Tag: investment

investment, Stock Market

The Simplest Way to Invest #3

by Enes ÖnerLeave a Comment on The Simplest Way to Invest #3

In the previous post, we tried to create a portfolio using the Market Price / Book Value ratio. We looked at the results of an imaginary ₺100,000 investment in a period of one year and five years.

This post is going to be about the P / E ratio. This ratio, which is defined as the price-earnings ratio, is the ratio of the price per share of a company to the profit per share.

XYZ has one million shares -one million lots- in circulation. XYZ made a million dollars profit this year. So what is the earnings per share? It is a dollar. Let’s say one lot of XYZ is trading at $ 30 on the stock market. This stock you bought for $ 30 will bring you one dollar of profit according to the profit announced in a one-year period. Do you think this is a sensible investment? Of course not. This means that I will invest 30 dollars and only make a dollar profit. In that case, it will take 30 years for me to pay off my investment. That’s the rule. But of course, even a share with a P / E ratio of 180 can make a premium, increase or decrease. Why is that? Because the profit to be announced in the next balance sheet will increase, as a result of their follow-up, investors notice this in advance and start investing. So could there be another reason? Yes, it could be just a speculative increase. Think about it, you will make an investment. An airline stock catches your eye. This is when the Covid-19 cases are on the rise. The shares are on the rise; P / E ratios are very high and P / B ratios are also high; But there can be no sectoral expectations, you are in the middle of the Covid-19 pandemic. It is not possible for an airline company to make enough profit to raise its shares in this environment. Here you need to understand that the rise of this stock is speculative and perhaps even manipulative. There will be no stability in speculative ups. Risk is high due to lack of stability. You can buy the stock at a high value and watch its value decrease. So, we need to understand whether the increase or decrease of a share is speculative.

Let’s create our portfolio now. I will create a portfolio from the end of 2014 and the beginning of 2015. We will be watching a one-year performance. Just like I did at the P / B ratio, this time I will select four companies. The companies I choose will be those with the lowest P / E ratio. Remember, a low P / E ratio means the stock is cheap. Well, is there a rule that if it is less than 1 as in the P / B ratio, it is cheap, and if it is higher than 1, it is expensive? Nope. The basic rule here is that the P / E ratio can be at the smallest values higher than 0. Where the price of all is 190, 150 is cheap. If the price of all is 5, 8 is expensive. So, when looking at the P / E value, we will look at “others” and say something relatively. Here, taking “others” as other companies in the same industry will give a better, more reliable result.

For the above timeframe, the four companies I will add to my portfolio are: TUPRS, YKBNK, THYAO and ALBRK. (These are stock exchanges in Turkey.) 

Warning: This is not investment advice. The chart below is from 2015 and is without details. It was created to give an idea. The following companies are in Turkey.

Blue Line: My Portfolio

Orange Line: BIST100 (the average earnings of the 100 largest companies on the stock market in Turkey)

As you can see, the portfolio I created using ONLY the P / E ratio performed very superior to BIST. As my portfolio started the year with an index of around 3800; It ended the year with an index of around 6500. BIST started around 350 and finished around 420. While my portfolio made my ₺100 roughly ₺170; BIST’s overall index made ₺100 to ₺120. The inflation value for 2015 was 8.81%. Therefore, I have achieved a very superior performance as a result of a year investment with the P / E ratio. I was able to make a profit well above the inflation rate. Without tiring myself, without getting lost in many fundamental and technical analysis terms, without watching the indexes on the screen for hours; I could only create a portfolio that I controlled from balance sheet to balance sheet, month to month. This is actually the nature of the investment. Investing is not about trading constantly, but about making a satisfactory profit at the end of a certain period by investing money in the right places.

I will check my portfolio again at the beginning of 2016. I will examine the P / E and P / B ratios of the shares of four companies in my portfolio. I will examine other companies in the same sector, if the P / E or P / B ratio has increased too much and there are no new investments that may come from the company whose shares I bought, I will remove this company from my portfolio. I will look at the stocks of other companies. Since I know that this process will take some time, if I start all this work in early December 2015, I can start 2016 with solid research and knowing what changes to make in my portfolio. In this way, I can maintain around 70% profit per year with simple techniques. If I keep this investment for five years and keep my profit rate of around 70% by making the right moves, my ₺100,000 could reach around ₺1,500,000. Moreover, 70% rate is not bad annually for someone who is interested in the stock market, but it is not exactly what is desired. We expect 100% annual return in the stock exchange. But for this, we know dozens of techniques and follow closely. Therefore, it is not bad to have a 70% return without spending that much effort.

