments exploded to record levels of debt.
Banks act as the “middlemen” for governments. The buy and on sell the bonds when issued, they create bonds to raise funds for corporate businesses. The very businesses which build the road, schools, hospitals that society demands. Banks need to be able to make money other than just through customer deposits. Hence, most banks have an investment arm as they need to make a return on the money.
The world of investing has millions of different types of investments that can be filtered down to just 4 categories – Property, Business, Paper and Cash. Within each of those categories are tens of thousands of investments opportunities. The movement of money into different categories creates highs and lows as money flows between the categories.
I think the number 1 skill of an investor is to buy low and sell high to the extent that every investor needs to know where the money is flowing from and where it is flowing to.
All investments have a high value and a low value. No market is ever static. Economies have ups and downs that are referred to as boom times and recessions. In the UK for instance, a recession occurs every decade. Over the past 50 years there were recessions in 1973-1975; 1980-1981; 1991-1992; 2008-2009 (officially) although the effects and negative quarters went through to 2014. Here we are in 2020 entering the next recession. During recessions, while investments are going down there are investments that boom.
Contrarian Investors will follow where the money is moving to watching which investments are going down and which are going upwards. As investments are going down investors will be waiting for the right time to buy. As investments are going up, investors will be watching which investments are in demand and selling them for a profit.
Money flow is important as it gives investors time to ensure they have liquidity to take advantage of the next investment opportunity. It’s like having a crystal ball that lets you see what could happen in the market over the next few months or years.
The definition of probability is – the extent to which something is likely to happen. Investors have to be patient and wait for the opportunities to come to them. I describe investing as watching paint dry, because you have to be patient and let the markets come to you. You cannot force a market as you will definitely lose money, but you can watch the flow of money and look at the probability that this is the next investment to get into or the next to get out of and prepare for it.
Why is Money Flow Important?
Money flow provides the investor with the probability that certain events could happen so the investor can prepare to take advantage of the opportunity.
A friend of mine has a saying, opportunity comes to pass, it doesn’t wait. Opportunities are always around us watching money flows allows you to be ready to grab the opportunity as it passes by.
Market Report 29th June 2020
My round up of what has happened in the markets for the past week.
Intu, the company owning 14 shopping malls in England and Scotland went into administration as shops failed to pay their rent on their units. Intu reportedly received on 13% of the quarterly rents due.
The collapse of Wirecard with their assets being frozen worldwide by regulators has major global repercussions. Wirecard provides a money processing platform and risk management system to so many international companies , pre-paid credit cards, mobile phone payments and online shopping carts that the fallout and losses to consumers could be enormous.
The IMF (International Monetary Fund) issued a warning to share investors about a 2nd Coronavirus Wave as it believes investors and trades have lost all reality and share markets are not reflecting the true economic situation
Facebook took a hammering on share markets on Friday. It lost USD56 billion in value as leading companies withdrew advertising from Facebook over its failure to control hate speech
Amazon purchases start up company Zoox for $1.2 billion as it continues its acquisitions into the autonomous vehicles market.
Gold – following the IMF warning about the share market the Gold World Council recorded 975,000 ounces of gold was bought through EFTs in 1 day of trading. A record. This resulted in gold hitting its highest value since 2012
Silver – ration remains high at 08.51 meaning silver continues to be undervalued and still offers good investment opportunities
Oil – prices which had been recovery since Covid-19 lockdown collapse having reached $40 a barrel pulled back to $38 a barrel on Friday. This was due to US increases in virus numbers causing governors in 2 US states (Florida and Texas) to start reinstating lockdown measures. Texas announced the closure of bars, cafes and restaurants.
California passed legislation forcing all trucks to have zero emissions by 2035. This will be implemented through incremental steps starting in 2024.
The global economy remains fragile and extremely volatile. For me, physical holdings of gold and silver bullions still remain the best investment options at present.
For more information about bullion investing watch the video below
Seeing the Future
I’ve written this blog to answer the many questions I’m receiving at the moment about a series of videos that Robert Kiyosaki has issued during the lockdown which have caused confusion. Robert Kiyosaki is a visionary and a genius at understanding how the financial markets work. He is especially good at seeing the impact today’s financial decisions and legislation have on tomorrow’s markets. What Robert Kiyosaki does is supply you with a certain amount of information, get you to do research for yourself, think about what you are reading and come to your own conclusions.
As an Investor, I follow the money, watching which markets it is leaving and which ones it is being invested into. By watching the money flow, I can make decisions about where I think the markets and the economy are heading. So, I understand some of what Robert is talking about but I look at it from a totally different perspective.
This blog will address some of my interpretation of what the impact of certain decisions has on the investment world that I operate within. Please remember, this is not investment advice but rather an interpretation of what I am seeing and how that impacts my decisions on the way I invest.
What is the Secondary Market?
In the videos, Robert Kiyosaki talks about the collapse of the Secondary Market in September 2019 and how the lockdown has been used to cover up pumping additional funds into the banks and lenders. So, what is the Secondary Market and how does it affect you?
The Primary Market is the transaction between the bank/lender and the customer. For banks to lend money they need deposits. Once a client deposits the money the bank can then lend more money out.
The Secondary Market, is the credit facilities created as a result of the deposits being made by customers. (Refer to my blog All Money is Loaned into Existence). There are many different Secondary Markets depending on the investment.
For example, borrowing money to purchase a property. The bank does all the checks and lends the money. Then along the way they bundle the mortgages together and sell to an investment company or another lender. The types of loans can be varied with some being good loans and some being poorer valued loans. This frees up liquidity for the original bank and provides the secondary lender with an income for their investment. Secondary Markets tend to be between investors rather than consumer/lender.
Secondary Market Crashes
A Secondary Market Crash often occurs when there is a lack of confidence between banks and Investors generally over the lack of the genuine asset value. Crashes have occurred throughout history so is nothing new. It is just the amounts involved keep getting larger.
The crash of 2008, occurred for many reasons but one being the lending packages that were being on sold to investors where the assets were overvalued or the asset backing didn’t exist for the lending packages. For instance, just before the 2008 crash there was the devastation of the New Orleans Hurricane which saw many families walk away from their homes due to having mortgages they couldn't pay and no insurance to rebuild. Investors were left with loans that would not be paid and nothing to protect the home owner against loss meaning, the investor had non-existent assets. Confidence between banks and investors broke down and the secondary market collapsed.
Fast forward to 2020 and banks have spent 12 years supposedly, rebuilding their assets. In America banks have been allowed to fail. During the Great Recession 2008-2014 US banking failures were:
2008 – 25 banks
2009 – 140 banks
2010 – 157 banks
In 2020 to date, 2 banks have failed. This was not due to the coronavirus but rather due to issues which existed before lockdown and can be tracked back to 2019 when the quarterly financial reports were issued showing banks were not financially stable. They had a measuring ratio of 1050% when any bank at 100% is considered at risk.
Currently investors are still buying secondary market investments in an economy, which is based on debt growth. The lockdown has caused the economy debt momentum to stall. (refer blog on quantitative easing and blog on all money is loaned into existence) What the coronavirus lockdown highlighted was the lack of reserves held by investors and banks. This resulted in the US Feb pumping trillions of liquidity into them once lockdown was announced.
The lockdown highlighted that the money/debt ratio system is extremely fragile and does not have the liquidity and reserves that should have been expected.
The Future Impact on the Secondary Market
Many of the top investment companies, banks and general businesses in the world have little or no liquidity within their businesses. They operate a Just in Time stock system with 30 days plus invoice payment system. Many operate on 60 or 90 days. They operate on a debt system with no cash reserves for emergencies. Just look at the number of businesses which have gone into administration over the past 3 months of lockdown.
