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CONTENTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27.

  Shock  Warning««««««««««««««««««««««««2   Income  is  not  wealth««««««««««««««««««««    3   No  debt  is  a  good  debt«««««««««««««««««««4   Do  things  differently««««««««««««««««««««  8   Find  out  what  your  boss  earns««««««««««««««  9   Make  sure  you  love  what  you  do  for  a  living««««««    10   Recognise  the  value  of  time««««««««««««««««    11   Ideas  are  the  new  hard  graft«««««««««««««««   Invest  from  your  surplus««««««««««««««««««13   Get  a  good  broker««««««««««««««««««««««    15   Be  tax  smart«««««««««««««««««««««««««    16   Invest  in  money-­makers,  not  flashy  pipe  dreams«««    17   Diversify,  Diversify,  Diversify«««««««««««««««      18   'RQ¶WLJQRUHJOREDOPDUNHWV««««««««««««««««    19   Invest  for  income««««««««««««««««««««««    20   Understand  how  to  recover  from  losses«««««««««    25   Avoid  Investment/Trading  Seminar  Scams«««««««    27   Understand  that  conflicting  advice  may  all  be  correct«  29   Investing  on  news««««««««««««««««««««««    30   Understand  the  jargon  and  the  charts««««««««««    31   Do  not  under-­estimate  your  life-­expectancy««««««      32   'RQ¶WIRUJHWJRRGROG-­fashioned  saving«««««««««    32   Enjoy  without  addiction«««««««««««««««««««    33   All  bulletin  boards  are  positive«««««««««««««««  34   Aim  for  multiple  income  streams«««««««««««««      35   You  never  know  enough««««««««««««««««««    36   $QGILQDOO\«««««««««««««««««««««««««««    37  



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This  Guide  is  not  going  to  make  you  rich  overnight  (at  least  not  tonight,   unless  you  are  extremely  lucky).     This  guide  is  not  for  those  who  are  hoping  for  a  µget  rich  quick¶VFKHPH because,  although  it  is  unfashionable  to  say  it  ±  there  is  not  really  any   such  thing.       No,  this  guide  is  different.  You  have  not  just  wasted  money  on  yet   another  scheme  or  system  which  will  ultimately  fail  despite  the  claims   made  in  the  advertising. What  is  it  then?     Well  this  is  a  guide  to  help  you  accumulate  wealth  steadily  and  sensibly.   You  may  indeed  have  great  rises  in  financial  wealth  in  short  periods  of   time.  You  may  also  have  to  take  some  losses.  That  is  all  part  and  parcel   of  this  experience.  What  we  are  aiming  for  is  that  in  the  long  term,  your   gains  will  outweigh  your  losses  by  some  considerable  distance.  You  should   also  avoid  some  of  the  mistakes  that  many  people  make.     In  fact,  you  should  be  able  to  avoid  making  the  mistakes  that  MOST   people  make.     <RXKDYHKHDUGLWVDLGWKDW³NQRZOHGJHLVSRZHU´     In  the  wealth  building  game  that  is  certainly  true.  Those  who  have  the   knowledge  are  able  to  capitalise  on  how  the  system  works.  The  rest  are   simply  going  about  their  daily  lives  hoping  that  somehow  things  will  be   different  next  year,  without  actually  doing  anything  about  it.                        

Well ±  now  is  your  chance  to  do  something  about  it!  


Secret Number  1     ³Income  is  not  wealth´     Your  biggest  barrier  to  attaining  wealth  is  yourself.  It  is  no  use  blaming   everything  and  everybody  else  if  you  are  actually  living  your  life  in  a  way   which  is  not  helping  you  to  build  your  wealth.     Ultimately,  you  will  only  become  wealthy  if  you  spend  less  than  you  make   each  month.  Most  people  think  that  you  need  to  have  an  enormously  high   monthly  income  to  be  considered  wealthy.  Actually  ±  there  are  many   people  who  have  lower  level  incomes  but  act  more  sensibly  with  their   money  and  so  overall  are  wealthier.  Any  fool  can  get  a  high  income  ±  but   the  same  fool  will  spend  it  all  so  that  there  is  nothing  left  when  that   income  ceases.   Please  understand  ±  Income  is  NOT  wealth.   In  financial  terms  (for  there  are  other  types  of  wealth),  your  wealth  is  the   part  of  your  net  worth  that  makes  you  money  (either  income  or  capital   growth)  without  you  needing  to  work  hard  for  it.  So  for  example,  whilst  a   teacher  may  work  hard  each  week  to  get  their  monthly  salary,  somebody   with  a  property  portfolio  can  be  paid  each  week  in  terms  of  rental  and   capital  gain  on  their  houses,  for  doing  relatively  little.  If  they  were  to  add   to  this  some  high  dividend  paying  stocks,  and  maybe  some  regular   returns  on  sales  of  a  book  they  wrote  some  time  ago,  you  can  see  how   they  would  be  considered  wealthier  than  the  teacher.  They  could  actually   continue  to  live  in  the  manner  they  have  become  accustomed  for  as  long   as  their  portfolio  paid  out  ±  which  would  normally  be  longer  than  a  normal   salary.  Even  better,  they  would  not  have  worked  themselves  into  an  early   grave  in  the  process!   Ask  yourself  this  question.   How  long  could  you  continue  with  your  normal  spending  habits,  if  your   regular  monthly  pay  were  to  be  stopped?  Your  aim  should  be  to  make  it   so  that  a  regular  monthly  salary  from  an  employer  becomes  a  nice  bonus!   ,I\RXGRQ¶W-­  you  will  forever  be  bound  by  the  lie  that  it  takes  a  high   income  to  become  wealthy,  and  it  requires  working  all  the  hours  in  the   day  and  night  to  achieve  that  salary.  Believe  that  -­  and  financial   independence  and  security  will  always  be  just  out  of  reach.    


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Secret Number  2   ³1R'HEWLVDJRRG'HEW´   Although  most  of  us  will  go  through  life  needing  to  borrow  money  at  some   point  or  other,  be  it  to  ease  cash  flow  by  the  use  of  a  credit  card,  or  by   taking  out  a  mortgage  on  a  family  home  ±  the  paying  of  interest  will  of   necessity  mean  that  we  have  paid  back  much  more  than  we  borrowed.     This  is  a  sure  fire  way  to  eat  at  your  wealth.  The  more  debt  you  take  on,   the  more  difficult  it  will  be  to  get  out  of  it.  It  is  like  a  drug,  and  it  can   destroy  you  in  the  same  way.  Any  debts  you  take  on  need  to  be  targeted   and  cleared  as  soon  as  possible  ±  Yes,  even  your  mortgage.   What  should  I  do  first  ±  clear  the  debts  or  invest?   As  I  said,  we  all  have  some  debts  at  some  point  in  our  lives.  It  may  be   that  we  are  still  faced  with  a  student  loan  after  university.  It  may  be  that   we  needed  to  take  on  a  loan  to  buy  a  new  car  (more  on  that  later),  or  it   PD\EHWKDWZHKDYHVRPHIXUQLWXUHRQDµEX\QRZSD\ODWHU¶GHDO$OPRVW without  exception,  we  will  have  a  mortgage.  And  then  comes  the   quandary:  If  all  my  money  is  pumped  into  paying  off  the  debts,  I  will  not   be  doing  any  saving  for  a  rainy  day  or  for  my  life  when  I  have  retired.       Thankfully,  this  dilemma  can  be  solved  with  a  fairly  simple  calculation.   The  answer  depends  on  two  variables:   1.  How  much  interest  you  are  paying  on  your  debt,  after  tax.   2.  How  much  interest  you  expect  to  earn  on  your  investments,  after  tax.   Please  note  that  there  are  two  types  of  debt.  At  one  side  we  have  the   worst  kind  -­  very  high-­interest  debt  that  comes  from  things  like  credit   cards  and  store  cards.  This  kind  of  dead  is  lethal  and  should  really  be   avoided  unless  absolutely  necessary.  It  should  only  really  be  used  to  aid   cash  flow,  and  it  should  be  paid  off  each  and  every  month  if  at  all   possible.  The  second  kind  of  debt  is  the  lower  interest  variety;;  things  like   the  mortgage  or  student  loan.  Often,  the  interest  on  this  kind  of  debt  is   low  enough  that  it  may  worth  holding  onto  the  debt  for  its  full  term.   The  bottom  line  is:   If  you  can  guarantee  a  higher  after-­tax  return  by  investing  than   the  after-­tax  interest  rate  you  would  pay  on  your  debt,  you  should   go  ahead  and  invest.  If  not,  you  should  clear  the  debt  first.   4    

Here are  some  examples  for  you:   Example  1   Imagine  you  have  a  30  year,  £150,000  mortgage  with  a  4  percent  rate.  If   you  expect  to  earn  an  after-­tax  return  higher  than  4%  on  your   investments  (the  odds  are  reasonable  that  you  will  if  you  have  a  long-­ term  view),  then  you  should  invest  rather  than  pump  additional  funds  into   the  mortgage.   Example  2   Imagine  you  have  a  £10,000  credit  card  debt  with  a  22%  interest  rate.   You  should  only  invest  if  you  think  you  can  earn  a  22%  after  tax  return   on  your  investments.  The  average  return  on  the  stock  market  has  been   somewhere  around  11-­13%,  so  this  seems  a  risky  proposition.  In  this   case,  it  would  be  foolish  to  invest  and  you  should  instead  work  on  clearing   the  debt  first.   KEY  POINT:   You  need  to  do  what  is  best  for  building  wealth  long  term.  Many  people   cannot  see  that  paying  off  a  debt  is  actually  saving  them  more  money   than  they  would  be  able  to  make  any  other  way.  Do  the  calculation  and   work  out  what  is  best  for  you.   Credit  Card  Debt  is  Deadly   How  to  find  the  money  get  out  of  credit  card  debt   Many  people  struggle  to  pay  more  than  the  minimum  balance  off  each   month,  and  as  such,  they  never  eat  into  the  debt.  Here  are  a  few  tips   about  how  to  get  rid  of  the  most  deadly  debt  of  all.  Until  this  has  gone,   \RXGRQ¶WVWDQGDFKDQFHRIEHFRPLQJZHDOWK\   1. Do  you  have  any  investments  you  can  use  at  this  stage?   As  you  will  have  seen  from  the  last  calculation  about  whether  to  invest  or   pay  off  the  debt  ±  with  credit  cards  it  is  always  better  to  pay  it  off  first.   Therefore,  if  you  have  money  in  savings  accounts  or  invested  in  bonds  or   stock,  it  is  more  than  likely  in  your  best  interests  to  use  that  investment   to  clear  your  debt  at  this  stage.  Remember,  if  your  investment  is  not   inside  an  ISA,  it  is  taxable.  It  is  subject  to  capital  gains  tax  and  you  will   pay  tax  on  the  dividends.  As  pointed  out  earlier,  it  is  debateable  whether   you  will  ever  beat  the  25-­29%  needed  to  make  it  worth  keeping  the   investment  rather  than  paying  off  the  debt  first  (even  if  it  is  inside  an   ISA).  Cash  in  the  investment  and  use  it  to  lower  your  debt.  