You may have noticed something. Return on investment with P / E was better than return on investment with P / B.

THE SIMPLEST WAY TO INVEST

THE SIMPLEST WAY TO INVEST #2

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The Simplest Way to Invest #2

by Enes Öner1 Comment on The Simplest Way to Invest #2

In the previous post, we talked about the importance of risk sharing and the need to create a portfolio to share risk. We said that the first step in creating a portfolio is to look at the P / B ratio of the shares we will buy. This ratio helps us to understand whether the lots we will buy are cheap or expensive. You can check the previous post for detailed information on this subject. In this post we will examine a sample portfolio.

Warning: This is not investment advice. The chart below is from 2015 and is without details. It was created to give an idea. The following companies are in Turkey.

In the first quarter of 2015, while looking at the P / B ratios of the company shares, I saw that the P / B ratios of ECILC, DOHOL, VESTL and TRGYO companies were low. This means their shares are cheap.

The blue line in the chart below shows the average earnings of these four companies ECILC, DOHOL, VESTL and TRGYO over 2015. The orange line shows the average earnings of the 100 largest companies on the stock market in Turkey (BIST100).

As you can see, the index created with these four companies has gained value in a year. I formed the index of the portfolio by looking at the values of the last four days of the stock exchange’s closing in 2014. The index of the portfolio was roughly 1480 at the time, while the BIST was around 400. By the end of 2015, while BIST did not even reach 500, the portfolio I created approached roughly 2300. This means that when 100 thousand Turkish Lira was invested, it became 155 thousand Turkish Liras at the end of 2015. If this performance continues for five years, when 100 thousand Turkish liras are invested, it becomes approximately 1 million 280 thousand Turkish Liras in five years. However, this portfolio may not show the same performance for five years.

When we create a portfolio, we need to check the P / B ratios of the companies we buy from their shares, and when we determine that the ratio has reached saturation according to itself and the sector, we need to sell our shares. Now we can get our profit. Then we can buy another cheap stock with a low P / B ratio and add it to our portfolio. If the P / B ratio of the company whose shares we bought does not reach saturation for many years, we can continue to make profit without effort.

Here, it is necessary to mention the loss of value of money. Suppose we buy 100 thousand Turkish Liras worth of shares and sell our shares for 1 million 280 thousand Turkish Liras at the end of five years. When we look at the inflation values between 2015 and 2020, we see that the purchasing power of 100 thousand Turkish Lira at the beginning of 2015 is equal to the purchasing power of 550 thousand Turkish Lira at the beginning of 2020. Still, we made 175% profit.

In this example, we saw that we made a profit without tiring ourselves on an investment we made just by looking at the P / B ratio. If we make the right investment and follow it correctly, we can easily make a profit. To be able to do this, there is no need to stress, watch the stock market for hours, sit in front of the screen all the time, learn technical analysis terms…

If you want to start investing, you can start by trying to identify stocks with a low P / B ratio. If you don’t have any experience yet, create a portfolio and follow it without buying shares. Or buy one lot from each of the companies you choose. This will cost around $ 25-50 on average. Follow the lots in your portfolio for a few months with online banking. By taking such small steps, you can start investing and gain experience.

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The Simplest Way to Invest #1

by Enes Öner2 Comments on The Simplest Way to Invest #1

People think investing is dangerous, risky or scary. But the only thing to do is to learn how to invest without worrying. Investing cannot be learned overnight. Still, it is something you can move forward quickly. It is possible to create the right portfolio by looking at very simple indicators and making very simple analyzes.

You need to create a portfolio for risk sharing. Professional investors say “don’t put all your eggs in one basket”. Because if all your eggs are in one basket, you may lose all your eggs when something happens to your basket. In this case, you have nothing else to compensate for your loss. Novice investors often make this mistake. However, when things go wrong, you should be able to balance the loss from one investment with another. If you have many baskets, it won’t be a big problem if one of your baskets falls. That’s why we must diversify our investments and create a portfolio.

As the first step in creating a portfolio, we should look at the P/B ratio of the companies we will buy shares. This ratio helps us to have an idea about whether the lot we will buy from that company is cheap or not. If the ratio of Market Value (P) and Book Value (B) is less than 1, the share is cheap. When it is higher than 1, we say the share is expensive. But of course this is not always the case. Sometimes, even if a company’s P/B ratio is 4, we consider that company’s stock cheap. Because the industry of the company may have started to improve. As a result of this, all profit rates and market values of companies in that sector increase. While the ratio of the company we are looking at is 4, the P/ B ratios of other companies in the sector may have reached values such as 8, 10, 15. Then we can think that the share of this company is cheaper than other companies for now and will be valued. However, the reason why a company’s stock is cheap is important. Is this company not yet valued in the industry or does this company have a problem? Did the company borrow money but couldn’t pay its debts? Was there a negative news in the media? Does the company have foreclosed assets? Is the owner / CEO a bad reputation?

