The Physics of Money

There are tons of books that tell stories of big challenges, taken by the richest billionaires. I have read many of them, and I can tell some of them are really inspirational. The majority of these stories, explain how these people were able to create their own fortune. 

 

I am here to provide you with the unique opportunity of learning how did they manage to keep their fortune. You have to know not only how to accumulate but most important how to maintain your wealth.

 

What if you make $1 million, and you lose it after a few months?

 

Do you know that this kind of “loss”, usually happens to the many who happen to win the lottery for the first time? Inform yourself… In order to build and to keep your wealth you need a plan on how not to waste your money.

 

 

First point. Wealth is Accumulating (and not spending…)

Your first fortune is learning how to maintain your money. 

 

In my latest post, "the Survival Handbook" , I introduced the Cash Flow, and the Tracking Ob. If you do not have a plan, you have less opportunities to become rich. Planning, budgeting and controlling expenses are key elements. Accumulating money means knowing your daily inflow and outflow. Build a plan of action, study your Cash Flow and Tracking Ob.

 

 

Second point. Money is a form of Energy

 

Let me introduce you a metaphor: consider a weir on a lake. The water is your wealth. If the inflow is less than your outflow, you are generating wealth. If not, you are wasting money. You need to close the plug or at least to open it carefully. If you pull out the plug, the water creates a giant whirl of energy. Same thing is for the money. 

 

Money, is a form of energy. And what you need to know, is how does energy works. I don’t understand why at school they taught me about physics (and that’s an important subject) but they didn’t teach me about the Physics of Money …

 

Money is energy!!

 

The more money you have, the more energy you are able to provide. 

 

Do not trust those who go like: “do you prefer money or love?” I prefer both. I couldn't live without my son’s smile, my wife’s cuddles and my dogs… but I cant live without money too. In these few lines I am ready to challenge every Scientist on earth to prove that Money is not a form of Energy. Money is Energy.

 

 

Third point: Net worth and Cash Flow are the measure of economic success

 

You need to control your levels of net worth and your cash flow, in a systematic way. Check your wealth status. 

 

 

Fourth point. High consumption lifestyle and High Maintenance are not forbidden

 

The important thing, is that your spending must always be under the line of your income budget. 

 

For example, if you buy a car with a lease, that’s not the best way to generate money, because you work to pay the lease rates and its interest rates. You work to have something you cannot afford! It’s like if you keep running without moving a step forward and if you stop you "probably" default. Ask yourself: if you stop working now, how long would you be able to keep up with the same living standards?

 

Advice of the day: Live below your means. 

 

 

Fifth point. Work to “Retire Rich”

 

Even if you have a job, my advice is to start creating your own Automatic Cash Flow. And later you will check your finances. When you are in the “Retire Rich” level, your money will work for you. 

 

Your time will be dedicated to generate money, counting the inflow and checking your financial status.

The Question....

 

Now, after these 5 points, I ask you a question: “Why aren’t you in the “Retire Rich” level yet?” 

 

The answer is easy: Nobody taught you how to do it. Nobody told you anything about the opportunity to “Retire Rich”. 

 

Sixth point. “Teach by Examples”

 

Thus, don’t let your children do the same mistake you did! The most important thing you can do for your children is teaching them about the money physics. Teach them financial discipline and how to be financially independent. 

 

If you don’t, they will always struggle to make ends meet. It is proven that a random donating system always generate financial dependence, in the end, It’s like any other addiction. Teach your kids how to fish and not simply provide them with the fish every day. They will become financial independent and productive adults. Eventually one day they will thank you.

 

You will find out you are able to learn the art of making money sooner than what you thought. Life is a long run.

 

Luigi Foscale

Survival Handobook

 

Each day brings more bad news.

 

Governments rip off taxpayers by collecting always new taxes while public officials uphold it on the media claiming we need these new “measures” to restart the economy. Read this Article on the Corriere della Sera. However, after this further strain on the taxpayers, those same hot shots are now telling us our effort was completely vain.

Isn’t that weird?

 

By heart you can tell they add insult to injury and I believe there are many people out there who share my same feelings on this “particular” issue. 

 

However if I decided to write this down, is because I wish to share my formula to crack the code to the government’ subtext, which the media in fact “wisely recommend” as important news.

