14 Rules for Achieving Financial Literacy
The Success Margin
Thursday, March 31, 2005
Virtually everyone reading these words is interested in increasing their wealth.
However, to achieve financial success and independence, including a comfortable retirement, you are absolutely required to be financially literate.
And there’s the rub. The lack of financial literacy of all but an elite group of very rich people.
The little guy just hasn’t been exposed to the real facts.
In the U.S., the richest country the world has ever known, here is what life is like for the average person. They spend their entire life helping someone else get rich working for a pittance. Upon retirement their total assets are less than $7,000. They have no savings whatsoever. Instead, they are deeply in debt. On average they owe over $18,000 on their
credit cards, with few prospects of ever paying them off.
Most Americans spend more than they earn. Unfortunately the spendthrift lifestyle of Americans is rapidly spreading to Europe and Asia.
It’s no wonder personal bankruptcies in America are at an all-time high, with projections of over 2,000,000 this year.
Not even one person in a thousand is financially literate. It’s not taught in schools or universities. Parents tend not to teach their children virtually anything meaningful on this important topic.
Since I haven’t seen anything that makes sense written on becoming financially literate, I decided to share my views and experience.
This issue is dedicated to all the people I love and care about. These include my family, friends and readers.
What you are about to read is responsible for earning my first million dollars by age 24. And my assets have continued to grow ever since.
The principles I will share were not taught to me by anyone. I’ve developed them through the hardest but most effective taskmaster. Trial and error.
Much of what I say will contradict what you’ve been taught and exposed to. You may not agree with some of my views. Several are surely going to make you uncomfortable.
But, breaking out of your comfort zone may be exactly what is necessary for you to acquire real-world financial literacy that works.
* 14 little-known rules for achieving great wealth *
Nicholas Rule #1:
Recognize the difference between active and passive income.
Active in^come is that which is earned in a job. Poor people stay poor, living paycheck to paycheck. The employees’ mentality is to trade time for money. Clearly, this is not a wealth formula.
Passive in^come is completely different. It is the only route to great wealth. It exists in several forms. These include:
— Royalties – Such as that earned by authors,copywriters, and inventors
— Rents – From real estate or equipment
— Dividends – From shares in companies
— Interest – From bank notes and other interest-bearing investments
— Residual in^come – From network marketing organizations
Rich people earn the biggest portion of their in come by having their money work for them. Or they earn money on work done once upon which they get paid over and over again.
Twenty-four hours a day, every day of my life, regardless of what the economy is doing or world events, my wealth grows from each of the above categories. You can do the same. In fact, you only need one of them to achieve enough wealth to become financially independent.Nicholas Rule #2:
Learn how to sell.
The jobs and professions with the highest rewards are those which generate in^come and profits.
There are only two basic ways to earn money as an employee or professional in the business world.In a job that brings in money. Or that costs money.
To earn the highest in^come, bonuses and raises, learn the skills that make money. Avoid the technical and administrative positions. Theycost money. They also have the lowest level of in^come growth.
The highest paid jobs and professions include salespeople, copywriters, marketers, product developers, and those who manage such people.
Of course, the highest paid career by far is that of a successful entrepreneur. Over two-thirds of the world’s wealthiest people are entrepreneurs.
Nicholas Rule #3:
Discover how to manufacture money.
The only legal way to create unlimited quantities of money on the basis of nothing more tangible than an idea is in a business you own.
Tip: Start a small business on a part-time basis as soon as you can. And the best time ever to be in your own business is right now. Nicholas Rule #4:
Spend less than you earn.
Unlike the majority of people who spend more than they earn, live on 75% of your in^come. Invest 15% of your in^come in things which provide you passive in^come. Give 10% away to charities you wish to support.
You must delay gratification to ultimately achieve financial independence. You will be wealthy at the point when your passive in^come equals or exceeds your expenses.
Nicholas Rule #5:
Trust only yourself.
Do not follow the advice of third parties. These include friends, family, bankers, investment advisors, stockbrokers, economists and politicians. Especially politicians.
The ridiculous advice of Alan Greenspan and President Bush and other bureaucrats to “spend, spend, spend-buy cars, bigger houses, etc.” only encourages the downward spiral of debt that many people, especially Americans, pursue.
You can’t spend your way to wealth. No one ever has or ever will. On the contrary, to become rich one day you must simplify, save and invest. This is the only real route to a golden future.
Nicholas Rule #6:
Avoid debt like the plague.
The financial cancer that keeps people poor and is sinking so many individuals and their families is debt. Especially credit card debt, automobiles and houses.
It’s far better to:
— Pay cash for your car. A car is absolutely the worst investment you’ll ever make, depreciating 50% or more the first year. Car payments will tend to keep you broke.
Tip: A great car buy can be a 5 to 7 year-old Mercedes, Volvo, or Saab. Often you can find them for $3,000 to $7,000. These cars tend to be well maintained by conservative owners.
Christian Boucke attended my seminar in Germany awhile back. He recently picked us up on the way to the Dusseldorf airport in a gorgeous white Mercedes that rode like a dream.You simply couldn’t tell it from a brand new automobile. It cost him just $3,000!
— Get rid of your credit cards as soon as possible. These will keep you broke since you must pay 18%-21% interest. That’s why most people never pay them off.
— Most people’s wealth is tied to their homes and depends on rising prices. This is a huge mistake. Nothing goes up forever. It’s only a matter of time before the worldwide property bubble bursts!
Avoid single-family homes until you can pay cash. Instead, sell your home. Invest in a duplex or multiple-family house. Live in oneunit. Rent the rest of the building. Often you
can earn enough in rental in^come to cover your mortgage expenses. There are lots of variations on this strategy.
