5 Habits of Self-Made Millionaires

1. Snowball Your Money

People who end up very, very rich, think of money as material.  It’s not, first and foremost, the gateway to wacky hijinks or to excess.  Instead it’s a tool for building more money.  Millionaires look for the kind of money that allows them to safely do what they want , sums large enough to pass on to the kids, to amount to power and independence.  It’s not about getting just enough money to buy some fun and fine things.
Therefore, millionaires begin putting money away as soon as they can, a bit more aggressively than others, investing in funds more than just opening savings accounts, engaging in more and more risk as the snowball effect kicks in.

2. Ride The Wave of Uncertainty

Steve Siebold, author of How Rich People Think,” says, “Physical, psychological, and emotional comfort is the primary goal of the middle class mindset,” In other words, people with middling incomes who stay that way have comfort and safety as prime goals—they’re not achieving great riches because they are afraid to try, feeling it would be a shame to lose a decent position in life due to a failed business or a bad investement.
The goal of those who become ultra-rich is to do so.  They aren’t attempting to be sure not to suffer in any way, not to have to ride out waves.  Self-made millionaires don’t get there just because they think it’d be fun; rather, they earn it by dealing with great uncertainty.  Yes, they sometimes fail, but they know how to pick themselves up afterward, rather than feeling only the need to regain some certainty.

3. Choose Not to Choose

We’re taught about yin and yang and about making priorities.  If you want to become very rich, you’ll have to sacrifice time with your family.  Or perhaps it’s idealism or part of your soul or peace and quiet, or time for church.  To some extent, this relates to the desire for comfort—the average person wants to be able to comfortably find balance.
Those who go on to be millionaires find a way to accomplish that which others would find impossible—it may involve rushing around, deftly juggling schedules, paying people to do certain tasks, but they do the things other people don’t have the stomach for.

4. Money Isn’t For Money’s Sake

Any good card player will advise to think of the chips as chips not as real money.  Even if you’re at a buddy’s house with actual money on the table, think of what you’re betting as a game piece—if you think of actual cash value, you’ll get too conservative, which can mean making the wrong moves.
Similarly, while self-made millionaires do wish to be very rich, they’re not thinking of the money itself.  As I mentioned above, they think of money as a tool—for freedom, choices, not having to be beholden to others.  For many ultra-rich, money isn’t for many small things like shoes and mp3 players, but fewer big things like voyages around the world, homes, and perhaps that pro sports team they’ve always wanted.

5. Hang Out With Millionaires

Being around other millionaires, of course, encourages networking and opportunities.  But it also gives one the chance to see for themselves the habits I’ve been describing.  It will give one a chance to emulate people in a way that will lead to success.

Source: http://frugalentrepreneur.com/2014/09/5-habits-of-self-made-millionaires

5 Risk Management Mistakes To Avoid

I’ve been mentoring a junior project manager and we were reviewing the risks on his project last week. We went through all the risks on the log and we talked about good practice and what he should be actively doing to manage the risks. Then he asked me a question. “What mistakes should I be looking out for?” he said. I thought this was a great question. Too often we focus on what we should be doing and forget about what we should avoid doing! That’s when mistakes creep in as we haven’t been focused on stopping them from happening. So here is my list of 5 mistakes to avoid when you are carrying out risk management on your project, which I shared with my colleague.

Mistake 1: No Risk Owner

Your notes in your risk management software should always include who is responsible for owning the risk. That means writing down the name of the person who will ensure that the risk management tasks are carried out. That individual doesn’t have to do all the work themselves, but they should coordinate the people who are actually doing the work and make sure that the risk log is updated with progress and that you get status reports as required.

Don’t be tempted to record your own name as the risk owner for every risk. Many risk management plans would be better off led by a subject matter expert and this can also be a useful development exercise for a more junior member of the team who wants to take responsibility for a small, manageable piece of work.

Mistake 2: No Action Plan

Each risk should have a documented action plan. This sets out exactly what is going to be done to prevent the risk from happening. Sometimes, of course, you will be taking no action and are prepared to accept the risk without doing anything about it. If this is the case, make sure that you record in your risk log that you have considered what actions are required and have actively decided to do nothing. And sometimes it will be a positive risk and you’ll want it to happen!

Whatever the approach you want to take, it should be documented so that you know exactly what is going to be done and can track progress against it. Remember to go back to your action plans regularly and update them with what actions have been completed and what new tasks have been identified.

