Category Archives: Investing

3 Celebreties Who Went Bankrupt – And The Lessons You Can Learn

Michael-JacksonThere is sometimes the perception that ‘celebs’ have got it all sorted.  Well – this is few and far between.  Whilst I am going to give you just 3 examples below – I realise that you have probably heard some of this before.  And of course the ‘countless’ stories of those who have won the ‘Lotto only to blow their millions (and indeed their health and relationships) in a very short time period.

Read what happened – but most importantly learn from the lessons I’ve provided.

1. Donald Trump

“The Donald” and his different corporate entities have filed for bankruptcy four times: in 1991, 1992, 2004, and 2009.  Each instance was a corporate and not a personal bankruptcy, which is often described as being the “restructuring of debt” and not going broke.  But the fact remains that businesses associated with his name have needed financial assistance four times in the past two decades.

In exchange for getting some of these bankruptcies approved, Trump had to give up Trump Airlines, a mega-yacht, and an almost 50% stake in the Grand Hyatt Hotel.  But even after all those filings, Trump currently has an estimated fortune greater than $2.7 billion, as he keeps his personal money separate from his business money.

Your Takeaway Lesson: If you are running a business, creating lifestyle options through assets and investing, you may want to establish yourself as a corporation.  This way you can separate business funds from personal funds, and also limit your liability should your business start to falter.

2. Michael Jackson

Even before his death in 2009, the King of Pop was recognised as the most successful entertainer of all time by the “Guinness Book of World Records.”  But in 2007, Jackson filed for bankruptcy after not being able to pay back a $25 million loan on his home, Neverland Ranch.

Neverland, purchased in 1988 for the price of $17 million, had grounds containing a zoo, an amusement park, a movie theater, a railroad line, helicopter pads, and its own fire department. It reportedly cost more than $10 million dollars a year to maintain, and Jackson was well-known for his shopping sprees, including a $6 million trip recorded for the documentary “Living With Michael Jackson.”

Even after signing a nearly $1 billion recording contract in 1991 and selling more than 750 million records, Jackson had just 0.05% of his net worth in accessible cash, which left him no option but to file for bankruptcy.

Your Takeaway Lesson: No matter your income or personal net worth, you cannot overextend yourself by taking on more debt or financing a grander lifestyle than you can afford.

3. Gary Coleman

Star of the TV program “Diff’rent Strokes,” Gary Coleman had to file for bankruptcy in 1999 after his parents and manager spent the majority of his money.  Coleman had amassed $8 million in trust funds during his career as a young actor, but eventually discovered he had just $200,000 in cash to his own name.

His ongoing medical issues did not help his financial situation either, and Coleman died in 2010 after many years of financial difficulties.

Your Takeaway Lesson:  It’s not what you make – but what you keep.  It’s a dangerous gamble to not be educated or involved in managing your finances.  

How Does This Happen?

The Number #1 Reason These Celebrities (and everyday people) commonly file for bankruptcy:

Lack of a Financial Education

Often, when you go from having nothing to having everything, a financial education is not part of the package. Learning how to save, budget, and invest can take years, and if you’ve never had substantial money before, you may never have learned these essential financial management skills. When handed huge checks to cash, many celebs go out and buy the biggest house and fastest car they can find, rather than learning how to properly handle their money.

Don’t Let This Me You.  It’s Worth Checking That You Do ‘Have All Your Finances In Order’.  I Promise To Give Your Finance & Investing Situation the ‘Once Over’ For FREE.

CLICK HERE TO BOOK IN ONE OF SIX AVAILABE POSITIONS FOR A LIVE CALL AT A TIME THAT SUITS YOU

Investing must be rational; If you don’t understand it – Do It Anyway

Have I got your attention.  The title is close – and I want to explain in some more detail exactly what I mean.

Whilst ‘knowing what you are doing’ may sound pretty obvious, have you ever invested (or made another non-finance based decision) where you didn’t fully understand what was happening?

I know I have.

I’m not saying you need to understand the intricate DETAILS of every decision you make.  But you really should understand the following:

  1. What is the end-state or result I want to experience from this investment.
  2. What is the preferred scenario or outcome?
  3. What is the least preferred or worse case scenario?  How can I mitigate this?  Am I still OK with this.
  4. What other options are out there?

I don’t believe the saying of “If you doesn’t understand something, don’t invest in it.”  But rather:

Because there are so many variables that can help you out.  Some of my investments achieve great cashflow results.  Sometimes up to nearly 20%pa.  I used a variety of investment types to achieve that.

And I leverage from specialists in other fields.  Now I don’t understand the DETAILS in how they assess and position certain deals.  But I DO understand the process, the pros and cons.

I continually measure and track the results and therefore I get a better and better understanding.

If you wait to be an expert in everything before you acted (especially in the world of investing) then you may be waiting a very long time.

The BEST results I’ve achieved has been receiving guidance from people who knew more than me.  People who had got ‘runs on the board’ and ‘walked their talk’.  And sometimes I just needed a ‘sounding board’ of a Mentor to ensure I was still on track.