In these pages you will read what no one would ever tell you. Out of two, one: our government officials are completely unfit to conduct a simple Economic Outlook or forecast (which I can definitely rule out) or worse, they are excellent depression promoters and major pessimism supporters. 

 

In order to understand what happened behind the scenes, we should try to re-read what they claimed on the media: first they recommended us to pay some new taxes because that was our only way out from the crisis, then they changed their mind saying those taxes we just paid were not able to solve the problem.

So we should had probably expect more taxes to pay in the near future. 

 

Although if you were able to read between the lines, you could have sensed something like this: the government wants all you’ve got and if you want to survive you have to pay it and after you paid it they ask you to pay more.

 

To me this sounds like a ransom drop gone wrong. Thing is, a ransom involves a kidnapping and a hostage. The kidnapper is the government and the hostages are represented by our lives and the taxes are the ransom we have to pay. Nonetheless this time the ransom drop went wrong because the government-kidnapper wanted more money from us. Indeed the amount we paid didn't fill the giant gap created by the crisis. 

 

The worst is every citizen understands his contribution was totally pointless compared to the magnitude of the crisis.

 

There’s a say: If you want to do away with someone you should break his means and will to resist. In practice you annihilate his own spirit.

That’s exactly what they’re trying to do. It’s like if a father is asking his son to run for a mile as fast as he can. Then, when he’s finished running and he’s gasping for breath, his father tells him his performance was absolutely unacceptable and that he’d better give up running.

 

Now I am asking you: while you are reading this, can you imagine whether all the taxes you have paid did not fill the gap to make up the deficit?

How big is your fear to lose what you got? Are you worried you won’t make it to make ends meet? How much worried? How would that kid had felt whether he was asked to run at his best once again? Maybe this time for ten miles? He would had run, going all out, or maybe he would had felt his strain being completely useless?

What you just read is the most effective way to generate great frustration, anxiety, panic and distress. People who suffered the hard blow they know it was completely useless and that they are due to pay even more. 

 

At the end of the day, the truth is somebody wants you to be poor and somebody gets richer by imposing on you. Plain, simple and terrible. This is the actual scenario and it’s happening right now. Unfortunately if things keep going the way they are, there’s a great chance the situation will collapse. We are now in a recession that could lead to a depression. Eventually the crime rate will skyrocket and the next step we’ll have riots in the streets. In practice the whole system would collapse. Don’t you think this sequence of events is already in progress? Unfortunately this is very similar to what happened in the 30’s right before WWII.

 

Nonetheless if I am here writing this, it’s because there’s a glimpse of hope. Back to the basis. Here I describe an exit strategy to face the crisis.

 

First of all is crucial to get your bearings. Like a boat in the middle of the storm without a GPS. Orientation. Where do you go? It is vital to have a compass which has to be cheap.

Time is key. Lehman Brothers the day before it crashed, was one of the major investment banks in the world. It took one day to collapse. From rags to riches in one day... this is today’s timing. You should know in advance what’s next. That’s why aligning yourself is so important. You need to position yourself in order to know if you are in the right direction or in the wrong path, in case, it’s important you know it right away.

 

In practice I define Orientation as the sum of many skills. Like in an airplane cockpit you have a lot of buttons, so in order to survive the crisis, you have to know the tools at your disposal. The Orientation tools are those that allow yourself to switch from visual flight to instrument flight. This works both for airplanes and for the people, whether you are a manager, a family father or an entrepreneur.

 

These tools don’t require much time to learn how use them, but it’s the most useful time you may spend learning something. It's about an hour a week or two hours a month. No one is so busy not to have 6 hours in a month.

The first tool is the Cash Flow. Many Economy books talk about it and they show it in a proper form. Although you won’t be able to find my idea of Cash Flow in the mainstream finance, but it works. Exactly, it works because it’s very simple. I am not here to make an essay about finance....there is plenty of places where you will find such textbooks. My only wish is to make this stuff useful also for a ten years kid. You don’t need an MBA to know what Cash Flow is. You just need common sense....(and please let me tell you that most of the financial big shots who made the crisis they completely miss what common sense is).The Cash Flow is a periodical activity you should update once a week. Usually I do it once a week, on Mondays. Cash Flow is an 18 months economic outlook. In practice you take a piece of paper (or an excel file) and you divide it in 5 columns then you write Date, Subject, +, -, =. Then under each of these columns you write down the expenses invoices that you have every week/month.

