Myth #1 — Financial Freedom

May 31, 2009

Every time I speak these days, someone in the audience wants to talk about their frustration with obtaining “Financial Freedom, Passive Income and More Time.” This newsletter is the first of a three part series on these issues.

Let´s start with financial freedom, which is a myth. The real issue is NOT financial freedom. The reality is that you already have that! Compare yourself with the rest of the world. If the world was a village of 1,000 people, 500 went to bed hungry last night, 600 are illiterate, 700 live in shanty towns – no running water or central sewage. (It adds up to more than 1,000 because some people who are hungry also can´t read or write.) 60 would have ½ the income and if you make more than $30,000/year, you are in the top 1% in the world! In other words, you are already financially free and rich beyond measure in the eyes of the rest of the world, which is why I said financial freedom is a myth.

The real issue is how much do you want and what kind of lifestyle do you want with your “financial freedom”? You can be financially free on $2,500/month, and I know many people who have this amount as their goal. The problem is that the quality of life and lifestyle you will have is not necessarily one of abundance unless you decide to move to a third world country.

Financial freedom is a myth because we talk about it as if it would be the panacea to all our problems. I keep asking audiences and students this question: “If I could get you all of Bill Gates money this afternoon, but the exchange would be that you would agree to spend the rest of your life in an iron lung, paralyzed from the neck down with no friends or family around, would you make the exchange?” So far, I have no takers on this deal, which doesn´t surprise me. If you are obsessed with the pursuit of financial freedom to the exclusion of an abundant life and a great relationship and massive health and a deep spirituality, you will find yourself looking back one day in utter dismay and regret.

If we put as much energy and thought into creating a life worth living, in growing and making a contribution as we do in pursuing the seemingly holy grail of financial freedom, we would be stunned by the results we would get in all our lives.

Don´t misunderstand what I´m saying. Money and wealth and financial abundance are a critical part of living a full life. But, it is not the only thing there is in life, any more than relationships or health or spirituality are the ONLY things important in life. Financial freedom is an outcome — an EFFECT! Too many people fall in love with the EFFECT and not the CAUSE, and the key to having what you want in life is falling in love with the Causes!

What would you do with all the extra time you would have if you ever achieved the financial freedom you desire? Most people don´t have a clear answer to that question, but if you are one of the fortunate few that does know, are you already doing some of that in your life right now? If not, why wait to do it perfectly “someday?” Why not start today and do it imperfectly and see what results you start getting? Anything worth doing is worth doing POORLY!

To start a business based on the desire to become financially free is a huge mistake and a prescription for disaster. The wealthiest people on the planet did not start out saying their goal was financial freedom or retirement because if they had, they would have stopped long ago. The 10 wealthiest people on the planet are all still working — not just 40 hours per week, either. Bill Gates, Michael Dell, Warren Buffett, Larry Ellison etc are all still regularly logging 60/70/80 hour weeks. Not one of them is concerned with financial freedom or retirement.

You see, retirement is simply doing what you want, when you want to do it. Each of the Forbes 400 is doing that. They have all retired — INTO their jobs and companies. They have all fallen in love with the CAUSE. They are passionate not because of what they are doing, but because of how they are doing it. They are growing and contributing and focused on solutions, which means they are excited and excitement comes not from what you do, but rather how you do it. Remember, it´s never about what you do, but rather how you do it.

If the pursuit of financial freedom seems difficult or if the sole reason you are pursuing it is because of a desire to “do something else”, why not start doing some of that something else today? Why not fall in love with what you are doing and retire into your job or company and give yourself to it 100% and see what it gives back to you.

But, most importantly, remember to keep your life in perspective. This lifetime is not solely about getting to financial freedom but rather to live it so that at the end you can say, “This was my life. I am proud of it and I would gladly live it again if given the chance!”

Best
KJC

PS Keith Cunningham was the “Rich Dad” in Robert Kiyosaki’s bestseller book Rich Dad Poor Dad

PPS Keith Cunningham was my mentor in 2003/2004 during his mentor and graduate business school programs

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One Minute “BACKSTOP” Check

May 30, 2009

One Minute “Backstop” Check:

 

In your life you will have dreams and goals that you will want to have happen, and you will be using the cash flow in your life to funds these. Statistics show that only 3% of New Zealanders are independently wealthy and the rest of us need the regular cash flow of our jobs, rentals and investment income to fund our life.

But what should happen if you become sick, disabled or in the worst instance die? Will you let your interests, business, assets and family life disappear?

