I attended a Rich Dad seminar and workshop in September this year. It was queite interesting, because some things were revealed about paper assets that I, as a registered representative, was not aware of. Paper assets are stocks, bonds, mutual funds, ETFs, insurance, annuities and savings. If you own any of these products singly or in combination, you may be under the impression that you're broadly diversified against market down turns or major economic collapses. It is only true for a "special" few. For example, the stock market crash of 2007-2008 produce a few muti, multi mega-millionairs and billionairs who shorted the market, because they knew that the global real estate bubble was realistically unsustainable. This happened in a market that was massively correlated. Most of the paper assets crash together during a market crash-a fact that most people are oblivious to. I was guilty of this assumption myself ,because I did not have a solid financial or economic background, when I decided to become a financial services professional. Neither was I trained to understand or discern properly what the true ramifications are when you and I are heavily invested in only one asset class! The other asset classes are "Real Estate, Business and Commodities."
Here's what I mean; never invest solely for appreciation, because you're relationship with money becomes a risk verses reward relationship. Without the right kind of financial education, you're risk must go up dramatically to receive your reward. This encourages your dependence on the government, private business, insurance companies and financial institutions. Diversification only minimizes your loses between or among stock, bonds, annuities and mutual fund holdings. It does not increase your gains, but limits your upside potential and increases your down side risk absolutely. You assume all of the risk associated with the markets. The only protection you have is between the stocks, bonds, etc. of the different companies you own which are usually common shares and not preferred. Market risk is different from the risk associated with diversification between stocks of varies companies. "Market Risk is also known as Systemic Risk." It is the day to day potential for an investor to experience lossess from fluctuations in securities (stock, bonds, etc.) prices. This risk cannot be diversified away! This revelation blew me away when I learned of it at the Rich Dad Educational seminar! I was never taught to discern or make the distinction in this meaningful way before. Now, I understand why Warren Buffet said, "Diversification is protection against ignorance. It makes very little sense for those who know what they're doing."
Good investors make money in any market. With the right financial education, your taxes and risk go down or are eliminated completely, and your returns and control go up. Think about the significance of the previous statement? Tell me, what do you really want out of life more than anything else? What I'm interested in knowing from you are the questions you live with, the questions you don't know how to answer, the wondering, where the confusion is that can become clarity, but isn't yet. This takes courage, the courage to hold and live with your questions honestly and sincerely without assumimg any premature judgements about what the answers should or might be, because it will hinder your evolution and ability to manifest your dreams. What I've shared with you has a dollar figure attached to it, because how you think about your money, is how you really live and do everything! There is no denying this fact.
Some of the other things I learned at the seminar, are that diversification doesn't protect an investor from whole scale market crashes, rising markets that cannot keep up with or outpace inflation, or in a market that flat lines over a long period of time because these phenomena a beyond the control of any investor. Secondly, past performance is no indicator of what futture performance will be. Paper assets may do well in a given year, but have no track record of sustainabilty of performing well for periods of five to ten years. That was pretty shocking to me, because when performance is averaged of extended periods, it all seems to make sense right? I am not saying that paper assets are bad. They've made a lot of people very wealthy. This about our (your's and mine) financial literacy. Fees and professional money management are big concern, as well as, beating the market indexes. We all know when the markets are up , socks do well, and when the markets are down, stocks are down to. This begs the question of how does one protect oneself against this kind of unlimited down side risk of the markets? There are many ways to do this, and you can how by clicking here http://theelevationgroup.net/presentation/register.php?a_aid=b79fcead&a_bid=290b868b to learn more about how you can win like the rich do with money.
Depending upon what your situation is specifically will determine the kind of advisor you need. For example, is the advisor a generalist or a specialist in a given area with specialized knoweldge. Is he or she an investor or is committed to becoming an investor? Does he or she work for the company as employee or sales person? How financially literate are they and do they own substantial assets and is responsible with their own money matters? Are they building relationships with other key advisors who can really help you with problems beyond the scope of their expertise? What are they reading, do they go to seminars, practice self development? These are just some of the things you and I as investors must become committed to knowing before saying "yes" to an advisor who we are entrusting our money to. Remember, government entitlements and privatization is what the media is selling us on. If this is what you are ultimately interested in, then, you're headed down a very treacherous and slippery slope without a sound financial education and the right advisors to guide you.
I am currently learning about how to become an investor in real estate. I'm starting small because I value what this vehicle and the information can do for me in supporting the groth of my understanding and wisdom concerning the financial markets, investing and my relationship with you. We get to win together and you can reach out to me, if or when the need or inspiration arises.
To your success, happiness & fulfillment
Arly Denis
Email: ad1018.mainst360@gmail.com
Ph: (347) 675-4428
Fax: (866) 282-0937
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