Building Wealth

Books Financial Wizard David Bach Recommends

January 9, 2018 By Twila Van Leer

David Bach Book Recommendations — The six books David Bach recommends for those who want to improve their personal finances and build wealth

David Bach is one of the country’s leading financial gurus. His words of wisdom on personal finance are read in a dozen books and touted on top TV shows and other forums. So, what does he read on his own time? Here are six books that he recommends for those who want to improve their personal finances and build wealth:

• “Think and Grow Rich,” by Napoleon Hill. A journalist, Hill researched more than 500 self-made millionaires, including Andrew Carnegie, Henry Ford and Charles M. Schwab, to include in his 1937 best-seller. This classic explains that accumulating wealth has more to do with mindset and the drive to overcome psychological barriers than anything else. It tells you how to start “thinking your way to success.”

• “Business Adventures” by John Brooks. Self-made billionaires Bill Gates and Warren Buffett endorse this book, which posits that starting a business in the best way to start your march toward financial success. It was published in 1969, but though a lot of business practice has changed, the fundamentals stay the same.

• “Your Money or Your Life,” by Vicki Robin, Joe Dominguez and Monique Tilford. Millionaire Grant Sabatier, who claims to have read more than 360 books on personal finance, declares this one the best. It also was the first one he picked up. Another endorsement comes from Chris Reining, 38, who had logged his first million by age 38. The book reiterates over and again the idea that you exchange your life for money. The question then becomes, when you consider what you exchanged for a particular item: “What did I trade for this and was it worth it?”

• “Unshakeable,” by Tony Robbins. After interviewing some of the world’s greatest financial minds, Robbins created a step-by-step on how to transform your financial life and begin to grow wealth. He posits that you don’t have to predict the future to win the investment game. Focus on what you can control and you’ll be the master of your own investment fate, he writes.

• “The Little Book of Common Sense Investing,” by John C. Bogle. Wise investing is the core of building wealth, this author says. He is founder of the Vanguard Group and creator of the world’s first index fund. He details the simplest and most efficient strategy: low-cost index funds, Warren Buffet recommends this read.

• “The Automatic Millionaire,” by Bach himself. The book exposes a handful of money misconceptions that keep ordinary people from achieving financial goals. Bach insists that “you don’t need a budget, you don’t need a lot of money and you don’t even need willpower to accumulate a fortune.”

With 2018 just getting under way, there’s a reading list to keep you learning more about how you can manage your money and start realizing goals to increase your wealth. Happy reading!

And The Rich Get Richer

December 26, 2017 By Twila Van Leer

All over the world, one economic fact remains the same. The most rich people in every country continue to get richer and the poor share less of the wealth. Recent global statistics show that the wealthiest 1 percent of the population saw twice as much growth as those in the bottom half.

The middle class, which exists primarily in North America and Europe, has seen the most slippage over the past 40 years, according to the World Inequality Report 2018. While globalization of some industries has significantly raised incomes for hundreds of millions of people, particularly in China and India, that has been accomplished at the expense of manufacturing and other middle-income workers in the developed world.

The report is prepared by an international team of notable economists. In past reports, they have chronicled the increasing gap between the poor and the wealthy in the United States. The top 1 percent on the wealth scale held about 10 percent of the country’s wealth, the 1980 report showed. By 2016, that figure had risen to 20 percent. In Europe for the same time frames, the top 1 percent had gained less, showing just a 12 percent income share.

The researchers attributed the growing gap in the United States to less progressive tax policies. European countries tended to favor more support for education, which in turn enhanced earning power for the middle and lower classes in those countries.

The tax legislation recently passed in the United States will be most damaging to the country’s middle and low-income classes, most economists agree.

Secrets Of Some Millionaires

November 12, 2017 By Twila Van Leer

Millionaire Secrets — According to financial guru Dave Ramsey, more than 80 percent of America’s millionaires are ordinary people who have accumulated their wealth in one generation.