How To Invest On A Single Income

This may be relevant to some of you wanting to know how you can invest on a single income.

Maybe you are dropping from two incomes to one.  Maybe you are changing jobs soon and only have the one income for a period of time.

Or maybe…it’s just you!!  And you need to understand what your options are.  Hope this helps.

If you have any questions at all – just click on this link to book a time for a call and we can work on a solution.

Do You Measure Investment Return In Percentage or Dollars?

dollars v percentge

Hey the new, revised LIFETIME online investment course is available.  And congrats to those who are already getting into it and making HUGE financial changes.  It’s an excellent way to get a good grip on your current financial and investment position.

Start articulating what you want, what the results are.  You’ll get to go through different types of investment strategies, different types of investment opportunities, what they look like, how you measure them and then make sure you’re set up to getting great results.

But as a bit of a teaser as to one of the key measurement tools that I want to share with you.

this is to do with percentage versus dollars.

And what do I mean by that?  I mean that when we measure our financial returns, you can measure it essentially in two different ways.  You measure it by actual dollars as in what is the thousands or hundreds of dollars or tens of thousands or hundreds of thousands dollars profit that you’ve made.  The same happens with loss.

Or you can measure it as a percentage.  Has it increased by 1.2%?  Has it increased by 5%?  Has it decreased by 4%? And here’s the big point of differentiation I want you to be very aware of.

And it’s a bit of a psychological shift.  So many people when they measure loss, they measure loss in dollar terms.  When people talk about profit, they measure it in percentage terms.

I would suggest that you would need to do both in both scenarios.  And what happens is as human beings we’re far more focused around our fear of loss, around our fear of missing out a fear of pain, of making mistakes.  So when we look at any financial losses we make, we don’t say “Oh, I’ve lost 4.7 percent” .  Its “I’ve lost $47,000 dollars”.

Because $47,000 dollars is a real tangible number.  Its something you can understand but also something that you can definitely talk to other people about.  You can put it in context because $47,000 dollars represents something.  $47,000 dollars represents your new car, $47,000 dollars represents a substantial decrease in your home loan.  $47,000 dollars can represent many many years of education costs for your children.  $47,000 dollars is real, its tangible, its measurable.

But if you said to someone else “Hey, I’ve lost 4.7% ”  4.7% of what?  Now its just a percentage.  Yet often for so many investors that I talk with, they share with me that much of their investment decisions are based on percentage return.  “I like this one because it gives me 4.7%”.  “This one gives me 5.5%”. “I think I’ll get a better return over here because I’m making 2.3% over here, whereas I’m making 13% over there”.

But again, how about you refer to this in exact dollar amounts.

Because when you actually talk in dollar terms, it’s easier to really grasp the difference between $550 dollars and $900 dollars.  Therefore are you changing investment decisions to increase your return by a couple of hundred bucks.  To determine if this is important I suggest you need to make sure that you’re measuring profit in real tangible numbers.

Then you can understand, as part of your goal setting, how those actual dollar figures link back into the results that you want.  That is why using things like the “Reverse Investment Analysis Method” (taught in the Online Program) is so powerful, because it allows you to absolutely directly align your goals and your results with dollar values and not just with percentage.

So my parting message for you is don’t get caught up in analysing everything with percentages only.  Or in dollar terms only.

If you’re going to use dollar terms for losses, make sure you use percentages as well.  It helps you measure and articulate and compare different types of investments.  And when you look at profits, make sure you don’t just measure in percentage.  But you also talk in specific, measurable and definable dollar amounts.

The Biggest Demographic Change In History – Are You Prepared?

OK Peeps – this is a very important post.  And I IMPLORE YOU to please take 3 minutes to read it.

There are some MASSIVE changes coming through the economic world.  Yep – this will impact little ‘ole Australia as well.  So you NEED to be prepared.  Well you don’t have to be prepared.  You can continue in ignorant bliss if you like.  But if not – read on.

We are currently living through the biggest demographic change in history – which will hurt economic growth for generations.  And we will need to adjust.  YOU will need to adjust.

For the first time in human history, we are arriving at “peak youth”.  This is where the number of people over the age of 30 outnumber those who are under the age of 30.  And the number of people who are 65 or older are likely going to outnumber children under 5 years of age by 2020.

Screen Shot 2016-08-02 at 4.28.52 PM

This has never before happened in history.

So what does this mean?  Well quite simply there are less ‘working’ people – which means less taxes for the government than there are / will be non-working people.

This will make governmental support over the coming decades near impossible.  Therefore you must raise your FINANCIAL IQ and get help to ensure YOU ARE PREPARED.

This global shift in age demographics will affect GDP (Gross Domestic Product) growth in countries all over the world.  That’s because the global workforce will shrink as a higher percentage of the population is past working age.  Fewer workers is a major cause of lower productivity and slower GDP growth. 

**  Now on a side note – this is just PART of the reason why Australia is reviewing the age for compulsory retirement and also options to review the use of Superannuation funds.  This will be clearer later.