So what is the “backstop” in your life, to replace your cash flow? In life we don’t know what will happen, but we need to know how we will manage it.

Below is a table that is a quick check for you to complete, it list events in life some are what we think will happen like retirements, buying a house, putting the children through their education, and others are events that we hope won’t happen.

You need to think have you managed this event? If so how have you managed it? Through an investment? Would you have to borrow? Or would you insure against it?

   

Backstop Management Tool

Event 

Managed 

Invest 

Borrow 

Insure 

Retirement 

Y/N 

      

Ultimate end of life 

Y/N 

      

Children’s education 

Y/N 

      

Early death 

Y/N 

      

Surgical / health 

Y/N 

      

Disability 

Y/N 

      

Critical Illness (Cancer, Heart Attack, Stroke)

Y/N 

      

Unemployment 

Y/N 

      

Home purchase 

Y/N 

      

Start a business 

Y/N 

      

Other goals 

Y/N 

      

 

Have you managed the Backstop in your Life? Or do you need to talk to me?

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PropertyTalk.com Interview Daniel Feller

May 30, 2009

Daniel is the Swiss Money Wiz with a passion for finance and property. While being mentored by Dolf de Roos in 1999 he became an investor and mortgage broker. Since then he has not only bought more property than any other mortgage broker, but also helped mom and dad fund a spectacular early retirement, and many investors to become super investors.daniel@financialpictures.com

-How did you start investing?

I met a number of key people when I immigrated to New Zealand from Switzerland in 1995. The first, my mortgage broker, managed to secure a mortgage for my first property with a small deposit while I was a student at Auckland University. When I sold the property three years later I made more money than I would have made in a job. I was ecstatic and my mortgage broker made a comment along the line that perhaps I should do this again. I then went on to find mentors like Dolf de Roos, Robert Kiyosaki and Keith Cunningham to guide me to become a professional investor. In 1999 I was ready to quit my job and I set up my mortgage and investment businesses.

-How long have you been investing for?

I started investing in myself when I was 9 and a teacher told me that I would never achieve anything. I bought my first home in 1995, relocated and subdivided an Otara property and bought two brand new properties in 1999. In 2001 my team and I lined up 26 properties for settlement in one day – I was on the fast track.

-What are your top 5 tips for investing?

1. In the best of all possible worlds what would you really want to happen? Think about what YOU want and how YOU want to design your journey in this lifetime. I’ve met thousands of people in the last seven years and most are still in the same space because they don’t know what they really want out of life.

2. Be very clear and focused on whether you want to be an investor or a saver. I have an interesting article on this topic and it is often misunderstood. Investing is the process of building financial wealth. Saving is setting money aside now (i.e., foregoing current consumption) to spend it later. An example of saving would be buying real estate to fund retirement. Investors never really “spend” their financial capital, but continue to manage it going forward. The building process continues even as we begin to use our financial capital.

3. Kiwis are excellent DIYers. Trust me: this is the hard way to do anything. Whether you want to become New Zealand’s Donald Trump or save for a spectacular early retirement with real estate, build a TEAM of trusted advisors who can guide you in achieving your dreams.

4. Should you choose to become an investor you need to know more and constantly educate yourself in a wide range of subjects. As a saver or new investor you need professional advisors to give you advice. A professional investor on the other hand needs a professional advisor to help execute plans.

5. Good planning is important, but effective implementation is crucial! Don’t get stuck with chasing the perfect plan or the latest fad of an investment technique. To plan for your financial future, a boring old-fashioned rental property in a good location bought today will always beat the perfect deal purchased with the newest technique one day in the future.

-Have you been through a complete property cycle?

Looking at the statistics I’m in the second property cycle now.

-If so, what experiences/ lessons have you learnt during the differing phases of the cycle?

I’m buying well and know my cash flow position at any time. If you focus on what you can control the property cycle is not relevant. There is no point in finding a “hot spot” if you only can predict 12 months ahead. And you’re focusing on something you can not control. For mom and dad who save for their spectacular early retirement, good advice and time will enable them to achieve their goal. The more time they have the easier it will be to achieve their goal.

As an investor you need to follow your master plan and adjust to the market. In this property cycle from 2000 to 2005 properties were at times going up so fast that just about any property could have been bought and sold soon after at a profit. Properties also sold quickly. In the last two years it was more difficult to buy very well and it took longer to resell properties. Hence, it was important to understand how this affected the cash flow position and to make sure that all mortgages could be paid on time.

-Any tips on how to survive a complete property cycle?

