Tag: save money

investment, Stock Market

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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motivation

Getting Rich More Quickly

by Enes ÖnerLeave a Comment on Getting Rich More Quickly

Study the lives of billionaires who came from nothing. You will find that the reason almost all of them can quickly move to financial freedom is investing or owning a company. Because there is legal convenience for people who earn income in these ways. So, it’s easier for investors or business owners to get rich quick. You can also achieve your financial freedom faster in case your money works for you.

Achieving Financial Freedom

Debts and taxes are two barriers to many people’s financial freedom. To quickly achieve financial security or freedom, it is necessary to own a company or to invest. For this, it is necessary to know that the important thing is not employment security but financial security and financial freedom, and also to understand the difference between them.

The Difference

  1. Employment Security
  2. Financial Security
  3. Financial Freedom

What most people believe is to complete higher education, start a job and retire in that profession. A large segment places emphasis on employment security in this way. They think that employment security is financial security, until they see that they lose their job and cannot find another job. None of them even consider the possibility of losing their job. However, wealthy people do not even speak of the term employment security. They talk about financial security.

Employment Security

People who care about employment security do their jobs very well. Most of them have devoted many years to training and gaining work experience. Although they have retirement plans, they do not know how to invest. They don’t feel safe because they are only trained to work or fulfill their profession.

It’s Always Good to Have Two Legs Instead of One Leg

To get more financial security, you will also need additional income and it will be important to educate yourself to earn those extra income. Whether you are an employee, a company owner or an investor, if you trust your skill, you will naturally feel more secure even if you don’t have much money. Knowledge means power… All you have to do is wait for the right opportunity to use that information and then you will have money anyway.

That’s why we were created with two legs. If we were one-legged, we would always stall, we would not feel safe. A person who is both actively working and investing with his savings is two-legged. Having knowledge on both sides gives us confidence. Those who know nothing but their job or profession are one-legged. Every time the economy goes down, they suffer far more disruptions than two legged ones.

Financial Security

Rather than investing the money in a retirement account and waiting for the highest return, self-taught people to be both employees and investors value financial freedom. I suggest you learn to be a professional investor in the same way we study at school to learn a profession.

The question that the reporter mentioned in the previous post had to ask the investor who earned a million dollars in the asset column but did not pay taxes was actually this:

“How did you get a million dollars?”

This was the main question. It is easy to find legal opportunities to avoid paying taxes. However, earning a million dollars is not easy.

Let’s also take a look at financial security through the eyes of “self-employed” people:

The average American millionaires are self-employed, live frugal, invest long-term.

The path from self-employment to company ownership is followed by big entrepreneurs like Bill Gates. While it is not easy, it is perhaps the best.

Operating in Different Fields

So being educated in more than one field gives more advantages than being well educated in just one. Did you know that wealthy people earn, on average, seventy percent of their earnings from their investments or companies, and the remaining thirty percent as employees or self-employed? No matter how much money you make, knowing how to increase your money will increase your assurance. Financial security is the ability to earn income from both sides independently of each other.

Financial Freedom

This path leads to real financial security, because there is one thing in common between those who earn income as company owners and those who earn as investors: they have people who work for them and make them earn money. Also, they make their money work for them. They work if they want, they don’t work if they don’t. Thanks to their knowledge in two areas, they do not have to work physically.

This is the path the billionaires take. This path shows the revenue models of Bill Gates from Microsoft, Rupert Murdoch from News Corp., Warren Buffett from Berkshire Hathaway, and Ross Perot.

Warning: Owning a company and being an investor are very different. I have seen many successful company owners who have sold their companies for millions of dollars. They like to think that their money is an indicator of how high their intelligence is, so they step into becoming investors and lose everything. A different game is played in each income generation model, different rules apply. Therefore, I strongly recommend that you be informed.

Just like financial security, operating in two areas will provide more stability to the person in the world of financial freedom.