Everyone knows that when you have a million dollars, give or take a few, that you live high. Right?

Wrong. In some instances, people with a lot of money continue to live modestly. For instance, in 1958, Warren Buffet, whose net worth today is pegged in excess of $75 million, bought a home in a quiet Omaha neighborhood for $31,500. He still lives there, although its value now is more than $800,000. That’s still pretty tony, but not what you’d expect for one of the richest men in the world.

Actually, according to financial guru Dave Ramsey, more than 80 percent of America’s millionaires are ordinary people who have accumulated their wealth in one generation. Their stories are told in a book by Thomas Stanley, “The Millionaire Next Door.”

Among the lessons Stanley draws from his study of the ultra-rich:

They read. On average, they read at least one non-fiction book a month. Quoting late-President Harry S Truman, “Not all readers are leaders, but all leaders are readers.” A constant desire to learn is a hallmark of the successful. They spend more time in books, particularly biographies and leadership how-tos than with the latest reality show. When they have free time, they use it wisely.

They understand the principle of delayed gratification. Many of those with money have spent a lifetime of sacrificing immediate gratification for long-term gain. They aren’t afraid to own a used car, live in a modest neighborhood and wear inexpensive clothing. They don’t waste time and resources in the elusive race with “the Joneses.” They tend to save for the things that they want, including education, a down payment for a home, retirement.

The popular concept of “debt as a tool” evades them. They avoid debt and prefer to save for what they want. Car payments, student loans and same-as-cash financing are things they avoid. They end up with more of their own cash to do with what they want.

Budgets are important to them. Ending up with a million or more dollars doesn’t just happen to the majority of the wealthy. They plan and they budget to reach their goals. On a monthly (or more frequent) basis, they assess where they are visa vie their money. Even those with plenty of money to spend, such as Ramsey, track it down to the penny.

They share. The majority of those with money to spare share it with those less fortunate. They tithe at their churches, contribute to charities, give to more needy persons in their circles of family and friends. They plan ahead to look after loved ones through sufficient inheritances, instead of spending it all on too-much house, $500-per-pair jeans and other unnecessary items.

You may never have to deal with money on the level of a millionaire, but the same principles can work for you.

Middle Class Is Moving Up

October 22, 2017 By Twila Van Leer

“The national median household income rose to $59,039 — an increase of 3.2% from the previous year and the American middle class’ highest income level to date, beating the previous record of $58,655 in 1999 (all numbers are adjusted for inflation).” 2017 Business Insider

America’s middle class is moving up the financial ladder. But they can’t outpace the wealthiest Americans in economic growth, according to a Federal Reserve survey.

The figures show that the net worth of all American families rose 16 percent from 2013 to 2016. The median is the point at which half are above the figure and half below.

The time frame for the survey represents the recovery period after the 2008 recession. During that time, wealthy Americans saw more economic improvement than those in the middle class and whites saw more positive growth than either African-Americans or Latinos.

Two factors that have contributed to the improvement are the declining levels of unemployment and the recovery of the housing market, which has shown steady growth for the past few years.

The Survey of Consumer Finances still shows significant gaps between the middle class and the wealthy, economic gurus say. The middle tier is taking longer to recover from the recession. Those with wealth contribute more to the 16 percent improvement overall.

African-American families showed more improvement in net worth than did white families, the survey found. Median wealth for an African-American family was $17,600, up 29 percent since 2013. The increase for white families was 17 percent.

But white families enjoyed median wealth 10 times greater than for the African-Americans at $171,000. The white families also had median wealth eight times greater than Latinos. The median incomes for middle-class whites rose only 6 percent, but still easily outstripped the medians for other ethnic groups.

Median wealth for the richest 10 percent of the overall population rose by 40 percent, the survey showed, to $1.63 million, a disparity that would be hard to diminish quickly. That means that nearly 39 percent of all U.S. wealth is now held by 1 percent of the population.

The survey also divided people by where they live. City-dwellers saw median income increase by 10 percent and those outside cities just 2 percent.