Like for example you’ll have food expenses, medical checks, the rent/loan rate and eventually you'll have some income too from a rent or a salary. So you start writing them down, following a temporal order by when and what you forecast to spend or to collect. In our case, I forecast to cash a salary of $2500 on the 27 of the current month, so I write down 09/27/2012 – Salary – $2500, I leave empty the “-” box then the balance of my money on the column “=”. Then I forecast to do a certain expense the day after, so I would write $600 on the column “-“ by indicating the day 28 of the current month. Then at the beginning of the following month I know I have my kid’s school rate deadline, so I stick it in the box “-“ and so on. The “=” column is very important because is the sum of what you have the day before and what you have today after considering the whole activity. For example if yesterday I had 0 and today I cash a $2500 salary, today I have 0+2500=2500. If tomorrow I have a $600 expense I will have 2500-600=1900. And so on for the coming 18 months. Obviously there also will be extraordinary expenses like Holidays and other unforeseen operations.

 

The most important thing is to keep the Cash flow active and steady. You will realize that if you fill it with perseverance, you will learn to perfectly forecast a cash deficit..... so that you can manage your money in a different way and in advance. Time needed: a hour a week.

The second tool is the Debt Analysis. A debt in its very nature isn’t bad nor good, because it’s just the use of cash that is not yours. What makes a debt useful or not, is the use you do of the money you borrow. Good debts are those you need to generate cash flows, bad debts are those which “eat” your cash flows. In particular, a useful debt is more an apartment loan that we give out for rent whose income quit of charges and taxes are superior to the loan cost. A bad loan for example is a lease to buy a sport car. However if the lease is to buy a car whose purpose is to help generate income (for example if you are a car dealer or a cab driver) then that debt is considered useful. So you know when a debt is useful depending on what you use the money for.

Here you need a sheet where you will draw down the columns: the bank that gave you the loan, number of contract, type of interest rate, (fixed, variable or compound) date of redemption, deadline terms, type of allowance (where applicable), purchased goods with the loan, rate price + allowance on a yearly basis, cash flow generated by the loan, difference between the cash flow produced and the yearly rate + loan allowance.

This last data provides us with the information if the loan is a financial weight or not.

You can update the sheet once a month or after every activity. Time needed: an hour a month.

 

In the end, it is important to systematically verify if the route is the one you expected, and this is the Tracking Ob. So I suggest you to write down your long-range objectives, 5 years, 3 years, 2 years and 1 year and for the coming months. This way I know where I wish to go. If you update this document every month you will have the chance to verify if you reached your monthly target or if what you did is coherent with the long-term objective. Time needed: an hour a month.

 

To get out of the crisis you have to know what your priorities are: economic, moral, environmental and familiar ones. So you have to know how to keep your honour steady.

Unfortunately the crisis leads to miss the accomplishment of your objectives and it might lead to a decadence of personal values. To avoid this to happen it’s fundamental to keep up your honour and dignity. This section is about the fundamental values.

The crisis is stressful. In order to prevail in times of crisis, you have to be aware the crisis could generate psychological suffering: pain, cold, headache, general sense of frustration, inadequacy, loss of self confidence.

 

Those who are in charge knew since their beginnings, these would have been the consequences of the crisis. They knew it, but they acted for good whatsoever. That’s why I say that financial derivatives and the uncontrolled use of debt are tools of mass destruction. If you know they want to destroy you, you can better resist.

 

So your Mission and your Fundamental Values are useful to not fall down to the dramatic consequences that somebody wants for you.

 

The crisis attacks the Emotional side too: so it’s possible to feel fear, anxiety, panic, rage, you can get into substance abuse and you can lose hope.

 

These emotional consequences have been foreseen by those who generated the crisis.

 

The crisis as we saw it, it might generates distress and that’s the main cause of many diseases. You just need to be aware of it. At this point it is fundamental to introduce in the battle your survival instinct because that’s the best antidote to all kind of struggle you may face.

 

The Mission, the Fundamental Values, the Awareness.

 

This is the strength you need to overcome the crisis distress.

 

In one word is the will to live and to survive.