This has a flow on effect for support businesses and consumers. It also means the tax takes will be down for governments who are reliant on income to meet their obligations including benefits for those who have lost their jobs and pensions for the elderly. School, hospitals and all the services provided by governments are affected. The government are reliant on income to pay for the interest on the trillions they have pumped into keeping liquidity moving in the economy.
Just this week, the Bank of England stated they cannot raise interest rates until the level of debt goes down as it will bankrupt the country. In other words, every time a government prints money the value of the paper currency (fiat currency) devalues. The only way for debt to go down is for inflation to reduce the impact of the debt ratio. For services to be cut back and the goverments payment for benefits and pensions to be reduced.
In the past couple of weeks, central banks around the globe have issued bonds with no interest payments or negative interest payments just trying to raise funds for their economies. As their currencies lose value as the debt ratio increases.
The Coronavirus Impact
As countries one after the other went into lockdown economies crashed. First out of lockdown was China, which over recent years has pumped a great deal of money into building manufacturing links (the silk road project). Once out of lockdown China increased manufacturing providing coronavirus safety equipment to countries in desperate need. Despite this it is estimated the impact on China's economy through lockdown will see unemployment between 15%-20%. But with China you never know the real figures.
On the other side, many countries have invested into finance market systems (services) such as New York Exchange, London Exchanges, Hong Kong and Singapore Exchanges dealing with money flow services. Service industries are reliant on other industry sectors being robust and needing their services leaving these countries exposed with little or no manufacturing to support the economy.
Most financial transactions use the US dollar as the base currency with each countries own currency fluctuating against the dollar. The US set up the US Currency Swap Lines to provide some stability for currencies. 15 countries signed up to the agreement. Canada, UK, EU, Japan, Switzerland, Australia, Brazil, Denmark, Korea, Mexico, New Zealand, Norway, Singapore, Sweden and Indonesia. Those countries were able to borrow credit from the Swap Lines. They are known as the positive Swap Lines and countries which didn’t sign up to the facility have negative swap lines.
The impact of this is if you have a global business with a head office in a country with a positive swap line getting into difficulty, it is more likely that the governments will step in and support essential businesses by taking part ownership of the business in the form of assets for liquidity. Just this morning we have heard the UK government are looking at nationalising the railways. In a global economy where there is non-global resources available to governments who are not part of the swap line agreement business will probably fail. The nationalising of businesses (asset swap for credit lines) put the world based on freedom of trade at risk.
When investing in shares it is going to become far more important to research thoroughly all the markets a business operates in and the possible impact on that business as to whether or not it is likely to remain on the share market, is it possible, part or some of it will be nationalised; is it in a +Swap line country or -Swap line country. What is the stability of the currency and current government policy.
Two key areas most likely to be affect are country infra-structure stocks and mining stocks. With gold and silver likely to be the default currency in the event of fiat currency failure governments are more likely to step in and nationalise the industry for their own benefit as was seen with Venezuela who taking control of gold mines and oil fields. Venezuela even demanded all gold held overseas in banks had to be returned to the Venezuelan Government.
One piece of advice is, don’t invest if you don’t understand the market, the country, the company and the processes.
What do you do?
Education and information are going to be key to navigating your way through the minefield of global economies. Thorough research of an investment along with really understanding the process of the industry will be a necessity not a luxury.
Management of the risk associated with any investment will be essential and will have to be built into the cost of the investment.
Plan for your own financial needs rather than depending on a government pension will be absolutely essential.
I have a variety of coaching programs in Business Investing, Property Investing, Shares & Bonds and Bullion Investing. These are educational programs which can be customised to meet your current educational knowledge, experience and finances. Coaching be in a group environment or 1-2-1 basic. Contact me on firstname.lastname@example.org and see how my team and I can help you.
Robert Kiyosaki is a visionary genius who understands the impact government policies and decisions have on future markets. It is worth taking note of what he says and being prudent. But don’t be alarmist as there are always things which might change the economic destiny. There are always opportunities in turbulent times. Robert Kiyosaki wrote the book Prophecy in 2003 where he predicted a major economic crash in 2016. As Robert will say – his theories were right and still are, he just didn’t count on Donald Trump becoming President and putting in strategies to prevent the crash.
One thing is certain, we are in turbulent times where education and knowledge will be key to navigating the economic minefield. You owe it to yourself to become as fluent in the markets as possible so you can take advantage of the opportunities that will arise.
Market Report 22nd June 2020
A round up of the markets since lockdown in the 4 investment categories of Business, Property, Shares and Bullion
Business – With many countries now able to open shops attracting shoppers back onto the streets is proving difficult. The fear culture that kept many home during the lockdown is the same fear preventing many from going back into the shopping centres and high street. A string of well known brands went into administration during the lockdown which means many favourites and reasons to hit the high street no longer exist. Shop capacity is having an impact with many shops operating within 50% - 75% of normal capacity for shoppers. Online shopping is in a boom time and likely to continue for some time.
Whenever there are difficult times there tends to be a growth in network marketing businesses and cottage industries. This crisis has been no different with both these industries growing over the past few weeks.
Property – will traditionally drop during difficult markets but the past week has seen property rise in many countries. UK has been stunned at the demand for property as Estate Agents and Rental Agencies are permitted to open. The low interest rate at 0.1% in UK offers good opportunities to get into the property market.
In Spain, property prices have varied depending on where the virus was most active. In regions such as Madrid, heavily affected property prices have dropped on average 1.8% but in regions such as Murcia, one of the least affected by the virus property prices have increase with properties rising in value between 6% - 13%
Shares – remain very volatile with some of the gains initially recovered, following lockdown, starting to ease back again as fears of a second wave affect confidence. The impact on shopping has affected the prices of retail shops. The market is favourable for Value Investors with many undervalued companies. Dividend investors have had dividends affected with some companies delaying payout of completely missing payments. The current markets are still more favourable to Traders rather than Investors.
Bullion – The past 3 months of lockdown has seen money flow into gold and silver. Gold has risen 9.73% and silver is up 33.33%. Silver tends to lag behind gold in activity but traditionally will outperform Gold in value. The current gold:silver ratio is 97.78 down from 120.48 a 3 months ago. This indicates silver is still the commodity to purchase.
Bonds - Central Banks have been issuing bonds at zero/negative interest rates to raise funds for the huge expenditure during lockdown
Quantitative Easing - still remains in force with many central banks as they pump liquidity into banks who will hopefully pass some of the funding on to support businesses.
Oil – prices are recovering following the shock drop and negative prices at the start of the lockdown. Iran shut down fields which helped to increase the price. Stock piling ready for the winter months has also helped increase the price. Prices still remain volatile offering good trading opportunities.
Interest Rates – Central Banks are indicating they want their buying programs to stop and reduce their asset holdings before increasing interest rates. However, the level of support through quantitative easing is still needed so it is likely to be a while before interest rates are increased providing inflation remains low.
Dividend and Compounding Investing
There are many different types of strategies you can use in share investing.
Often the first image that comes to mind is sitting in front of a computer screen and watching numbers ticking over at a rapid pace hearing buy, sell, sell, buy. That tends to be trading and is a strategy best left until you are more skilled with shares and investing.
Some will think of mega share investor, Warren Buffett, whose strategy is based around value investing. Analysing companies and looking for ones that are undervalued, have monopolies and exceptional prospects.
But, for the new to shares investor the simplest and less risky form of investing is buying dividend shares and using the compounding effect to accelerate returns and income.
