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!]

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!]

The Best AND Worst Investing Advice

Would you like to earn an 18% yield on one of the world’s safest investments?

It’s something anyone can do.

You simply need to learn one of the great investment secrets in the world.

Here it is…

When it comes to investing, boring is big money.

Boring causes “investment magic” to happen.

Boring can provide you with financial freedom.

For example, let’s study one of the greatest investment stories of all time: Procter & Gamble (P&G)…

Most every house in America has at least one P&G product somewhere in a medicine cabinet, pantry, or storage closet. P&G is one of the world’s top consumer-products businesses. Every year, it sells billions of dollars’ worth of everyday products like Gillette razors, Pampers diapers, Charmin toilet paper, Crest toothpaste, Bounty paper towels, and Tide laundry detergent.

Razors… diapers… toilet paper… toothpaste… paper towels… laundry detergent.

You could hardly think up a more boring product lineup. It’s nothing that will interest the average investor.

But great investors see something unusual in it. They see something that others do not. They are able to see a wealth-producing “golden thread” running through P&G’s products.

Not many people can see this golden thread. That’s why most individual investors have zero interest in owning such a boring business.

But it’s a source of tremendous power. It’s one of the great secrets of successful long-term investing.

And it’s why seasoned, sophisticated investors have HUGE interest in owning them. For many elite investors, it’s ALL they want to own.

They know when it comes to investing, boring is big money.

You see, in 2014, Procter & Gamble shareholders received a cash dividend of $2.52 for every share owned.

Procter & Gamble’s dividend in 2014 was 7% more than the dividend paid in 2013. The dividend paid in 2013 was more than the dividend paid in 2012… which was larger than the dividend paid in 2011… which was larger than the dividend paid in 2010.

The dividend increases were no surprise to longtime owners of Procter & Gamble. It was simply business as usual. P&G has increased its dividend paid to shareholders every year for more than 50 years. To P&G investors, larger cash payments are a fact of life.

Because P&G has increased its dividend every year for more than 50 years, a kind of investment magic has happened. P&G is rewarding longtime shareholders with incredible amounts of cash.

An investor who bought P&G in 1994 at around $14.25 (split-adjusted) began earning a 2.3% dividend yield on his investment. Since P&G’s annual dividend has increased every year and shares have split a couple times along the way, that same investor is now earning an astounding 18% on his original investment.

Remember, P&G’s dividend yield rises every year. It’s one of the safest, most reliable income streams on the planet. Earning an 18% yield on P&G is incredible when you consider that many investors take huge risks in the pursuit of 5% dividends. They buy businesses with dangerous debt levels. They buy dangerous commodity investments that can plunge with the price of a commodity like crude oil.

But not longtime P&G owners. They’re earning huge dividend yields that rise every year, paid by one of the world’s strongest, safest companies. That’s investment magic.

If you’re new to investing, you’re probably groaning right now. You’re likely drawn to stocks with huge growth potential. You’re drawn to the hot companies featured on magazine covers and financial television. You’re always looking for the opportunity to double your money in months. You spend your time trying to find “the next Facebook” or the “next Apple.”

P&G isn’t going to increase its revenues 50% with some great new invention… so you probably have no interest in it.

This is the amateur mindset. It’s the gambler’s mindset. And if you have it, don’t worry. You’re not alone. You’re only human. Starting out, it’s perfectly normal to think this way. But as I’m confident you’ll eventually learn, it’s a reliable way to lose all your money in the stock market.

You can buy all kinds of businesses in the stock market. You can buy bank stocks… gold-mining stocks… retail stocks… biotechnology stocks… semiconductor stocks… and software stocks.

When it comes to choosing which investments to make, people naturally gravitate to companies with exciting stories. They gravitate to companies “poised on a breakthrough” or “set for 50% annual growth.” After all, the potential upside with these firms is huge.

But what people fail to realize is that buying these kinds of stocks is playing a low-probability game. For every mega-hit social-media website like Facebook, 1,000 other Internet businesses failed. For every Starbucks, 1,000 other restaurant franchises flopped. Sure, the one company you buy might beat the odds, but it’s unlikely. The odds greatly favor you losing money.

On the subject of odds…

What do think the chances are that people will continue to buy trusted brands like Tide detergent, Pampers diapers, and Crest toothpaste? What are the chances P&G increases its dividend next year just like it has done for more than 50 consecutive years?

Very high. Nearly guaranteed.

Those are the kinds of odds great investors look for. You can find them in boring businesses like P&G. You can find them in dominant companies that sell candy, like Hershey. You can find them in dominant companies that sell soda, like Coke. You can find them in self-storage businesses (people will always need places to store their stuff).

None of these businesses are particularly exciting. They just enjoy the most consistent and reliable cash flows in the world. Great investors looking to make long-term capital commitments are drawn to them because of it.

Although this idea immediately makes sense to most folks, few people actually apply it to their investing when they’re getting started. Most folks can only come around to this idea after suffering painful losses in “exciting” investments. Your parents can tell you not to touch a hot stove, but you probably won’t learn not to touch a hot stove unless you actually touch it yourself.

Something to keep in mind: An investment’s excitement level is usually an inverse of its likelihood of success.

Nowadays, I’m much more likely to be interested in a candy or beer company that pays reliable dividends than I am in a small biotech company. I’m more interested in the boring, reliable, tax-free income paid by municipal bonds than I am in a small semiconductor stock.

I’m more interested in steady income streams deposited into my accounts than the excitement of gambling on the “next Facebook.”

I don’t know what the next popular website will be. I don’t know who is going to make the next popular tech gadget. But I am confident that no technology will render having a beer after work obsolete. That’s the kind of confidence we want in our long-term investments.

Like most any great money lesson, we see this at work by studying investment legend Warren Buffett.

Over the course of his 40-plus-year investment career, Buffett has, for the most part, shunned high-tech investments. He has consistently focused on boring consumer franchises. He has made large investments in Procter & Gamble, candy maker See’s Candies, beverage maker Coca-Cola, gum maker Wrigley, and retail giant Wal-Mart.

Buffett buys these types of businesses because new technologies are much less likely to disrupt their industries. They are likely to retain their competitive advantages. A decade ago, Coke was the dominant soda company. It will probably be the dominant soda company 10 years from now. It’s much harder to say those things about Internet sites or high-tech businesses.

Also, remember the wisdom of George Soros, who has made billions of dollars in the market. Soros says, “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”

I’m not saying you can’t make money in exciting stocks like biotech, high tech, and gold mines. You’re just unlikely to pull it off. If you want that kind of “spice” in your investment life, consider investing like a wealthy friend of mine. My friend is a conservative investor. He keeps the bulk of his portfolio in safe investments. But over the years, he has boosted his overall returns by placing tiny amounts of money in small, speculative, “exciting” investments. Several have been huge winners.

The key is to keep the bulk of your portfolio (at least 90%) in safe, boring investments that throw off dividends and interest. Invest tiny amounts of money in more speculative, “exciting” stocks.

But if you’re interested in long-term investment success, train yourself to be interested in things like diapers, mouthwash, self-storage, chocolate, beer, soda, municipal sewer services, and food. These everyday things enjoy constant demand… and the businesses that provide them enjoy consistent sales and profits.

None of this is exciting. It just works. And boring means big money.

If you’d like to improve your investment returns, I encourage you to think about the ideas in this essay.

Good investing!$

[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!]