United States, Fund Management Company, SAP discussed on Conscious Millionaire Show ~ Business Coaching and Mentoring 6 Days a Week
Why is the stock market? A place over time. That actually has less risk than many of the things that we've talked about on the show the first reason why that's the case is because you can get in and out very easily if you were to walk down the street and see a restaurant and invest ten percent you know. Put intemperately your money into that restaurant and the owner of the restaurant uses that money to build a business. It's very difficult to get out of that. Investment but the stock market you can get in and out of very very easily so what? What are the ways that anyone listening? And we're not giving investment advice won't be clear about that. We have a disclaimer at the end of every. Show what we're doing is giving you information what you do with it is up to you. So what are some of the ways that someone maybe hasn't been investing in the stock market but wants to build wealth over time wants to be sure they have a retirement wants to perhaps pay for the college education of their children? What's a great way to get started? that's going to diversify their risk. So I WANNA put a parameter on that so that they're making smart decisions and taking into consideration risk which was one of the six ways you can lose. Your money is not paying attention to risk. Well when I wrote this book how to start building your wealth investing in the stock market. I wrote it specifically for five people. Those five people were might five nieces. My five nieces did not study finance and I can say not. One of them is interested in watching the financial news. And any of that. So what I wanted to do in the book was tried to help a beginner. Think about how they could start investing. Now what I would say that one of the most riskiest things you could do is put all of your money in one company or one investment therefore what I advise my my nieces and I talk about in the book is said why not put your money in every business in the world if if you did that the point is if one goes bust and other ones rising so you've eliminated what we call company specific risk so the first most important thing for a beginner is don't make crazy bets on one stock or something like that. Look at an instrument that owns every stock in the world. So one of those that may not be every stock but looking at index funds. Were you for instance have everything in in in the mid cap? Everything that's in large-caps everything this value stocks so that you're investing across the board everything that's in the sap so you've got five hundred stocks in the SNP that are representative of some of the strongest growth. That's going on in the world in at least within American companies yet. I think that the challenge there is that you know yourself. Jv as well as myself. You know we've done a lot of work on the area of finance but what I've found with my nieces. They were not interested in even thinking about Should I be in growth or Siberian? The S. and P. Five hundred or is it large-cap now or all? Those things are very big complications so I decided that I would teach them just own every single company in the world. And then you're not having to make this allocation decision of should I put more in the US or non US in value? Get rid of that decision and just own every stock in the world. And that's part of the simplifying principle. What I like to do because remember the book is how to start building your wealth. And so what's the instrument that they should utilize consider researching to be in every company in the world so this Kinda ties every listed company every public correct. Yes and I think this is where you know really the first step for anybody is to to call a mutual fund company on their hotline. And ask them you know whether that's vanguard whether that's fidelity or Wendy that Schwab or any other call them up and asked him what what fun do you have that owns every stock in the world. And they're going to have a fun now. They may say oh. You don't WANNA own every stock in the world. You want to own this or that or something. Forget about that. Just think about that one fund and there's a few of them each one of those Companies has one of those funds at owns every every listed stock in the world. So once you get started with that that's the first step what is it. Let's apply some of the the six ways that they could lose their money and apply them here so for instance they simply by the all the world's stocks but then they still ignore it and don't pay any attention to what's going on in terms of financial cycles that are going on and there will inevitably be folks one of the things you can count on with one hundred percent guarantee but unfortunately not one hundred percent ability to predict is that there will be financial cycles that are both world based and geographic based. I think the first thing is that In this case the research that you want to do is by calling the broker. We talked about failing to do research calling the Fund Management Company. Talking about looking at your option of these different com these different options of owning every company in the world in some ways for beginner there. My nieces were relying on my research and what I was saying. Is that if you own every stock in the world? You're reducing your company specific risk. But you still have the risks at all. The stock market is high. I don't know if I should put money in. That brings us to the next point. One hundred and ten minus your age. Now my nieces were twenty at the time I started them invested so if we take a hundred and ten my on his twenty I said ninety percent of your money should be in that all stocks in the world and ten percent of your money should be in some sort of bond fund that owns every Bonn in the world or every bond in the US and this is a massive risk reduction. Reduce her so. I like to say that. Owning every stock in the world is like having a seatbelt on and blending in small portion of bonds is like an airbag. Those two risk reducers are massive that and that brings us to the thing which is trying to predict a cycles. Like you know we always expensive. Should I put money in? You know? I always be careful about lump sum investments but if you're just contributing on a monthly basis to build your well it doesn't matter whether the stock market is high or low or in the middle because chances are you're going to retire at age sixty seventy whenever that is so. You're trying to hit a number. That could be twenty thirty forty years away and you're going to be much more in pain if you don't start investing consistently on a on a monthly basis than you know if you don't start compared to if you put money in sometimes at the peak and you put money sometimes in at the bottom that will even out. Is there anything else that you would like to advise entrepreneurs that are building wealth in their business and as you begin to build wealth you start having cash flow and some of that cash should be reinvested in your business? It might be reinvested through more marketing. Because now you can bring more leads in brick and through your sale cycle and and if you've proven your sale cycle that's a proven way that you can grow your business but then at some point you need to start taking money out. What is your advice to those entrepreneurs that have not yet looked at taking the money out? How do they start making that decisions to win? They should do that so the first part is obviously in early. Gross stage of Your Business. You're going to have to keep investing and growing the business so there's not a lot of choice at that time. Also remember that you are. You are in a high risk investment. You've invested your whole life in trying to make this business generate cash flow for you and so therefore when you look outside of Your Business and you start to get some money that you can invest. I find that Most entrepreneurs have a lot of confidence by the time they get to the point that they're generating a lot of cash flow and they bring that confidence into the stock market and they get crushed. They've listened to the advice of others. They do some research and they don't realize that the stock market is a very complex place. It's a lot like a casino. And so what I WOULD. Highly recommend is that they see themselves as being in a very high risk endeavor which is their startup or their business and therefore their their strategy in the stock market should be much more Reduced risk and. That's really what I'm explaining so I like to explain it. This way create grow and protect your well. The entrepreneur creates wealth through their business. Some people also create wealth through their salary. My Dad created wealth by keeping his expenses massively below his income and my mom and dad were able to do that over time but many entrepreneurs created out of their business. You grow your wealth in the stock market and then you protect following the six ways and six strategies that we talked about. We're here with Andrew Stotz. He lives in Bangkok Thailand. He's the CO founder of coffee works. He's a financial analyst..