Luigi Foscale

Hard times for the Middle Class

 

If you are a Middle-Class folk, you have been losing up to 40% of your wealth in the last 4 years, as CNN wrote in this page. According to the Federal Reserve's Survey of Consumer Finance, the bad news is that the scenario is now very difficult.

You should be very careful when you decide what to invest in. Of course you need a strong financial education in order to create and protect your wealth.

Luigi Foscale

In this Economic War, I ask myself: how can we decide to invest in this chaos?

The first investment is in the contemporary economic culture. Studying last century economics is important but studying today’s economics is key. If you keep reading this blog you will understand many helpful things, but mostly you will know day by day what’s really happening.  

At this regard I want to cite the First Amendment:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”.

So if we are at war, the war game is to impoverish us all through consumer debt, because through this mass indebtedness the bigs are storing up great capitals and you can bet they are making money.

So you want to play in the same ball park of those who are getting rich? And by knowing all this, on your opinion is it necessary to grab what game the bigs are playing?

Luigi Foscale

Guadagna la conoscenza

Viviamo nel periodo più luminoso, perchè la conoscenza è alla portata di tutti. Avere informazioni leggendo alcuni articoli su Internet, oggi, è un esercizio molto diffuso. Quello che rende facili le informazioni, è la familiarità. E questa è una delle ragioni del successo di Internet e questo Blog.

Tuttavia, ci sono moltissime informazioni, e la maggior parte sono inutili. Pertanto, devi fare una attenta selezione per scoprire quelle di maggior qualità.

La selezione di articoli sul Financial Times, “Economy by Luigi Foscale”, http://clippings.ft.com/lists/foscale ti offre l’opportunità di incrementare la conoscenza di questo periodo economico.

Leggila quitidianamente,

Luigi Foscale

Gain the Knowledge

We live in the most brilliant era in terms of knowledge sharing. Today the practice of acquiring information from the Internet is a very common activity and Internet is a world wide network that can be easily accessed by anyone, anywhere.

Although there are billions of information on the Internet, so you just have to make a selection based on the principle of usefulness, as information is considered valuable as long as it is useful for yourself and for your business. 

Here’s my News selection on the Financial Times: http://clippings.ft.com/lists/foscale 

Check it out.

Luigi Foscale

They taught us to be poor

 

So here we are, the members of Generation X. We haven’t had the opportunity of a cutting-edge education because our School program was focused on the study of the past and not about the present.

 

Back in the days, the school system at any level, exclusively provided a “classical” education, almost completely focused on humanities. Regarding our program, all of our professors followed a historical chronological order in developing their course and they wanted us to center most of our attention on the Classical antiquity period. Often in the final classes like in sixth or twelfth grade our professors weren’t able to deal with present times, they just reached the end of XIX century or the half of XX century. It was like if our school had a sort of adversity for anything contemporary and whatever would be connected to it.

While in sixth grade, the only reference to our present time was a hour a week of Civics but not even a minute was about economics or any financial topic.

 

Today the same idea of knowledge cannot be defined without referring to at least one of these two subjects. The immediate result is our generation had to take care of itself regarding its own financial literacy.

 

Honestly I think humanities are important but I think the school did not provide me with even the basic tools to handle my finances.

 

Until I was 18 I studied everything I was supposed to but nobody taught me how to manage my assets, despite being it necessary for every individual in order to survive. Eventually during my University years and after that, during my post-graduate programs, I had the chance to study in depth, some crucial aspects of our economic system.

However even while attending these schools I haven’t been taught how to build my fortune or how to make it grow.

The course of studies I have pursued would perfectly fit for someone whose career goal is working in the government or as a professional but not as a businessman.

 

In fact I was never taught how to become a businessman and when I say “businessman” I mean someone whose skills and knowledge allow him to invest his own money in any industry in order to make a profit.

Luigi Foscale

 

Were the Baby Boomers right?

 

Unfortunately the coming generation will have to pay the many mistakes done by those who run the country today and by those who has run it in the past.

 

When I was a child the political and the financial establishments tried to convince me the right way to see things was theirs. In the meanwhile in our school, the teaching formula did not provide the student’s interaction nor an active participation of the students to the educational process. On the contrary we only had to listen and to learn what’s been made up for us.

On balance the figures show that what the financial big wigs claimed as the holy truth, it turned out to be a total failure. Besides, the educational system is now considering as absolutely necessary the student’s feedback.

