The Greatest Financial Gift You Can Give to Your Children

I wrote this essay for your children and grandchildren.

You’ve probably heard about America’s huge debt load. The U.S. government’s financial obligations now exceed $663,000 per American family. This burden will fall on the youngest Americans.

It’s unethical. It’s unfortunate. But it’s the reality.

With this giant financial obligation bearing down on them, it’s critical that now – right now – your children and grandchildren learn about money and finance. They need to know the basic principles… like how to be independent, why debt is dangerous, and how to grow money.

They don’t teach finance in schools. If you don’t teach them this knowledge, no one will. They call this financial illiteracy.

If our children are financially illiterate, they have as much chance of survival as a swordsman in a gunfight. There will be no mercy for the financially illiterate in the future. It’s likely these people will live as indentured servants to the government and its creditors.

But if our kids have a grasp of finance and its basics – and they obey its laws – they will grow up rich. They will be in a position to help other Americans, too.

Below, you’ll find the three vital financial concepts all children need to understand. Please pass them on to your children and grandchildren as soon as you can. I have three children… And these three concepts are my starting point for their financial education.

First of all, our kids must know that they are not entitled to money or wealth… or anything for that matter, even Christmas presents. They must earn money. I want my children to learn that they shouldn’t expect anything to be handed to them. I don’t want them to rely on the government for their livelihood, like many people do right now.

So many people treat money and prosperity as an entitlement. The government even calls its welfare programs “entitlements.” This word – and what it represents – gets stamped into young people’s brains. Kids act as if they are somehow entitled to toys, video games, and cars. But why should they be? Just because they have parents, it doesn’t mean they should get everything they want.

It's good to regularly remind your children of this when they are old enough to understand it. Not paying kids an allowance is a great start. An allowance would reinforce the sense of entitlement. They can make money by earning it: doing the dishes, making their beds, mowing the lawn… there are a million things. It's better to pay them for doing those things. But I’m not going to just give them money.

The second concept our children need to understand is debt. Debt is expensive. If you abuse it, it will destroy you. Like the entitlement mentality, debt is an enslaver. It robs you of your independence. I avoid debt in my personal life… and when I’m choosing investments.

The best way to illustrate the cost of debt is to calculate the total amount of interest the debt generates in dollars over the lifetime of the loan, instead of looking at the interest rate (like most people do). Once you look at it like that, you can see how expensive borrowing money really is.

For example, say you borrow $100,000 with a 30-year mortgage at 7%. Over 30 years, you’ll end up paying $140,000 in interest to the bank. In the end, you’re out $240,000 for a house that cost less than half that. Not a good deal.

The third thing our kids need to learn is the power of compound interest and the best way to harness it.

Compound interest is the most powerful force in finance. It is the force behind almost every fortune. The brilliant Richard Russell calls compound interest “The Royal Road to Riches.” And it’s mathematically guaranteed.

Let’s say, for example, you have $100 earning 10% annual interest. At the end of a year, you’ll have $110. During the second year, you’ll earn interest on $110 instead of $100. In the third year, you’ll earn interest on $121… and so on. This is the power of compound interest. The numbers get enormous over time, simply because you’re earning interest on your interest.

Because time is the most important element in compounding, it’s an incredibly powerful idea for children to understand. They have the ultimate edge in the market: the time to compound over decades.

The stock market is the best place to earn compound interest. You buy companies that have 50 years or more of rising dividend payments ahead of them. Then you let the mathematics work.

As soon as your kids are old enough to understand some arithmetic, you can sit down with the classic compounding tables and show them which stocks they have to buy. I’ll use Coca-Cola, Johnson & Johnson, and Philip Morris as examples.

Another very safe place to save and compound your money is our “Income for Life” strategy. 

After that, assuming they have the discipline to follow through, they will get rich. There’s no doubt about it.

In sum, you have the responsibility to educate your family about finance. If you don’t, no one else will, and they will suffer for it.

Encourage them to work hard and avoid the entitlement mentality. Teach them the power of compound interest and explain the dangers of debt.

If you do this, you will equip your kids and grandkids to survive financially in the difficult circumstances ahead. You’ll provide them with something that nobody can place a price on: the power of independence.$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…
 

Click here to watch the video and start your own premium traffic business today!]