Mistake 3: No Risk Analysis

When you’ve got a lot of risks it can be tempting to skip the analysis phase and not spend time working out which area of the project it will impact or how serious the problem will be if it happens. You shouldn’t do this – it isn’t appropriate to treat every risk in the same way and you’ll only know how much time and effort to invest in addressing it if you properly carry out some analysis to assess the impact and likelihood of each of the risks.

Review each risk and establish how likely it is to happen, and what impact it will have on the rest of the project if it does happen. Get the whole team involved as they will probably identify other impacts and have some useful information to feed into the analysis exercise. This will enable you to focus your risk management budget in the right places by targeting the most serious risks first.

Mistake 4: No Timescales

When do you need the risk resolved by? Or when will it stop being a problem if nothing happens? Risks don’t last forever, so you should also be recording a timescale for the risk in your log.

For example, if there is a risk of bad weather delaying the delivery of some equipment to your building site, then this will pass on a particular day – the day that the equipment is due to be delivered. If you don’t note down this date in your log and then update the risk entry once the date has passed you could be including the mitigation plans or reporting on this risk for far longer than you really need to. Also make sure that any actions related to your risk management plans have dates against them.

You’ll want to monitor that they are being dealt with in a timely manner so you can be sure that enough appropriate action has been taken in time to offset any impact should the risk occur. Otherwise you may be working on actions and find that you are too late!

Mistake 5: No Risk Priority

Use your risk analysis and timescale information to give each risk a priority. Those that are likely to have an impact quickly are obviously more important to deal with than those that may not cause any problems until next year. Those risks that will have a huge impact are more important than those that won’t cause many issues.

Each risk should be given a priority and then you can tailor your work plans to ensure that the important ones are dealt with first. You can also use risk priorities for reporting purposes as generally stakeholders will only be interested in knowing more about the high priority risks. You won’t bombard them with information about all risks if you can tailor your reports to only give them the most important data about the highest priority problems that the project is facing. “Thanks for these pointers,” my colleague said. He had made lots of notes and went away from our mentoring session feeling a bit more confident about handling risk management on his project (or at least, I hope he did).

What other mistakes have you encountered when it comes to managing risk? Let us know in the comments below if you are prepared to share your experiences!

Source: http://www.projectmanager.com/5-risk-management-mistakes-avoid.php

Indecision Costs

More money has been lost to indecision than was ever lost to making the wrong decision. The economy and the housing market have caused some people to take a “wait and see” position that could cost them in lost opportunities as well as almost certain higher costs in the future.
To illustrate what the opportunity cost might be, let’s compare what the value of the down payment two years from now would be if it was invested in a certificate of deposit, the stock market or used to purchase a home today.
A 3.5% down payment on a $175,000 home is $6,125.00. If it was invested in a CD that would earn 2%, a person would have $6,372 in two years. The earnings would be taxed as ordinary income tax rates. It wouldn’t earn much but it would be safe and secure.
The same amount would grow to $7,013 in the stock market if you picked the right stock or fund and it yielded 7%. The earnings would be taxed at the long term capital gains rate. The return could be greater but so is the risk involved.
If this person were to purchase a home today that appreciated 2% in value over the next two years, the equity in the home would grow to $18,769 due to value going up and the unpaid balance going down.

Source: http://www.newhopehomesforsale.org/indecision-costs

Your Biggest Investment Risk Is You

It’s very easy, and very human, to seek to place blame for decisions that don’t work out. A thousand factors can influence outcomes, but we often discount the single biggest one: Our own reactions.

This really comes home when you think about driving. Modern automobiles are cutting-edge when it comes to safety. We have airbags in all directions, seatbelt laws are commonplace and most other drivers are courteous to a fault.

Yes, a random truck could run a red light and kill you. Yes, bad things happen all the time. But you do in fact control a lot of what happens when you get behind the wheel. Getting foggy? Turn on your low beams. Tired? Pull over and rest.

Most significantly, nearly any touchy traffic situation is most quickly and easily remedied just by making the choice to slow down and avoid whatever is ahead of you. That’s hard to do at high speeds on slick roads, but driving fast in the rain is a choice you made, isn’t it?

Investing isn’t that different. If you are the kind of person who freaks out when stocks drop a half-percent in a day, you probably shouldn’t be 100% stocks. If you own an individual company’s shares and find yourself obsessing over its price daily or even hourly, maybe you shouldn’t buy individual shares.

If you’re one of those very thick-skinned types who can put money into a fund and forget about it for years, great. Most of us aren’t, and especially when balances get higher and start to feel like “real money.”