What is dividend investing?
Dividends are the interest received from an company in exchange for holding their shares. Companies will pay dividends once a year, twice a year, 3 times a year, 4 times a year or 12 times a year. There are some companies who pay no dividend at all. For dividend investing, look at companies that pay either 4 times a year or 12 times a year.
When companies pay dividends more frequently you can accelerate the yield return through reinvesting the dividends. For example, one of my favourite shares has a fairly stable yield average around 7.17%. It pays dividends on a monthly basis. By reinvesting the dividend every month, this allows more shares to be bought each month and subsequently more dividends to be paid. Calculating the yield over 12 months produces a return of 8.12%.
This strategy works particularly well when the dividend is paid on a monthly basis.
Quarterly dividend paying shares also offer higher returns but not as spectacular as monthly dividends. With the above example the yield would be 7.4% based on the return for this particular share if paid quarterly rather than monthly.
Dividend investing is a simple strategy which with patience can provide exceptional returns.
Imagine a hockey stick. It is flat on the ground level, curves gently, then goes almost straight up to the handle. The hockey stick is a perfect example of what a compounding effect chart would look like.
When investing in shares the return is low to start with. Then returns increase and create the gentle curve. Finally, returns grow exponentially creating the handle effect.
Albert Einstein described compounding interest as the 8th wonder of the world. He said “he who understands it, earns it. He who doesn’t, pays it” sadly very few have the patience to allow the compounding effect to grow to the exponential returns possible and earn financial wealth.
Combining dividend investing with the compounding effect and you build a powerful combination of strategies which can produce incredible results in the shortest possible time.
10 Minute Shares – Simple Strategies to Make Money on the Share Market – Karen Newton
This book review is about my own book which is available on amazon at https://www.amazon.co.uk/10-Minute-Shares-Simple-Strategies-ebook/dp/B07V38BYJM is a beginners guide to investing in the share market with some very simple strategies to get you going.
Einstein described compounding interest as the 8th wonder of the world and very few people understand how powerful it can be. In 10 Minute Shares it forms a basis for regular investing which when dividends are reinvested makes it possible to generate incredible wealth within a 10 – 15 year time span.
2 charts are included in the book which show an initial investment of £2000 followed by £100 monthly investments with the compounding effect taking 15 years to become a millionaire. In the second chart an initial investment of £3000 is used again investing £100 per month. This time the investment gets to £1 million only 6 months sooner.
Starting with an investment of just £100 per month and every month thereafter will take just 8 months longer than the first chart to become a millionaire.
The benefit of the compounding effect shows that it is consistent investing which produces the best results.
With dividend investing the book show which are the best investment strategies to get the best returns. Monthly dividend shares using auto invest, can produce a much higher return than the traditional one or twice a year dividend.
Using a monthly dividend share with a yield of 7.7%, reinvesting the dividend over 12 months the return is 8.12%. The effect of reinvesting the dividend each month and earning dividends on dividends produces the higher return and shows how the combination of dividend investing with the compounding effect and explode results.
PCA is a beginner’s strategy producing capital growth and stands for Price Cost Averaging. Using PCA involves buying shares at the same time each month regardless of the price. Throughout a period of 12-18 months it produces a steady return of 5% capital growth.
Compounding the dividend yield of 8% and capital growth of 5% the investor has a growth of 13% per year.
The use of charts has long been a strategy for analysing shares and the book shows different types of charts which could be used include Line Charts; Candlestick Charts; Area Charts and OHLC Charts and when to use them.
Part of charting are the overlay tools which provide much more information on which to base a decision. The tools covered in the book are the use of Moving Averages and RSI (Resistance and Support Indicator)
The 10 Minute Shares book offers the absolute beginner a way to start investing in shares with some simple strategies which over time using the compounding effect together with dividend investing will provide the investor with a stable investment strategy to build wealth.
If you would like to learn more about 10 Minutes Shares - Simple Strategies to Make Money on the Share Market. The link will take you to YouTube where you can hear more about 10 Minute Shares from the author.
Turning Dreams into Reality
“Dreams are nothing more than wishes and a wish is just a dream you wish to come true.” Sang David Cassidy. Sadly, too many people give up on their dreams when they could make them a reality simply because they don’t know where to start.
Focus on It
Visualisation is the first step to making a dream a reality. By visualising your dream, you are getting your brain to think about the reality of the dream coming true. Your subconscious mind will then set to work to finding a way to make the dream come true. Visualisation is simply creating the vision of the dream becoming a reality. In your mind you think it, see it, feel it as if it is happening right now.
One of the best ways I found to create the atmosphere for visualisation is to associate a piece of music to your vision. I have different songs for different visions. Most songs last for 3-5 minutes put the song on and build your vision in your mind. Walk yourself through the vision. Then each time the song plays your mind will automatically associate with your vision.
You only need to spend 3-5 minutes a day, while the song plays, building your dream, then you will start to see the opportunities around you.
Putting a plan together scares a lot of people. There are fears that it is unrealistic, or I’m being stupid for wanting this. When the opposite is true. If you have the dream then it is your right to achieve anything you deserve.
The first step is to write down what the end result will look like. Work backwards until you have come up with a stepping stone to get from where you are to where you want to be. For example, if you want to learn to drive a car the end result is you have a driver’s license. Working backward you have to pass a test. Before that you will need driving lessons but you can’t start your lessons until you have a learner’s license. To get a learner’s license you need to apply for it. What is the first step to take to apply for your license?
Now, you have just created a plan.
You’ve just created a plan and for it to become a reality you need to take action. Only when you have something committed to paper and take regular action will the dream become a reality.
Think of a cake recipe. The recipe is the plan to bake a cake. However, cakes don’t bake themselves, you have to follow the plan and take action to bake it. Your dreams are exactly the same. Once you have a plan, commit to it by taking an action. Write it in your diary and make time for yourself to take the action step. Make sure you do something everyday or every week until you achieve it.
Building Wealth and Dream Lifestyle.
So, now you are wondering what dreams have to do with Investing. I help clients build the wealth they need to create their dream lifestyles. The first step is to know what sort of lifestyle they want and how much it will cost. Each meeting we review what action they have taken towards achieving their dreams. Anyone can make money once they know how. It’s a simple process. The problem is not how to make the money but how to maintain the momentum of making money as the process can be very boring. To keep you motivated you need to have a dream. A dream that creates enough passion in you that you will focus on it, plan it and take action until you achieve it. Then move onto the next dream and the next until you no long recognise the old life and instead you have your dream lifesyle.
Your lifestyle is the reward for doing the same dull boring process over and over so you can make your dreams come true.
As David Cassidy sang “Dreams are nothing more than wishes and a wish is just a dream you wish to come true” unless you focus on it, plan it and take action until you achieve it.
What is Quantitative Easing and How it Affects the Economy
Imagine you woke up this morning to find £1 billion in your bank account. Wouldn’t that be great? With a wage of £7.25 per hour it would only take you 66,313 years to make a billion. The Bank of England, or any reserve bank, can create that sum of money almost instantly.
In a previous blog “all money is loaned into existence” I discussed how reserve banks will create the money through quantitative easing. By creating money from nothing, buying bonds or other assets from banks and creating liquidity of cash. Exactly, what happened in 2008 during the credit crunch to keep the flow of money circulating and trust within the banks.
Throughout the Great Recession 2008-2014 the reserve banks were creating a lot of money each day through quantitative easing. In America, in 2013 the Federal Reserve Bank was creating $85 billion a month. This had the effect of protecting bonds, keeping value in the share market and keeping interest rate low. In other words, what you think of as a free market was totally manipulated by Reserve Banks.