How to Create Personal Wealth

Donald and Mildred Othmer were ordinary Americans. Don was a chemical engineering professor in Brooklyn. Mildred was a teacher. They never did anything extraordinary and never had great luck at anything, yet they did amass a $750 million fortune before they died.

They did it by following two principles that we talk about constantly:

1. Have a second income. Both Don and Mildred developed secondary sources of cash. Don wrote and filed patents. Mildred worked as a buyer for her mother’s dress shop. This extra income wasn’’t ever phenomenal, but it was, for many years, significant (in the range of $15,000 to $50,000 per year).

2. Invest it wisely. The Othmers put all of that secondary income into “value” investments. Since they understood that they did not and would never understand other people’s businesses well enough to predict how they would perform, they invested their extra income in businesses that had good “fundamentals.” The stocks they invested in represented companies with a steady history of growth and earnings. They favored businesses they could understand.

Luckily for them, they found one company with a growth plan that reflected their conservative investment philosophy: Berkshire Hathaway Inc., Warren Buffet’’s company. The Othmers were so impressed with Berkshire and with Buffet’s analysis that they bought $50,000 worth of the company’s stock. How good an investment did that turn out to be? They saw their $42 shares go up to $77,250. You don’’t need to be lucky enough to pick Warren Buffet as your stock adviser to become wealthy. Had the Othmers invested in any ordinary index fund (or even municipal bonds), their net worth would have been in excess of $100 million. That’’s plenty enough for a comfortable retirement, don’’t you think?

The Othmer formula — having a second income and investing it wisely — applies to folks who have regular jobs and don’’t have the nerve to give them up. If you have your own business, you should not find something additional to do but instead do more in your business. Treat that “more” as a second job and take all the money you make from that and treat it exactly as the Othmers did. The important thing is to develop a comfortable lifestyle that allows for all your needs to be met on your “regular” income and then create — for your personal wealth fund — an additional $5,000 to $50,000 a year (or more if you can) that can grow steadily, taking advantage of the miracle of compound interest.

Here’’s what you can do today: Figure out how to make an extra $5,000 to $50,000 in the next 12 months and promise yourself that you will invest every penny of it.$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…
 

Click here to watch the video and start your own premium traffic business today!]

4 Steps To Wealth Building

““The harder I work, the luckier I get.”” – Lee Trevino

If you want to be wealthy one day, there are four things you must do:

1. Master a financially valuable skill.

2. Develop a high income.

3. Invest conservatively in other businesses.

4. Invest aggressively in a business you know.

I'’ll talk in more detail about each of these at a later time, but for today I’'d like to clarify what I mean by “financially valuable skill.”

A financially valuable skill might include doctoring or lawyering, but for the purposes of this and future conversations, try to think of them as falling into one or several of three categories:

* speaking well

* writing well

* thinking well

Speak And/Or Write Well And They Will Follow You

In any organization or organized system, power moves inexorably to those who are persuasive. The means of communication you develop doesn't matter so much. What counts is that you have a way to convince people that your ideas are worthwhile.

It goes without saying that you don’t need flawless grammar and a good vocabulary to be persuasive. They can help, but they are minor skills in the Art of Rhetoric.

All Difficult Problems Are Collections Of Simple Problems

By thinking well, I mean having the ability to analyze a problem and figure out its component parts, what it is made up of and how important each of these pieces is. If you apply this thinking to a business situation,– say analyzing a market,– you can figure out solutions before your colleagues have begun to figure out the problems.

Great marketers are really great thinkers. They look at a complicated market, break it down into understandable patterns, and develop a selling program that reflects those patterns. If you can figure out how to sell products/services when everybody else is throwing up their hands in despair, you’ll be rich and powerful sooner (probably) than you even want to be.

To make a high income (in excess of $100,000), you almost have to have one of these skills.

Spend some time today thinking about what kind of valuable skill you have and how you might use it to get your income up – at least to a hundred grand. More if you want more.$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…
 

Click here to watch the video and start your own premium traffic business today!]

Are the Rich Smarter Than You?

“Well if you’re so damn smart, why aren’t you rich?”

I heard this question asked when I was young, and it ingrained in me the notion that the rich must have a little something extra going on upstairs, otherwise, we’d all be rolling in it. Right?

There is, in fact, some evidence to support this. According to a recent report from the U.S. Census Bureau, there is a strong positive correlation between income and education. Over an adult’s working life, on average…

• High school graduates should expect to earn $1.2 million.
• Those with a bachelor’s degree, $2.1 million.
• Those with a master’s degree, $2.5 million.
• Those with doctoral degrees, $3.4 million.
• Those with professional degrees, $4.4 million.