You may want to read: WHICH PATH ARE YOU MORE INCLINED TO? (EMPLOYEE, SELF-EMPLOYED, EMPLOYER OR INVESTOR)

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Financial Attitudes, investment, motivation

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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Debts, economy, Financial Attitudes, investment, Understanding Money

The Difference Between A Good Investor And A Bad Investor

by Enes Öner2 Comments on The Difference Between A Good Investor And A Bad Investor

Many people invest in mutual funds. When I ask someone, who is investing in mutual funds, he answers: “But I am also investing. I have a portfolio of mutual funds. I also have bonds and stocks. Isn’t this all investment?”.

Yes, saving is also an investment. Buying mutual funds, stocks or bonds is also an investment. But it is the kind of investment a saver would make, not an investor.

Let’s take a look at the passive investor philosophy. Most investment advisors provide a recommendation like that:

• Work hard

• Save money

• Get rid of your debt

• Make long-term investments

• Diversify your investments

This is good advice for a certain group of people – suitable for people with a savings philosophy or passive investors. In today’s circumstances, I believe this advice is riskier than any financial advice. It may seem as a reliable and wise advice to those who are financially inexperienced.

There is only one word to distinguish between a saver and an investor. That word is leverage. Thanks to leverage, you have the ability to do more with less.

Many savers do not use financial leverage. And if you don’t have enough financial knowledge or experience to apply leverage, it would be better for you not to use it. I will explain this to you later. Let’s take a look at these standard recommendations from the perspective of the saver and then the investor.

Work Hard

When many people think of “work hard” advice, they only think about their own hard work. The leverage effect on one’s own hard work is very small. Imagine if others will help you to get rich with their hard work. This is the power of leverage. States do not ask us to seek jobs, but to create jobs. If everybody starts looking for work, economies will collapse. For economies to grow, we need people who can create jobs.

Save Money

The problem with saving money is that the current economic system needs borrowers, not savers, to grow. In order for our economic system to continue to grow, it needs smart borrowers. The system does not need people who get poor by borrowing, but people who can borrow money and get rich. While 10 percent of the people who borrow money in the world benefit from their debts to be rich, 90 percent of them become poor with their debts. And this ratio is getting worse every day.

Get Rid of Your Debt

Many savers think that debt is bad and it’s smart to pay off mortgage loans quickly. And for many people, borrowing is bad and getting rid of debt is wise. However, if you are willing to devote some time to your financial education, you can use your debt to move forward. But if you are considering investing with debt, I would like to warn you once again that you should invest in your financial education first.

There is good debt and bad debt. Being financially smart is knowing when to borrow and when to avoid it.

In these economic conditions, savers are losers and borrowers are winners. For whatever reason, you should always be careful when using borrowed money.

Make Long-Term Investments

Look at this advice in terms of sellers: “Give me your money to keep me for years, and I’ll get certain payments from you over the long term.” The phrase “make long-term investments” is like the advantages that allow you to earn points. You become a loyal customer.

Depending on the payments you make to manage the fund, mutual funds may not earn you as much money as other investments.

Diversify Diversify Diversify

Warren Buffet, considered the richest investor in the world, says this about diversification: “Diversification is a safeguard against ignorance. It won’t make much sense if you know what you’re doing. “

Then the question arises: Whose ignorance do you protect yourself from? Is it your own ignorance or the ignorance of your financial advisor?

Diversification generally means that you should not put all the eggs in the same basket. Warren Buffet puts them all in the same basket. He once said: “Put all your eggs in one basket, but watch your basket carefully.”

Personally, I prefer to focus rather than diversify, and actually the reason I was able to move forward was focus, not diversification.

I saw an acrostic on focus in a book I read.

For many, diversification is a good strategy. This is only because it protects investors from themselves and inadequate advisors.

The traditional financial planning advice “work hard, save money, get rid of your debts, make long-term investments and diversify” is good for the average. This advice is also good for those who are rich but are not interested in learning how to become an investor. Many movie stars, wealthy professionals, or former athletes do that. Just remember that while following this path, you will have a very small leverage.

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