How money is loaned into existence
When governments want money all they do is create bonds, release them on the open bond market, banks buy the bonds, receive regular interest on them and hold them as an asset until such time the bond expires or they can on sell it.
The government needs more money, the banks don’t have enough to buy more bonds so the reserve bank steps in.
The reserve bank will create money buying bonds from the banks who in turn lend the money to the consumer through overdrafts, loans and credit cards. That the simple analogy.
In reality what happens is the Reserve Bank will announce it is looking to buy bonds to X value for Y interest rates. The Banks will go to the Bond markets buying as many bonds as it can for a lower interest rate than the Reserve Bank is offering. The banks then sell the bonds to the reserve bank at the interest rate the reserve bank offered to buy. The banks who are the middle men will make money on the transaction of selling bonds to the Reserve Bank and again in lending it to the Consumer.
The process of the Reserve Bank purchasing bonds or other assets from the banks is known as quantitative easing and is how the money flows into the economy.
What happens when tighter money controls are needed?
When there is too much money in the market the Reserve Bank will tell the Banks they need to buy back the bonds the Reserve Bank are holding as security. Sounds simple? In reality it can cause major problems.
When the Banks sell the bonds to the Reserve Bank there is a value and an income generated from the bonds. In simple economics – supply and demand – there are limited bonds on the market meaning often higher interest rates are payable on the bonds.
When the Reserve Bank decides to sell the bonds back to the Banks, there is a flood of bonds on the market. The government are still creating bonds to generate the income it needs to operate the country and the Reserve Bank are selling the bonds it holds as securities. In this case there is an over supply of bonds on the market and the interest rates reduce. Banks will lose money on the transactions. This in turn affects stock markets; bonds and house prices.
Why Quantitative Easy is Dangerous to the Economy?
In March 2020, many countries went into lockdown over the coronavirus. Immediately, businesses were closed and productivity ceased. The GDP (Gross Domestic Profit) for countries came tumbling down. Share Markets crashed and Bond Markets crashed and many banks were on the brink of collapse.
Deemed an exceptional circumstance Reserve Banks started quantitative easing and printing billions of fiat currency. Not just one country, but almost every country started printing money. The money was supporting businesses who faced permanent closure; it was supporting employees and it was needed to bring in the medical supplies to support the hospitals and the sick.
The world has never seen so much money being printed. However, somewhere along the line, the creation of money will need to be reigned. When that happens, there is be a surplus of bonds and securities on the market forcing the prices downwards. The share market and housing markets will suffer. Businesses which have been closed will not open or will be unable to pay back the loans they borrowed. Unemployment will rise and the world will see the biggest economic collapse in history of the world will have been triggered by excessive quantitative easing.
Loss of Faith
Money, the notes and coins you use every day or the digital transfers you do within your bank accounts is built on faith. It is a faith that the note you use to pay for your groceries will buy the quantity of food you expect.
Quantitative Easing is an experiment to control a financial market. It provides support in difficult times but it can cause the opposite when trying to reign in the amount of cash in circulation. A loss of faith in money which in turn has repercussions of collapsing markets and hyperinflation which is why the long term effects of quantitative easing are dangerous to the global economy.
What are Investment Clubs?
They are simply a group of people who come together with the aim of investing or trading. The club can be social based; educational based or both and have a specific reason to invest. Each month the members of the group pay a set amount into the club and each month a decision is taken by the members about what they should invest in.
A group of doctors decided to set up a Share investment Club. There were initially 8 members which later became 10 members. The club started in 1994. The doctors all had interests in different areas so each person was responsible for researching shares in the designated area and presenting their findings to the group each month. Collectively the group started with members contributing a small amount equivalent of around £100 per month. Today the investment club has funds equivalent to £725,000. For the past 4 years nobody has contributed to the club they just reinvest the funds. The calculation on this is 10 people have invested £100 each per month which equals £12,000 per year multiplied by 22 years equals £264,000 total contribution and £461,000 profit.
Investment Clubs operate throughout the world and can be used for specific investment strategies such as Trading; Share Investing; Property Investing and Bullion Investing.
How Investment Clubs Work
Clubs are set up to run as a separate entity through companies; trusts or partnerships. They have their own bank accounts and everyone within the club is responsible for the running of the club, the research and the decision on the investment. For example, a club would have a treasurer; a secretary to record the minutes of the meeting; a chairperson who controls the meetings and has the final say if there is a deadlock in the voting; a designated investor who will place the investments and you would need back ups to the roles. The entity needs a set of rules to run by with decisions on how to exit a club if a member wants to leave; the timeframe you want the club to run; adding new members etc.
Benefits of Investment Clubs
· Pooled resources – with everyone contributing to the club the research is spread amongst members which allows more research to be done than one individual could
· Pooled Money – with larger sums of money to invest the trading costs are reduced allowing higher returns than if you were investing as an individual. You can access investments that may be more expensive but offering greater returns
· Risk Reduction – with majority rules the decision making carries less risk as you are all contributing to a decision rather than making it individually
· Tax – a SAPP can be set up with a company structure to reduce tax and provide future pensions (depending on club rules)
· Trust – clubs can be set up with people you already know and trust
· Social – clubs can be social so you get out and meet people
Investment Club Opportunities
There are currently some opportunities to join investment clubs through the £2.73 Club they are:
1. Trading Club – for clients interested in Trading on overseas markets. This club is educational and practical
2. Business Investment Club – this club has opportunities to buy into other businesses providing long term residual investment opportunities
3. Bullion Investment Club – for club is for investing in Gold & Silver Bullion through offshore, tax free, income generating opportunities
If you are interested in joining an Investment Club contact me
All Money is Loaned into Existence
While you and I work to generate the cash we need to cover all our everyday bills, have you ever thought about where the money comes from?
It is all loaned into existence.
My specialist area is money flow. What that means is I look at where money is moved from an investment and where it is being reinvested. Following the flow of money makes it easier for me to understand where the next best investment is likely to be. For example, if people have money in shares and the share price is dropping where are they reinvesting the money. As part of the flow of money I am watching the markets to see government debts and how much money is being loaned into existence.
Why is Money Flow Important?
I am what is known as a Contrarian Investor. A contrarian investor invests opposite to what the markets are doing. This allows me to buy investments at the lower range and sell at the higher range. If everyone is selling shares, the share price is dropping. A contrarian investor is buying. It’s like having a sale on shares as the price is low.
Once I know where the money is flowing to, I can then start selling that particular asset. With high demand for the asset, the price will go up and I can sell for a profit. This whole cycle means I am selling high, buying low and generating income and capital growth at the same time.
The only way I can use this strategy is to understand the money markets, investments and money flow and the use of asset and liability creation. Government intervention through Bonds and Quantitative Easing have an impact not only on the value of the currency and the value of the investment but the way the money flows.
What is Asset and Liability Creation?
Imagine you have £1000 in cash. You deposit that money into a bank. You have an Asset of £1000 and the bank has a Liability of £1000. The liability for the bank is that at any time you may demand the money back. Now they need to have an asset on their books so they create loans using your £1000 deposit. This is called Fractional Reserve Banking
How does Fractional Reserve Banking Work?
Each time a deposit comes into a bank, they are allowed to lend up to 90% of the deposit. In the table below I have assumed the loan is used to pay someone and the deposit goes back into the same bank under a new customer. If this table were completed you would see the original £1000 deposit has generated lending of £10,000 in effect, the bank has created £9000 of new money. (£10,000 of loans minus £1000 original deposit)
Running Total of Money Created
The bank now has an asset on its books of £10,000 in Assets from the loans simply created from an initial deposit of £1000. For me, following money flow, I know that every time money is deposited into the bank if will flow out as lending in one or more formats such as loans, overdrafts and credit cards.
