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How to Be a Successful Investor

Here are 5 ways to help you become a successful investor:

1. Educate Yourself

Don't worry this doesn't mean going to university to get a MBA, or a degree in finance, or accounting. I am talking about practical education that you can implement right away on how to invest for success. Education is the first and most important element, because without you will not be able to implement the rest of the items in this list. A lit bit of effort in education will reap huge benefits for you for the rest…

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Jack and Jill – A Fairy Tale or How Jack Lost $97,429

Don’t wait to start investing. The sooner you start the more money you will make.

Once upon a time there lived two friends in a land far far away, both were the same age with the same birthday but very different in all other aspects.  Jack was the impatient type, always wanting to “live large” and spending everything he earned. Jill was more patient and a visionary, she always thought long-term.

Jill started investing at the age of 25, she invested $1200 each year and earned 6% annually. Jack …

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Why Bother Investing?

Why should you invest your hard earned money? Why bother to learn about investing, and then spend time implementing investing strategies? Most people will respond: “Because I want to make money!” Why do you want money? You want money because it will give you the freedom and time to do what you love. Here are some of the reasons why people invest:

1. To live comfortably

2. To travel

3. To support their children/parents

4. Buy the house/car/clothes they always wanted

5. The ability to retire …

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Whose Interests Are Truly Being Served?

How do you tell financial advisors and product pushers apart? Is your financial advisor looking out for your best interest or their own? A recent article from Morningstar identifies 4 things to consider before working with a financial advisor. I’d like to add one more to the list:

Is the advisor living paycheck to paycheck?

In other words if the financial advisor isn’t wealthy himself, how can he or she help you to achieve financial success? Ask any potential advisor how long they have been fo…

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Saving money for a vacation, car, or house? Don’t put that money in stocks.

Don’t put your short-term savings in stocks and that includes ETFs, and equity mutual funds. If you are saving money to go on vacation, buy a car or a house in less than 5 years then don’t put that money in stocks. Investing in stocks requires a long-term time horizon, generally more than 5 years, and the more the better.

Imagine you are trying to save $5000 towards a vacation, car, or down payment. You don’t need the money till 2 years from now so you invest it in stocks. In 2 years when it co…

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Paying Dividends Since the 19th Century

Can you list at least five companies that have been paying dividends since the 1800s? How about 10 companies which have been paying dividends for more than 115 years? In this post I list a few American and Canadian companies that have been paying dividends for a very long time.

But first, what is a dividend? A dividend is a cash payment paid to shareholders monthly, quarterly, or annually. The company decides when and how much to pay shareholders. As a shareholder you are part owner of the comp…

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Top 5 Reasons Why Mutual Funds Fail

Fees

1. Mutual funds charge a fee, the Management Expense Ratio (MER), to cover their expenses. An MER virtually guarantees that mutual funds will lag the stock market performance. In a previous post I discussed the high cost of mutual fund fees.

Selling at the wrong time

2. A mutual fund will drop in price if a large number of mutual fund holders decide to sell their funds in a short amount of time. This is especially worse during a market downturn, at which time everyone runs to their mutua…

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Investment versus Speculation

Are you an investor or speculator? Or are you a speculator thinking that you are investing? Over the years I’ve heard people say things like, “I’m going to play the stock market. I’ll gamble a few hundred dollars on this stock. If I get lucky I can retire soon.” When talking about stocks, I never mention the words “play” “gamble” or “lucky”. Those words belong in a casino not when you are investing your hard-earned money.

There is a big difference in investing versus speculating, Benjamin Graha…

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Most People Will Never Be Rich

Most people will never be rich. Why? Because most people (the middle class) are investing the same way as everyone else, and everyone else is not rich. The middle class are not wealthy, and if you are going to invest like the middle class then statistically speaking you will never be wealthy. You have to change the way you think and act about investing in order to achieve financial success.

You were probably told by your parents/friends/peers to go to school, get a good education, get a good jo…

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Imagine Never Having to Pay Federal Income or Payroll Taxes!

It’s that time of year again. Tax time! Everybody’s doing their taxes or thinking about taxes ….so, this reminded me of something I read in Berkshire Hathaway’s 2006 annual report where Warren Buffett talked about zero taxes for all.

On page 19 of Berkshire Hathaway’s 2006 annual report Warren Buffett wrote:

“Berkshire will pay about $4.4 billion in federal income tax on its 2006 earnings. In its last fiscal year the U.S. Government spent $2.6 trillion, or about $7 billion per day. Thus, for m…

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