For example, starting my very first business, a candy shop, I had no money. I bought a three-story building with no money down for $50,000.The mortgage was $308.74 per month and was carried by the former owner. I inexpensively converted the upper two floors into three apartments that paid me $575.00 in rental in^come. So, I was in the building not only rent free but generating positive in^come.
Nicholas Rule #7:
Avoid buying most stocks, including mutual funds.The stock market is a loser’s game. Ninety-nine percent of small investors lose their shirts. And it’s no wonder.
Insiders and big institutions are privy to information the little guy never sees. Do you really think you can get access to the same inside information as Warren Buffett, George Soros, Bill Gates and other big investors? Do you think with limited information you can outsmart them? I’ve never seen anyone do it.
Quick note: I’m not suggesting companies are deliberately withholding information. One of my previous companies traded publicly. However, even though we wanted to we could not give shareholders the real facts about our future potential as it was against SEC regulations! The only people who know about the real future of any company are the insiders. I’ve never seen this very real fact discussed anywhere.
Plus, most securities in the U.S. are overpriced at 22 times earnings on average. And most pay no interest.
The only type securities you should ever buy are those in solid blue-chip companies with a long history of dividends and/or interest payments. Remember, always look for those which generate passive in^come. Otherwise, don’t make the investment.
Nicholas Rule #8:
Learn about how to employ corporations in your financial plans.
Discover the difference between Limited Liability Companies (LLC’s), S and C Corporations and Not for Profits. Learn about how to protect your personal assets, which should be kept separate from what you invest in the business.
Tip: Talk with a good accountant well-versed in business. Review your personal situation. Take their feedback into account before you make your financial decisions.
Nicholas Rule #9:
Do not keep all your assets in any single country.
Spread your assets among several countries, including Switzerland.
One-third of the world’s wealth resides in Switzerland. It’s not an accident.
Other countries which are relatively strong and stable include Austria, Australia, New Zealand, Germany, Luxembourg, Liechtenstein, the United Kingdom, and Monaco.
Perhaps the safest as well as perfectly legal way to invest and get approximately 8% return on your money and have a guaranteed retirement income for life is via a Swiss annuity. The income can be in Swiss francs or in U.S. dollars.
Tip: For better protection and safety, diversify your assets among several currencies, including those of Switzerland, Austria, New Zealand, Australia, Norway, Germany, United Kingdom and the Euro. Bill Gates, Warren Buffett, and George Soros for example are currently betting against the U.S. dollar by putting much of their cash into non U.S. currencies.
Nicholas Rule #10:
Keep your taxes to the legal minimum. Most entrepreneurs overpay their taxes unnecessarily.
With the help of a really good and aggressive Small business tax accountant, often you can legally re^duce your tax pay^ments to little or nothing. If you prefer to fund any government schemes, you can always contribute whatever you like.
Tip: Explore the use of such concepts as employee-benefit plans, where you are the biggest beneficiary. Business deductions for rent for your home office, as well as much of
your business-related travel and entertainment are deductible. And, as mentioned, use corporations in your home country to personal
advantage. Nicholas Rule #11:
Learn to benefit from setting up bank accounts, companies and foundations in off^shore centers.
There are many ways to do business off^shore.
As an independent entrepreneur, you can do the same sorts of things major corporations around the world have been doing for years to reduce taxes and achieve other important benefits. These include great asset protection and increased privacy. Places such as Bermuda, Liechtenstein, the Cayman Islands, Cook Islands, British Virgin Islands and Channel Islands can often provide excellent benefits for you .
Selecting a good lawyer well versed in off^shore financial planning is an absolute must.Nicholas Rule #12:
Invest in yourself.
There are only two investments that are forever and can never be taken away from you.
The first is your knowledge.
You can suffer losses and if you are not careful even lose all your money. But what’s retained in your mind is always yours to keep. Continuously invest in well-chosen seminars. At least 4 and up to 12 per year. Also, read a minimum of one book a month. Plus listen to CD’s and tapes. You can turn your car into a “University on Wheels.”
The other unsurpassed investment is your health.Nicholas Rule #13:
Invest in your health.
You cannot get all the nutrients you require from food alone.
Budget each month to invest a minimum of $175 in natural supplements and herbs. (My budget is $275 monthly.)
You must exercise. Join a fitness center or pool if that’s your style. Or simply walk an hour a day. Make sure you acquire good walking or running shoes, goggles, and other sports equipment to help support your daily exercise program.
The number one asset all of us have is our health.No other investment will pay off for you as well. Nicholas Rule #14:
Study direct marketing and copywriting.
In this age of mass communication in all the major media including the Internet, the very best way to take advantage is by using direct marketing.
By learning to write sales copy that gets your message to your markets, you can build a fabulous business fast. No other skill will pay you more. Study this topic and watch your wealth multiply faster than any way I know.
Tip: You may recall the “8th Wonder of the World” ad I ran for several years. The 8th wonder is compound interest. It is the most powerfulforce man has ever created. When you put this force to work for you, your wealth will continue to compound for your benefit as well as your loved ones.
Study and apply these 14 rules. I promise you that your wealth will compound faster than you may now even imagine.
Quick note: Anyone who wants the inside secrets of how to write successful sales copy, you can now get the knowledge you need really fast from my MILLION DOLLAR COPYWRITING BOOTCAMP. This was recently recorded live and comes on CD’s along with workbook and complete transcript. For all the details, including a very special
price, call 1-877-232-4002.
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