 

Today in the most advanced education programs the students are asked to rate their teachers in a sort of evaluation scheme.

This can be considered as weird in an old and stuck education system but that’s exactly what’s happening now. Indeed if we are in this world crisis the reason is the failure of the old financial system and the lack of a basic economic education at all levels.

When you become an adult, you need to deal with all sort of things like a bank account, the interest rate, buying a home, the rent. Anyone sooner or later will have to deal with a lawyer. It’s my personal wish to provide everyone the necessary tools to understand what’s going on and to train your eye to be critical.

 

This blog’s mission is to help you becoming financially free because if you still rely on government and those who run it, you re not going to sleep well.

You re the only one who can provide yourself your own economic freedom.

 

So even if the fact that the crisis is lying over our shoulders is not fair, everyone of us should be able to take care of him/herself and start building her/his own wealth.

Luigi Foscale

 

Ma i nostri genitori avevano veramente ragione?

Purtroppo, la generazione che verrà sarà costretta a pagare per i tanti errori fatti da chi ha governato in questi anni e negli anni precedenti.

Quando ero bambino, la classe dirigente e quella finanziaria, cercavano di convincermi che il modo corretto di vedere le cose, era solo il loro. In parallelo, il metodo scolastico, non prevedeva l’interazione e la partecipazione attiva degli studenti al processo formativo.  Noi dovevamo solo ascoltare ed imparare quello che era stato stabilito per noi.

Ora, a conti fatti, i numeri dimostrano che quello che i grandi finanzieri asserivano come unica verità, si è dimostrato un totale fallimento. Inoltre il sistema educativo, inizia a considerare come necessario, il feedback degli studenti. Nei centri di formazione più avanzati, oggi sono gli studenti, o meglio, la classe, a dare i voti ai professori. Questo può sembrare strano in sistemi educativi statici, ma è quello che sta succedendo.

Infatti,  il motivo per cui ci troviamo in questa crisi mondiale, è il fallimento dell’ormai superato sistema finanziario, e la mancanza di una istruzione economica di base per tutti. 

Quando si diventa adulti, bisogna cimentarsi con cose quali il conto corrente, il tasso d’interesse, l’acquisto di una casa o l’affitto. Chiunque prima o poi dovrà avere a che fare con un avvocato….

È mio desidero quindi, fornire a tutti, gli strumenti necessari per capire cosa sta succedendo e per allenare l’occhio, ad essere critico. Questo Blog ha la Mission di aiutarti a diventare libero finanziariamente perché, se conti ancora sugli Stati e chi li governa, hai ben poco da stare tranquillo.

 Sei solo tu, che puoi provvedere alla tua tranquillità economica.

Quindi, anche se non è giusto che il peso della crisi sia sulle nostre spalle, è invece opportuno che ognuno di noi inizi a provvedere a se stesso, creandosi la propria ricchezza.

Luigi Foscale

The Best investment during High Inflation periods

In a period of high inflation, the purchasing power decreases day by day.

 

So it is absolutely crucial to invest in something that is inflation-protected, while at the same time it must be something that allows you to make money during high inflation periods. Be aware that if you invested in bonds you expose your assets to the risk of being decimated in their value. While if you invest in shares you expose yourself to great losses because of their high volatility.

 

So we advise you to link yourself to stores of value, like real estate, which allows you to have both cash flow in the short term than having an asset that grows with the inflation rate.

 

If you are interested in knowing what’s the best Rental Property opportunity please contact me!

 

Luigi Foscale

The need for a financial literacy

 

If you complain about the crisis, it means you are focusing on the negative side of the crisis.

If you are in debt or you underwent a decrease in sales, you are in serious trouble. Unfortunately government officials are doing nothing to put yourself in the condition to prosper. The government is not able to help you or maybe there’s not a real interest in doing so.

 

Taking care of yourself it’s up to you. If you don’t have any cash-asset you better start thinking of how to create one, because from now on, you will always receive less support from government.

If in fact, you have some asset, you have excellent opportunities. In any case, you should be very careful because if you take the wrong step you are at risk to lose everything.

 

So my advice is to get a financial literacy.