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2. Do  you  need  all  that  stuff?   A  life-­laundry  is  a  useful  way  of  cutting  down  our  debts.  When  was  the   last  time  you  read  those  books  or  rode  that  bike?  Are  you  likely  to  use  the   tent  again?  Why  not  sell  it  all  on  eBay  or  Amazon  Marketplace.  Making  a   few  hundred  pounds  at  a  car-­boot  sale  could  also  help  to  cut  down  your   debt.   3. Ditch  the  subscription  lifestyle   Many  of  us  subscribe  to  Sky  and  to  a  daily  newspaper,  or  a  monthly   magazine.  We  also  pay  for  extra  insurance  plans  on  our  mobile  phones   and  electrical  appliances.  We  love  the  fact  that  we  can  use  900  minutes  of   talk  time  and  3000  texts,  with  unlimited  data  download  on  our  mobile   plan.  However,  all  this  adds  up  and  we  need  to  decide  whether  we  want   to  become  wealthy  or  not!  When  was  the  last  time  you  exceeded  the  data   download  of  the  mobile  package  below  yours?  What  about  the  talk  time?   'R\RXXVHDOOWKRVH¾IUHHœPLQXWHV"'R\RXQHHGFKDQQHOVRQ\RXU TV?  How  often  do  you  actually  read  the  paper?  Could  you  pick  one  up  on   your  way  to  work  instead  of  having  it  delivered?   Small  changes  in  your  monthly  subscriptions  can  actually  save  hundreds   of  pounds  which  can  be  channelled  to  paying  off  debts.   4. 'RQœWpay  for  the  brands  whHQ\RXFDQœWWHOOWKHGLIIHUHQFH   We  are  all  suckers  for  advertising  (otherwise  companies  would  not  invest   PLOOLRQVLQLW +RZHYHUIRUDZKLOHWU\VRPH¾KRPH-­EUDQGœRUFKHDSHU alternatives  in  the  super-­market.    Fill  up  the  car  with  fuel  from  the   supermarket  rather  than  paying  the  premium  price  of  the  named  brands.   Go  to  the  local  cafÊ  rather  than  the  big  brand  and  big  price  COSTA  or   STARBUCKS.  All  the  money  you  save  will  help  you  to  cut  down  on  your   debt.   5. The  Snowball  effect   The  idea  behind  getting  rid  of  your  debts  is  that  once  gone,  you  will  have   more  disposable  income  available  to  put  towards  your  goal  of  becoming   wealthy.  People  often  wonder  whether  they  should  attempt  to  target  the   largest  debts  first,  because  they  are  accruing  the  most  in  terms  of   interest.  However,  it  is  quite  demoralising  to  see  how  little  difference  you   are  making  to  a  large  debt.  Meanwhile,  your  smaller  debts  are  also   growing  and  you  end  up  standing  still.  You  should  pay  the  minimum   balance  on  each  debt,  and  channel  all  the  extra  money  you  have  made  by   following  steps  1-­4  above,  into  clearing  the  balance  of  the  lowest  debt.    


Once that  debt  has  gone  altogether,  you  take  the  money  you  were  paying   to  that  and  channel  it  onto  the  next  largest  debt.  Now  repeat  the  process   until  you  have  only  one  debt  left.  All  spare  income  can  now  be  targeted  at   removing  the  final  debt.  In  effect,  you  have  gradually  increased  the   amount  of  spare  money  simply  by  knocking  off  one  debt  at  a  time.  This  is   FDOOHGWKHµVQRZEDOO¶Hffect.     Remember,  even  small  amounts  will  make  a  difference.  It  only  takes  a   handful  of  snowflakes  to  make  a  snowball  ±  this  will  get  the  ball  rolling.   And  in  the  long  run  ±  even  a  few  pounds  a  week  extra  will  save  a   thousand  pounds  over  the  year  on  a  credit  card  bill.       KEEP  AT  IT  ±  it  is  really  worth  it  and  will  unlock  all  the  other  secrets  in   this  guide.    


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Secret  Number  3   ³'R7KLQJV'LIIHUHQWO\´   Most  people,  believe  it  or  not,  will  continue  to  do  the  same  things  that   they  have  always  done  and  the  same  things  that  their  parents  have   always  done  ¹  even  when  they  know  it  has  not  brought  them  success.     If  you  look  at  your  parents,  and  discover  that  they  worked  extremely  hard   all  their  life  to  earn  a  reasonable  salary,  and  then  had  to  cope  with  a   reduced  income  upon  retirement  ¹  do  you  want  to  be  in  the  same  boat?     If  not,  check  yourself.     Are  you  doing  anything  differently?     Are  you  planning  at  the  moment  on  relying  on  your  company  pension  (or   even  your  state  pension)  to  get  you  through  your  retirement  years?  Are   you  hoping  that  things  will  just  be  alright?  Well  wise  up.  If  their  method   GLGQœWZRUNIRUWKHPLWLVQRWJRLQJWREHDQ\GLIIHUHQWIRU\RX     You  have  made  a  good  start  by  buying  this  guide.  This  will  help  you  to   think  differently.     But  remember,  you  will  also  need  to  DO  things  differently.        



Secret  Number  4   ³)LQG2XWZKDW\RXU%RVV(DUQV´     OK  ¹  So  I  said  that  income  is  not  wealth.  That  is  true.  However,  whilst   you  are  working  on  building  your  wealth  you  will  be  relying  on  your   income,  and  a  high  income  is  a  much  easier  starting  point.   Now  whatever  your  line  of  work  is,  it  is  important  to  aim  for  a  job  in   which  you  can  rise  up  the  ranks.  It  is  also  important  to  recognise  that   with  each  promotion,  you  should  be  getting  a  rise  in  pay.  Now  here  is  the   thing  that  most  people  simply  do  not  consider:   ,I\RXUERVVGRHVQœWHDUQPXFKPRUHWKDQ\RXZK\VKRXOG\RXH[SHFW much  of  a  pay-­rise?   You  will  find  that  in  offices  and  schools  all  over  the  country  people  take  on   new  responsibility  at  work  for  what  amounts  to  a  token  gesture  ¹  more  a   badge  of  honour  than  a  pay-­rise.  People  convince  themselves  that  they   are  doing  it  more  for  the  experience!  However,  in  other  offices  and   schools,  people  are  doing  the  same  jobs  for  much  more  money.  The   reason  for  this  is  simple  ¹  the  Top  Earner  is  on  a  great  salary.  

If  the  top  man  or  woman  has  a  very  healthy  salary,  there  is   more  scope  for  those  under  that  boss  to  be  paid  well.   If  your  boss  earns  £60,000  and  his  or  her  second  in  command  earns   £50,000  why  should  you  be  offered  much  more  than  £40,000  for  simply   running  a  department?  Instead,  apply  to  run  a  department  at  another   firm  where  the  boss  is  on  £150,000  and  you  should  find  that  your  salary   has  risen  in  the  same  way.   ,I\RXFDQœWPRYHWRDQHZILUP¹  GRQœW  take  on  the  post  of  responsibility   LIWKHSD\GRHVQœWPDWFKWKHLQFUHDVHGZRUN-­load.  All  it  will  do  is  drain   your  time  and  patience,  for  little  financial  reward.   There  are  better  ways  of  using  that  spare  time  to  make  money  (more  of   that  later)  instead  of  investing  time  in  a  company  that  will  not  invest  its   cash  in  you.      



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Secret  Number  5   ³0DNHVXUH\RXORYHZKDW\RXGRIRUDOLYLQJ´   All  over  the  developed  world  there  are  people  who  are  in  the  rat  race,  and   FDQœWZDLWWRJHWRXWRILWEHFDXVHWKH\KDYHSLFNHGWKHZURQJSURIHVVLRQ     It  may  well  pay  them  handsomely,  but  it  gives  them  no  joy.  This  is  a   sure-­fire  way  to  eat  at  your  wealth.     People  who  hate  their  day-­jobs  end  up  spending  all  their  money  trying  to   find  ways  of  improving  their  lives  and  bringing  some  joy  back  in  to  an   otherwise  dull  and  frustrating  existence.  This  will  ultimately  leave  nothing   left  for  the  time  it  is  most  needed  ¹  that  is,  when  the  job  finally  stops  at   retirement  and  you  are  able  to  enjoy  it.  At  this  point,  your  lifestyle  would   have  to  change  because  there  are  no  funds  left.  The  job  has  taken  all  the   best  years  away  from  you.     The  best  thing  is  to  find  a  job  you  love  ¹  and  then  you  will  be  paid  every   day  for  doing  something  you  actually  enjoy.  In  fact,  it  could  be  said  that   you  never  actually  work  at  all!      



Secret  Number  6   ³5HFRJQLVHWKH9DOXHRI7LPH´   Many  people  who  strive  to  be  wealthy  have  little  understanding  of  the   value  of  time.  They  work  all  the  hours  under  the  sun  in  order  to  gain  just   a  few  more  pounds  on  the  pay  slip  each  month.  However,  they  have   neglected  to  notice  one  important  fact.  They  are  not  finding  the  time  to   enjoy  their  income.  In  fact,  they  have  no  time  to  enjoy  their  income   because  of  the  hours  they  are  working!     You  know  you  are  truly  wealthy  when  you  have  the  ability  to  control  your   time  and  use  it  as  you  see  fit.  You  are  only  wealthy  if  you  are  able  to   spend  your  time  doing  the  things  you  really  love  doing.  It  may  well  be   that  you  do  really  love  your  job,  and  that  is  absolutely  fine.  The  key  thing   is  to  be  able  to  have  the  freedom  to  do  it  when  you  want  to  and  not  do  it   when  you  GRQœW7KLVLVWUXHZHDOWK     <RXQHHGWREHDEOHWRVD\³5LJKW,œYHKDGHQRXJKQRZDQG,DPQRW JRLQJWRZRUNDQ\PRUH´$WWKHVDPHWLPH\RXQHHGWREHDEOHWRKDYH the  confidence  that  you  will  be  able  to  continue  to  live  in  your  current   house  and  with  your  current  life-­style.  You  need  to  be  able  to  enjoy  the   same  holidays  and  eat  the  same  kinds  of  foods.     If  there  is  a  need  to  cut-­back  and  tighten  the  belt  immediately,  this  will   mean  that  your  free  time  is  not  as  enjoyable  as  it  could  be.     Sadly,  this  is  the  situation  most  retired  people  find  themselves  in.  Despite   working  hard  all  their  lives,  their  pension  and  investments  simply  do  not   provide  them  with  the  lifestyle  they  had  dreamed  of.     Right  now,  then,  you  need  to  work  smarter.  Enjoy  your  life  whilst  you   can.  Value  your  time.    