It’s easy to learn all this. After typing the name of the company and “P/B ratio”, search on google. In the results, there will be sites showing the company owner, company executives and company partners. You can also search those names on the internet. Explore, find the site you can read most comfortably. What you have to do is google the code of a company that has publicly listed shares on the stock exchange. On the Internet you will find announcements, postings and notifications made by the company. Check them out too.

Let’s say you looked at company executives, company’s announcements and investments; you did not see anything negative. While the company’s P / B ratio was 4, the others in the same sector were 10, 15. If you haven’t seen anything negative, you can say that the shares of this company are cheap for now even though the P / B ratio is higher than 1. The cheaper will be valued. You can now add this company to your portfolio for medium term investment. But remember, don’t put all your eggs in one basket.

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How Can You Prepare Yourself for Economic Changes and Your Retirement Days? Don’t Stuck In Case You Lose Your Job

by Enes Öner1 Comment on How Can You Prepare Yourself for Economic Changes and Your Retirement Days? Don’t Stuck In Case You Lose Your Job

I met a few people on social media recently. The lives of these people and what they do in one day seemed very interesting to me. Let me introduce two of these guys to you:

At first glance, these guys are firemen. So, they are public officials. They probably didn’t have any higher education. They only work two days a week. They have employment security, regular salaries and retirement plans. They also invest professionally three days a week. Their “side income” is quite high. These people have made great fortunes with their investments. Lastly, they can relax and spend time with their families two days a week.

One of these men buys old houses and rents them out. Currently, he owns forty-five houses with a monthly return of ten thousand dollars after paying debt installments, taxes, maintenance and repair costs, management and insurance expenses. His salary as a fireman is approximately 1200 dollars. He is five years into retirement and his goal is to increase his annual income to two hundred thousand dollars when he is 56 years old. Not bad for a public official with four children.

The other person does company analysis and deals with stocks and long-term transactions. Its current portfolio is over three million dollars. If he turns it into cash, he gets ten percent interest per year, which equates to three hundred thousand dollars. In all market conditions. But be sure his annual income is much more than that. Not bad for a public employee with two children.

Both of these men could have retired in their forties after twenty years of investment. But they chose to work and take advantage of retirement as public officials. Now, they have the advantage of operating in both areas, both as employees and investors.

I know many people who have a lot of money in their retirement accounts but don’t feel secure. They make up their retirement savings from the money they earn by working. Unfortunately, they know very little about investment. They wouldn’t know what to do if their savings melted away and their working life ended.

In times of major economic changes, wealth changes hands. Regardless of your economic situation, it’s important to invest in financial education. Because when time and conditions change, it is necessary to be prepared for the new situation. So you won’t be afraid. Although no one can see the future, it is good to take precautions and be prepared for all conditions. Therefore, it is necessary to start obtaining information as soon as possible.

Economic changes have already begun due to company sales and mergers. A businessman who recently sold his company had fifteen million dollars in his account, but those who worked with him had to look for new jobs. In such cases, anger is felt along with sadness at farewell parties. Employees realize that they make their bosses rich, not themselves, in return for years of hard work.

The truth is that bosses are not supposed to make their employees rich. Their responsibility in this regard is only to ensure that salaries are paid. Being rich depends on everyone’s own will and effort. What to do to become rich starts when the salary is received. If a person is not good at managing finance, he cannot continue to have wealth, even if he has all the money in the world. He eventually loses it all. The important thing is not to gain wealth and prosperity, but to sustain them.

If you can manage your money wisely, educate yourself about being an investor or a company owner. So, you are on your way to achieving personal wealth and financial freedom.

The difference between someone who is rich and can maintain it and someone who is not, is basically the way they use their money and leisure time.

Learning to invest and allocating time and budget for it saves much more free time and money in the long run. Do your best while at work, but also make sure you make efficient use of your wage and free time after work. It is not very wise to enrich others with your lifelong labor. If you make a commitment to work for yourself, you can achieve financial freedom in time.