Here’s the trick: Slow down and assess. Ask yourself a few basic investment risk questions:

1. If the stock market fell by 20% in the course of a few weeks, would I sell, hold or buy?

2. Do I honestly believe (and do my past actions show) that I prefer investments that can decline substantially but promise better long-term results?

3. Or, do I believe (and do my past actions show) that I prefer investments that do not vary much in value but might have a lower long-term performance result?

If you answered “sell” to question number one and affirmatively to question number three, you’re a risk-averse investor by nature. If you answered “buy” and affirmed number two, you are probably more comfortable with a higher-risk portfolio.

Down the middle? A portfolio that middling on risk is a better fit for you.

Investment risk reconsidered

You can, and should, be invested in a way that matches your ability to manage  your own reactions. Like slowing down in tight traffic, it helps have time to gauge what’s going on and make better choices.

The ultimate investment portfolio is one that fits your personality and promises to deliver the results you expect with a minimum of risk, while doing so at the lowest possible cost. We all deserve to arrive at our retirement goals on time, safe and sound. A risk-adjusted portfolio is thus a big step in the right direction for retirement-oriented investors.

Source: http://www.forbes.com/sites/mitchelltuchman/2014/08/04/your-biggest-investment-risk-is-you

5 Tips For Avoiding Investment Bubbles

Investment bubbles have become a regular part of the landscape in recent years. For investors, that means that avoiding boom-and-bust cycles has become an essential survival skill.

Why so many bubbles?

The collapse of Japan’s market in the early 1990s. Various emerging market crises later in that decade. The dot-com bust. The bursting of the real estate market bubble, followed by the financial crisis. More recently, speculative peaks and plunges in oil and gold prices.

Why does this keep happening? After all, we are in the information age — shouldn’t investors be better informed than ever before? Not really. They certainly have more information, but more is not always better. The Internet and the 24-hour news media often fan the flames of hype and help it spread.

Meanwhile, international investing allows capital from around the world to flow into hot areas, so bubbles are less contained within national borders. Finally, the low-interest-rate environment of recent years is a contributor. With bank rates near zero, and Treasury yields not much better, investors are desperate for alternatives. Desperation often leads to mistakes.

Government intervention: help or harm?

Speaking of low interest rates, they are an example of how government intervention may do more harm than good when it comes to managing boom-and-bust cycles. The Federal Reserve has responded to a crisis of excessive borrowing by lowering interest rates to encourage even more borrowing, and in the process has driven interest-starved investors into more speculative asset classes. Meanwhile, lawmakers actively encouraged subprime lending and the deregulation of banking.

To a large extent, the government is eager to keep the party going for the time being, which means helping to make some bubbles bigger.

Minimizing the impact

So — bubbles are a recurring threat, and the government is not going to save you from them. What then do you do?

Here are five ways you can minimize the impact of bubbles.

1. Don’t mind missing the party. The music always sounds good, until the police raid the joint. If something feels wrong, don’t join in just because it looks like everyone else is having fun.
2. Focus on your objectives. Don’t get sucked into playing someone else’s game. If you focus on investing to meet your needs and circumstances, you will be less inclined to follow the crowd.
3. Diversify. It is one of the most basic of investment principles, but one that people abandon too readily. If you spread your investments out sufficiently, you will minimize the impact of any one bubble bursting.
4. Use a sell discipline. When you buy something, have a target price at which you plan to sell. That way, if you are fortunate to see your investment go up, you won’t get drawn into holding on just because it seems to be getting more popular.
5. Rebalance. This will help you execute tactics 3 and 4: As individual investments or asset classes rise, periodically trim them back to keep them in line with your planned mix. That way, a bubble won’t inflate an investment to the point at which it has an oversized impact on your portfolio.

Speculative bubbles are so ubiquitous, and their reach so widespread, that it would be unrealistic to talk about avoiding bubbles altogether. However, with some disciplined investing, you can minimize the impact and avoid disastrous damage to your portfolio.

Source: http://www.forbes.com/sites/moneybuilder/2014/08/04/5-tips-for-avoiding-investment-bubbles

Best 5 Tips On How NOT To Lose Money On The Forex Market

When you think about the forex market you realize how economically stable it is, as it spans across the entire world and brings in about four trillion dollars’ worth every single day (that number being the average daily trading volume). As a result, the forex is the largest market pertaining to financial processes that we’ve ever seen (and that we will probably ever see in our lives). The popularity of this particular market is pretty obvious, and traders from all sorts of different backgrounds have taken it upon themselves to work their way into it.
It’s one of the easiest things to get into, and that’s exactly why trading forex is one of the most popular financial past times ever. The costs to get started when it comes to trading forex are rather affordable, and we’ve decided that due to its popularity it was only right to go through 10 different ways to help you keep your money (while trading forex).
There aren’t any online courses out there that are going to guarantee you a successful venture when it comes to trading, but there was ways to learn how to keep your head above the water. Losing money is the last thing you want to be doing when it comes to trading forex, and hopefully these 10 tips will help you keep (and even profit) from your endeavors.