Make  your  income  work  for  you,  rather  than  simply   working  for  your  income.      




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Secret  Number  7   ³,GHDVDUHthe  new  KDUGJUDIW´   Gone  are  the  days  of  needing  a  trade  in  order  to  support  yourself.  Gone   are  the  days  of  the  protestant  work  ethic,  in  which  we  are  told  to  feel   JXLOW\LIZHDUHSDLGIRUWKLQJVWKDWGLGQœWWDNHXVPXFKWLPH RUHIIRUW      Because  of  the  internet,  ideas  and  products  can  be  presented  and   marketed  by  every  man  woman  and  child  on  the  planet  (well-­almost).   And  yet,  people  still  fall  into  the  age-­old  trap  of  assuming  that  the  only   way  to  live  is  to  give  up  all  their  energy  and  time  to  a  company  in   exchange  for  being  paid  at  the  end  of  the  month.     What  you  need  to  do,  whilst  doing  your  day-­job,  is  to  experiment  on   finding  your  own  marketable  product.  It  could  be  something  you  make   and  sell.  It  could  be  a  service  you  offer.  It  could  be  something  you  buy   and  sell  on  for  a  profit.  Or,  it  could  simply  be  the  smart  use  of  the  pay   yRXUHFHLYH,œOOH[SODLQZKDW,PHDQ     You  get  your  pay  each  month  ¹  what  do  you  do  with  it  then?     'RQœWWHOOPHLWDOOJRHVRQSD\LQJWKHELOOV,IWKDWLVWKHFDVH\RXQHHGWR go  back  to  my  advice  on  how  to  free  up  some  additional  income.     What  is  left  over  will  be  enough  for  you  to  start  a  business.  Yes,  I  am   absolutely  serious.  You  can  start  a  business  on  the  internet  for  as  little  as   £5.00  a  year  ¹  it  just  takes  the  setting  up  of  a  website,  and  of  course  a   product.  Now  that  is  where  you  use  your  time  and  energy.  Be  creative.   What  would  YOU  buy?  What  would  your  friends  buy?  What  do  YOU  know   that  others  would  be  interested  in?  Which  service  would  YOU  pay  for?     Give  it  a  try.  You  only  need  to  make  a  small  amount  of  money  to  have   more  than  you  have  now.  Once  you  have  that  small  amount  of  money   coming  in,  you  can  put  it  to  good  use  by  investing  it.     Money  is  like  a  seed.  It  will  only  grow  if  you  plant  it  wisely.        



Secret  Number  8   ³,QYHVW)URP<RXU6XUSOXV´   Building  wealth  takes  time.  You  may  make  small  amounts  relatively   quickly,  but  using  these  amounts  to  make  the  serious  money  is  where  the   ULFKEHFRPHULFKDQGWKHUHVWGRQœW     The  way  to  lose  money  quickly  is  to  invest  from  money  you  cannot  afford   to  lose.  There  are  always  losses  in  investing  and  if  you  invest  money  you   cannot  afford  to  lose  and  subsequently  lose  it,  so  begins  a  downward   spiral  of  loss  chasing.  This  is  an  emotional  roller-­coaster  which  eats  away   at  funds.  Each  new  investment  becomes  more  risky  as  an  attempt  to   recoup  the  previous  losses,  and  wherever  emotion  is  involved  in  investing   there  is  likely  to  be  disaster.   All  investment  portfolios  need  to  have  a  spread  of  different  types  of   LQYHVWPHQWLQWKHP7KH\QHHGWREH¾GLYHUVLILHGœ.  This  way,  if  one  area   (manufacturing,  for  example)  is  hit  hard  and  drops  in  the  market,  your   ZKROHSRUWIROLRZRQœWVXIIHU,QIDFWRWKHUDUHDVLQ\RXUSRUWIROLRPD\ bounce  to  compensate.  I  will  show  you  how  to  create  such  a  portfolio   later.   However,  on  each  and  every  day,  the  markets  move  up  and  down.  Three   out  of  four  stocks  will  follow  the  direction  of  the  market  in  the  long  term.   This  means  that  if  there  is  a  big  reason  for  the  market  to  take  a  tumble,   the  chances  are  your  portfolio  will  also  drop  down.  This  is  no  use  if  you   were  hoping  to  use  some  of  this  money  to  pay  your  weekly  shopping  and   food  bills  or  mortgage.   You  should  be  aware  too  of  what  is  called  the  BID/OFFER  spread  (or   BID/ASK).  This  is  essentially  the  difference  between  the  asking  price  that   you  have  to  pay  to  buy  a  share  and  the  selling  price  that  you  will  get  if   you  sell.  At  any  fixed  point,  the  selling  price  is  always  less  than  the   buying  price.  For  this  reason,  as  soon  as  you  purchase  some  shares  (and   assuming  the  price  stays  the  same  for  a  while)  you  will  have  lost  money.   Factor  in  the  stamp  duty  (Tax)  you  have  to  pay  on  your  purchase  and  the   commission  you  have  to  pay  your  broker  for  carrying  out  the  deal  and  you   will  have  lost  even  more  on  the  deal.  In  fact,  the  price  of  the  shares  will   have  to  rise  considerably,  just  for  you  to  break  even.  As  soon  as  you  sell   the  shares  you  will  have  to  pay  a  commission  charge  and  potentially  some   capital  gains  tax  too,  so  to  really  make  money  the  rise  has  to  have  been   worthwhile.    




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Trading  too  frequently  (a  temptation  if  you  are  desperate  for  the  money)   is  a  sure-­fire  way  to  see  your  gains  eaten  up  in  bid/offer  spread  and   commission  losses.   With  this  in  mind,  you  should  see  that  you  simply  cannot  expect  to  make   money  easily  and  quickly  and  it  is  therefore  beyond  stupid  to  invest   money  that  you  need  for  other  purposes  like  paying  bills.  

¾Only  invest  what  you  are  prepared  to  loseœ   This  is  a  psychological  state  of  mind,  but  a  very  important  one.  Emotion   has  no  place  in  investing.  Nobody  is  happy  to  see  money  go  down  the   drain.  However,  with  investing,  you  simply  have  to  be  prepared  to  see  it   GRMXVWWKDWRU\RXVKRXOGQœWHQWHULQWRWKLVJDPHDWDOO7KHSODQRI course,  is  to  win  more  than  you  lose,  so  that  in  the  long  term  your   portfolio  grows  and  your  net  wealth  increases.  It  is  simply  a  fact  that  you   will  have  to  take  some  losses  along  the  way.     So  is  it  worth  it?     Yes.  The  growth  of  money  is  exponential.  By  that,  I  mean  that  it  grows  at   a  faster  rate  as  the  size  of  the  sum  increases.  This  is  because  of  the   beauty  of  compounding.       Earning  a  10%  return  on  £10,000  is  only  going  to  get  you  £1,000  before   tax.  However,  10%  return  on  a  £1,000,000  portfolio  is  £100,000.  This  is   naturally  far  more  impressive,  despite  needing  no  more  effort  or  work  on   your  part.  Once  this  return  is  compounded  every  year,  the  larger  sum  will   grow  at  a  considerably  faster  rate.    

With  compounding  (assuming  just  a  10%  return  per  year),   even  £10,000  can  turn  into  £44,402  over  15  years!        



Secret Number  9   ³Get  a  good  broker´   There  are  countless  good  brokers  out  there  who  can  purchase  and  sell   your  stock  for  you.  They  offer  many  different  levels  of  service  and  you   need  to  decide  what  it  is  you  want  and  need.     You  can  get  a  fully  managed  portfolio  whereby  you  pay  your  broker  a  fee   and  a  percentage  of  your  gains.  They  will  discuss  with  you  and  advise  any   major  decisions  to  buy  or  sell  and  will  then  make  the  transactions  for  you.   This  kind  of  service  can  be  useful  for  people  who  do  not  want  to  make  the   effort  of  getting  their  feet  wet  and  doing  the  research  themselves.  It   tends  to  be  for  the  more  risk  averse  people.  The  problem  with  such  a   scheme  of  course  is  the  additional  cost  of  the  brokerage  and  the  loss  of   money  in  commission.     You  can  also  go  to  brokers  who  will  let  you  make  all  the  decisions,  and   will  simply  act  as  executors  of  your  decisions.  They  will  charge  you  a  flat   fee  per  trade.  Some  will  charge  a  quarterly  or  even  monthly  fee  for  the   privilege  of  having  the  account  and  there  will  often  be  an  additional  fee   IRUµLQ-­DFWLYLW\¶±  meaning  that  you  have  not  made  enough  trades  in  the   month.  These  brokers  can  act  by  telephone  and  many  now  have  platforms   where  you  can  do  it  all  yourself  on-­line.     Personally,  I  recommend  the  newest  breed  of  broker  ±  the  online   investment  platform.  There  are  some  great  deals  out  there  and  depending   on  your  trading  frequency,  you  can  get  considerably  lower  execution  fees   than  with  traditional  telephone  brokers.  Some  do  not  charge  for  the   account  or  have  any  inactivity  fees.  The  best  will  have  a  portfolio   manager  section  on  the  website  which  enables  you  to  see  all  your  stock   holdings,  and  their  current  position  in  terms  of  price,  profit  and  loss.  You   can  action  buys  and  sells  in  real  time,  or  as  regular  subscriptions.  You  can   choose  to  purchase  (or  sell)  a  set  number  of  shares,  or  a  set  cash  value.     I  like  to  use  the  Interactive  Investor  platform  (  and  I  tell   you  that  without  prejudice  or  any  commission.  As  I  said,  there  may  be   better  deals  out  there  for  you  at  any  given  stage,  so  do  shop  around.      


