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Sunday, April 24, 2011

Rules for Maintaining Wealth

Simple Formula for getting rich:

1. Make a good living in your job, profession, or business.
Gaining and Maintaining Wealth: A Guide to Financial & Estate Planning
2. Save a high percentage of your earnings and don't marry a spouse who likes to spend, spend, and spend some more.

3. Don't carry any credit card debt or have a home equity line of credit.

4. Make good safe, non-speculative investments in a Low Cost S & P Index Fund and/or Total Stock Market Index Fund, and High Quality diversified municipal bonds (not bond funds, but individual high quality munis) for fixed income . Avoid managed funds.

5. Be tax efficient with your investments and personal affairs
Renowned investor Joel Greenblatt can't keep a secret.

The founder of Gotham Capital, the hedge fund he started in 1985 that produced 40 percent annualized returns under his 20-year tutelage, wants you to be rich. Very rich. And it doesn't mean pouring your hard-earned money into five-star rated funds or hiring talking head money managers (they are plenty of them on cable business channels). In Mr. Greenblatt's latest book, The Big Secret for the Small Investor, he decodes the secrets of Wall Street for the average investor and debunks the most common myths of investing.

What's the biggest secret revealed? "Investing comes down to valuing something and paying a big discount to that value," Greenblatt recently told Breakout. In his book, Greenblatt gives plenty of examples of how to determine a company's valuation with simplified numbers and mathematical equations. He strips away the grandeur and lays bare the basics of investing. Greenblatt sys investors should look for a basket of companies that appear undervalued, because winning big in the stock market means "figuring out what something is worth and paying a lot less." Of course, determining a company's value and future earnings can be very difficult, even for the most sophisticated and experienced money managers, Greenblatt admits.

Another secret Greenblatt divulges is that market-cap weighed indexes beat most active managers —- and all successful managers go through periods of underperformance. Therefore, investors should avoid chasing managers based on prior performance stats -- as we know, past performance does not guarantee future success. Historically speaking, Greenblatt said 70 percent of active managers have underperformed the market over the past 10 years and "odds are investors are not going to find that superstar manager." Believe it or not, retail investors and money managers really do compete on an equal playing field, he adds. The market is "very emotional," and to separate the emotion from the reward, Greenblatt recommends buying ETFs —- specifically Value Index ETFs.

Follow Greenblatt's advice and your portfolio could soon be well ahead of the markets and outperforming even the most eminent managers. Warren Buffett and Ben Graham made fortunes looking for value, and so can you.

We want to know what you think. by  Break - out - crew

1. Maximize your 401k to the fullest extent of the company match.

2. Have additional money taken directly from your paycheck into an investment account. Diversify your holdings and rebalance. Study investing, use stop losses and buy put protection to protect your downside risk.

3. Pay off your credit cards each month.

The Little Book That Still Beats the Market (Little Books. Big Profits)
4. Buy only the house you need.

5. Buy sensible cars. Few people really need a gas guzzling $50,000 SUV. Consider buying used, around two years old and plan on keeping for at least 10 years.

We do not make a lot of money. It's not important what you make, it's important what you keep.Replies ??
Rules for Maintaining Wealth:

1.) Everyone wants to steal your money

2.) Everyone has an ulterior motive

3.) By the time its in the press, it's too late

4.) Don't believe brokerage stock ratings

5.) Everyone who approaches you is out to royally screw you

6.) Everything can go to $0

7.) There is no "safe" investment

8.) Hedge funds are betting against you

9.) The House always wins

10.) Don't buy it if you can't understand it

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