How the Government Raises Money.
All governments need money to pay for services such as hospitals, schools, benefits etc. While they collect taxes there is usually a shortfall. To cover this shortfall, they issue Treasury Bonds. The bonds have a face value and pay interest. They then offer the bonds for sale. Some are bought by Banks and some by Investors. Now the government has raised the cash it needs to pay for the country’s services. The government has created a loan that it has to pay with interest and offered the loan to whoever will buy it. They have loaned money into existence.
What is Quantitative Lending?
In 2008, Quantitative Easing became a buzz word. Central Banks/Reserve Banks/The Fed were pumping money into their countries to keep the banks afloat. Now as we deal with the Coronavirus crisis we again have the situation of quantitative easing being pumped into economies.
Mervyn King, Governor of the Bank of England and Hank Paulson, Secretary of the Treasury, USA both reported that the situation in 2008 was so bad that the worldwide banking system was just days away from total collapse. Without quantitative easing, we would have no banking system as we know it today. Currencies worldwide would collapse and all deposits that the general public had with banks would have disappeared with the collapse.
Quantitative Easing is generating money as a loan to banks so they have deposits on their books and can then lend the money out. It allows money to flow again.
All Money is Loaned into Existence?
I started this blog by saying all money is loaned into existence. Any money we handle on a day to day basis, from the very first pound, dollar, euro issued by a government was generated as a loan.
The whole world is based on a debt economy that requires loans to be continually pumped into the market to generate the deposits, the savings and investments that you and I take for granted. So, every time you spend money, invest money or deposit it into the bank remember all money is a debt that someone somewhere has loaned into existence and has to be paid for.
What’s your Fire in the Belly? Asks Pete Lonton.
Pete bought his first property at the age of 20, out of necessity for somewhere to live while working on a contract in the UK. He continued to grow his portfolio and within a few years had 16 properties. Today, property is a key part of his investment strategy. Pete and I both started property investing around the same time so we chatted about what the markets were like, negotiating deals and the mortgage market.
Last year Pete launched the Progressive Property Network (PPN) in Northern Ireland providing a platform and meeting environment for anyone interested in property whether as an existing owner or as someone keen to get into property.
As a business owner Pete’s new project is Fire in the Belly. As Pete says “why do some people get out of bed and achieve amazing success and why do other people get out of bed and watch tv? He talks to success people about what motivates them, keeps them going in tough times and what is their Fire in the Belly,
Join Pete and I for a chat about property investing, business and Fire in the Belly.
What has happened to the Price of Gold & Silver?
Bullion is a traditional hedge against turbulent economic times. So why are they going down in value now?
Throughout history gold and silver have been classed as real money with today’s paper currencies being called Fiat Currency. All Fiat Currency was backed by Gold and Silver reserves until the 1970’s when US President Nixon made the decision to remove gold as security and rely on the dollar to be trusted enough to guarantee a dollar bill was a dollar. It wasn’t long before other countries followed suit and the reserve banks sold off their bullion reserves.
The crash of 2008 highlighted the lack of confidence in paper currencies especially with quantative easing from governments. The result Gold and Silver Bullion once more became the safe haven and drastically rose in price.
Today, with stock markets plunging, most people would have expected the bullion to become a safe haven and boom in value. But it hasn’t. In fact, it has done the opposite and gone down. So, what has happened to the price of Gold & Silver?
Watching the flow of money around the markets is the key to discovering why Bullion is dropping in value and I have seen some trends that indicate there are 2 key reasons for the drop in value.
Many traders use leverage to trade. For example if you were to trade on gold going up in value then you only need a percentage of the value of the trade to complete the transactions. ETF’s are one of the main leverage tools. You can buy anything for a percentage of the cost. When the price goes in the direction you have placed your trade you sell the ETF and pocket the difference. This is in an up or down market. For example you can buy $10,000 worth of gold etf’s and only pay $1000. Then if you said Gold was going up and it did to the price you nominate you make the difference in the profit you would have made as if you owned $10,000 worth of gold. In reality you only paid $1,000 for it. If the trade goes against you then you have to cover the cost of the loss.
We have seen historical drops in the value of share markets and tradeable products. Traders have lost millions/billions on ETF’s and other tradeable contracts and have to cover those losses. Physical Gold & Silver which they owned has been sold to cover losses.
For every sell there has to be a buyer and vice versa. With so much gold and silver flooding the markets to cover Margin Calls the price goes down. That is basic supply and demand. Too much product on the market and price drops.
There are a variety of Bonds on the market, in this case I am talking about Government Bonds also known as Treasury Bonds. Government Bonds are guaranteed. In the UK there is a restriction of £1,000,000 (one million pounds per person) but other countries have no restrictions and all bonds issued by the government are guaranteed.
Bonds pay interest twice a year. When the interest rates are higher than the returns on the Share Market then money flows into Bonds. When the returns are higher on the Share Market then money flows to Shares.
We have currently seen the biggest drops in history on the Share Market so money has flowed into Bonds. Some governments have reacted and dropped interest rates while other governments have kept rates high.
When the governments of the world are in sync with dropping rates then investors will move their money into the next investment seen to offer the best security. That tends to be Gold & Silver Bullion.
What Next for Gold & Silver?
It is still regarded as a safe investment. An investment that offers a hedge against economic woes. It is still one of the traditional money flow tracks.
Already Governments are talking about the amount of fiat currency they will need to print to support countries through these difficult times. Those same countries have for several years been stock piling bullion reserves for such an emergency so there is plenty of reason to have confidence in gold and silver still being a hedge.
In an earlier post I wrote about the Basel 111 agreement which from April 2019, removed risk restrictions on bullion investing for banks to zero. This encourage banks to also buy heavily into bullion for their reserves.
It is unlikely that with both Governments and Banks investing so heavily into bullion that it will suddenly fall out of favour. In fact, the opposite is likely to happen and more money from both institutions will likely go into bullion.
When is the Best Time to Buy Gold and Silver?
The simple answer is now. Both have dropped in value due to the exceptional circumstances I mentioned above offering the best time to buy. Many bullion businesses are unable to dispatch bullion at the moment to clients but are offering storage and delayed postage.
The Gold/Silver ratio which is a marker which tends to indicate whether it is best to buy Silver or Gold is at historical highs indicating silver is very undervalued and suggesting that would be the best investment at the moment.
The economic turmoil is just starting and as it goes through it’s cycle money will start to flow back into Gold and Silver Bullion. Then both will accelerate exponentially. When will that happen, no one knows. It’s very much watch this space and watch the markets but one thing is certain there has not been a better time to invest in bullion since pre 2008 than now.
Internet Marketing, Asset Protection
Are you protecting your Assets? Asks Sotiris Bassakaropoulis as we chat about Internet Marketing.
Sotiris and I both started Internet Marketing in the same year 2003. We were coached by some of the best Internet Marketers in the world. Both Sotiris and I had different aims from the coaching.
Sotiris lost his job when arriving late to work. It was an approved lateness previously agreed with his employers. But that made him determine to never rely on anyone else to provide income for him or his family. Over one weekend Sotiris made 40 online sales and knew he could make a living from Internet Marketing.
I always wanted to write books and was looking at how I could market them. I learnt strategies from the training that allowed me to sell my books worldwide.
Today, Sotiris works with people who want to build an online business but his passion is about protecting the digital assets you create online.