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Secret Number  10    

³%H7D[6PDUW´   Most  people  know  very  little  about  their  tax  entitlements,  possible  reliefs,   and  the  ways  in  which  some  of  their  money  can  be  allowed  to  grow  tax   free.     1RZGRQ¶WJHWPHZURQJ,DPQRWDJDLQVWWD[DWLRQ XQOLNHVRPH ,QHHG to  have  my  bins  emptied,  the  roads  mended,  emergency  services  and  the   like  provided.  I  should  pay  my  fair  share.  I  even  believe  the  wealthy   should  pay  more  than  those  in  relative  poverty.  That  is  only  fair.  But  the   key  thing  here  is  that  I  should  pay  my  FAIR  share.  I  should  not  pay  more   than  that  simply  because  I  am  unaware  of  the  rules.     The  wealthy  know  all  about  how  to  play  the  system  to  their  advantage.   They  are  not  cheating  (well  not  the  decent  upright  ones).  They  are  doing   nothing  illegal.  It  is  simply  that  they  are  better  informed.     So  your  first  task  is  to  investigate  whether  you  are  paying  more  in  tax   than  you  should.  You  can  do  this  in  one  of  two  ways.  The  easiest  is  to   book  a  tax  accountant  to  come  round  and  go  through  all  your  paperwork   and  advise  you.  This  will  cost,  however,  anGLWGRHVQ¶WFRPHFKHDSly.  The   other  route  is  to  go  online  to  the  government  website  for  the  Inland   Revenue  and  read  all  the  help  guides.  Take  your  time.  It  is  inertia  that   prevents  people  doing  this,  and  they  end  up  paying  thousands  of  pounds   more  than  they  should  every  single  year.  Many  do  this  for  their  whole   working  career  and  never  know  about  it.     The  second  thing  is  to  make  sure  that  you  use  your  ISA  allowance  for   saving  and  investing.  ISAs  are  tax  free  wrappers  for  your  money.  Any   capital  gain  inside  the  ISA  wrapper  is  tax  free.  Any  dividends  paid  as   income  inside  an  ISA  wrapper  are  µWD[IULHQGO\¶  (reduced  tax)  and  income   tax  is  not  charged.  A  little  bit  of  advice  on  investing  tax-­efficiently  from  an   Independent  Financial  Advisor  will  go  a  long  way.     7KLVµWD[-­VPDUW¶DSSURDFKZLOOKHOS\RXWREHFRPHRQHRIWKRVHZKRVH wealth  grows  at  a  faster  rate,  because  you  are  not  constantly  giving  it   away  again  ±  in  particular,  you  are  not  giving  MORE  than  your  fair  share.      


Secret  Number  11   ³,QYHVWLQPRQH\makers  ¹  not  flashy  pipe-­GUHDPV´     Too  many  people  are  wooed  by  the  latest  technological  advance  and   assume  that  because  it  is  new  it  must  be  set  to  make  millions.  Well,  just   occasionally,  they  are  right.  However,  very  often  these  technological  ideas   fail.  7KHUHDUHPLOOLRQVRI¾PXVW-­KDYHœSURGXFWVWKDWSHRSOHVLPSO\GRQRW need  or  want  and  therefore  do  not  have.  If  you  invest  in  the  company   that  makes  these  things,  your  portfolio  is  likely  to  go  down-­hill  fast.     Instead,  you  need  to  think  about  true-­value.  What  do  people  really  need?   Yes,  the  technology  to  listen  to  different  music  in  every  room  in  the  house   all  controlled  from  your  phone  sounds  like  a  great  idea  and  it  may  sell  ¹   EXWLWZRQœWVHOODVRIWHQDV3L]]D'RPLQRHV3L]]DLVFXUUHQWO\RQHRIWKH most  recession  proof  companies  in  the  UK.  It  has  achieved  year  on  year   profits  despite  not  being  a  trendy  company  with  any  new  technology.  And   what  about  refuse  processing  companies?  These  are  very  un-­trendy  but   are  absolutely  necessary  and  will  ride  out  a  recession  happily.     Again  I  say  ¹  keep  emotion  out  of  your  investment  decisions.  Go  for  the   investment  that  is  going  to  give  you  the  best  return  on  your  money.  Ask   yourself,  is  the  product  essential?  Is  the  demand  rock  solid?  Is  the  need   for  this  product  going  to  continue?  Is  the  company  going  to  pay  the   shareholders  well?     ,I\RXJHWVWURQJ¾<(6œDQVZHUVWRWKHVHTXHVWLRQVWKHQ\RXDUHRQWKH right  track.     Of  course,  it  is  worth  taking  a  punt  occasionally  on  a  few  new  and  trendy   companies  hoping  to  create  a  new  market.  The  returns  can  be   phenomenal  when  they  come  off.  However,  you  must  remember  what  I   said  about  a  diversified  portfolio.  There  should  be  a  predominance  of   regular  companies  in  necessary  sectors  ¹  even  if  they  are  boring.     You  will  be  interested  to  know  that  if  you  look  at  the  careers  of  people   who  can  afford  to  send  their  children  to  independent  education  you  are   MXVWDVOLNHO\WRILQGWKHFKLOGUHQRIWKHPDQZKRUXQVD¾VNLSœILUPDV\RX are  the  children  of  a  doctor.  You  are  certainly  more  likely  to  find  the   children  of  builders  and  plumbers  than  you  are  the  children  of  cutting   edge  technology  developers.          



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Secret  Number  12   ³'LYHUVLI\'LYHUVLI\'LYHUVLI\´   Not  all  investments  are  the  same.    Some  are  the  kind  that  will  grow   (hopefully  rapidly)  in  terms  of  their  capital  value.  Others  are  the  kind  that   are  fairly  static  in  terms  of  capital  value,  but  pay  a  dividend  (an  income   per  share).   You  should  invest  in  different  types  of  company  and  in  different  markets   For  example:   A  Mining  company  and  an  Oil  company   A  Telecommunications  company   Something  in  the  Financial  Services  area  ¹  like  Insurance   A  Biotech  company  (like  a  drug  manufacturer)     You  should  also  look  to  diversify  in  terms  of  growth  and  income.  The   balance  of  this  depends  on  your  time  of  life.  What  I  mean  is  -­  if  you  are   young  you  should  favour  growth.  If  you  are  nearing  retirement  you  should   aim  for  income.   The  companies  that  are  likely  to  have  the  greatest  growth  are  usually  the   most  risky  in  terms  of  the  possible  loss  of  the  investment.  For  example,  if   you  invest  in  a  speculative  oil  company  you  have  two  outcomes.  Either   they  will  strike  oil  and  your  investment  will  go  through  the  roof,  or  they   wonœt  and  it  will  gradually  dwindle  away  to  nothing  until  the  company  runs   out  of  money  and  goes  bust.  Always  edge  of  the  seat  stuff!  It  is  foolish  to   have  all  your  money  in  such  companies,  of  course.   On  the  other  hand,  there  are  companies  which  over  ten  years  may  not   really  change  much  in  terms  of  their  capital  value.  This  means  that  you   are  not  going  to  lose  on  your  investment  (although  nothing  is  absolutely   certain).  If  you  choose  wisely,  you  should  be  able  to  pick  a  company  like   this  which  also  treats  its  shareholders  well  by  paying  dividends.  This  is  a   share  of  the  profits.  If  you  get  it  right,  this  kind  of  investing  can  be  the   one  which  brings  you  an  income  for  life.      



Secret Number  13   ³'RQ¶WLJQRUH*OREDOPDUNHWV´   ,WLVDOVRYLWDOWRUHFRJQLVHWKDW\RXVKRXOGDYRLGµKRPHFRXQWr\ELDV¶   It  is  usually  the  case  that  private  investors  favour  the  country  in  which   they  live  in  terms  of  their  investment  decisions.  For  some  reason,  people   tend  to  believe,  for  example,  that  because  they  themselves  are  British,   their  money  will  perform  better  if  invested  in  British  companies.  It  is  as   though  they  think  they  understand  the  business  better  and  have  some   input.   This  is  dangerous  thinking  though.  If  all  your  investments  are  in  one   country,  then  the  basic  economic  performance  of  that  country  will   influence  the  growth  of  your  portfolio.  Government  decisions  on  interest   rates  or  on  corporation  tax  rules  (for  example)  could  have  a  massive   effect  on  your  whole  investment,  rather  than  just  a  part  of  it.  

Just as  it  is  important  to  diversify  into  different  types  of  stock,   it  is  also  important  to  spread  your  investments  into  different   countries.   You  can  do  this  either  by  going  through  a  broker  who  allows  you  to   purchase  stock  in  a  foreign  exchange  directly,  or  by  investing  in  funds   which  focus  in  overseas  markets.  Once  this  psychological  barrier  has  been   crossed,  you  will  find  that  you  are  fishing  for  investments  in  the  ocean   rather  than  a  small  lake.  There  are  far  more  opportunities  to  find  some   bigger  fish!      


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Secret Number  14   ³,QYHVW  for  income´   This  secret  is  dynamite.  What  many  investors  are  simply  not  aware  of   is  that  investing  for  income  can  actually  also  lead  to  capital  growth  in  two   different  ways,  as  I  will  explain.  Therefore,  it  is  actually  a  very  sensible   idea  to  invest  for  income  almost  entirely,  and  leave  only  a  small  amount   of  your  portfolio  for  speculative  growth.   Time  and  time  again,  this  has  been  shown  to  provide  a  lower  risk   investment,  which  actually  grown  in  the  longer  term.  You  will  not  have   the  white-­knuckle  ride  or  the  overnight  riches.  But  nor  will  you  have  the   obvious  and  real  danger  of  losing  the  lot!  You  will  have  the  possibility  of   financial  freedom  and  true  wealth  that  you  dream  of.   How  can  these  companies  grow?   Well  putting  it  bluntly,  companies  that  are  able  to  spend  some  of  their   profits  on  the  share-­holders  are  by  and  large  the  companies  that  are   doing  well  enough  to  have  no  financial  worries.  This  means  that  they  are   generally  safer  bets.  This  means  that  over  the  long  term,  they  will  grow   at  least  in  line  with  the  stock-­market  (an  average  of  12  ±  13%)  and  often   better.  In  addition  to  this,  you  have  the  dividend  payments  and  using   them  wisely  will  make  you  even  more  money.   Dividend  Paying  Stocks   You  need  to  check  what  is  called  the  Dividend  Yield  of  a  stock.  Generally,   if  it  is  paying  upwards  of  4%,  this  is  considered  good.  If  you  can  get  over   6%  this  is  considered  excellent.  However,  some  companies  seem  to  pay   out  exceptional  dividends  (at  about  12%)  but  on  closer  inspection  this  is   seen  to  be  unsustainable  for  the  growth  of  the  business.   The  best  companies  will  only  give  40-­50%  of  the  profit  back  to   shareholders  in  dividends.  The  rest  is  reinvested  into  the  company  to   ensure  growth.  Companies  which  give  much  higher  dividends  are  in   danger  of  being  excellent  payers  for  a  few  years  and  then  either  going   bust  or  having  to  stop  the  dividend  altogether.  Neither  of  these  is  good   for  an  investor.      