Luigi Foscale

La necessità è l'istruzione finanziaria

Se ti lamenti per la crisi, significa che ti stai focalizzando sul lato negativo della crisi. Se hai dei debiti, o se il tuo fatturato è in declino, oggi, puoi avere dei seri problemi. E, purtroppo, ma è brutto da dirsi, i governanti, stanno facendo veramente poco per metterti nelle condizioni di prosperare. Il sistema statale, non è in grado di aiutarti. O forse, semplicemente, non c'è interesse a farlo.

Quindi sei tu che devi provvedere a te stesso.

Se non hai un patrimonio, ti conviene al più presto iniziare a crearlo, perchè lo Stato provvederà a te sempre di meno. È importante iniziare con un primo passo, anche se piccolo.

Se, invece, hai un patrimonio, oggi, puoi trovare delle ottime opportunità. Ma devi stare molto attento, perchè se sbagli, rischi di perdere tutto.

Quindi il mio consiglio è di istruirti finanziariamente.

Luigi Foscale

Is running into debts a dangerous practice today?

It only depends on what you do with your debts.

 

Debts may lead you to bankruptcy but they can also make you rich.

 

Only through a decent Financial Literacy you may be able to decide (as the ball is always in your hands) what to do.

 

First of all it is absolutely crucial to know how debt may help yourself. If you buy a car, a tv set or you are refinancing to buy new furniture, you run into debts to buy goods that will lower their value with time. This is a road that will certainly drain your resources..

 

On the other hand you can decide to purchase goods that are going to increase their value and that will eventually provide you with a stable income. If this is the case, debts could make you richer.

 

I use the conditional mood because you have to weigh the pros and cons: interest rate, Return on Investment and the tax regulation. Indeed if you overborrow that’s a risk too. In order to know if you are on the right track, my advice is to check your cash flow.

 

Indeed it’s a steady cash flow that ensures your debt repayment.

 

When you think about refinancing, like through a home equity line, think first to the possible cash flow eventually coming from that debt. 

 

Luigi Foscale

The Retire Rich literacy is absolutely crucial

 

This blog will keep you up-to date with the hottest market-strategies.

 

The majority of people are not able to spot a good advice from a bad one. So it’s absolutely imperative knowing the business basics. My blog has the ambition to teach you how to Think Rich, a way of thinking maybe you never experienced before and if you did, well you can still use my creative inputs for additional opportunities or new perspectives.

 

In our schools they teach you all kind of stuff (and that’s fine) however they don’t teach you how to manage your assets. I think it is necessary to provide a smattering on interest rates, bank op-costs, incomes and taxes. Doing so you will be able to teach your fellow citizens how to save their own money as everyone of us once we are adult we have to deal with banks, taxes, etc.

 

So you can create yourself an alternative space, an information source where you can learn the strategies on how to build your own fortune and how to grow your money.

Luigi Foscale

È fondamentale l’istruzione Retire Rich

Questo Blog ti tiene aggiornato con le più innovative strategie di mercato.

La maggior parte delle persone non sanno riconoscere un buon consiglio da uno cattivo. Quindi è fondamentale sapere i fondamentali del business.

Questo è un Blog che ti insegna a pensare. Come, magari, non hai mai fatto prima.

Nelle scuole dell’obbligo si insegna di tutto (e questo va bene), tuttavia non si insegna come gestire il patrimonio. Credo che sia necessario dare una infarinatura su cosa siano gli interessi, i costi bancari, le rendite e le tasse. Facendo così si istruisce la popolazione sul risparmio perché tutti, una volta adulti devono fare i conti con le banche, tasse etc.

Quindi, puoi crearti uno spazio dove apprendere le strategie per costruirti un patrimonio e come farlo crescere.

Capirai bene, che per me è un onore il fatto che ogni giorno tu mi segui, quindi troverai le risposte alle domande che ti eri posto.

Luigi Foscale

Do you want to profit from the Crisis?

 

Whether it is true that many at this time are losing their savings, it’s also true that others are making profits from it. For example the banks now are making a fortune and if you want to make it too, you have to enter their Ballpark and then you want to make your home run.

 

In order to get into their game, you have to catch on the activity of a Commercial Bank. The bank buys money from those who deposit the cash on their checking and savings account, then the bank re-sell it to those who ask them for the money.

 

The gap between the two transactions is the bank’s profit.

 

If you multiply it for thousands of daily operations you can easily make yourself a picture on how much do they make from the banking daily business.