But here’s the rub. Studies show that those who earn the most aren’t necessarily the richest…

How to Determine Real Wealth

To determine real wealth, you need to look at a balance sheet – assets minus liabilities – not an income statement. According to the late Dr. Thomas J. Stanley, the bestselling author of The Millionaire Next Door and perhaps at the time the country’s foremost authority on the habits and characteristics of America’s wealthy. Many of his findings are just the opposite of what you’d expect.

For example, we generally envision millionaires as Bentley-driving, mansion-owning, Tiffany-shopping members of exclusive country clubs. And indeed, Stanley’s research reveals that the “glittering rich” – those with a net worth of $10 million or more – often meet this description.

But most millionaires – individuals with a net worth of $1 million or more – live an entirely different lifestyle. Stanley found that the vast majority:

• Live in a house that cost less than $400,000.
• Do not own a second home.
• Have never owned a boat.
• Are more likely to wear a Timex than a Rolex.
• Do not collect wine and generally pay less than $15 for a bottle.
• Are more likely to drive a Toyota than a Beemer.
• Have never paid more than $400 for a suit.
• Spend very little on prestige brands and luxury items.

This is certainly not the traditional image of millionaires. And it makes you wonder, who the heck is buying all those Mercedes convertibles, Louis Vuitton purses, and $70 bottles of Grey Goose vodka? The answer, according to Dr. Stanley, is “aspirationals.” People who act rich and want to be rich, but really aren’t rich.

Many are good people, well educated, and perhaps earning a six-figure income. But they aren’t balance-sheet rich because it’s almost impossible for most workers – even those who are well paid – to hyper-spend on consumer goods and save a lot of money. (And saving is the key prerequisite for investing.)

This notion shocks many Americans. During an Oprah appearance, Dr. Stanley was asked the following question from a member of the audience, one he’d heard hundreds of times before:

“What good does it do to have all this money if you don’t spend it?”

She was angry, indignant even. “These people couldn’t possibly be happy.”

Keeping Up With the Joneses and Smiths

Like so many others, this woman genuinely believed that the more you spend, the better life is. Understand, we’re not talking about people who live below the poverty line. (Clearly, their lives would be better if they were able to spend more.) We’re talking about middle-class consumers and up, those who often live beyond their means and then find themselves under enormous pressure, especially in a weak economy.

Some were overly optimistic about their earning prospects. Others didn’t realize that they are up against an army of the best and most creative marketers in the world, whose job it is to convince you that “you are what you buy,” that you need to outspend – to out-display – others.

The unspoken message behind the constant barrage of TV and billboard ads featuring all those impossibly good-looking men and women is that you are special, you are deserving, and you need to look and act successful now.

According to Dr. Stanley, “The pseudo-affluent are insecure about how they rank among the Joneses and the Smiths. Often their self-esteem rests on quicksand. In their minds, it is closely tied to how long they can continue to purchase the trappings of wealth. They strongly believe all economically successful people display their success through prestige products. The flip side of this has them believing that people who do not own prestige brands are not successful.”

Yet “everyday” millionaires see things differently. Most of them achieved their wealth not by hitting the lottery or gaining an inheritance, but by patiently and persistently maximizing their income, minimizing their outgoing, and religiously saving and investing the difference.

You Aren’t the Car You Drive or the Watch You Wear…

They aren’t big spenders. They just recognize that real pleasure and satisfaction doesn’t come from the car you drive or the watch you wear, but time spent on activities with family, friends, and associates.

They aren’t misers, however, especially when it comes to educating their children and grandchildren – or donating to worthy causes. Although they are disciplined savers, the affluent are among the most generous Americans in charitable giving.

Just how prevalent are American millionaires? According to the Spectrum Group, there were 8.39 million U.S. households with a net worth between $1 million and $5 million at the end of 2014. Very few of them won a Grammy, played in the NBA, or started a computer company in their garage. Clearly, thrift and modesty – however unfashionable – are still alive in some parts of the country.

So while millions of consumers chase a blinkered image of success – busting their humps for stuff that ends up in landfills, yard sales, and thrift shops – disciplined savers and investors are enjoying the freedom, satisfaction, and peace of mind that comes from living beneath their means.