Remember I  spoke  of  how  compounding  interest  gives  ever  increasing   UHWXUQV":HOOWKHVDPHLVWUXHRIGLYLGHQGV,¶OOH[SODLQ   Imagine  you  own  1000  shares  in  a  company,  and  for  the  sake  of  ease,   the  share  price  is  £1.00.  That  company  pays  you  10  pence  per  share  as  a   dividend.  Obviously,  you  would  earn  £100.00  from  this  dividend  issue.   Now  you  have  a  choice,  you  can  spend  that  money  on  a  treat,  rather  like   an  unexpected  bonus  (choice  1).  Or,  you  can  reinvest  the  dividends   VWUDLJKWEDFNLQWRWKHFRPSDQ\ FKRLFH /HW¶VORRNDWZKDWKDSSHQV now.   Assuming  the  share  price  is  still  £1.00  (it  may  not  be,  of  course).  At  the   next  dividend  payment  (still  at  10p  per  share)  there  is  an  obvious   difference  depending  on  whether  you  took  choice  1  or  2.   Choice  1  would  mean  you  still  had  1000  shares  and  would  be  paid  a   dividend  of  £100  again.   Choice  2  would  mean  that  you  now  have  1100  shares  and  would  be  paid   £110.   If  this  cycle  were  repeated  exactly  again,  choice  1  would  have  received   £300  in  total.  Choice  2,  with  dividend  reinvestment  would  have  received   £321.   With  each  new  reinvestment  of  the  dividend,  the  growth  of  the  next   payout  becomes  larger.  Growth  is  exponential.   Now,  I  have  not  factored  in  dealing  costs  or  stamp  duty.  Neither  have  I   factored  in  the  rising  and  falling  dividend  payments.  Neither  have  I  taken   into  account  a  rising  and  falling  share-­price.  Nevertheless,  even  with  all   this  taken  into  account,  the  brute  fact  remains  ±  dividend  reinvestment   will  make  a  portfolio  grow  exponentially,  whereas  taking  the  dividend  as  a   cash  withdrawal  will  leave  it  on  capital  growth  alone.   <RXVKRXOGDOZD\VXVHDµ'LYLGHQG5HLQYHVWPHQW3ODQ¶ WKLVVKRXOGEH offered  by  your  broker).  This  will  automatically  purchase  more  stock  with   the  dividend  payment,  and  commission  will  be  much  reduced  in   comparison  with  organising  a  separate  trade  yourself.      


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There are  other  important  things  to  remember  regarding  dividends.     Declaration  date:  The  declaration  date  is  the  day  the  Board  of   'LUHFWRU¶VDQQRXQFHVthat  they  will  pay  a  dividend.  Once  this  has  been   done,  the  company  now  must  pay  that  money  to  the  stockholders.  At   this  point,  the  Board  will  also  announce  a  date  of  record  and  a   payment  date.  It  is  usually  about  the  same  time  each  year,  but  there   are  fluctuations   Date  of  record:  This  date  is  usually  DV³H[-­GLYLGHQG´GDWHThis  is  the   day  on  which  the  company  checks  its  record  of  shareholders  and  sees   who  need  to  be  paid  a  dividend.  If  you  bought  shares  after  the  ex-­ dividend  date,  you  would  not  be  entitled  to  the  next  dividend  payment.   In  fact,  the  investor  who  sold  you  those  shares  would,  despite  no   longer  being  a  holder!  This  is  the  dividend  trap.  Buying  a  dividend   paying  stock  once  it  has  gone  ex-­dividend  means  that  you  actually   miss  out  on  that  dividend  (although  you  do  get  any  subsequent   dividends  if  they  are  paid  and  you  are  holding  at  the  next  date  of   record).     Payment  date:  This  is  the  date  the  dividend  will  actually  be  given  to   the  shareholders  of  company.     Some  dividends  are  paid  four  times  a  year  on  a  quarterly  basis.  Others   DUHSDLGWZLFH\HDUO\DVDQµLQWHULPGLYLGHQG¶DQGDµILQDOGLYLGHQG¶6RPH companies  pay  dividends  only  on  an  annual  basis.   Tax  on  Dividends   The  best  place  to  invest  in  dividend  paying  stocks  is,  as  I  said  earlier,   inside  an  ISA.     If  you  are  a  basic  rate  tax  payer  in  the  UK,  you  pay  a  low  rate  of  tax  on   your  dividends  which  is  taken  as  a  tax  credit  before  you  receive  the   dividend.  If  you  are  a  higher  rate  tax  payer,  you  would  normally  pay   above  32%  (at  current  rates)  on  dividend  income  and  then  get  back  the   10%  tax  credit,  but  inside  the  ISA  although  losing  the  10%  tax  credit  you   will  not  pay  any  additional  tax.  In  addition,  any  capital  gain  on  your   investment  inside  your  ISA  is  capital  gains  tax  free.  Very  beneficial  to   your  investment!      


Bonds There  are  many  types  of  bonds  that  you  can  buy.  Unlike  a  share,  you   GRQ¶WRZQDSDUWRIWKHFRPSDQ\±  you  have  loaned  money  to  it  (or  the   government).  Basically,  a  bond  is  an  investment  that  promises  to  pay  a   certain  level  of  interest  if  the  investment  is  held  for  a  set  period.  There   are  variations,  of  course,  and  some  will  promise  to  pay  a  set  amount  only   if  a  few  conditions  in  the  market  are  met.  This  means  that  some  bonds   are  higher  yielding  in  interest  than  others,  but  are  also  higher  risk.  You   should  also  remember  that  your  capital  is  tied  up  in  the  bond  for  the  set   period  of  time.  You  either  cannot  withdraw  it  at  all,  or  will  lose  all  the   accrued  interest  if  you  cash  it  in  early.  It  is  best  not  to  tie  up  money  for   more  than  5  years  in  a  bond.  Interest  rates  can  fluctuate  a  great  deal  in   this  time  and  it  is  impossible  to  know  now  whether  the  bond  will  still  be   the  best  place  for  your  money  in  five  years  time.   In  terms  of  how  many  bonds  or  bond  funds  to  invest  in  ±  you  should   typically  stick  to  the  rule  that  the  percentage  of  your  portfolio  in  this  type   of  investment  should  equal  your  age.  For  example,  a  40  year  old  ought  to   have  around  40%  of  their  portfolio  in  bonds.  Any  more  than  this  will   hamper  the  potential  growth  of  the  portfolio  and  any  less  will  probably   mean  that  the  portfolio  is  too  risk  orientated.  You  will  see  that  as  you  get   older,  the  risk  level  needs  to  drop  to  guarantee  income  and  capital  growth   is  less  important.     Property   Investing  in  property  can  be  done  in  several  ways.  The  most  obvious   (although  costly  to  start  up)  is  to  purchase  the  property  directly.  Once   being  the  rightful  owner  of  a  property  (even  with  a  mortgage)  it  is   possible  to  let  it  and  take  a  rental  income.  This  has  the  advantage  of   helping  to  pay  off  the  mortgage  (if  a  repayment  mortgage  deal  is  taken)   and  then  eventually  being  an  income  for  doing  next  to  nothing  each   month.  In  addition,  there  is  likely  to  be  a  rise  in  the  capital  value  of  the   property,  which  can  be  released  at  a  future  date.   This  cannot  be  put  inside  an  ISA,  of  course,  so  is  subject  to  capital  gains   and  income  tax.      


Please turn  over...  

The second  approach  is  to  purchase  shares  in  a  property  based  fund.  This   is  essentially  the  same  thing,  as  you  then  get  a  share  of  the  capital  gain   in  the  properties  the  fund  owns,  and  a  share  in  the  income  of  those   properties  that  are  let.   This  kind  of  fund  can  be  wrapped  in  an  ISA.  This  is  a  cheaper  way  of   investing  in  property,  but  unlike  the  first,  you  do  not  actually  own  the   property  itself.  For  this  reason,  if  the  value  of  property  falls  dramatically,   the  investment  can  become  almost  worthless,  whereas  in  the  first  case,   the  House  (or  commercial  building)  can  still  actually  be  used  by  the   owner.  It  therefore  has  a  practical  value  and  is  also  inflation  busting.   What  this  means  is  that  as  inflation  erodes  the  value  of  the  currency,  the   property  itself  still  exists.  This  is  why  some  people  have  mortgages  which   were  once  difficult  to  afford  each  month,  but  now  many  years  later  cost   them  less  per  year  than  having  their  daily  newspaper  delivered!   The  danger  with  investing  in  property  is  that  there  are  additional  costs,   such  as  legal  costs,  void  periods  when  the  property  is  empty,   refurbishment  costs  and  the  like  which  do  not  occur  in  stock  market   investing.  In  addition,  over  the  long  term,  the  stock  market  has  always   out-­performed  the  property  market.  However,  having  some  property  is   essential  in  a  diversified  portfolio  and  when  in  the  right  area  can  bring  in   a  good  and  regular  income.      