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Debts, Financial Attitudes, investment, Taxation

If You Know the Tax Law, You Can Also Pay Less Tax

by Enes ÖnerLeave a Comment on If You Know the Tax Law, You Can Also Pay Less Tax

Today, being an employee in America means paying half of the labor in taxes to the state. In fact, this rate is almost the same all over the world. There are no other tax options for employees. Before the employees receive their salaries, the state receives 24% of it.

The only tax cut that the state provides to employees only makes them more into debt. So, the path to financial freedom for employees or self-employed people is much more difficult.

Accountants tell their wealthy clients that if they buy a more expensive house, they can get more tax cuts. This option makes sense for employees or self-employed people. However, employers or investors often do not heed it.

Tax Reduction May Cause Debt Increase

The income tax rate paid by employers or investors is very low. For this reason, it is much easier to increase the money earned as a company owner or investor.

Employees or self-employed people can only benefit from tax deductions by purchasing a larger house. This doesn’t give a person financial freedom. It only brings more debt.

Buying a more expensive home is not wise for employers and investors. Because for them it’s the same as saying, “Lend me a dollar and I’ll give you fifty cents back.”

World History Full of Resistance to High Taxes

America has a progressive tax system. This means that low-income people pay lower taxes and higher-income people pay higher taxes. However, the system does not work exactly like that. Millionaires and billionaires can be the least taxpayers.

The taxes collected in American history have been protested many times. There have been many rebellions against taxation. The American Revolutionary War (1775–1783) opposed the heavy taxes collected from the British colonies in America. Later, Shays’ Rebellion appeared in 1876, Whiskey Rebellion in 1791, and Fries’s Rebellion in 1799. The reason for all these resistances is taxes.

Not only in America but all over the world, there was resistance to taxes from time to time. There have been more than three hundred and fifty resistance, civil disobedience or uprising against taxes imposed since the 16th century.*

Baby boomers begin retiring. What will happen now?

Especially in our modern world, taxes are needed. Problems arise if taxation is not carried out successfully and the collected taxes are poorly managed.

Baby Boomers are already retiring. Within a few years, millions more of them will retire and will cease to be taxpayers and enjoy social security benefits. This will increase the financial burden of the states considerably. So, in the face of rising taxes, the rich will seek other countries where they can invest their money.

How You Earn Money Determines Your Perspective on Taxes

There was an interview with an investor in the newspaper recently. The investor made a million dollars profit and paid no taxes. Because he was able to delay his tax since the money he earned was a capital gain. He was also exempt from tax when buying and selling real estate because he only exchanged property.

A few days later, I saw elsewhere that this same investor was captioned: “He made a billion dollars and admitted he didn’t pay taxes.”

What is written in this title is actually not a lie. However, at first glance, it makes you think that the investor is evading tax. But the investor did not do anything against the tax law.

Different ways of generating income.

This is a good example of the difference in tax perspective of those who make money in different ways.

The truth is that not all income is taxed equally. Some are less taxed and some are not taxed at all.

Those who have gained financial freedom, and especially investors, are familiar with the laws regarding taxes. Thus, it is easier for them to increase their money.

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Book Recommendations, investment, Understanding Money

Advices from Babylon for Those with Financial Problems

by Enes ÖnerLeave a Comment on Advices from Babylon for Those with Financial Problems

If you are having financial problems or want to have an idea about finance, the first book you should read is The Richest Man in Babylon. Below you can find some summary of the recommendations given in the book.

So let’s start.

You must secure your source of income for your future. Look at the old people, remember that after a while you will be one of them. Invest your savings very carefully so they don’t get lost. Save money so your family can meet their needs when you leave this world. If you make small payments regularly, you will be able to provide such protection. A frugal person would never delay putting aside a large amount for such a clever reason. Consult knowledgeable people for ideas. Listen to the advice of people whose business is related to money. 

Although advice is given for free, it is important to pay attention to what advice is sought from whom. The cost of seeking advice from someone with no experience in savings may be to lose all savings.

A small safe return is always better than risk. High interest rates can cause you to lose all your money. Stay away from them. 

Wealth also grows from a small seed, like a tree. The first money saved is the seed of the wealth tree. The sooner this seed is planted, the sooner the tree of wealth begins to grow. If this tree is fed with regular accumulation, it will have a shade to lie under with pleasure as soon as possible.

Enjoy life while you’re here. Do not force yourself too hard or try to save too much. If you can only keep a tenth of what you earn, be satisfied with that. Do not be stingy while spending. Life is beautiful and full of things to enjoy.

It is necessary to spend only nine tenths of what is earned and accumulate the rest.