What is Internet Marketing?
Internet Marketing is the creation of digital products which are marketed online. The type of products are information products such as books, videos and training programs which anyone can buy and either access online or download for their own use. (refer to my blog about Desktop Publishing and Self-Publishing)
The protection of the digital products are important as what happens when you go to switch on your computer and find your account with a supplier or a website are no longer accessible. What do you do?
Join me for a chat with Sotiris Bassakaropoulis, where we chat about Internet Marketing, Asset Protection and more.
click on the photo above to watch the video
For more information about internet marketing visit
A Routine Day
Two of the most common questions I am asked is “how do you fit everything in?” or “where do you get your ideas?” or I get comments about my work ethic and how much time I spend working. So, I have pondered on the questions and considered what I do and when I do it. It’s really something I hadn’t thought about until recently, due to all the questions I get. But the more I thought about exactly what I do each day the more I began to think the key to achieving everything I do is having a routine day.
My day starts with a walk regardless of the weather. When I had my dog, the day evolved around two or three walks a day for him. Since his death, I have kept up the morning walk which lasts about an hour. During this time, I do very little talking, my husband and I just walk, take in and enjoy the surroundings. On days when I have to be somewhere early then I set the alarm earlier so I fit in my walk. It’s a relaxing start to the day along the promenade.
Once I get back home it’s breakfast which is followed by writing my Journal. In the journal I dump everything I want to say about everything on my mind. The good, the bad, what’s going right, what’s going wrong, progress on goals, the plans and action steps. It can be anything and I write until there is nothing left to write. Do you remember the hot water tanks in every home? Each day you heated the water for what you needed during the day. When the water was used it was refilled with fresh water and the whole process started again. I use my journal in the same way buy emptying the things on my mind into the journal until I have cleared everything.
The next step in my routine day is probably the most important – thinking. I have just dumped everything that was on my mind into my journal and now I have an empty canvas with which to work. I sit quietly, listening to the sounds around me. The sound of water is my favourite and the sound I tend to notice first and then I wait for the ideas to come into my mind – the goals, the affirmations, the plans, the action steps. Now, I am motivated and ready to go.
The last step in my routine day is writing the success diary. Everything I have just been thinking about gets noted in there, the affirmations; the action steps, meetings and the key thoughts. It focuses my mind on what the order of work is going to be.
I am now ready to begin my work day. Whatever the rest of my day brings it’s usually anything but routine. But I’m ready to tackle it head on and get done everything I have set myself for that particular day.
Most people have a morning routine, they get up shower, wash, eat breakfast and run out the door. They are constantly in a rush, dashing from one thing to the next often achieving nothing. They get home exhausted thinking about dinner and sleep before starting the whole process over again. Talk about Groundhog Day.
In recent years, I have seen a trend and read books about having a morning routine to set you up for the day. But when I try what the books suggest I found it didn’t work for me. What I did discover though, is we are all different and the morning routine I have used for years is the one that suits me best. You need to discover your own morning routine. By all means, look at other people’s ideas but create your own routine. Create the routine that feels comfortable and relaxing for you. Create the routine that ensures your day starts the way you want it to. Create a routine that puts you in control of your day. When you create a routine that puts you in control of your day and leaves you feeling relaxed yet energised you know you have the right routine for you.
Wouldn’t it be great to have that much free time I can hear you saying?
Like you I have 24 hours in a day. I choose what I do with that day. I don’t have that much free time because I choose not to. I have the choice to use time in the best way to suit me. I still have deadlines to meet, I still have constraints on when investment markets are open or shut for doing my investments. I still have to work around other people’s timeframes. What I do have is control over when I get up, when I go to bed and how I organise my day.
Arnold Schwarzenegger said “There are 24 hours a day. If you only sleep 6 hours a day, then you have 18 hours left. Most people work 8 or 10 hours. So, you still have 8 hours left. What you do with those eight hours, is really the question.” I choose to use my 8 hours a day by starting my morning quietly and peacefully and the rest of my day tends to run exactly the same way. There is no rush to get everything done as I know I can pace myself and do what has to be done. I choose to spend the rest of my 8 hours doing what I want to do with whom I want to do it.
When the morning routine is changed so is the day. Often, when travelling, I find myself so out of kilter that even some of the smallest things to do seem like a mountain of work to get through. It’s on these days that my routine day has to be fitted in where and when I can. I may have a very early start to catch a flight. I find myself writing my journal through the flight and taking time out to let the thoughts and ideas flow in. I don’t have my success diary with me as it’s too big and heavy for flying but my journal fills that role. My routine day has to be flexible to fit in around my work day.
So, how do I fit everything into my day? I just do, there is no panic as I know I have plenty of time to do what I have to as that is the way my day is set up to create the space and time to do what needs to be done.
The second question “Where do I get my ideas?” I dump all my thoughts into a journal, relax and let the thoughts come to me.
So what about you? Do you have a routine day that helps or hinders your successes?
|How to become a Billionaire|
How do you become a billionaire I asked John Boyle? His answer will surprise you.
The unassuming and humble Irishman, John Boyle was sacked from his job doing bread deliveries, so he started his own business in the small Irish town of Markethall in 1982. Although economies were experiencing boom and bust by 1989 his sports betting business had grown to 5 stores. This expanded to 19 stores in 2002, 77 stores by 2004 and in 2006 he reached the milestone of 100 stores across Ireland and UK. Today there are over 300 stores and an enormous online presence.
Click photo above to view video
The business growth has been one of taking opportunities as they arrive. When competitor’s businesses were in trouble, he bought them saving jobs within the industry with each business purchased. He also saw the opportunities of moving his business online and gaining access to the international markets and the clients he could attract through the internet and through developing his own apps.
As an investor myself, I was fascinated to know how John Boyle has grown his business and become a billionaire. On a cold, wintery evening in Dublin, in February 2020, I had dinner with him and a group of entrepreneurs at an event organised by my business coach, Pat Slattery, and I asked John Boyle “how did you become a billionaire?” I waited with bated breath for his words of wisdom, his answer surprised me, “I partied” he said. “When the business was at 250 million euros I had a party celebrating it being worth a billion euros. Just party as if you have already achieved what it is you want.”
Mr Boyle’s philosophy is common among many wealthy people I have spoken to and it is that of mindset. Whatever, you want to achieve assume you have already achieved it. Act as if you are already where you want to be and it will happen. It doesn’t mean that you just wish and wish for it and it will happen, you still need to take action and work towards your goal but by letting the universe know it is yours then your subconscious mind will work hard to make it a reality.
As we continued chatting John Boyle asked me what was my goal? I explained where my investments were at this stage, how they had stagnated and I was trying to break through a plateau and he said “great, set the next level and let’s have a party.”
How do you become a billionaire? Have a party.
John Boyle & Karen Newton Dublin February 2020
Making Money Made Simple
Making Money Made Simple by Noel Whittaker & Roger Moses was the very first book I ever read about investing. Originally published in New Zealand & Australia in 1989 it is part of a series of 3 books which take you from school leaver to retiring.
click phote above to view video
Noel Whittaker was Australian and Roger Moses a New Zealander and together they co-wrote the books with emphasis on what was available financially within their countries.
I started Peer-2-Peer investing with Roger Moses in the early 1990’s. This type of investing was pioneering at that time but now common place with online platforms providing access to Peer-2-Peer lending opportunities almost worldwide.
The book consists of 41 chapters split into 6 sections. They are
The Basics – understanding the basics of money. This section covers the Compounding Effect and the importance of allowing investments time to work. Budgeting so you know how much is coming in and how much is going out. Importance of planning and setting goals for success.
