Keeping In Touch
Recognize an important principle. In a crisis, printed money doesn’t disappear. It just goes somewhere else. Credit disappears. Recognize, that when an individual puts a dollar in a bank savings account the bank will lend out at least ten dollars based on that dollar deposit. Depending on the type of bank, various banks are lending out as much as ten to one hundred dollars on a one dollar deposit. If and when the debtor does not pay the loan back, anywhere from ten to one hundred dollars of credit disappears from the face of the earth. That is why right now we have a generally declining price level. Money is disappearing faster then it is being created due to debts going bad. That is the reason why the Federal Reserve has been able to get away with inflating the currency (credit) without causing a massive increase in the cost of consumer goods.
This suggestion is only for people who already have enough cash on hand to maintain their lifestyle for the rest of their lives and also enjoy an excess. It is only the excess that should be put at risk if a person has the urge to gamble; and only then when the potential for gain is great and there is only a minimal possibility for loss. For those who have the funds they can afford to put at risk consider the possibility of an account divided into four unrelated areas. First there should be something less than 25% in stock at present since there is a likely decline coming. It may already be in progress. The second would be about 25% in gold or silver. Silver is the best. This is not an investment. This is simply a form of real money. Next would be 25% in cash in the form of whole life insurance. These funds would be readily available when opportunities occur and would allow a person to be flexible in their finances. For some people, a 25% stake in real estate would round out the mix. This does not include a house and it certainly doesn’t include some one else handling the real estate. It would be better if you purchase real estate yourself if you have the skill. Recognize that these four asset types do not correlate with each other. If one of these asset types goes down in value the likelihood is that one or more of the others will go up to replace the losses in the one category and still make a significant profit. Over a long period of time, the risk is much reduced and the potential for gain is much higher than the norm. Again, this is for people who are willing to gamble. I would never personally, want to gamble more than .1% of my liquid assets on any one item. That is only a .1% of liquid excess after my finances are entirely secure.
“It is not important what you buy: it is the price you pay for it.” This is so critically important. So many people are convinced that gambling is the way to save for the future. Not only is that an out and out lie, but worse than that, when people take that advice, they tend to enter any given market when it is soaring higher and closer to a crash. They are reluctant to buy in after a crash when prices are low. That is purely human nature. Realize that when something less than 1% of the population makes a lot of money in a gambling casino because they are running the show, the other 99% are the suckers who provide their profits.
For most people the real investments available to them are to own a business or develop a career in a field where they have special knowledge and skill compared to others. It helps to have an insider’s knowledge. In one of my newsletters in this series you will see a drawing that shows the place where I believe investing fits into a total plan.
John Templeton, “I saved $.50 on every dollar I earned in order to invest”. He also said, “The more you help others the more prosperous you will be personally”. Because he was such a high quality individual and because he was so financially successful there are other quotes of his I would like to share.
“Bull markets start on the time of pessimism. They rise on the time of skepticisms. They continue on the time of optimism. They end on the time of euphoria.” “The great majority of people do not build wealth because they do not practice the self-discipline of savings some of their income nearly every month”.
“Usually twice every 12 years, there is a severe bear market in a major nation, but they do not occur at the same time.”
“To overcome fear the best thing is to be overwhelmingly grateful. If you wake up each morning and think of five new things for which you are overwhelmingly grateful, you are not likely to be fearful, you are likely to radiate your optimism, your attitude of gratitude, likely to do things in a better way, draw people to you.”
“I am a student of always trying to learn. I am a sinner. All of us are. I try to be better day by day, and particularly I try to keep asking myself, what are the purposes of God? Why did God create the universe? What does God expect of his children here? The closer you can come in just a few words is He expects to grow spiritually. There are trials and tribulations just like you have examinations in school because it may help you to grow into a greater soul than you would have otherwise. So life is a challenge. Life is an adventure. It is a marvelous, exciting adventure. All of us should do the very best we can as long the Lord allows us to be on this planet. “
“Abundance isn’t about providing everyone on the planet with a life of luxury-rather, it is about providing all with a life of possibilities. This is the philosophy that helped to found America as the greatest country in the modern history of the world. It is exactly the opposite of the Marxist philosophy which says that productive people need to be robbed to pay the expenses and meet the dreams of the unproductive people. You recognize that this is a complete disincentive for productive people and an incentive for unproductive people to remain so. Just take a look at our welfare system to see how people who once become involved in it become trapped. They lose their dignity and lose all their God given potential. “
“Wealth is the ability to fully experience life.” Henry David Thoreau
John Templeton, “Without gratitude and appreciation for what we already have, we will never know true fulfillment. If you’ve got a billion dollars and you are ungrateful you are a poor man. If you have very little, but you are grateful for what you have, you are truly rich. “
Self esteem can be measured by how much we feel we control the events in our lives versus feeling that life events are controlling us. I see this especially in men when they temporarily lose their job. We, as men, judge our worth by the work we do and the money we make, there is nothing left when the job disappears.
“The quality of our lives is controlled by the meaning we give to things. “
“If you want to shape your actions, the fastest way is to change what you focus on and change the meaning to something more empowering. “
“If is true that giving is what makes us fully alive, then perhaps the ultimate test of this theory is what life is like for those willing to give their lives for something they believe in. “
“Human beings can overcome our pain when we choose to see life’s beauty and find a way to give ourselves to others. “
“Giving in any form builds wealth faster than getting ever will. “
John Templeton also said he has never known anyone who tithed- meaning the person gave 8% to 10% of what he earned to a church or charitable organization over a ten year period-who didn’t massively grow his financial assets. This is simply a restatement of God’s principle that what we sow is what we reap. And the more abundantly we sow the more abundantly we reap.