1. Do Your Due Diligence – Learn the Ropes before You Trade

Learning the ropes when it comes to trading forex is one of the most important parts to being successful with it. Most of the time the most efficient way to learn is to just start making trades, but there are a bunch of resources online that can provide you with useful information regarding the topic. There are tons of factors that come into, things like the geological and economic factors regarding your trade can come into play, so learning how to adjust accordingly is a crucial component to the entire process. Developing your very own trading plan is always a good idea in this regard, and soaking up as much information as possible before making the first trade is ideal.

2. Find Yourself a Trustworthy Broker

Trading with brokers that haven’t built up a reputation is never a good idea, so when you’re looking into forex trading make sure you’re working with a high-quality forex broker that’s been around for a while. Worrying about deposits and other things like that should never take place when you’re trading forex, so you should only look for brokers that are part of the NFA (National Futures Association), as well as a broker firm that is registered with the well-renowned U.S. Commodity Futures Trading Commission (usually referred to as the CFTC).

3. Trade While Using a “Practice Account”

Before you start to make forex trades on your “main account” it’s recommended to make prevalent use of a practice account. When it comes to trading platforms almost every single one that you use will have a practice account implemented, and these are usually referred to as demos. The accounts let new traders make “fake trades” without any funds, and then it allows them to see the repercussions of their trades (whether they be good or bad).

4. Make Sure Your Charts Are Tidy!

There are tons of tools available to you to analyze the competition (as well as anything else that can be monitored by the trading platform). Although they are useful you need to be aware as to which ones are currently working, and when you find them you should keep them while cleaning out other useless statistics. Keeping a chart tidy will help you trade with ease as you move along, and using two different types of tools that analyze the same thing is just foolish.

5. Keep Yourself Protected

Trading with your forex account is a foolproof way to gain a profit, but keeping that account secure is an entirely different story. Knowing how to accept a deficit in your revenue (or even your profit) is something a quality forex trader needs to be able to deal with, so make sure you have a loss threshold put into place. It’s always nice to know when to cut your losses, and when you don’t know your limits you could find yourself in the position of constantly losing money (this usually happens when people keep making bad trades even after they’ve suffered a loss in the market).

Source: http://investazor.com/2014/07/24/best-5-tips-on-how-not-to-lose-money-on-the-forex-market

Everyone’s Talking About Market Bubbles

After a brief lull, one of 2014′s dominant financial-markets themes is back: the big debate about whether we’re in a bubble.

With a difference. Now the chatter isn’t just about stocks and bonds in the U.S. It extends to just about every other type of asset around the world. A recent front-page article in the New York Times put it this way:

“Around the world, nearly every asset class is expensive by historical standards. Stocks and bonds; emerging markets and advanced economies; urban office towers and Iowa farmland; you name it, and it is trading at prices that are high by historical standards relative to fundamentals.”

Well, no. Stock prices indeed are higher than their historical averages in some markets. So are prices of most of the world’s government bonds. But equities in the emerging markets are not near their highs. Neither are gold and single-family homes in much of the U.S. And “relative to the fundamentals” is a highly subjective opinion.

As has been well documented over the years, the likely primary explanation for current valuations of various assets, overvalued or not, is unprecedented central-bank monetary stimulus that has driven interest rates to or near record lows.

Both Federal Reserve chairwoman Janet Yellen and Mario Draghi, president of the European Central Bank, decided to air their views on the bubble/valuation subject this week.

The published report that the Fed released accompanying Yellen’s testimony before Congress said: “Valuation metrics in some sectors do appear substantially stretched — particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year.”

But the report also commented that broad-market valuation measures are “generally at levels not far above their historical averages.” This suggests that investors “are not excessively optimistic regarding equities.”

Yellen also said: “While prices of real estate, equities and corporate bonds have risen appreciably and valuation metrics have increased, they remain generally in line with historical norms.”