Personally, when I started using nine-tenths of my earnings, I didn’t feel like I had less money than before. And soon my money seemed to get more and more. Undoubtedly, the person who does not spend all of his earnings will get money more easily after a while. On the other hand, money escapes from one whose wallet is empty.

What do you desire most? Is it the fulfillment of all your wishes every day, jewelry, better clothes, better food, things that go as easy as they come? Or do you want more permanent things like gold, property, trade, income generating investments? The dollars that come out of your wallet allow you to get the first set of things, and what you leave in your wallet allows you to access the second set.

It is necessary to eliminate unnecessary expenses by making budget planning, so that you do not spend more than nine tenths of the money earned.

What we define as “necessary expenses” increases according to our income as long as we do not make the opposite effort. Do not confuse your desires with real necessary expenses. Each of us desires more than our earnings can deliver. Even if we use all the money we earn to meet our desires, we still have unmet desires. Man’s desires never end. Desires are usually instant pleasures, whereas accumulation helps for a lifetime.

We should make our money work for us. We should increase our savings with investment. 

The first principle of a good investment is the security of the capital. Is it okay to aim for a bigger profit if your capital is likely to be lost? Obviously not. Don’t let your desires to get rich quick get you on the wrong track.

When investing with the money you have saved, take precautions and do not trust yourself. It is much better to take the opinion and advice of those who are used to using money to make a profit. Such recommendations are free and their value is the amount you are willing to invest. Because it will save you from losing that amount of money.

One of the remedies for a weak wallet is to not let your wallet empty after it is full. Only invest your money in ways that your capital is safe and you can get it back whenever you want. Consult the knowledgeable and experienced people for ideas. Their knowledge and experience prevents you from making precarious investments.

Have your own house in a neighborhood where you can pay the mortgage instead of sitting in a rental.

Someone who acts by the rules of wealth should think about the upcoming retirement days, must make fundraising plans and her investment must be safe for years. She should arrange them in such a way that she can easily access the money when she needs to use it.

Look to create an income now for your old age and for your family’s needs.

Generalized goals cannot go beyond weak wishes. A man’s desire to be rich doesn’t make much sense. But a man’s desire to have five grams of gold is a tangible goal, and therefore it is likely to be achieved. After obtaining five grams of gold, he can find 10 grams of gold, 20 grams of gold, and a thousand grams of gold with similar methods, and then he will be rich. By trying to achieve a small goal, he learns to secure a large amount. 

Wealth happens this way: first with small quantities, then more can be achieved with large quantities. Goals must be clear and defined. If goals are too much, too complex, or too difficult to achieve, they will not serve their purpose.

Work by nurturing your own strengths, become wiser, gain more skills, and respect yourself. Thus, you can gain the confidence you need to achieve your carefully shaped goals and increase your earnings.

The wealth that comes quickly disappears in the same way. Wealth that comes slowly brings pleasure and satisfaction to its owner, because it is the product of knowledge and persistent purpose.

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You are the Person to Take Control of Your Investments

by Enes Öner1 Comment on You are the Person to Take Control of Your Investments

Rich people use much more leverage than poor people. If you want to get rich, you need leverage. If you really want to get rich, you need a lot of leverage.

We mentioned about leverage before. Now let’s talk about another thing we need to achieve a better economic situation, control power.

People who earn are careful about their thoughts. They don’t think they can’t. They don’t say “This is too risky.”. They don’t back down by saying “I cannot afford this.” Instead, they ask “How can I do this?” or “How can I reduce my risk?” or “How can I afford this?” People who invest to earn money are also extremely careful when choosing people for financial advice. Just as Olympic athletes should be careful when choosing foods that go into their bodies, investors who invest to earn must be careful with advice that will enter their minds. This process may sometimes involve cleansing your mind from old thoughts.

Control Power

Investors who invest to earn want control as well as leverage. People think investing is risky because they have no control.

Think of a car. A car with steering wheel, brake, accelerator, gear and engine. Just imagine if you could drive without any of these. If you got into a car without a steering wheel, could you drive that car?

Many people think investing is risky because they lack control. Imagine investing in mutual funds, stocks, bonds or savings accounts without any knowledge. When you invest in these tools without being able to answer the questions of what will happen next, how they will be traded, or how they will be affected by price volatility, you have almost no control over them.

Interestingly, most of the people who invest are not trained in this field. Driving a car requires at least a driver’s license to show that the driver has been trained and can drive a car.

The lack of control of uninformed and inexperienced investment advisors, financial planners and stockbrokers also makes things worse. For this reason, they make recommendations “Diversify, diversify, diversify”. Diversification is something you will need when you are out of control. Warren Buffett doesn’t diversify because he’s investing in a controlled manner. It buys either all or most of the shares of a business.