Secret  Number  15     ³Understand  how  to  recover  from  lRVVHV´   The  stock  market  can  be  an  unfriendly  place.  There  are  days  when   hundreds  or  even  thousands  of  points  are  wiped  off  the  value  of  shares  in   one  day  -­  the  famous  ¾&UDVKHVœ,WFDQKDSSHQIRUDQXPEHURIUHDVRQV and  the  thing  you  need  to  know  is  that  it  is  almost  impossible  to  predict.   Equally,  it  is  almost  impossible  as  a  private  investor  to  do  anything  about   it.  When  trying  to  sell  out  to  limit  losses,  you  find  that  your  broker  simply   cannot  get  you  a  price,  and  yet  at  the  same  time  you  can  see  the  price   falling.  It  is,  as  I  said,  a  frightening  place  to  be.   However,  if  you  follow  the  secrets  I  have  given  you  so  far,  you  should  be   protected  against  some  of  this.  A  diversified  portfolio  will  help.  Investing   in  good  dividend  paying  stocks  will  also  help,  as  these  tend  to  be   GHIHQVLYHDQGUREXVWLQ¾EHDUœRUUDSLGO\IDOOLQJPDUNHWV   It  must  be  expected,  however,  that  there  will  be  losses.  They  may  not  be   as  dramatic  as  a  complete  stock  market  crash  ¹  but  nevertheless,  you   may  wake  up  one  day  to  find  a  large  percentage  fall  on  your  portfolio.   Thank  fully,  whilst  it  is  certainly  not  a  comfortable  place  to  be,  and  whilst   what  I  am  about  to  tell  you  seems  counter  intuitive,  there  is  a  stack  of   research  and  experience  which  will  back  up  the  fact  that  it  works.   The  basic  trick  here  is  to  purchase  more  of  the  same  stocks,  even  as  they   continue  to  fall.  I  will  say  that  again  ¹  as  the  price  goes  down,  buy  more   of  the  shares.   There  is  a  psychological  state  of  mind  you  need  to  get  into.  If  you   believed  the  stock  was  worth  purchasing  at,  for  example,  £4.00  a  share.   And  then  the  price  slides  down  to  £3.05.  You  need  to  ask  yourself  a   TXHVWLRQ³+DVWKHFRPSDQ\DFWXDOO\GRQHDQ\WKLQJWR  make  it  worth  less,   RULVLWMXVWLQDIDOOLQJPDUNHW"´,ILWLVWKHFDVHWKDWWKHZKROHPDUNHWLV falling,  then  what  you  are  now  seeing  is  that  the  price  of  your  share  is   now  at  even  better  value  than  on  your  first  purchase.  It  therefore  stands   to  reason  that  you  ought  to  be  buying  more  at  such  a  bargain  price!  If  the   price  falls  again,  you  should  then  buy  more  for  the  same  reason.   Now  many  people  will  point  out  to  you  that  it  can  sometimes  take  years   for  a  stock  market  (or  even  an  individual  sector  or  share)  to  get  back  to   SUHYLRXVOHYHOVVRVXUHO\WKLVLV¾JRRGPRQH\DIWHUEDGœ+RZHYHUWKH\ are  simply  completely  wrong.    



Please  turn  over...  

As  the  markets  recover  ¹  even  if  it  is  10  years  later,  the  value  of  your   investment  is  now  going  to  be  considerably  more  than  it  was  when  you   first  bought  in  at  that  level.  In  fact,  if  you  have  consistently  and  regularly   invested  into  the  stock  during  that  low  period,  then  when  the  bounce  back   ILQDOO\FRPHV\RXZLOOKDYHORZHUHGWKH¾EUHDNHYHQœSRLQWE\VRPH considerable  margin.  This  LVEHFDXVH\RXZLOOKDYH¾DYHUDJHGGRZQœWKH price  of  your  share  purchases.  You  will  be  able  to  see  outstanding  growth   LQ\RXULQYHVWPHQWLQFRPSDULVRQZLWKWKHSHUVRQZKR¾ERXJKWDQGKHOGœ   I  have  already  mentioned  dividend  reinvestment.  This  is  particularly   important  during  a  bear  market.  Consistent  dividend  reinvestment  will   also  average  down  a  share  price  purchase  level  and  the  bounce  back  will   again  be  all  the  more  profitable.   6RWKHVHFUHWEHKLQGWKLVVHFUHWLV¾'21273$1,&œ,I\RXNHHSHPRWLRQ out  of  investing,  you  are  likely  to  have  more  success.  Investors   (particularly  inexperienced  ones)  are  likely  to  either  attempt  to  sell  a   stock  and  take  a  loss  (sometimes  a  huge  loss)  or  to  simply  hold.  As  I   have  shown,  neither  of  these  is  a  good  recovery  plan.   An  Example   Imagine  you  bought  105  shares  of  a  dividend  paying  company.  You  paid   £27.29  per  share  and  the  total  cost  including  commission  and  stamp  duty   was  £2,900.  Thanks  to  reinvested  dividends,  in  four  years  you  would  own   perhaps  124  shares,  almost  20  shares  more  than  you  started  with.     If  we  imagine  that  the  market  is  a  bear  market,  and  the  stock  has   crashed  (along  with  everything  else)  to  £23.62  -­  despite  a  drop  of  13%  in   the  price  you  would  actually  show  a  slight  gain  on  the  investment.  In  bear   markets,  where  50%  losses  are  not  uncommon,  you  will  agree  that  this  is   pretty  impressive.  Also,  the  dividends  would  continue  to  be  reinvested   buying  more  shares  as  the  stock  price  falls.     Here  comes  the  best  bit:   Imagine  that  now  the  price  begins  to  get  bullish  and  the  stock  gradually   rises  up  to  previous  levels.  Well,  if  it  were  to  reach  your  original  purchase   price,  you  would  now  be  showing  a  gain  of  nearly  18.5%!   Naturally,  this  will  only  work  if  the  company  is  robust  and  does  not  go   under  in  the  falling  market.  This  emphasises  again  the  importance  of   choosing  decent  dividend  paying  companies  who  are  likely  to  be  around  a   long  time!  


Secret  Number  16   ³Avoid  Investment/Trading  Seminar  Scams´   We  all  want  to  be  better  investors.  There  is  always  the  dream  that  out   there  somewhere  is  the  system  which  allows  you  to  pick  perfect  stocks   and  perfect  funds  every  time.  We  would  love  to  have  insider  information   which  would  enable  us  to  time  the  markets  perfectly,  jumping  in  at  the   start  of  a  bull  market  and  out  at  the  top  of  a  bear  market.   It  is  this  desire  which  is  then  exploited  by  others,  who  claim  to  be  able  to   give  you  the  skills  you  need  to  become  stock-­market  millionaires  in  next   to  no  time  and  with  no  understanding  necessary.   Unfortunately,  these  people  are  skilful  scammers.  They  have  the  funds  to   produce  glossy  leaflets  and  book  top  London  conference  centres  to  add  to   their  appeal.  They  are  able  to  offer  free  meals  with  their  conferences,  and   even  free  conferences.  However,  the  cost  of  buying  into  their  schemes   could  be  enough  to  set  your  investment  profile  back  by  several  years  and   in  some  cases,  it  can  lead  to  financial  ruin.  In  addition,  it  can  be  very   difficult  to  avoid  buying  in  as  the  sales  pitch  is  extremely  persuasive.   Remember  ¹  these  guys  are  pros.   ALWAYS  RESEARCH  THE  COMPANY  OFFERING  THE  SEMINAR   There  are  some  alarms  that  you  should  listen  out  for  when  investigating   such  schemes.   1. Does  it  require  a  big  up-­front  payment?  The  dodgiest  scams   demand  a  large  up-­front  payment  as  this  enables  them  to  cover  all   their  costs  and  then  some.  They  can  also  be  long  gone  and  have   disappeared  completely  (call  centres  and  everything)  when  their   recent  victims  try  to  return  the  schemes  or  ring  for  support  when   WKLQJVFOHDUO\GRQœWwork.     2. ³+LJK\LHOGVZLWKPLQLPDOULVN´.    Remember  my  mantra  ¹  there  is   always  risk  and  you  should  never  invest  what  you  cannot  afford  to   lose.  When  these  guys  try  to  sell  you  the  pot  of  gold  that  will  pay   out  in-­perpetuity  and  never  lose,  you  should  get  out  of  there.  When   WKH\RIIHUDPRQH\EDFNJXDUDQWHHGRQœWEHIRROHG7KHVHJX\VDUH pros  and  they  can  disappear  into  thin  air.     3. ³<RXPXVWVLJQXSWRGD\DVWKHUHDUHOLPLWHGSODFHV´  This  irritates   me  beyond  belief.  I  have  seen  systems  advertised  which  claim  they   will  only  take  200  people  on  to  ensure  that  they  can  provide  good   customer  service.  In  fact,  they  are  taking  200  every  day  that  week   and  every  week  and  providing  nothing  at  all.  Always  take  your  time.    



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4. Whatever people  tell  you,  it  is  highly  unlikely  that  you  will  miss  the   boat  on  a  share  or  scheme.  There  is  always  fluctuation  up  and  down   in  prices  and  steady  rises  take  years  of  up  and  down  movements   (just  look  at  some  charts)  in  most  cases.  Taking  a  week  to  think   about  it  could  well  save  you  your  whole  investment  pot.     5. ³:HWUDGHLQRYHUVHDVPDUNHWVDQGRII-­VKRUHLQYHVWPHQWV´ Scammers  love  to  say  such  things  as  the  average  punter  who  is   seeking  their  golden  ticket  to  financial  freedom  is  less  savvy  about   such  things.  Off-­shore  investing  and  hidden  markets  in  China  or   Brazil  are  often  used  as  a  way  to  make  it  all  seem  plausible.  They   may  even  tell  you  they  spend  half  the  year  out  there  getting  to   know  the  way  things  work  ±  VRWKDW\RXGRQ¶WKDYHWR7KH\DOVR love  to  tell  you  that  investing  overseas  means  you  can  avoid  paying   tax  (which  is  not  true).     6. ³,KDYHPDGHP\PRQH\DQGQRZRXWRIWKHJRRGQHVVRIP\KHDUW ZDQWWRKHOS\RXWRGRWKHVDPH,GRQ¶WQHHGWKHPRQH\,FKDUJH IRUWKHV\VWHPRUVHPLQDU´  If  this  were  the  case  ±  they  would  offer   the  whole  lot  for  free  with  no  charge  EVER.  These  guys  make   money  by  selling  the  system  only.  They  probably  never  trade  at  all.     Do  some  internet  research  on  them,  Find  some  bulletin  boards  dedicated   to  discussing  investment  systems  and  investment  scams.  Ask  a  few   questions.  Have  others  been  stung  or  are  these  people  legitimate?   Again  ±  TAKE  YOUR  TIME.  


