What is it about the Stock Market that is so enticing for me? I can't help but notice the millions of people making money on it. Sure you have your crashes here and there but in the long run a lot of people do come out on top. While you may be hearing that the economy is down and that there are no jobs out there and they are right to a certain point, there are still many people making a killing out there and there are still many investors still looking for their next big break.
I recently saw on CNN that a man had made an app for the iPhone and Android platform that managed to get $41 million dollars in investment money. Check it out here. That's crazy! Sure, he had overhead and a staff of very talented programmers he had to pay but $41 million dollars? That's a lot of money. This is just one of thousands of examples where people are out there making a killing in today's economy while you have others that can't find a job because they worked their entire lives in a profession that could be on its way to dying.
All of those people that used to work in making cars for GM and Chevrolet in Flint, Michigan lost their jobs and didn't know what else to do. Many lost their homes and everything they had worked their entire lives to make. This story has been told time and time again but there is a lesson to learn from this. The easiest way to make money in today's world is not to work for it but to allow others to work for it. Let me explain.
When you talk to older individuals they usually tell you that you should work hard when you are young so that you can retire and not have to work when you are old. They’re not wrong but there is another way to go about things. Let me be clear in saying that there is nothing wrong with working for someone else and that is in fact the best way to learn about a certain industry but it shouldn't be the only thing you do either. Many people are unaware but there is a higher level of living out there. In this higher level, people do not pay off a house throughout their entire lives; they buy a house in a day, cash, and then use it as an investment platform.
Most of us, regular people, think that they were just lucky and born to rich parents or got lucky and made it big doing some kind of niche market or the best one is they got lucky because they won the lotto. Well, if you win the Lotto, you are lucky but there is a much more normal way to make money, through the Stock Market. You might be telling yourself right now, "Oh, I've heard this time and time again and it's just so confusing. It's too much to take in and so I'm just going to forget it or stop reading this because it's not worth my time and effort." I know many people that start to blank out when I start talking to them about the Stock Market when it was them who asked me how I made so much money last year. It's true and I accept that learning something when you are used to doing something over and over again can be very difficult but even if it takes you 10 X the time it would someone fresh out of school it is still worth your time. The reason is because that those 6 months or year that you spend learning the ins and outs of how the Market works you will be multiplying your money for the rest of your life.
You can turn $1000 dollars into $2000 in one year without lifting a finger. I know that doesn't seem like much but remember that we're talking about multiplying here. So $1,000,000 dollars can make you $2,000,000 in the same year if you have enough capital to work with. Once you are this level though, people tend to take less risks when investing their money and tend to greatly diversify their investment ventures. Right there, I might have just lost you but what I mean is they would put all their money into one stock and hope it doubles up because that particular stock is going crazy. They will put a small amount that they are willing to bet with and put the rest of their money into something safer like real estate or less volatile (crazy) stocks.
This "higher" society doesn't live paycheck to paycheck and they don't live above their means either. Everything they sped is calculated because they don't work for their money, they have their money work for them. You see, money isn't tied to anything; it just kind of floats and changes in accordance to what people are willing to pay for things. A perfect example is the price of gas. Money is not tied to gas because if it was then the price of gas would never change. We could then, theoretically, buy things with gas as the currency. This is how it used to be with gold. Our money used to be tied to gold but we cut that tie a long time ago and now you hear things like the price of gold is going up. Well, that's true because the value of that paper in your wallet or in your bank is going down.
The reason for this is because we keep making more and more paper. So the question is why do we do this? Why do we keep printing paper? That's a good question and I have the answer for you. Are you ready? The answer is interest! Yup, interest, the money you need to pay back to the bank for lending you money in the first place. The reason for this is because banks control all of the money in the first place. So the money that you get from working is given to you by someone else that got that money from the bank. Does that make sense? So if I get money from the bank and give it to you for something you did I still have to pay interest on it because I borrowed that money to start a business. Not only that, the bank also tells me what that percentage of interest is going to be. If I think that interest rate is too high then I don't have to borrow it from them, I can go to someone else but I will eventually have to settle for some kind of interest because that is how they make their money right? But if the banks are the ones giving out all the money then how do we make money to give it back to them? If everyone's money comes from the bank then how do we give that money back to them without taking it from them in the first place? We can't! and so in order to pay for that interest rate we need that bank to print more money! And so that is why we have a 4% inflation rate every year! That means that you dollar is worth on average 4% every year than the previous one. That means that even if you save your money in the bank, where they pay you a certain percentage of interest every year one it, usually about 0.01% if you keep it in a regular checking account. You are still losing 4% of that every year without spending a dime of it.
You won't be losing any physical money, a dollar is still a dollar, but you will be able to buy 4% less than you would have been able to buy with each year that passes. The value of it goes down but not the amount. So even if you invest $1,000,000 dollars into a CD account, an account that the bank gives you to put your money into so that they can use it, and pay you about 4% a year on it which is $40,000 a year, you aren't actually anything. Sure, you're making $40,000 dollars a year but that just to covers that 4% increase in how much everything went up for that year. You would lose that every year of you had that money in the bank not collecting interest. Again, the bank wouldn't take that money from you, but the value of the $1,000,000 dollars would decrease about that amount every year.
So how do we fix this? How do we make more than 4% of the money we already have without actually working for it? The answer is investing! By investing, I don't mean to hand your money over to some guy, or girl, I mean to learn what to put your money into and to learn when to put it in. Many people doubled their money in a year when the housing market was booming, but then houses got so expensive that people couldn't pay them anymore and that's what happens when a market pops. The same thing happened in the 90s with the internet. People were buying stocks of companies that were coming out on the internet. The value of something goes up when a lot of people want to buy it. We buy things with money so if we give someone money for something that is going to up in value we are investing, we then sell it to someone else before people stop wanting to buy whatever we have for more money and that's how people that invest make money.
That person that we sold it to though might lose money if the value of what we sold to them goes down. So for every person that makes money there is someone that loses money. We can just as easily be that person that is going to lose money as that person that is going to make money. If you remember this then you will be cautious enough not to invest too aggressively and know when to back off. That is what a good investor does.
There are thousands of different markets to invest in and that's not taking into account international investing. So do your research, find something that you understand and like to learn about and let your money make money for you so you don't have to work so hard, or work at all. Good luck!
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