 

Today you can enter their ballpark and play the same game they play. And it’s so easy. When you catch on it, you can really make buku-bucks.

 

You buy a property with a mortgage and you find the way to pay the mortgage installment with the rent. This way you re the estate’s owner but it’s your tenant who is paying it for you. You just have to make sure the rent’s amount is higher than your mortgage’s installment rate.

 

If it happens you have a certain amount of cash you can also buy properties without a mortgage.

 

If you manage to enter this ballpark, you can hit the Retire Rich state very quickly.

Luigi Foscale

L'istruzione finanziaria

Quanto costa istruirsi finanziariamente? 

 In alcuni casi può costare istruirsi finanziariamente. Ci sono corsi, libri, scuole di affari ed altre pubblicazioni; tutte, rigorosamente, a pagamento. Anche l’ignoranza finanziaria può costare cara, e, se si considerano i patrimoni, le cifre possono essere importanti.

Desidero che tu sappia che la mission del Blog Retire Rich è quella di offrire la possibilità di accedere alle più avanzate idee economiche, e desidero farlo gratuitamente.

Ma la cosa più importante è che, se lo seguirai ogni giorno, riuscirai ad avere le basi per capire cosa sta succedendo, e per gestirti da solo il patrimonio. Quando saprai come gestire il tuo patrimonio, potrai anche decidere di farlo gestire da altri, ma saprai, comunque, come controllarli.

Le informazioni e le formule che puoi apprendere mentre leggi i post, non solo sono le più innovative, ma anche, rappresentano la risposta immediata alla crisi.

Luigi Foscale

Financial Literacy

How much money does a Financial Education cost? 

In some case a Financial Education could be expensive. There are courses, Bibles, Business Schools, publications, all very pricey. On the other side even financial illiteracy can be expensive, as if we consider what’s at stake (your assets) the figures might be of some relevance. 

I would like you to know the Retire Rich Blog’s mission is to offer you the chance to access the most edgy ideas about real economy and what’s even better is that it’s completely free! 

If you check my blog day by day you ll be able to get some Financial tips that might be helpful to know what’s really going on in today’s complex economy. 

You ll be able to manage your assets by yourself without relying on anyone but yourself. 

Once you are able to manage your assets, you could also decide to let others do it for you but still you will be able to supervise their management through your own financial judgement. 

The information and the formulas you can learn through the reading of my posts are not only the hottest tips in town but they also represent the immediate answer to the present crisis. 

Luigi Foscale

How to manage your money. Lesson 1

Learn how to manage your money!

 

Do you remember Subprime Crisis? How so many people could have lost their money? The answer is easy: some Brokers purchased huge amounts of these toxic investments for their customer's portfolios. Eventually those assets did default.

 

If you don’t know how to manage your assets and you don’t check out your broker’s management, you may find yourself at the mercy of a non professional operator or worse you may be at risk somebody will sell you some junk stocks.

 

Furthermore if you do know the basics, you can manage your own assets yourself or you can choose to hire an investment adviser, but always know what you’re investing in. This way your adviser will learn you re not a rookie he can take to the cleaner’s.

 

Luigi Foscale

Banks stopped Banking

 

Today the public opinion bashes banks because they use their money to buy public debt of their own country instead of borrowing it to those in need. In practice, even if it sounds weird, banks stopped banking.

The bank’s job is simple: they buy money from you (when you deposit your cash on your account). Then, they sell you the money when you are insolvent (mortgage rates, credit cards, lease). The difference between that little amount that the bank puts in your account and the enormous amount you pay as interest rate it’s indeed the bank’s profit. This was the routine banking procedure. While doing so they used to provide a service to the customers who requested it.

 

In the past twenty years the bank that did not make enough profits from ordinary operations they ventured in high-risk operations (derivative finance), which provided immediate and greater returns.

 

The evidence these were risky investments has been confirmed by the present-time crisis.

Now the problem is very serious: real economy stopped growing.

 

Those who needed liquidity were not able to get it because banks already spent it. And those who pay the price of it are the young couples who cannot afford a mortgage, the business owner who cannot enlarge its store and the companies whose scarce liquidity prevented them to invest and stay competitive in the market.  

And the Real Economy engine unfortunately but obviously stopped working.

Luigi Foscale