Secret Number  17   ³8QGHUVWDQGWKDWFRQIOLFWLQJDGYLFHPD\DOOEHFRUUHFW´   At  the  moment,  I  am  hearing  advice  to  invest  only  in  funds,  and  to  pick   the  best  fund  managers  irrespective  of  the  area  in  which  they  are   investing,  as  statistically  they  will  out-­perform  the  market.  I  am  also   hearing  advice  to  ignore  funds  as  the  commission  paid  to  the  fund   manager  will  kill  your  profits.  Instead,  people  are  advised  to  attempt  to   mirror  the  fund  managers  or  pick  the  stocks  themselves.   I  am  hearing  advice  that  the  only  safe  way  to  make  money  on  the   markets  at  the  moment  is  to  stay  out  of  them  altogether,  and  instead  to   HQJDJHLQµWUDGLQJ¶RUVSUHDG  betting  which  way  the  markets  will  go.  This   enables  a  win  from  a  rising  and  falling  market.  I  am  also  hearing  advice   that  spread  betting  is  a  dangerous  game  likely  to  bring  some  hefty  losses   of  more  than  the  original  stake.   I  hear  advice  that  the  way  to  go  is  to  stick  to  penny  shares  on  the   alternative  investment  markets,  as  this  is  where  the  big  growth  potential   is.  I  also  hear  that  people  should  avoid  the  risky  penny  shares  and  stick   WRWKHODUJHµEOXHFKLS¶FRPSDQLHVZKRSUHVHQWOHVVULVN   So  which  way  is  a  private  investor  supposed  to  go?   Well  the  answer  will  take  you  back  to  Secret  Number  12.  Diversify.   You  should  have  some  funds.  Leave  these  to  boil  over  the  long  term.   Subscribe  to  them  regularly.  Treat  them  as  your  buy  and  hold   investments.   You  should  also  have  a  diversified  range  of  other  stocks.  Some  of  these   you  will  treat  in  the  same  way  as  your  funds,  with  reinvested  dividends   and  regular  subscriptions.  Others,  you  may  trade  more  frequently  ±  even   taking  advantage  of  some  large  swings  in  the  price  occasionally  by  buying   in  and  out  on  the  same  day  or  several  times  a  week.   You  should  have  some  µhigh-­octane¶  and  risky  penny  shares.  You  may   lose  the  lot,  but  you  may  have  a  massive  growth  in  share  price.  You   should  also  make  sure  that  there  are  some  defensive  stocks  ±  the   dividend  payers  who  remain  fairly  static  in  the  market.   And  yes,  you  may  engage  in  some  spread  betting  of  the  markets  as  this   may  be  a  very  lucrative  thing  to  do,  whatever  the  market  is  doing  ±   providing  you  engage  in  some  careful  money  management  and  that  you   minimise  your  risk  with  stop  losses.  This  takes  you  back  to  my  mantra   again.  ,I\RXFDQ¶WORVHLW±  GRQ¶WXVHLWIRUWKLV  


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Secret Number  18   ³,QYHVWLQJRQ1HZV´     Many  private  investors  read  the  bulletin  boards  and  press  releases  about   various  companies.  They  subscribe  to  tipping  services  which  will  advise   about  what  a  company  is  about  to  do,  or  the  new  breakthrough  they  are   soon  to  launch.  The  mistake  they  make  at  this  point  is  assuming  that   somehow  as  a  result  of  the  news  the  share-­price  will  go  higher  from  that   point  and  therefore  buying  in.     In  fact,  it  is  usually  the  case  that  when  there  is  good  news  from  a   company,  the  share-­price  rises  a  little  for  a  short  period  and  then  falls   rapidly  for  a  longer  period.  This  leaves  the  new  private  investor  with  a   loss  on  their  recently  bought  share.     Why  does  it  happen?     Well  all  this  information  is  in  the  public  domain.  If  you  have  heard  about   the  share  tip  or  the  news  (or  even  the  likelihood  of  good  news)  so  will   others.  Pro-­traders  will  certainly  have  heard  about  it.  The  share  price  you   are  seeing  is  in  fact  one  which  has  anticipated  the  news  already.  Any   spike  after  this  is  where  inexperienced  private  investors  are  buying  in.   Once  this  spike  has  happened,  the  pro-­traders  all  sell  either  all  or  most  of   their  investment  in  large  volumes,  causing  the  price  to  drop  like  a  stone.   Once  it  is  low  down,  they  buy  in  again  ±  perhaps,  or  they  may  go  to   another  share  which  is  also  expecting  news  and  repeat  the  action  there.     Unfortunately,  this  causes  the  poor  private  investor  to  own  shares  which   they  bought  at  the  top  of  the  spike.  Worse  than  this,  some  will  panic  and   sell  out  as  the  share  drops,  taking  a  loss  along  the  way.     Thankfully,  because  of  Secret  Number  15,  you  know  what  to  do  in  this   scenario.  Simply  buy  more  on  the  way  down.  If  you  have  no  spare  capital   immediately  available  for  such  an  additional  investment,  never  mind.  Hold   on  to  it  until  you  do.  It  will  rise  again.     So,  the  trick  is  to  understand  what  it  is  that  drives  a  share  price.   Remember  the  rule  of  supply  and  demand.  The  price  goes  up  as  more   demand  the  share.  They  do  this  in  anticipation  of  the  news.  Once  the   news  is  out,  demand  has  gone  and  so  they  sell  again.  Please  note  that   technically  it  is  investor  sentiment  that  is  driving  the  price  and  not  the   news  at  all!  Investors  behave  like  a  herd.  Bizarrely,  people  spend  more   money  investing  as  a  share  price  rises,  and  then  sell  again  as  it  is  falling.   It  is  all  about  greed  and  fear.  Try  to  remove  your  emotional  response  and   WKLQNUDWLRQDOO\DERXWZKDWLVEHVWDQG\RXZRQ¶WJRIDUZURQJ     30    

Secret  Number  19   ³Understand  the  Jargon  and  Charts´   ,WLVFHUWDLQO\WKHFDVHWKDWVPDOOWLPH¾QHZELHœLQYHVWRUVRIWHQMXPSLQ with  both  feet  and  then  have  to  learn  by  their  mistakes.  Unfortunately,   this  is  a  costly  way  of  doing  things.     It  is  also  the  case  that  inexperienced  investors  become  over-­confident  in   their  own  ability.  Psychologically,  it  is  easy  to  see  a  few  gains  and  think   that  you  therefore  know  what  you  are  doing.  This  is  compounded  by  the   fact  that  we  do  not  like  to  think  about  and  dwell  on  financial  losses  as   they  are  painful.       It  is  true  that  a  little  knowledge  goes  a  long  way.  It  is  truer,  however,   that  a  lot  of  knowledge  goes  a  long  way.  Understanding  some  of  the   fundamentals  of  investing  (that  you  do  now  because  of  this  guide)  will  be   UHDOO\KHOSIXO+RZHYHU\RXVLPSO\ZRQœWJHWE\ZLWKRXWXQGHUVWDQGLQJ some  of  the  jargon  and  having  a  rudimentary  understanding  of  chart   technical  analysis.     You  can  study  for  weeks  and  weeks  and  still  be  only  scratching  the   surface  of  technical  analysis  (TA).  However,  some  basic  understanding  of   charts  is  quick  to  gain.  I  would  say  that  you  need  to  understand  the  fact   that  the  direction  and  trend  of  the  price  is  shown  by  the  chart,  and  the   volume  of  shares  purchased  is  also  shown.  The  higher  the  volume  on  any   rise  or  fall,  the  more  momentum  there  is  behind  the  move.     Basic  indicators  should  also  be  known.  Simple  moving  averages  (usually   the  20,  50  and  200  day)  can  be  used  to  see  where  the  current  price  is  in   relation  to  its  average  over  time.  If  the  price  crosses  a  moving  average   with  any  momentum,  this  is  often  a  signal  that  the  direction  of  the  price   has  turned  for  more  than  a  short  term.     Using  Google  to  searFKIRU¾(OOLRW:DYH7KHRU\œDQG¾6WRFN0DUNHW )LERQDFFL/HYHOVœand  reading  around  a  bit  will  also  give  you  a  good   grounding  in  some  of  the  more  complex  aspects  of  TA.  Again,  knowing   these  in  a  rudimentary  way  will  actually  put  you  miles  ahead  of  most   private  investors  who  know  only  that  the  price  is  going  up  or  down.     Spend  some  time  searching  the  meanings  of  investment  jargon  in  order   that  you  can  engage  fully  in  what  advisors  are  saying.  It  is  no  use   thinking  that  it  is  time  to  buy  in  a  bear  market  or  when  people  are   UHFRPPHQGLQJWKDW\RX¾JRVKRUWœ        


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Secret  Number  20   ³'RQRWXQGHU-­estimate  your  life-­H[SHFWDQF\´   Life-­expectancy  is  only  going  one  way  and  that  is  up.  Enforced  retirement   age  in  Europe  has  just  been  dropped  as  it  is  clear  that  people  are  living   longer  and  longer  and  are  obviously  still  capable  of  working  much  older   than  before.     When  planning  your  investments,  it  is  important  to  recognise  that  your   retirement  is  going  to  last  a  long  time  and  that  there  is  a  high  probability   you  will  need  to  have  money  to  live  off  for  longer  than  even  you  imagine.   Medical  breakthroughs  are  happening  all  the  time.  Our  understanding  of   the  need  for  exercise  and  a  healthy  diet  has  increased  or  life  span  hugely.   Standards  of  living  are  considerably  improved,  but  in  our  old  age  we  will   need  the  necessary  funds  to  keep  us  in  the  comfort  we  desire.   Secret  Number  21   ³'RQœWIRUJHWJRRGROGIDVKLRQHGVDYLQJ´     Saving  money  and  investing  money  are  different  things.  With  investment   there  is  always  a  risk.  You  will  read  over  and  over  again  that  the  value  of   your  portfolio  can  go  down  as  well  as  up.  In  fact,  as  I  have  explained,  in   WKHHDUO\GD\V¾GRZQœLVH[DFWO\ZKDW\RXZLOOVHH)RUWKLVUHDVRQLWLV essential  to  remember  that  some  money  needs  to  be  saved  in  very  low   risk  ordinary  bank  savings  deposit  accounts.  This  will  be  there  for  a  rainy   day  (or  a  much  needed  holiday),  and  may  enable  you  to  siphon  off  some   of  it  occasionally  to  invest,  but  you  should  aim  for  a  certain  amount  to  be   saved  in  this  type  of  account  each  month.  As  a  general  rule,  and  this  is   not  always  easy,  you  should  aim  to  save  enough  to  cover  your  mortgage   and  any  other  regular  bills  for  a  few  months  if  you  suddenly  found   yourself  out  of  work.  This  gives  you  a  couple  of  months  grace  to  get   yourself  sorted  out.  You  cannot  rely  on  investments  to  do  that  as  the   volatility  in  value  and  the  illiquid  nature  of  the  money  (relatively   inaccessible)  is  too  great.     You  should  always  shop  around  for  savings  accounts.    Banks  rely  on   LQHUWLD7KH\KRSHWKDW\RXZRQœWERWKHUVKLIWLQJ\RXUIXQGVWRD competitor  because  it  is  easier  to  keep  things  all  under  one  roof.  They   hope  tKDW\RXZRQœWQRWLFHWKHGHDOWKH\DUHRIIHULQJWKHLUQHZ customers.  BE  DEMANDING!  Ask  for  the  better  deal  or  you  will  take  all   your  accounts  elsewhere.  They  need  your  business  and  will  actually  bend   over  backwards  to  keep  you  on  their  books.   32    