Lack of Control

Most people feel powerless because they have no control over their work. I know many people who lost their jobs not because they were bad employees, but because their companies were sold. More and more people feel like they are losing control, as there are many jobs shifting overseas these days. It is difficult to feel safe when you have little control over your job and salary and invest in assets over which you have no control, such as blind investments in savings accounts, stocks, bonds and mutual funds.

There are three reasons people find it risky to invest.

– They have very little financial education.

– They invest in investment instruments over which they cannot control.

-They get investment advice from salespeople and these salespeople have no control over the investment.

Once you understand the use of leverage, your next task is to make sure you have control.

Control is all about education. The more financially educated we are, the sooner we distinguish between advantageous and unfavorable situations. It is also much easier to sort out the bad ones among the good ideas.

Life is full of risks. We don’t have full control – at least not as much control as we think we have. But by getting educated, making reasonable choices, and having a positive attitude, we can reduce risk. Many people have achieved magnificent successes, even when “fortune is not on their side.” They have won because they have decided to take control of their destiny and refuse to give up.

One of the ways to gain control is to always have the big picture in your mind. When people talk about the big picture, I usually think of a tapestry. If you look from behind an extremely beautiful and invaluable tapestry, all you will see will be many knots. Sometimes it’s all that people can see, because they haven’t seen the completed design on the other side yet.

One of the ways to gain control is to always have the big picture in your mind. When people talk about the big picture, I usually think of a tapestry. If you look from the back at an extremely beautiful and invaluable tapestry, you will only see many tiny knots. Sometimes it’s all that people can see, because they haven’t seen the completed design on the other side yet.

Someone once told me that there are many knots in his life that he could not untie. I quickly realized that his problem was simply that he wasn’t visualizing his own tapestry. He was quite relieved when I told him about it.

Look at the situations from the other side. It will help you gain control and gain insight into how to deal with problems and people. At the very least, you have to be able to control what is going on around you as much as you don’t get stuck with your life being full of knots.

You may not have control over many things, but you can start with yourself. The real leverage is brain power. Winners accept responsibility and retain control.

Review your life today. Can you choose how you spend your day, or are you told how you should spend your day? Do you direct your financial investments or do you leave this business to someone else?

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Ten Characteristics of Leaders and Successful Investors

by Enes Öner1 Comment on Ten Characteristics of Leaders and Successful Investors

They Think Positive

From time to time everyone fails, moves away from their goals, or becomes disappointed. But only those who do not give up on their goals can achieve success.

Almost every successful investor is a positive thinker. No matter how difficult the conditions are, they manage to look to the future with hope. Moreover, they do not stop improving and walking towards their goals even in the most adverse times. They don’t allow negative people or negative situations to divert them from their path. An average investor experiences dozens of small and big crises throughout his life.

Of course, we are not talking about a naive positivity here. A positive thought, strengthened and supported by knowledge, benefits everyone.

They Make Conscious Choices Towards Their Goals

Great investors and leaders make clear plans for their goals, and everything they do is directed towards that.

For example, Muhammad Ali, when he was a skinny boy, set his mind on becoming a heavyweight boxing champion and started working towards it. Warren Buffett was trying to accumulate capital by distributing newspapers with a profit of 1 cent each.

If we want to be successful, we must make sacrifices in this regard and all our steps must be directed towards this.

In particular, financial independence requires serious learning and practice. Saving can be learned, investing can be learned, but these skills do not come to you. You have to start somewhere. Then, it is necessary to constantly improve yourself.

We will either find a way or make a one. 

Hannibal

Goals Don’t Work Unless Taking Action

Successful investors and leaders “take action”. They must always move. They make and implement their decisions. Of course this requires a solid character.

You may owe a lot and you may not have invested yet. So you have to act now. Because the 100 dollars saved today is not just a piece of paper. It is a step for your new life that you are constantly improving.

“The best time to plant a tree was 20 years ago. The second best time is now.”

A popular Chinese proverb.

Successful People Never Stop Learning

Studies have found two common characteristics of successful people. The first is that they work in many different jobs and take on various responsibilities as a child. The other is reading too many books.

Warren Buffett tells students who ask the secret of being a successful investor: “You should read 500 pages of books a day. Because knowledge is like compound returns. It increases exponentially. But I know that most of you will not do that. “

The Key to Success is Working Hard and Being Persistent

Investing is like a long-term marathon. In this way, you always learn, develop and mature. Successful investors never give up.