Retirement Wisdom From An Expert

July 20, 2016 By Twila Van Leer

Expert advice for successful retirement.

If anyone knows how successful retirement works, it’s Warren Buffet. Over a lifetime he has become a hallmark of profitable market investment. A recent article in The AARP Magazine shares 10 keys to his success.

Keep A Cash Reserve

Keep a reserve of cash for emergencies and for unexpected opportunities. A rainy-day provision is essential, especially as retirement looms. The end of a regular paycheck means changes in cash needs. Now you must rely on Social Security and whatever other nest egg provisions you have made over your work career. Embellish your emergency fund to take care of any financial challenges. Tap the fund to respond to lucrative investment opportunities.

Invest In Companies That Provide Essentials

Boring companies don’t get any attention at parties, but you may find that there are great long-term returns from companies in more mundane industries. You may think, for instance, that toilet paper, baby diapers and soap are not exciting investments, but Buffett has successfully invested in Procter & Gamble, which has become a world leader in this market segment. Those who put $1,000 into P&G stock in 1986 and reinvested their returns would have more than $32,000 to show for it today. Boring companies who become tops in their industry niche often provide better rewards to shareholders than attention-grabbing upstarts.

How Effective Is The Brand?

Brand loyalty is something to look for in wise investments. Loyal customers will pay more for a product they like. Coca Cola is an example. The logo is known around the world, making it the third most valuable global brand in 2015. Its initial success as a soda drink has financed its expansion into other marketing areas. Invest in strong brands to get larger returns.

Look For Good Fund Managers

Good management is a keynote of successful businesses. Buffett notes that most companies eventually have to survive a bad manager, but when there is a great leader, the company prospers. He points to the outstanding examples of Bill Gates at Microsoft, Steve Jobs at Apple and Jeff Bezos at Amazon. A great manager and a strong business model is an unbeatable combination.

Learn From Your Mistakes

Avoid mistakes, but learn from them. Even Buffett admits to investing mistakes. He experienced a loss of about $450 million in a Tesco investment when the company fell afoul of accounting problems. When such things happen, the best way to recoup is to study what went wrong. Search out the warning signs, suck up the loss and use the information to avoid further market losses. Keep a record of mistakes and they’ll be a guide to better investing.

Stick With What You Know

Stick with what you know. The investment market is huge and intimidating, but Buffett believes you can succeed without being an expert. He avoided the technology revolution in the 1990s and so did not lose big in the tech bust that followed. If you are more familiar with particular areas of the market, put your money there.

Increase Your Buying Power

Look for what will increase your buying power over time. Investments that produce consistent income and steady growth are best. In 2011, Buffett looked at gold as an example of a non-income producing asset, overshadowed by such investment opportunities as croplands and petroleum companies. Retirees benefit in particular from income-producing investments that keep up or hopefully exceed inflation and that provide sustained purchasing power.

Buy At The Right Price

Don’t overpay. Even if a company is successful, a share price that is too high is a bad investment. Wait until an industry has settled before investing. Buffett waited on investing in energy companies until stock prices plunged after the decline in oil and natural gas prices. Make a watch list of interesting stocks and see if valuations fall to more suitable levels. Patience is a virtue in the world of investments.

Use A Buy-And-Hold Approach

Don’t make the same decision over and over again. When you are frequently trading, it increases the chances for missteps. The buy-and-hold approach puts more emphasis on what stocks you purchase in the first place. You may not want to hold a stock forever, but minimize the number of decisions you have to make. The more opportunities you allow yourself to make mistakes, the more mistakes you’ll make.

Look For The Spirit Of Innovation

Don’t avoid revolutionary investments. The business world is full of visionary individuals looking for ways to improve things. One for-instance is the forward momentum at General Electric, a long-time leader in world business. The company saw the opportunity for snapping up a leadership role in the wind energy and turbine business and became a pioneer in the renewable energy industry. Look for the spirit of innovation as an indicator of strong investment possibilities.