Execute your plan well and adjust your course if needed. Don’t listen to the Media. They’re in the business of selling bad news and not good news. Have lots of fun.

-What lessons/mistakes have you made along the way?

Some advisors had to be fired and I waited to long.

-What strategies have you used in the past few years? Trading, buy and hold, Reno, developments etc

Since 1999 I focused on a buy and hold and property trading strategy. I have used many of the other strategies when they offered a better solution. For example I’ve created a property portfolio of 10 properties for an overseas investor. He qualified for finance and I had the know how. It was a win-win situation for both of us.

-What investment strategies will you be utilising in the next few years?

I am focusing on growing Financial Pictures Mortgages and the property trading business so that I can acquire more buy and hold properties.

I am also exploring commercial property syndication.

-What is your most recent investment experience?

I’ve been offered a buy and hold property on a 1,200m2 section in an upcoming location. It was valued at $300,000 and I had an option to purchase at $275,000. The section was big enough for 3 dwellings/sections. I wasn’t looking for a buy and hold / development property at the time. But I went unconditional anyway as I had a client who asked me to help them. When the client came back from their holiday they were not ready to commit to their plan, and so I bought it myself.

-If you had to be a superhero who would it be and why?

James Bond – What a lifestyle and saving the world everyday.

-Who inspires you and why?

My parents, for believing in me and having the courage to follow me to New Zealand.

Lance Armstrong World Champion Cyclist and 7 times Tour de France winner, for never giving up and surrounding himself with the best team. (It’s not about the bike- excellent and inspiring book)

Keith Cunningham, who has a great business mind and showed me how to grow my mortgage and property businesses.

My business partners and clients, who challenge me to grow and find solutions for them.

All the friends who said “YOU CAN!”

-What advice would you give anyone entering the property investment game?

Nike got it right – Just Do IT. Discuss your plans with your loved ones and build a team to assist you reaching your goals.

Daniel provides a professional mortgage and wealth planning service. He can be contacted for a free no obligation chat at Financial Pictures Mortgages office 09 529 1115, mobile 021 533 360 or email

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4-HOUR WORK WEEK TIM FERRISS

May 30, 2009

Timothy Ferriss, nominated as one of Fast Company’s “Most Innovative Business People of 2007,” is an angel investor and author of the #1 New York Times, Wall Street Journal, and BusinessWeek bestseller, The 4-Hour Workweek, which has been sold into 34 languages.

He has been featured by more than 100 media outlets, including The New York Times, The Economist, TIME, Forbes, Fortune, CNN, and CBS. He speaks six languages, runs a multinational firm from wireless locations worldwide, and has been a popular guest lecturer at Princeton University since 2003, where he presents entrepreneurship as a tool for ideal lifestyle design and world change.

Tim is an active education activist and has architected experimental social media campaigns such as LitLiberation to out-fundraise traditional media figures like Stephen Colbert 3-to-1 at zero cost, building schools overseas and financing more than 15,000 US students in the process. He is on the advisory board of DonorsChoose.org, an educational non-profit and winner at Fast Company’s 2008 Social Capitalist Awards.

Since his debut presentation on The 4-Hour Workweek at the world-famous SXSW Interactive conference on March 12, 2007, Tim has been invited to speak at some of the world’s most innovative organizations, including Google, MIT, Harvard Business School, PayPal, The Central Intelligence Agency (CIA), Microsoft, Ask.com, Nielsen, Princeton University, the Wharton School, and the Stanford Graduate School of Business. He has also been invited to speak and keynote at world-renowned technology summits including FOO Camp, E-Tech, Supernova, and the Web 2.0 Exposition, where he shared the stage with figures like Eric Schmidt, Chairman of the Board of Google, and Jeff Bezos, founder and CEO of Amazon.

Tim has amassed a diverse (and certainly odd) roster of credentials:

  • Princeton University guest lecturer in High-Tech Entrepreneurship and Electrical Engineering
  • First American in history to hold a Guinness World Record in tango
  • Advisor to more than 30 world record holders in professional and Olympic sports
  • Wired Magazine’s “Greatest Self-Promoter of 2008″
  • National Chinese kickboxing champion
  • Horseback archer (yabusame) in Nikko, Japan
  • Political asylum researcher and activist
  • MTV breakdancer in Taiwan
  • Hurling competitor in Ireland
  • Actor on hit TV series in mainland China and Hong Kong (“Human Cargo”)

Tim received his BA from Princeton University in 2000, where he studied in the Neuroscience and East Asian Studies departments. He developed his nonfiction writing with Pulitzer Prize winner John McPhee and formed his life philosophies under Nobel Prize winner Kenzaburo Oe. He is 31 years old, and The 4-Hour Workweek is his first book.