Secret Number  22   ³Enjoy  without  addiction´     Once  you  start  investing,  you  will  find  that  it  becomes  extremely  tempting   to  watch  your  investments  going  up  and  down  all  day  every  day.  In  fact,   you  can  spend  hours  doing  it.  This  is  counter-­productive.  You  could  find   that  you  have  spent  three  hours  watching  a  £2.50  rise  on  your  portfolio.   In  terms  of  the  use  of  your  time,  this  is  very  poor.  You  would  be  better  off   spending  that  time  stacking  shelves  in  TESCO  and  it  would  give  you  more   money  to  invest!   It  is  important  to  remember  that  there  are  always  short  term  swings  in   the  market.  Watching  every  one  of  them  will  not  actually  serve  any   SXUSRVHRWKHUWKDQWRPDNH\RXZRUU\8QOHVV\RXSODQWRµ'D\-­7UDGH¶   (and  have  the  time  to  do  so),  I  would  advise  only  a  cursory  check  of  your   investments  each  day.  This  will  certainly  allow  you  to  top  up  your  shares   when  they  have  fallen,  but  will  not  take  so  much  time  that  it  becomes  a   very  poor  hourly  rate.   Remember  also  to  have  a  clear  strategy  as  to  how  much  you  are  prepared   to  risk  each  month.  Secret  8  was  to  only  invest  from  your  surplus.  Too   much  portfolio  watching  can  encourage  you  to  invest  beyond  this  amount   as  the  temptation  to  buy  new  shares  or  top-­up  others  is  very  strong.   5HJXODUDQGSODQQHGLQYHVWLQJUDWKHUWKDWµIRUFHG¶DQGHPRtional  trading   is  always  safer  in  the  long  run.      


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Secret Number  23   ³All  Bulletin  Boards  are  positive´     If  you  join  an  online  investing  community,  you  will  see  that  each  share   has  a  group  of  investors  who  will  watch  the  price  rise  and  fall  and   regularly  comment.  Some  are  very  experienced  investors  and  others  are   very  new  to  this  game.  The  key  thing  to  know  is  that  the  comments  will   be  almost  entirely  positive.   People  who  comment  on  share  bulletin  boards  are  almost  without   exception  holders  of  that  share.  ,WLVQRWLQWKHLULQWHUHVWVWRµGH-­UDPS¶RU talk  down  a  share  as  it  will  potentially  damage  their  own  investment.  In   fact,  if  people  do  post  negative  information  or  views  about  the  share,   these  posts  are  often  met  with  hostility  and  derision.  This  has  the  effect  of   making  such  posters  tread  carefully  before  considering  giving  any  balance   to  the  views  on  the  board.   As  a  source  of  information  about  a  particular  investment,  the  bulletin   boards  can  be  very  useful.  Private  investors  are  often  very  good  at  doing   research  into  the  fundamentals  of  a  company.  However,  you  need  to  be   aware  that  negative  comments  will  be  few  and  far  between  and  that   almost  every  share  will  be  portrayed  as  the  share  pick  of  the  decade!   Using  bulletin  boards  to  make  a  decision  on  whether  or  not  to  invest  is  a   dangerous  game.  The  information  presented  should  be  only  part  of  what   you  take  into  consideration.  Remember  also  that  all  this  information  is  in   the  public  domain  and  was  known  by  the  pro-­traders  long  ago.      


Secret Number  24   ³Aim  for  multiple  income  streams´   A  poll  of  wealthy  people  would  very  quickly  show  that  most  of  them  made   their  money  in  more  than  one  way.  I  have  already  mentioned  that  income   is  not  wealth.  However,  this  is  particularly  the  case  if  your  income  comes   entirely  from  one  source.   What  do  I  mean?   Well,  if  you  have  a  good  job  which  pays  a  very  healthy  salary  ±  but  that   job  stops,  your  income  will  stop  too.  You  will  be  left  only  with  what  you   have  managed  to  put  by  in  the  form  of  investments.   However,  if  you  have  managed  to  build  up  a  group  of  income  providers   alongside  your  regular  job  and  investments,  then  your  income  will  be  able   to  continue  for  longer  without  the  regular  salary.   What  kind  of  income  providers?   I  have  already  explained  about  investing  for  income.  This  is  a  good  place   to  start.  However,  you  should  investigate  the  possibility  of  generating   other  income  on  the  side.  There  are  plenty  of  part  time  and  flexible   working  opportunities  where  you  can  make  a  small  amount  of  cash  for  a   small  amount  of  time.  Some  of  the  best  are  the  multi-­level  marketing   schemes.  Providing  the  company  is  a  sound  one  (like  Telecom  Plus  PLC),   these  can  generate  a  reasonable  (or  outstanding)  income  which  goes  on   paying  long  after  the  initial  work  was  done.   The  other  area  in  which  to  look  is  the  service  industry.  Can  you  set  up  a   EXVLQHVVZKLFKZLOOGRSHRSOH¶V  unwanted  jobs?  Cleaning  Homes,  Washing   Cars,  Washing  Windows,  Doing  Ironing  ±  the  list  is  endless.  The  secret,   however,  is  for  you  to  act  as  a  manager  who  sets  up  the  deals  and   employs  others  to  do  the  hard  graft.  This  way,  you  get  the  profits  only   needing  to  do  a  minimal  amount  of  work  each  week  or  month.  You  can   expand  the  business  as  much  or  as  little  as  you  wish  depending  on  your   free  time.   The  beauty  of  such  an  opportunity  is  that  once  it  is  rolling  it  takes  very   little  time  to  generate  the  income.  Naturally  there  are  some  start-­up  costs   and  effort,  but  beyond  that  not  much.   Finally  ±  you  could  consider  writing  a  guide  on  something  you  love  and   selling  it!  


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Secret Number  25   ³You  never  know  enough´     It  is  always  important  to  remember  the  value  of  education.  We  all   continue  to  learn  throughout  life,  but  some  will  be  more  active  in  that   learning  than  others.  I  am  not  suggesting  that  you  should  go  out  and  do  a   higher  degree  (although  you  may,  and  it  could  be  the  best  thing  you  ever   did).  What  I  am  saying  is  that  when  dealing  with  the  challenges  that  life   brings  your  way  and  particularly  when  attempting  to  move  into  new  areas   out  of  your  comfort  zone,  there  is  no  substitute  for  education.   There  are  countless  books,  for  example,  on  technical  analysis  of  charts.  It   is  worth  reading  some  of  these.  There  are  weekly  eNewsletters  you  can   sign  up  to  which  will  let  you  know  what  is  going  on  in  the  markets  and   give  analytical  comment  from  experts.  There  are  websites  with   discussions  between  opposing  views.  All  of  these  things  you  should   digest.   However,  reading  the  manuals  is  not  enough.  You  would  not  expect  to  be   able  to  win  the  world  snooker  tournament  simply  by  reading  a  manual   about  how  to  hold  the  cue  and  strike  the  ball.  Nor  would  you  expect  to  be   able  to  play  the  violin  by  reading  about  the  techniques.  There  is  no   substitute  for  practice  and  exposure  to  that  which  you  are  trying  to  learn.   Many  brokers  allow  you  to  open  virtual  trading  accounts  and  you  can   µSDSHU-­WUDGH¶ZLWKRXWULVNLQJDSHQQ\7KLVHQDEOHV\RXWRPDNHPLVWDNHV before  hurting  your  finances.  It  also  enables  you  to  put  into  practice  what   you  have  learned  in  theory.  This  part  of  learning  is  invaluable.   Once  you  have  got  the  hang  of  what  you  are  doing  and  you  are  familiar   with  the  trading  platform  you  have  chosen  to  use,  you  can  venture  into   the  real  account  and  put  some  real  money  in.  Jumping  in  with  both  feet   without  any  knowledge  or  practice  is  rarely  a  good  thing  to  do.  

Remember, there  is  always  time  to  learn  something  new.      


$QG)LQDOO\« Try  not  to  lose  sight  of  what  you  are  doing  all  this  for.  What  is  it  you   actually  desire?  I  began  this  guide  by  saying  that  it  would  help  you   accumulate  wealth  steadily  and  sensibly.  However,  you  have  to  know  why   you  want  to  be  wealthy.   Those  who  seek  money  for  the  sake  of  money  are  actually  following  a   blind  alley.  Those  who  seek  riches  in  order  to  be  rich  will  find  their  life   ultimately  empty.   Instead,  you  need  to  visualise  what  it  is  you  will  use  the  money  for.   Perhaps  you  would  like  to  take  more  holidays  with  the  family.   Perhaps  you  would  like  to  live  in  a  bigger  house  with  more  space  to   unwind  and  entertain.   Perhaps  you  simply  want  to  be  comfortably  off  without  having  to  give  all   your  time  to  your  employer.   Perhaps  you  would  like  to  retire  early  so  that  you  can  see  the  world.   Perhaps  you  would  like  to  give  to  worthy  causes  all  over  the  world.   Perhaps  you  want  to  put  your  children  through  private  education.   Perhaps  you  want  security  in  old  age.   Whatever  it  is  ±  try  to  focus  on  this  when  you  are  investing.  Watching  the   pounds  and  pence  grow  is  of  no  consequence  if  you  have  nothing  to  aim   for.  Once  you  have  decided  what  it  is  you  are  working  towards,  fix  that   image  in  your  mind  and  factor  it  in  to  all  your  decisions.  You  will  be  much   more  sensible  in  your  approach  if  you  know  what  it  is  you  are  risking.   I  hope  that  you  have  found  this  to  be  a  valuable  guide.  I  wish  you  every   future  success.  

U.K.  Government  Required  Disclaimer  ʹ  The  information  in  this  guide  is  believed  to  be  accurate  and   sound  according  to  the  best  information  available  to  the  author.  The  past  is  not  necessarily  a  guide   to  future  performance.  The  value  of  any  investment,  and  the  income  derived  from  it,  can  go  down  as   well  as  up.  You  may  get  back  less  than  the  amount  invested.  Never  invest  more  than  you  can  safely   afford  to  lose.  There  is  an  extra  risk  of  losing  money  when  shares  are  bought  in  some  smaller   companies  including  penny  shares.  Before  investing,  or  if  in  doubt  about  the  suitability  of  an   investment  please  seek  independent  financial  advice.    


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How To Become Wealthy  

How to make money using the stock market and the internet -

How To Become Wealthy  

How to make money using the stock market and the internet -