- “Investing is a plan, not a product or procedure.”
- “Financial intelligence is the ability to convert cash or labor into assets that provide cash flow.”
It’s difficult to build a jigsaw puzzle without seeing the cover of the box. Likewise, it’s difficult to invest wisely without a fiscal picture in mind. The most successful investors are the ones who can envision a picture—and who build rather than buy the pieces.
- There are five different types of professional investors:
- The accredited investor. They may be content with security and comfort rather than wealth, and may rely on advisors to develop and implement their financial plans.
- The qualified investor. This investor is well versed in either fundamental or technical investing.
- Technical Investing Techniques
- Short selling is borrowing shares from a broker and immediately selling them, prior to an anticipated drop in the stock’s price.
- Margin buying is borrowing money from a brokerage firm to buy securities. By law, up to 50 percent of the cost can be leveraged.
- An option is the right to buy (call) or sell (put) a stock at a specified price within a stipulated period
- A stop-loss order instructs a broker to sell a security automatically if it falls to a certain price
- Related Books:
- The technical investor is typically an S in the CASHFLOW Quadrant
- The sophisticated investor. The goal of this investor is to build wealth by developing a foundation of assets that can generate high cash returns with minimum payment of taxes.
- Sophisticated investors take risks but abhor gambling, hate losing but are not afraid to, are financially intelligent yet rely on experts to teach them more, own little in their names yet command great wealth.
- The inside investor. Building or owning a profitable business is the primary goal of this investor.
- The ultimate investor. The goal of the ultimate investor is to own a business that is so successful that shares are sold to the public.
GUIDE TO INVESTMENTS
- Good debt is debt that someone else pays for you.
- Bad debt is debt you acquire with hard-earned, after-tax wages, like a credit card loan for a new pleasure boat.
- “The rich don’t work hard for money. They have their money work hard for them.”
- A true investor does not become attached to any one investment option but uses different vehicles to assemble a financial plan.
- In general, investments come in one of three forms:
- paper securities, such as stocks and bonds;
- tangible objects, such as gold and real estate; and
- business ventures, such as franchises or start-up companies.
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