Borrowing – Credit Ratings and good and bad debt. It goes through the hidden traps and additional costs that a borrower may not be aware of.
The Essentials – which covers buying a home and a car. Having adequate insurance and pensions
Investments – a variety of investment strategies include property, shares, bullion, insurance bonds, futures and alternative investments. What is category is and how to get started with these types of investments.
Making it work for you – consists of frequently asked question, common types of letters about money to people of different ages and in different parts of their lives, how to get out of financial difficulty and examples of different situations people find themselves in.
Conclusions – talks about the way to wealth, keeping motivated, how to overcome the brick wall and keeping a balance in life.
This was a pioneering book in it’s day but still has relevance today in putting plans and goals together to achieve financial success and how to retire debt free and on a good pension.
Making Money Made Simple is exactly that. Putting investment and life finance strategies into a simple to follow plan in plain English. I highly recommend this book..
How High Will Gold Go?
During the Great Recession of 2008-2014 the UK economy saw Gold hit a high of £1163.49 on the 9th September 2011 today as it has hit a high of £1273.14 we ask the question how high will gold go?
During difficult times gold and silver bullion are a safe haven to protect investments and in February 2020 this is most apparent due to the Coronavirus C-ovid19 which has hit the global economy since December 2019. With no end in sight to the spread of the virus and many places going into quarantine the likelihood of trade struggling and the fear of countries going into recession means gold and silver bullion are favoured investments.
The airline industry has announced it is expected to lose up to $30billion as people take fewer flights. The Asian airline are expected to be the worst hit.
In the final quarter of 2019 Japan announced it’s economy had shrunk by 1.6% with a risk of recession. These were based on data produced up to 31st December 2019 before the threat of the coronavirus had been announced. The effect on the Japanese Market will no doubt push the country close to if not into recession for the first quarter of 2020.
China is in lock down with many manufacturers and resellers struggling to fill orders as their materials and stock are stuck in Chinese ports. These industries will be greatly affected until the quarantines are removed. Oxford Economics has estimated the cost to the World Economy will be around £850 million while the IMF (International Monetary Fund) have described the world economy as fragile.
Ronald-Peter Stoeferle of Incrementum AG researched global gold trends and comparisons to the 1970’s gold bull market. In discussions with Mike Maloney of GoldSilver.com they talked about the similarities of the 1970’s bull market and the current bull market and when overlaid one on top of the other they are following a similar trend. The 1970’s bull market suddenly accelerated in value from 1975 – 1978 which indicates the current cycle could continue upward for the foreseeable future especially with the global economy being so fragile.
How high will gold go? Your guess is as good as mine but it is feasible it will go up to or beyond £2000 an ounce over the coming months especially while the coronavirus has such an impact on global economies. It will be interesting to watch.
For more information on our investing courses email email@example.com
Every investment has a natural cycle for when it is popular and not so popular. When prices are high and prices are low. Investors are looking to buy low and sell high. It’s how they make their money. If the general public are selling then investors are the ones buying. When the general public are buying, investors will be selling. There always has to be a buyer and a seller.
Investors specialise in finding investments that are out of favour with the general public and buying them at a low price. When the investment becomes popular again and there is demand for the asset the price will go up and investors will start selling the asset. The asset can be anything that has a deemed value.
Throughout our training courses, we cover 4 categories of investing – business, property, paper and cash. Within each of those categories are different types of investments for example in the property category there is residential property that consists of single lets, multi lets, hmo, apartments and student lets as just some examples of residential property. But you also have commercial property, holiday lets, garages, storage. All examples of different types of property investments. There are hundreds of different types of sub-categories within each type of investment not just property. All of these types of assets have their own investment cycles that go up and down. As an investor you can buy into any downward trend sub-category ready for when the next upward trend begins.
The question I am always asked is how do you know the cycle is at the bottom and ready to go up?
It would be lovely to say I have a crystal ball that says invest now. It doesn’t work that way. What you need to do is look at what the markets are doing and assess where you think that investment is. Then cross your fingers, take a deep breath and hope like hell you have reached the turning point.
When analysing an investment, I always assume that it might go down slightly when I buy it. Be prepared. If it does go down don’t panic. It will go up. Your timing just wasn’t quite perfect but you’ll get it right next time.
Investment cycles vary in time for each investment. The gold bullion cycle can last decades. Property investment cycles usually cover a recession whether that be a year, 5 years or a decade. A tip is to look at the trends for recessions within your country. Then overlay the property cycles and you will notice a pattern of when prices go up and prices go down. It doesn’t just need to be property. You can apply this to any asset and see how it is affected during the recession cycles.
Once you buy the investment at the low level, sit back and wait for it to grow and either cash out at the high or as close to a high as you can. Or you could hold the investment and let the next cycle kick in and do its thing. It is unusual for a low to go down below a previous low. Inflation, usually ensures the low is higher than the last time.
Imagine a coil, continuous going around in an upward spiral. This will represent the bottom of the investment cycle the asset you are investing in.
Example 1 - I purchased property in 2002 for £35,000 the property went up to £120,000 by 2007. During the recession the value dropped and the new low was £95,000. More than £60,000 higher than the previous low and this was during one of the worst recessions in history. Property prices are again rising. Who knows where the new high will be. Already house prices are higher than the 2007 price. There’s probably room for them to go even higher. I wouldn’t be surprised if the new high isn’t around £150,000+ for that property. Just watch the cycles and see what happens. Be realistic if you are waiting for prices to drop back down to start investing. Don’t expect the property to drop back down to £35,000 as that is highly unlikely to happen.
Example 2 – I started buy Gold Bullion in 2004 when the price was around USD400 by 2008. I was then selling at around USD1822 in 2011 even though the price kept going up to USD1896. The price of Gold bullion dropped by January 2016 to USD1100 but today is trading at USD1587. Where will it go this year is anyone’s guess. 20 years ago, it was trading at USD200 will it go back down to that level is very doubtful. Inflation and demand will probably keep it at the higher levels.
Every investment has a cycle. To take advantage of the cycle investing you have to track the data, keeping your own records. Identifying where you believe the cycle is and where you believe the price will move next.
A tip I can offer is to watch the newspapers. When the newspapers say this is the best performing investments and the next best investment, you know the general public will be buying and the price going up. When the paper suggests you get out of an investment the general public will be selling and the price going down. An investor is contrarian to the general public. That is when they sell an investor buys, when the public buy an investor sells.
Every investment has a natural cycle. Making money from an asset is about understanding where it is in the investment cycle and being contrarian.
Self-Publishing with Amazon & Kindle
They say everyone has a book they can write. What is yours?
Gone are the days of trudging around sending manuscripts to publishing houses hoping they will accept it and print your book. Today, businesses such as Amazon’s Kindle Direct Publishing make it so easy to publish, market and make money from your book. This article looks at self-publishing information product books. It’s what I call Desktop Publishing.
We live in a world where information is key. The quicker a potential reader can access the information the quicker you can solve the problem a problem a reader has. Ebooks and Audiobooks means the reader can find the information in a variety of formats to suit their preferences, pay for it and download in a matter of seconds. Instant access to the information a reader wants. Then, if a reader wants a paperback version of your book, they can easily order it, pay for it and get the printed version within a day or two. No bulk printing of books as Amazon Kindle Direct Publishing operates a print on demand system. Every time an order is placed for a paperback book a book is printed.
It used to be that self-publishing was frowned upon as not being a proper author. But, today, self-publishing authors are making a lot of money – often more than with a publishing house – simply by providing the information a reader wants.