These folks are turned on not by consumerism but by personal achievement, industry awards, and recognition. They know that success is not about flaunting your wealth. It’s about a sense of accomplishment… and the independence that comes with it. They are able to do what they want, where they want, with whom they want.

They may not be smarter than you, but they do know something priceless: It is how we spend ourselves – not our money – that makes us rich.$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…
 

Click here to watch the video and start your own premium traffic business today!]

How to Stop Losing Half of Your Money and Live Without Worry

Every eight to 10 years, inflation cuts the wealth you have in cash by half.

The Bureau of Labor Statistics says the inflation rate has averaged 2.6% since 1990. In fact, it’s at least twice that much. And it could be four times that much…

You see, in 1990, the government changed the way it calculates inflation. It conveniently removed certain costs from the Consumer Price Index calculations. Those included the prices of fuel and other commodities.

If you use the older, more credible government calculation, inflation for the last 20 years would average 6.5% per year. And according to the American Institute for Economic Research, it is actually closer to 8%!

An inflation rate of 8% means that $100,000 in cash today will be worth only $46,319 in 10 years. That’s more than half its value, gone.

In 20 years, it’s only worth $21,455. In 30 years, it’s worth an abysmal $9,938.

What can you do to protect yourself?

When most people think about arming themselves against inflation, they think in terms of investing: investing in hard assets and high-quality companies that can charge more for their products as their cost of goods increases with inflation.

They are great inflation hedges. But will this “Wall Street strategy” really help you?

Sure, but not nearly as much as Wall Street would have you think. That’s because they protect only a tiny part of your overall cash flow.

Let me ask you this: What percentage of your income do you save every month?

If you are like most U.S. citizens, you save a paltry 5.8% of your income. Put differently, Americans spend an astonishing 94.2% of their income.

When you are spending 90%-plus of your income every year, it is difficult to protect yourself against inflation. This is because investment hedges (such as the ones I described) benefit only the cash you put into them.

Let’s use some numbers as an example to make the point clearer.

Say you earn $100,000 of income. And let’s say you’re fortunate enough to save 20%, or $20,000. You put it in a traditional inflation hedge, such as gold or real estate.

Next, let’s say inflation spikes 10% in one year. We’ll assume that means your inflation hedge will increase by the same amount. If your inflation hedge rises 10%, it will increase your overall net worth only by $2,000.

And that’s if you save 20% of your income. Remember, the typical American only saves a little over 5%.

I hope you’re beginning to see how Wall Street’s laser focus on nothing but inflation-hedge investments is incomplete. It’s kind of like going to the emergency room for a broken leg, but the doctor insists everything will be OK if he just Band-Aids the scratch on your leg.

What’s the answer, then?

When I sit down with new clients, I tell them something that very few in the investment world say:

“You cannot hope to get wealthy by investing alone.”

You need to base your foundation of true wealth building on

• increasing the proportion of your income that you save and
• increasing your income.

These same strategies are also the solution to beating inflation.

Think about it: How can you grow wealthy when 80%-plus of your costs are going up because of inflation, yet only 5% of your income is in an inflation-protected asset? How can you grow wealthy when your boss gives you only 3% yearly cost-of-living wage increases, but inflation is rising at 5%?

The truth – the boring-yet-powerful truth – is that the two most effective ways to combat the pernicious effects of inflation are to decrease the amount of money you spend every year and to increase the amount of money you earn.

I have lots of ideas on how to spend less… You might see them in a future essay. But today, I’d like you to follow me for a moment as I use an analogy…

Imagine a water faucet pouring into a bucket. Your goal is to fill the bucket. But in the bottom of the bucket, there is a large hole that’s leaking water.

You probably know where I’m going with this. The faucet is your income – filling the bucket (your wallet) – and the hole in the bottom of the bucket is inflation – draining it.

Just spending less and saving more would be like trying to put Scotch tape over the hole in the bucket to stop the leaking. It will help, but you’re still going to lose a lot of water. You’re still losing to inflation. What now?

Then we turn to focusing on how much water is pouring out of the faucet.

In other words, you need to increase your active income. You need to make sure your active income is increasing at the same rate as the inflation rate, if not faster.

For every drop of water leaking out of the hole, you need at least a drop – if not more – pouring in from the faucet.

There are two primary ways to do this.

One, you become so valuable at your current job that your bosses reward you with a higher salary.