Draghi said on Monday that he didn’t see a risk of widespread asset bubbles in the euro zone, even if some markets are “frothy.” He acknowledged that investors had driven up the prices of riskier assets, with reduced premiums over less risky assets. But he also said that demand for high-yield investments had not been accompanied by a surge in the kinds of debt that preceded the financial crisis. “We don’t have the general conditions that accompany the creation of systemic bubbles,” he added.

Some air came out of the pseudo-bubble yesterday. The Standard & Poor’s 500 slumped 1.2 percent, its biggest drop since April. First, a Malaysia Airlines plane was shot down over the Ukraine, killing 298 people. Then Israel launched an invasion of Gaza. Until yesterday, U.S. markets had not been affected much by geopolitical tensions this year.

Yesterday also was the first time that the S&P 500 moved by more than 1 percent since April 16, the longest such streak since 1995. And the CBOE’s Volatility Index, the VIX, surged 32 percent to 14.54, its biggest one-day gain since April 2013. This so-called fear gauge recently hit a seven-year low.

Prices of U.S. Treasury bonds, widely viewed as overpriced, rose in an investor flight to safety as yields on the benchmark 10-year issue fell below 2.5 percent.

This is all the more amazing considering that Yellen this week also said that the Fed likely would start to raise its short-term interest rate, now at zero-0.25%, earlier than currently expected if the labor market continues to improve more quickly than now anticipated.

In sharp contrast, interest rates rose sharply in June 2013 when then-Fed chairman Ben Bernanke first hinted that the Fed would start to taper its bond-buying program at some point. That taper finally began in January and is expected to be completed in October.

Still, Yellen noted low levels of labor-force participation and slow wage growth as evidence of “significant slack” in the job market. She said the Fed previously has been misled during the economic recovery by “false dawns.” She added: “We need to be careful to make sure the economy is on a solid trajectory before we consider raising interest rates.”

The current expectation is that the Fed will start raising short-term rates around the middle of 2015, with the benchmark rate climbing to 1 percent by the end of next year.

Source:  http://www.investingdaily.com/20778/everyones-talking-about-market-bubbles-2/

5 Warning Signs a Startup Is a Bad Investment

A company that’s not growing is dying. This is an unpleasant reality that comes with the capitalist system, and it’s especially harsh for smaller or newer companies. Between concerns over debt, resource acquisition and client maintenance, plenty can go horrifically wrong. It’s no wonder that 80% of small businesses fail.

The prudent investor must watch must watch for these five warning signs.

1. Lackluster products. 

A common challenge for any new business is separating themselves from the crowd. A company unable to provide a quality or niche product will likely get steam rolled by others already established in their field.

Look through their product catalog to determine if the company has carved out a spot in their niche. If nothing stands out as unique to either the area or the market in general, rest assured someone else is already providing it. You should avoid investing in companies like that because, more often than not, you are disappointed in the end.

2. Lack of vision. 

To survive, a company needs a solid business plan stating the targeted markets, as well as a vision statement stating how the market will be penetrated.

One of the major issues small companies encounter is their inability to reach out, grasp the public’s attention and convince them to utilize their services or products. Ask to see the company’s planning documents. If they don’t have a one, that is your sign to pass.

3. Lack of growth. 

A young company needs rapid, yet scalable growth to survive. The reason  is simple. There is no guarantee their faithful customers will be there tomorrow. It’s vital to find new ones as often as possible.

Ask to see the company’s purchasing history and compare it with their list of clients. The company probably doesn’t have a very bright future if they only have one or two major clients and no active plans for expansion. Save your money for a brand that understands the importance of a diverse client base.

4. Crowded marketplace.

A market with dozens, if not hundreds, of competitors will prove much more difficult for a new company with limited resources for marketing itself and its services.

Look for companies that start in smaller areas, or have a niche product patented or trademarked. If in doubt, check to see if the company has spread. A startup is much more likely to succeed if it exists in more than one market, especially when competition already exists.

5. No research and development budget.

Markets change frequently, thanks to the changes in public demand and the pace of technological innovation. To succeed, a company will need to nimbly recognize changes as they come, adapt and take advantage ahead of their competition. 

Check the company’s financial report. Back away from any firm that does not dedicate a decent chunk of their profits towards preparing for the future. A hefty research and development budget is vital.

VC investing offers no guarantee you’ll make a profit or even get your money back, so pay attention to the warning signs of predictable startup failure. Obtain the necessary documents and consult with a financial analyst if you have the time. Otherwise, stick with more established companies and avoid the 80% failure rate.

Source:http://www.entrepreneur.com/article/235659