Anyone Can Be An Investor!
Posted on December 21, 2007
Filed Under Investing, Real Estate Investing |
But, not everyone should be an investor.
Warning! If you believe the hype of the gurus who say you can make millions starting with no cash, bad credit and a pile of debt…
DON’T READ ANY MORE OF THIS POST! You won’t like it and you will accuse me of being a dream stealer.
You have been warned.
Still reading? Good.
I have always found it funny how the gurus with expensive study courses and boot camps handle the dreamer who wants to make millions but has nothing to invest other than time pull their “mark” further into their lair.
The standard pitch is, you don’t need credit and it doesn’t matter how much debt you have and it doesn’t have to be your money. They usually tell you to look for someone with more money than time and partner with them. They put up the funds and you do all the work. Sounds great, doesn’t it?
But, let’s dig a little deeper.
Eliminating the obvious sources of ready cash like family that just can’t say no to you or the lottery winner who believes easy riches are the norm of the rich, anyone willing to put cash on the table is going to want to know their risks.
No, problem the hucksters say, it is all secured by the property, there is little or no risk. Uh, no. That has never been true and the current market further proves it.
The question that stays in my mind is why does anyone think anyone with enough money to fund the deal would be dumb enough to invest with someone who has no experience and if they have piles of debt and trashed credit have proven they don’t know much about money.
Remember, those who understand interest, earn it, those who don’t, pay it.
Can you start with nothing and earn millions? Sure, but you are going to have bootstrap yourself to the point where you have a proven track record before you can expect others to fund your deals.
So, while anyone can be an investor, not everyone should be an investor.
If you are…
- Saving less than 10% of your pretax earnings
- Carrying consumer debt
- Have a house or rent payment exceeding 25% of your pretax earnings
- Have less than six months expenses saved for emergencies
Then you absolutely have no business thinking about investing in anything other than reducing your debt and increasing your savings.
You might be saying, “What about flipping? I’ve heard you can do that starting with nothing but time.”
Not exactly. It takes marketing to find buyers to flip to and that takes money. It takes marketing to find deals to secure to flip and that takes money. There are expenses like gas, stationary, cards, flyers, signs. And that assumes you have a source of income for the regular monthly expenses.
So, how should you start? Become a savor before you even think about becoming an investor. Open a money market account and start making regular deposits. Regular as in, every paycheck, before you spend it on anything else. If that doesn’t leave you enough to pay all of your other bills then do one of two things. Reduce your expenses or increase your income with another job.
Reducing your expenses can mean…
- Doing without a cell phone or high speed internet (dial up still works everywhere and there are loads of free wifi hot spots around the country)
- Eat out less and eat at home more (lots of side benefits with this one.)
- Brown bag the lunch
- Cut back or eliminate cable or satellite television
- Move to a cheaper home
- Drive a cheaper car
- etc
See? I told you not to read this if you bought into the Carlton Sheets, et al, “you don’t need money or credit to invest” crowd.
Comments
3 Responses to “Anyone Can Be An Investor!”
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Wonderful post.
Bill Gatten of the infamous NARS Equity Holding Trust System said in his free training seminar that 80% of the people that become members of his club never use the system. And of the 20% that use it at least once, only 20%(4%) do it enough to make decent money(100k/yr). And of that 20%, only 20%(.8% overall) are doing exponentially well.
What people don’t realize is that 4% of the people that are making decent money that money that is being watched by Gatten does’t count advertising and other buisness expenses, and you can bet that they weren’t flat broke with no credit when they started. It is likely they are involved in other businesses as well.
I have heard that on average, 1% of people who show some interest(take a course, read a book, attend a sweminar) in investing in Real Estate actually become successful, meaning make enough money to hit critical mass for thier lifestyle. Not sure where I heard that statistic or if it is even credible, but Gatten’s numbers from his membership seem to support the 1% overall methinks.
Get your own house inline, then go make some money…
Hi
Well I will just say “AMEN”, I have been investing in Real Estate for years, good credit, and a down payment are essential. In Real Estate you will not a get rich quick but you can get rich slowly. I think a good buyers market is here if you watch your P’s & Q’s.
Just my thoughts
Best Wishes
Ted
http://www.campingsierra.com
Thanks, guys.
The interesting thing to me isn’t that so few people make money investing in anything but the overall perception by the dumb-masses that investing is easy money! It is an incredible amount of work and me thinks THAT is why so few succeed.