What could you do that would set you apart from the other employees? What could you do that would truly add value for your boss or the company? What actions could you take today that will get you noticed as valuable and irreplaceable?

I’ll give you a hint. Your job is to produce long-term profits. In other words, your job is to help your company make more money.

The secret to getting above-average raises each year is to accept that as your fundamental responsibility – and to transform the work you are doing now in such a way that it will produce those long-term profits.

To achieve this, do everything in your power to become the most valuable person in your company. Arrive early. Work hard and work smart. Volunteer for projects. Take initiative. Become the “go to” person for ideas and solutions. Become indispensable.

That way, your boss (or even your boss’ boss) will reward you with bigger raises and compensation (pay raises that are at least as much as the annual increase in inflation).

The better you can do it, the more money you will make. It’s as simple as that.

If increasing your salary from your primary job isn’t a possibility for whatever reason, you must focus on the second way of earning more income: finding or creating a new stream of income.

There are many ways to generate extra income. Working a second job. Freelancing… consulting… blogging… copywriting…Uber... the possibilities abound.

But the key is to begin looking right now. Start a Google search. Make a phone call to ask questions. Set up an informational interview to learn more about a possibility. The point is, take action.

As I have explained many times, “There is no faster or surer way to become wealthy than by creating extra income and allocating it toward one’s investments.”

Wall Street declares that you can beat inflation by simply investing in the right kind of assets. And yes, while that is important, that strategy alone will not beat inflation.

The best way to combat and beat inflation is to spend less and earn more.

I can promise you this: A month after you start implementing the strategies I showed you today, you will feel much better about the threat of inflation.

And as time passes, you will be able to sleep comfortably at night. You’ll know that you are immune to inflation’s malicious effects.$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…
 

Click here to watch the video and start your own premium traffic business today!]

7 Wealth-Building Lessons from Billionaires

There is no shortage of billionaires today. In 1985, there were fewer than 20 of them. Today, they number well over one thousand.

One of the best ways you can create and maintain wealth is by following the lead of people who’ve already done it.

About 33 percent of the very rich got their money through inheritance. The Waltons, for instance. The rest – two out of three – created their wealth through business. About half of those mega-entrepreneurs started with family money, and the other half started from scratch. These are the people – like Bill Gates, Warren Buffett, Sergey Brin, and Larry Page – who earned the wealth they have. These are the people I’d listen to if I wanted advice on how to succeed today.

I don’t know any of these billionaire entrepreneurs (BEs) personally, but I’ve done a lot of reading about them. I figured you might want to know what makes them tick and how they got where they are. Here is what I’ve discovered:

• Formal education matters – but not always. The great majority of BEs – about 90 percent – have a college degree. But it’s not necessary for success. Among the world’s super-rich today, Bill Gates, Fred DeLuca, David Geffen, and Andrei Melnichenko didn’t graduate from college. And David Murdock (Dole Foods), S. Truett Cathy (Chick-fil-A), and Richard Desmond (British publishing magnate) never finished high school.
• BEs work harder and longer than the people who work for them. Most say they work 50 to 55 hours a week. Some, like centibillionaire Canadian communication mogul Ted Rogers, work 12 hours a day. And some, like Bill Gates (when he worked at Microsoft) and eBay founder Jeff Skoll, took no vacations for years while their businesses were growing.
• BEs are constantly looking for profit opportunities. When they hear about an economic or business development, they think, “How could I profit from that?”
• BEs don’t dwell on mistakes. They view problems as learning opportunities. “I don’t remember any mistakes,” the late pharmaceutical billionaire James Sorenson told Forbes, “only the opportunity to overcome problems.”
• BEs think neither completely positively or negatively, but strategically. Instead of thinking, “That’s impossible” or “I can do anything,” they think, “Is that possible?” and “If it is, how could I do it?”
• BEs don’t believe in luck. In a Forbes poll of the 400 richest people in the world, none said they had become wealthy entirely by luck. Some said they considered luck to be a minor factor. Most, like Oprah Winfrey, consider luck an outsider’s way of describing someone who works hard and seizes opportunity. “Luck,” Winfrey says, “is preparation meeting a moment of opportunity.”
• BEs are not driven primarily by money. “Studies show that the desire for financial success is no stronger among entrepreneurs than among those not starting a company,” says entrepreneur expert Kelly Shaver. Wharton School management professor Raphael Amit agrees: “No one is saying they don’t like their wealth; but what matters more is the innovation, the intense commitment they have to an idea and the difference it can make. Money is a byproduct.”

