As founder of Solomon Success, Jason Hartman knows that readers of the blog occupy a spectrum of positions when it comes to level of investment knowledge. Most everyone agrees they need to be investing but too many put it off until “tomorrow,” that mythical day that hardly ever (okay NEVER) arrives. Even worse is to fall for the junk financial advice that regularly finds its way onto radios, televisions, and computers across the nation. Usually this “advice” is expressed in various ways of how to get rich quick.
Here’s the truth about getting rich quick. It happens in so few cases as to be a useless point for discussion. Getting rich quick is almost entirely based on taking a long shot and hoping it pans out. This is not the way King Solomon created wealth, it’s not the way God advises you to live your financial life in the Bible, and finally, it’s worse than silly; it’s stupid.
If you find yourself flailing haphazardly at the stock market lately, we’re here to help. The first thing we’d suggest is stop messing with the rigged game on Wall Street. This is a whole different topic for a different day but suffice it to say that Big Time Operators are the only ones who thrive on stock investing, because they don’t depend on the business cycle. They depend on YOU and your willingness to part with large chunks of investment profit each year through transaction and administrative fees.
We know that the chasm from where you are to where you want to be, financially, often seems uncrossable, but banish such thoughts because you can certainly put yourself on the road to financial independence using Jason’s unique, common sense methods.
Establish a 5 Year Plan
Today is June 15, 2012. Before you do anything at all related to investing, think about where you want to be (economically) in 2017, and more importantly, what you can do to get there. Reflecting on the financial quagmire our economy has been in the past several years should impress upon you the absolute necessity of not depending on the government to take care of you. Chances are, it can’t and won’t. At the best you’ll be scraping by on a less than subsistence level Social Security check.
The good news is you can get a huge start on a sizable nest egg in five years, and the sooner the better when you consider the following realities:
1. The real unemployment in America is closer to 26-27%. As the modern changes to a freelance information economy, people are getting left behind.
2. Thanks to inflation, the foreclosure crisis, and underemployment, the standard of living in America continues to decline.
Get Educated
The good news is it doesn’t take long to get a solid grounding in the kind of investing that has been proven to work better than anything else in history: income properties. While the name might not be familiar, the idea probably is. An income property investor purchases single family residential homes with long-term, fixed-rate mortgages and then rents them out. This is the best kind of income ever. Passive. Eternal. You can get a good start on your real estate education by visiting JasonHartman.com. Browse through the archived episodes of The Creating Wealth Show. This podcast was created by Jason specifically to help investors like you transition your thinking into one of continual wealth creation. Check out our blog updates as well.
If you want to get up to speed on property investing quickly, consider attending Jason’s twice-yearly Master’s Weekend, where he assembles a panel of experts from around the nation, each well-versed in Jason’s unique method of investing, to deliver a powerful recipe for real estate success. You literally could take what you learn at the Master’s Weekend and use it to begin investing in income properties immediately. In fact, if you already have cash on the sidelines ready to go, there will be local market experts on hand from various cities around the country to help choose your first property.
Why are we so hot on properties? Hopefully, you won’t mind if we digress a bit to make it more clear why you should extract yourself from the stock market and insert yourself into real estate. It all comes down to the return on investment. In a good year you’ll earn 10% on stock investments. Immediately reduce that number by half because annual inflation eats away the value of stock at the government reported rate of about 5% annually. Our calculations reveal the actual inflation rate to be about double what the government claims, but we’ll ignore that for now. After taking inflation into account, you’re left with a 5% profit, right? Not quite. Transaction and administrative fees come out at various points along the way, eating up another couple of percentage points. By now, you should be able to see why stock investing is a losing proposition!
Real estate, done the right way, normally beats Wall Street hands down. It’s not even close. Through the use of leverage (mortgage) you should be able to earn close to 30% on your money each year. Of course, we’re not silly enough to make any guarantees, but we see that number regularly with our clients and in our own investments. Profits of this magnitude keep you well ahead of inflation and begin building an impressive nest egg slowly but surely.
The Magic of Refinancing
The secret to increasing wealth through Jason’s real estate strategy requires an about face in the way most people think. Almost every financial advisor out there tells you to pay off your mortgage as soon as possible. In reality, this strategy is not the best way to grow wealthy in an inflationary economy. Inflation reduces the purchasing power of any cash based assets so paying down a mortgage decreases your net worth. What you want to do is maintain as high a level of quality debt as possible, which means you should be looking to refinance your investment properties every seven years. Take the cash out and finance more properties. Obviously, these few paragraphs don’t tell the entire story but this foundational material is valid. It’s how Jason, starting from modest circumstances, turned himself into a multi-millionaire before the age of 30.
The amazing part of this strategy is that it works better in the face of inflation. There is no other investment on the planet that can make the same claim. If you want to learn more about this incredible way to ratchet up your personal wealth with less risk than the stock market, get started by going to JasonHartman.com and listening to his series of short podcasts called the Speed of Money. From there you’ll be ready to move on to the Creating Wealth Show archive, stay updated on new blogs, and perhaps decide to attend the Master’s Weekend this fall. We’ll let you know when the date and time are set.
The Solomon Success Show
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