I have been at seminars where a speaker has self-published a book with a print company. They spend thousands getting their books published then months trudging around venues speaking – often for free – in the hope they can sell their books and recoup their costs.
Self-publishing through Amazon’s Kindle Direct Publisher, takes all the cost and hassle out of publishing and selling your book.
Kindle Direct Publishing (KDP)
This is the platform Amazon uses for your self-published book. It is a very simple process of creating your book, book cover and uploading it to the platform.
Once you have completed and uploaded your book, KDP create a proof of your book which you accept or amend and then reproof. Once you have accepted a version you tell KDP to publish it and in which countries.
In 2003 I published my first information product. It involved printing off the pages then binding them either with a glue binder or a ring binder. If I had several orders the process was slow and tedious. By 2009, Amazon had launched it publishing site and I started putting my information products on Amazon in the ebook format and later paperback format. Today my books sell around the globe in Canada, US, New Zealand, Australia, Ireland, Japan and India.
Kindle introduced the Kindle Library where books could be borrowed and read without purchasing. While this was initially not liked by many self-publishers, I found that the commissions I receive from page views rather than book sales has had little if no impact on my overall sales. In fact, it seems to have encourage potential readers who would not normally have purchased my books to read them from the library and in return I receive commission based on per page views.
Why Would Anyone Want to Buy my Book?
As I mentioned earlier, we live in the information age where readers have problems that need solving. You are unique with the information you have learnt through life experiences and your knowledge about certain things. By providing your skills and knowledge in a book format, there is someone out there wanting the type of knowledge you have and are willing to pay for it. It might not even be in the country you live in.
I have mentioned how I sell books around the world but I don’t live in the countries where my books sell. People worldwide are looking for information that I have that will help them gain knowledge, improve their skills or solve a problem they have. By producing the information in a book format the reader has access to that information from anywhere where they have internet access.
Marketing Your Book
Contrary to belief, if your book is published through a publishing house, you still have to do marketing to sell your book. The publishing house will want you to do book launches, author presentations and anything possible to help sell your book. Well, self-publishing requires the same dedication only you have more control over your time and the marketing.
As my books sell worldwide, the basis of my marketing is through articles on line that attracts the potential buyer and encourages them to purchase my book. Articles similar to this one. However, as my books are global, I do all my marketing online rather than trudging around seminars, book stores or even markets.
Once I have an idea of sales volumes and demand, I will then put on paid seminars or webinars and provide additional information to a ready-made audience who want to know more. This is the upsell generated from the book. This creates more demand and more sales of additional information products.
The more demand created for your book, the more sales and the more Amazon will market it for you. Based on previous purchases Amazon will recommend to the buyer similar types of books and yours could be the one they advertise. I love receiving recommendations from Amazon and seeing it’s my book they recommend.
Is Self-Publishing for You?
If you can write a book, produce a video or record an audio book then self-publishing is the way forward for you. It is the way to earn maximum returns for the work you have created and keep control over the whole process of self-publishing and marketing your book.
For more information on niche marketing read my book Niche.
|How to Invest in a Property for just £1|
Have you ever heard or even been guilty of saying “you need money to make money”? and what about “I don’t have enough money for that” or “when I’m rich I’ll buy that”.
Well, would you be interested in knowing you could start a property portfolio with just £1.
There are lots of people who would like to sell a property but can’t find a buyer and vice versa there are people who would like to buy property but don’t have the income or the credit rating to do so. You can act as a sourcer of property or as the middleman either with a buyer in mind or buying the property for yourself. It costs just £1 to complete a contract between yourself and the seller to act on their behalf to sell the property either fairly quickly or at some specific time in the future.
Example 1 – I have control over a property on which I have the right to buy it at any time within the next 8 years. The property is 3 bedrooms end terraced, and tenanted with a regular income from the property. A letting agent manages the property and under the agreement, between the seller and myself, I pay the seller a fee each month on the property. The fee covers the seller’s mortgage and gives them a little something in their pocket. The remaining income from the rent is my profit. The cost of doing this deal was £1 to make the contract legal and the time put into negotiating with the seller. The deal is a win/win for both the seller and myself.
Example 2 – I have another property with the right to buy the property in 10 years. This deal was put together by a property sourcer. The deal is similar to example 1, where the seller receives a payment which covers the mortgage and a little something for themselves. I have an agent who manages the property and the remaining income from the rent is profit. The only difference with this deal is I paid a sourcing fee for the deal. This was a win/win/win deal. Win for the seller who wanted to sell but couldn’t due to certain circumstances. A win for me as I have control over a property I don’t yet own but which generates income for me. It’s a win as I can purchase the property at any time in the next 10 years. A win for the property sourcer as he earned a commission for putting the deal together.
Property sourcing is about talking to the seller, solving a problem they have and then finding a potential buyer.
What do you need for this type of deal?
For hundreds of years businesses have used the right to lease land or property. A lease is frequently used with builders and supermarkets. Traditionally, they will ask a landowner to give them the right to purchase the land sometime in the future in exchange for a small fee paid to the landowner either monthly, quarterly or annually. The builder or supermarket does this so they can get planning permission approvals without the cost of buying the land and then having to sell if they fail in their planning application.
The same principle is used to acquire property to buy at a future date. This is known as a lease option. It gives the owner of the lease the right to control the property as if they owned it. It also gives them the right to buy the property for a pre-agreed price sometime in the future. If the potential buyer is unable to buy the property for any reason or simply decides the property is not suitable to them, they walk away from the deal at the end of the term or when ever there are break clauses in the contract.
The seller, on the other hand, has an agreement to sell the property some time in the future for an agreed price. They no longer have any responsibility for the property other than the mortgage payments. The owner of the lease will pay the seller a monthly fee to cover the mortgage payments (if there is a mortgage) and they will generally also receive a little something for themselves as a commission for the use of their property. If the property does not sell within the agreed period the seller knows the property will come back to them or they can renegotiate the deal for an extended time.
The only thing needed to complete this deal is a Lease Option Agreement and the exchange of money to make the contract legal. There is £1 between the negotiator (sourcer) and the seller. There is a commission between the negotiator and the buyer. If they are the same person then the property deal has cost just £1.
Why would a Seller Agree to this?
There are a variety of reasons why sellers would be open to a Lease Option.
· It could be that the property is in negative equity and they can’t sell for current market prices. A deal done on a 10 year lease allows the property to go up in value and the seller to sell the property and cover their costs.
· It could be that the seller has been unable to sell the property but has another deal in place for a new property. Putting the property on a lease option means they no longer have responsibility for the property as that passes to the option holder and the seller is free to move to their new property
· Marriage breakups are often a source for lease options. Neither party want the responsibility of the property but it isn’t selling so a lease option takes the burden off their shoulders and allows a deal to go through at a later date.
· The seller may think they have sold their property but the deal fall through and they don’t want the burden of looking after it
There are any number of reasons why a seller will be happy to use a lease option and sell at a future date.
Who are potential buyers?
The most common type of buyers are property investors who want to quickly build a property portfolio without the hassle of having mortgages. A second source is someone who would like to buy a property but doesn’t have the credit rating to be able to purchase a property. Both these types of purchases are good a looking after the property and are most likely to complete the purchase at a later date.
Lease Options are a great way to get into property as an investor or as a buyer. If you source the property deals yourself then you could purchase the deal for only £1. If you buy from a property sourcer then be prepared to pay commission for the deal. Commission is based on around a percentage of the property value. The higher the value the higher the fee you can expect to pay.
For further reading I recommend
Lease Options Made Easy
Escape the Rat Race with Lease Options