Jesse Livermore, despite three bankruptcies, continued to renew his system, take lessons, and work harder. When Tesla first went to America, he had to dig holes for two years, Michael Jordan was kicked out of the basketball team in high school, Einstein received an F in mathematics and did not receive acceptance from the university to become a researcher.

Many of life’s failures are people who did not realize how close they were to success when they gave up.

Thomas A. Edison

Successful People Make Detailed Analysis and Search for the Facts

Famous investors attach great importance to details and work hard to get the facts. While most people forget their mistakes, they confront them and do detailed analysis.

“Plot out your mistakes on charts, study them, and write some additional rules in order to correct your mistakes and the actions that cost you money.”

William O’Neil

“When the facts change I change my mind, what do you do sir?” 

John Maynard Keynes

Successful Investors Focus on Time and Money

Successful investors value their time very much. Being able to say no is their biggest weapon. They don’t let anything get in their way and distract them from their goals.

Focusing and saying no are important to achieving goals.

Success Often Requires Doing Things Different and Innovating

Most successful people have found new ways to do things more efficiently. Most of the time, they criticized the existing.

Sam Walton warns people to swim against the flow of the river, to go the opposite way of everyone’s heading, and to go against the general public belief. “If everyone is doing something the same way, you can find different things only by going in reverse.” he says.

John C. Bogle, who revolutionized the Fund Management industry with low-cost index funds, could not convince anyone when this idea came to his mind. Now, most of the savings in America are parked in low-cost S&P 500 index funds.

Successful People Inspire The Masses

Successful people set an example to others with their lives and words. They are a teacher, motivating coach or inspiration for the masses.

Warren Buffett’s letters to Berkshire Hathaway shareholders are read by millions.

Long-Term Success Requires Honesty and Solidity

Successful leaders are all honest, reliable, and responsible people. They never give up on their principles. Because these principles are the products of experience they have created to prevent them from making the same mistakes again.

Jesse Livermore has never taken a venture with all his money again after losing all his money twice. In addition, he has adopted the principle of cutting his losses after reaching a certain rate. Warren Buffett never invests in businesses he doesn’t know about.

Principles like these have saved the lives of investors.

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I urge you to read my WHY ACCOUNTING KNOWLEDGE IS NEEDED post.

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Don’t Be Afraid To Invest Your Money

by Enes Öner2 Comments on Don’t Be Afraid To Invest Your Money

Wealth Is Measured in Time Not Money

“Wealth is the number of days a person can live without physically working and maintaining her standard of living.”

Let’s say your monthly expenses are $ 1000. If you have $ 3000 in your savings account, your wealth means 3 months or 90 days. Wealth is measured in time, not money.

After all, it is not how much money you make, but how much money you can keep and how long you can increase the money. I know many people who make a lot of money every day, but most of their income goes to the spending column.

If their income increases, they consider buying a bigger house or a new car. This means long-term debt and hard work, so nothing is left for the asset column. Money runs out quickly.

“Going in Red” Shortens The Life Of The Engine

To go in red is to continue driving even though the gas gauge drops empty. This phrase is also used to describe going at full speed.

Whether rich or poor, there are many people who always “go in the red”. No matter how much they earn, they quickly spend what they get. “Going in red” shortens the life of the engine.

According to many doctors, the main cause of stress today is hard work and not making enough money. Especially some people insist that “wallet cancer” is the biggest cause of health disorders.

Money Works for You So You Don’t Have To Work

No matter how much money people make, eventually they have to use some of it to invest. Investors are more interested in making money out of money. This is also the idea that money works for you so you don’t have to work. But the important thing here is to know that there are other ways to invest.

Other Ways to Invest

People invest in their education. Traditional education is important because the better you study, the better your chances of making money. If you devote four years to college, you have the potential to earn between $ 24,000 and $ 50,000 a year or more. Considering that an ordinary person actually gives 40 years to work, studying at a four-year university or similar institution can be a very good investment.

Loyalty and diligence are also another means of investment, for example a lifetime working in a private company or a government agency. The reward for this is the retirement bonus and lifetime pension, as well as the right to various services. However, this type of investment, which is valid in the Industrial Age, has lost its validity in the Information Age.

Others invest in a crowded family and want children to take care of them in their old age. Such an investment used to be good, however, due to today’s economic difficulties, families are no longer in a position to meet the living and health expenses of the elders.

There are also independent pension investment plans called individual pension plans. The federal government provides tax relief for incentives to both employers and workers so that they participate in these plans.