If you want to survive and prosper in the 21st century, emulate the habits of the world’s richest people. Educate yourself about money. Make conservative investments. And seize opportunities to start and/or invest in entrepreneurial businesses.$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…
 

Click here to watch the video and start your own premium traffic business today!]

The 3 Secrets of Self-Made Billionaire Investors

Warren Buffett was born in 1930 and became a child of the Great Depression. Today he’s worth in excess of $50 billion.

George Soros was born the same year, and became a child of the Great Depression, the Holocaust, and WWII. According to Forbes.com, he’s worth over $19 billion.

Carl Icahn was born in 1936. He was once so broke, he had to sell his car to feed himself. Forbes.com says he’s worth around $20 billion today.

All started with nothing. All wound up billionaires. All did it by investing.

At first glance, they don’t seem to have much in common… Buffett buys stocks and whole companies and says his favorite holding period for investments is “forever.” Soros became a billionaire by making huge leveraged trades in stocks and currencies. Icahn buys controlling stakes in public companies and badgers management to sell assets, buy back shares, and do anything it can to realize hidden value.

But they do have some traits in common, a few core investing ideas that helped make them billionaires. Like every great secret of life, this one is hiding in plain sight. These three self-made billionaire investors…

1. Don’t diversify
2. Avoid risk
3. Don’t care what anyone else thinks

No. 1: DON’T DIVERSIFY. CONCENTRATE.

Consider what is likely your greatest source of wealth generation: your career. You probably haven’t diversified at all in your career. Even if you tried many different careers, you were never doing several of them at once. And, even if you do more than one job, it’s highly likely you spend the great majority of your time at just one of them and that just one provides the great majority of your income.

Why should investing be any different?

For many years, Buffett had most of Berkshire Hathaway’s money in just four stocks: American Express, Coca-Cola, Wells Fargo, and Gillette. Today, most of Berkshire Hathaway’s money is still in just four stocks: Wells Fargo, Coca-Cola, IBM, and American Express.

No. 2: AVOID RISK

When Carl Icahn bought Tappan shares, he was paying around $7.50 each. But he knew by looking at the balance sheet that the company was clearly worth $20 per share if it were broken up. That’s a 62% discount to fair value, a very safe bet.

After Tappan, Icahn targeted a real estate investment trust called Baird and Warner. At the time he found it, the stock was trading for $7.89 a share. Its book value was $14 a share. That’s a 44% discount to book value, and a generous margin of safety.

Soros manages risk differently than Icahn and Buffett. He says the first thing he’s looking to do is survive, and he’s known to beat a hasty retreat when he’s wrong. He keeps loss potential in mind before trading. When he shorted $10 billion of British pounds in 1992, he first calculated that his worst-case loss scenario was about 4%.

No. 3: THINK FOR THEMSELVES

Wall Street wouldn’t buy shares of The Washington Post when Buffett started buying it in February 1973. That’s true, even though most Wall Street analysts acknowledged that this was a $400 million company selling for $80 million. They were too scared because the overall market had been falling for some time.

Soros talks to lots of people to get a feel for where a market is going. But he never talks about what he’s buying or selling. He just does it.

Carl Icahn doesn’t need Wall Street, because he has his own research team. Icahn’s people comb through thousands of listed companies to find the ones that are right for his corporate-raider style. Icahn has to have his own research team. If he bought research from Wall Street, the whole world would figure out what he was doing, and it would become difficult to buy shares cheaply.

Think for yourself, avoid risk, and don’t attempt to diversify into a bunch of investments you don’t understand.

If you really want to get rich in stocks, those three rules are your foundation.$

[Do you know how Facebook and Google became the most powerful companies in the world?

It’s NOT helping you share pics of last night’s dinner...
It’s NOT searching for drunken cat videos…

And it’s DEFINITELY NOT about free Gmail accounts.
 

The simple truth is Facebook and Google SELL TRAFFIC.

They SELL TRAFFIC to business owners, and that advertising revenue alone has turned them into billion dollar companies.
 

Traffic is the most valuable commodity on the internet, and that will never change.
 

This is why using the Traffic Authority business system is the ultimate way to make extra income in your business…
 

Click here to watch the video and start your own premium traffic business today!]