“Tim has packed more lives into his 29 years [at time of publication] than Steve Jobs has in his 51.”
- Tom Foremski, Journalist and Publisher of SiliconValleyWatcher.com

“Thanks to Tim Ferriss, I have more time in my life to travel, spend time with family and write book blurbs. This is a dazzling and highly useful work.”
-A.J. Jacobs Editor-at-Large, Esquire MagazineAuthor of The Know-It-All

Click to view Tim on YouTube

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#1 on Book Amazon Who’s Got Your Back:

May 30, 2009

Disregard the myth of the lone professional “superman” and the rest of our culture’s go-it alone mentality. The real path to success in your work and in your life is through creating an inner circle of “lifeline relationships” – deep, close relationships with a few key trusted individuals who will offer the encouragement, feedback, and generous mutual support every one of us needs to reach our full potential. Whether your dream is to lead a company, be a top producer in your field, overcome the self-destructive habits that hold you back, lose weight or make a difference in the larger world, Who’s Got Your Back will give you the roadmap you’ve been looking for to achieve the success you deserve.

Keith Ferrazzi, the internationally renowned thought leader, consultant, and bestselling author of Never Eat Alone, shows us that becoming a winner in any field of endeavor requires a trusted team of advisors who can offer guidance and help to hold us accountable to achieving our goals. It is the reason PH.D candidates have advisor teams, top executives have boards, world class athletes have fitness coaches, and presidents have cabinets.

In this step-by-step guide to the powerful principles behind personal growth and change, you’ll learn how to:

· Master the mindsets that will help you to build deeper, more trusting “lifeline relationships”

· Overcome the career-crippling habits that hold you back, once and for all

· Get further, faster by setting goals in a dramatically more powerful way

· Use “sparring” as a productive tool to make the decisions that will fuel personal success

· Replace the yes men in your life with those who get it and care – and will hold you accountable to achieving your goals

· Lower your guard and let others help!

None of us can do it alone. We need the perspective and advice of a trusted team. And in Who’s Got Your Back, Keith Ferrazzi shows us how to put our own “dream team” together.

Review and order here:
http://tinyurl.com/ms9nv3

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Coldplay

May 18, 2009

Thought you might like this. Fee download from Coldplay

 

coldplay

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Interest Rate Outlook May 2009

May 12, 2009

 

Current Interest Rates
Rates offered are the best of standard, carded interest rates available and do not reflect any discounts your Advisor may be able to obtain for your client. Rates correct as at 02/05/09.
Variable 6.30%
6 Month Fixed 5.39%
1 Year Fixed 5.69%
2 Year Fixed 6.20%
3 Year Fixed 6.70%
5 Year Fixed 7.50%

What a difference a month makes in the interest rate world, with last week’s drop in the official cash rate by the Reserve Bank by 0.50% to 2.5% all the panic of last month to fix interest rates for long term has completely evaporated.

This recent reduction is supported by a pretty clear indication by the Reserve back that they see rates staying at this level or lower well into the back half of 2010 with the potential for further small cuts again later this year seeing the possibility that the OCR could hit as low as 2.0%.

The OCR only immediately impacts variable and short term fixed rates but does have the potential to filter through to some of the mid range fixed rates as well. Banks have historically run on a margin of about 2% above the OCR but currently this sits at around 3.5% suggesting that while the bank’s do have their own challenges they are certainly taking this opportunity to increase their margin.

Meanwhile as the realisation that interest rates will remain at their current low levels or even lower for the foreseeable future and another key indicator to housing market strength ‘net migration’ showing very positive signs with a net increase in population last month of 1670 people some confidence is returning to the housing market.

While some confidence is being restored it will still be a long slow road back as we need to realise that we are recovering from very depressed levels and negative drivers such as the scare of unemployment and a continuing scarcity of available credit will continue to hold us back.

Our current recommended borrowing strategy sits firmly in the 6 month interest rate bracket. Almost none of the banks have effectively passed on last week’s cuts yet, so we expect to see 6 month fixed rate money being consistently available from as low as 5.30-5.40%, given this is a good 1-1.50% below 3 year fixed money and probably around 0.70% below variable money we fail to see value in any other option today.

For the more conservative borrower maybe a split between some of your mortgage fixed on 3 year rates and some on 6 months would give greater comfort, at the end of the day there is no ‘right’ or ‘wrong’ it comes down to personal comfort levels in relation to risk.

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