Income from Investments

Although all of the above are investment tools, people who invest are more concerned with a continuous source of income than these. Are you currently deriving your income from your investments? In other words, does your money work for you and generate income for you?

Let’s look at someone who buys a house for investment and rents it out. If the rent he receives is more than he has to spend for that house, it means cash coming from investments. The same is true for those who earn interest on their money in the bank or receive dividends from stocks.

Advantage of Earning Income From Investments

The main difference that separates those who make money from their investments from others is to make money from money. If they succeed in this, they can run their money, and the next few generations of members of their family also benefit.

In addition to the obvious advantages of knowing how to earn money from money and live without having to get out of bed in the morning and go to work, there are also tax advantages that are not available to those who work to make money.

One of the reasons the rich get richer is because they earn millions but do not pay taxes on that money. Because their earnings are included in the “active column”, not the “passive column”. Or they make money from their investments, not physical work.

Those who work to make money are not only subject to high taxes. Also, a certain tax is deducted from their wages, that amount goes to tax before they even get it.

Why Are More People Not Being Investors?

Investing means working less, earning more and paying less tax. So why don’t more people become investors? For the same reason as the small number of people starting their own business. In one word, we can say because of “risk”.

Many people are afraid of losing money when they are investing it somewhere. Even if they know how much their investments may earn them, they avoid investing and risking their money because they are afraid of losing.

Fear of losing money divides investors into four classes:

1. Those who avoid risk, love guarantees and keep their money in the bank

2. Those who leave their investment decisions to experts such as financial advisors or mutual fund managers

3. Gamblers

4. Investors

We can distinguish between the gambler and the investor as follows: According to the gambler, investment is a game of chance. For those who hand their money over to someone else to invest, investing is a game that they do not want to learn. It is important for these people to be careful when choosing financial advisors.

It’s Time to Become an Investor!

The defined and predictable plans of the Industrial Age are gone. As the Information Age shifts to specific retirement plans, everyone has to be responsible for their own finances. However, the number of people who realize this is very few.

I urge you to read my WHY YOU NEED TO INCREASE YOUR FINANCIAL IQ post.

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Earn More With Less

by Enes ÖnerLeave a Comment on Earn More With Less

The difference that separates a good investor from a bad investor is that the good investor can make more money with less money.

Leverages allow us to do more with less force.

The Key Is Leverage

People have sought to do more work with less labor since they lived in caves. When a child was old enough, he was taught to use a spear for hunting and defending himself. Spear has provided a great deal of convenience to human beings in their cruel environment. Over the years the spears have shrunk in size and the bow and arrow have been developed. This was a superior technology. Compared to a spear, the bow and arrow allowed people to do more with less.

As time progressed, man learned to tame horses. More distance could be taken on horseback in a shorter time and with less fatigue. It was an important convenience used not only in transportation and agriculture but also in wars.

When gunpowder was invented, the rulers who owned the cannons triumphed. Indigenous peoples such as the American Indians, the Hawaiian people, the Maoris of New Zealand, the Aborigines of Australia, and many other cultures lost to gunpowder.

Just a hundred years ago, cars and airplanes replaced horses. Once again, these new technologies have been used in wars and peacetime for some work. Telephone, radio, television, computer and internet networks all also enable people to do more with less. Actually, they are all levers. Each breakthrough new invention brings more power and wealth to those who have access to these tools.

If you want to be rich and not a victim of global changes, it is essential that you develop the leverage that is stronger than all others: Your mind. If you want to be rich and protect your wealth, your mind, your financial education, is your strongest lever.

You might say: “I don’t know anyone who can teach me finance. I haven’t heard of such an education. There is nothing to do.” Perhaps because of this mindset, your chances of reaching great wealth and, more importantly, protecting your potential wealth are extremely low. Your chances are low because you are using your most important asset, your mind, against yourself. You’re using your mind to find excuses instead of making money or finding solutions. Remember that your mind is your strongest lever. If you can’t control your mind, you can’t control your life. Excuses are easy to find. For this reason, unsuccessful people always have an excuse.

We Are All Born Rich

We are all born rich. Each of us has been given intelligence, the world’s most powerful lever. So instead of using our minds to make excuses, let’s use it as leverage to make us rich.

In summary, the difference between cavemen and monkeys is leverage. The difference between the rich, the poor, and the middle class is leverage. The difference between savers and investors is leverage. A well-educated and disciplined investor can achieve higher returns by taking much less risk and spending less money. But this requires leverage. And in order to have leverage it requires you to train yourself and use your mind wisely.

If you want to learn more about investing, you may read my YOU NEED TO SAVE MONEY post.

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