Global life expectancy is expected to reach 77.1 years by 2050, compared with 48 years in 1950.  That means over a period of 100 years, life expectancy will have climbed by 29 years, or 60 percent.  The global population of those 60+ years is expected to grow to 2.1 billion, compared with 901 million today.  That is about a 130% increase.  More than DOUBLE.

One way to look at the impact this will have on global economies is through something called a support ratio.  A country’s support ratio is the ratio of its working age population (15-64 years) to its old-age population (65+ years).  It reflects how many workers “support” older people – via an economy’s social support system. 

**  Again – another prime example why you need to look after and take control of your OWN financial support system.  ‘Cause I can guarantee that what is around now in the form of government sponsored social systems will NOT be around in 20, or even 10 years time.

The global support ratio has steadily fallen, from 12:1 in 1950, to 8:1 in 2013.  In developed economies it stood at 4:1 in 2013.  Meanwhile, fewer new workers are entering the workforce.   Simply because there is not the younger people around to do so anymore.  The support ratio in developed economies is expected to fall to just 2:1 by 2050.

Management consultants McKinsey & Company suggest that average global economic growth will fall to 2.1 percent over the next 50 years, compared to 3.5 percent in the previous 50 years.

During that time (the previous 50 years), growth in productivity and labour contributed roughly equally to economic growth.  But they forecast that labour growth will nearly vanish as a source of economic growth, as shown in the figure below.Screen Shot 2016-08-02 at 4.29.06 PM

So what does this mean?

Here are a few points that I take from these startling facts:

a. There will be more ‘baby-boomers’ (people aged 60+) over the next 2 decades than there are aged 5 years or younger.  This means there will be a significantly reduced ‘work-force’ for developing countries to tax and derive income to provide government sponsored social support programs.

b. It is more apparent now and will increasingly be so, that every individual MUST expand their financial knowledge and take control of their own financial future.  The way it has been done in the past, by your parents and your parent’s parents are now NULL and VOID.

c. Failure to develop an investing mindset combined with an investment strategy (different from a traditional financial plan) will lead you to suffer from what the globe will throw at you.

d. Finally, the times of good and higher level ‘growth’ in traditional assets will slow.  And this will be normal.  Hence you may want to consider alternate options, get educated and embrace strategic decisions and ignore the desire for the ‘fast-buck’.

Is there an answer?  Sure there is.

  1. Develop Your Own, Personalised Finance & Investment Strategy.  If You Don’t Have One (or Know How To Even Start) Then Team Up With Someone Who Can Help You.  The cost to do nothing is 100x greater.
  2. If you are basing your future ‘profits’ from equity or growth alone – maybe adjust your targets slightly.  ALSO have an alternate plan or understand how a slow-down may affect you.
  3. Finally – look at short-term (say 2-4 year) measures for alternate income generation.  As inflation will slow along with growth, cash returns will be at an all-time low.  Most are currently sub-3%pa.  Expect this to be below 2% – that means in the 1%’s per annum.  You need something that can get you at least 8-10%pa or more.

There are plenty of options at www.DuncanBuchanan.com where you can avoid these problems and set yourself up for financial & lifestyle success.  Or just call / email and ask.  Never hurt anyone by just asking eh!

It’s Completely Up To You!!

Lost Opportunity Cost

lost opportunity costHey Guys.  I need to talk to you about “Lost Opportunity Cost”.  If you’ve already got an investment in shares, property, business or a combination of both, you really have to listen to this message.  It is critical to your success in the investing world.

So what is lost opportunity cost?  For a lot of you out there and this is the  fact.  90% of investments, so that’s 9 out of 10 investments are made by an individual or by an entity and then forgotten about.  Ok, here me now.

That means that people have gone in and made and investment and then have kind of just forgotten about it in any detail.  They just put it to one side and hoping that magically, they’re going to get an email or a cheque is going to land in their letter box.

Lost opportunity cost is about not understanding how you can optimise the opportunity that you have and you lose or you miss out on future opportunities.

And this is commonplace where you’ve gone and bought an investment.  It could be a share portfolio, you could have one or two real estate investments, it could be some bonds, it could be a term deposit.  It could be a business that you are not directly involved with and what happens is you just put it on the back burner.

You are thinking to yourself – “You know what?  It’s just sitting there.   It’s not causing me any problems.  And it’s not having a real negative impact on my lifestyle.  So I’ll let it go and just let it do its thing.”  

OMG!!!

There are opportunities that you are missing out on and it’s because you’re not tracking your investments.  It’s because you’re not measuring what’s happening with your investment.  Do not be the 9 out of 10 investors who take on something, and it could be something as simple as some bonds or a term deposit, it could be a piece of real estate where you believe that:

“As long as it’s not costing me anything.  It’s OK”

Here’s the rub people –

Whether it is costing you or not is irrelevant – If it’s not making you anything – get rid of it!!

How do you know if your investment is not costing you anything.  Because if you know whether or not it is costing you – then you should know whether or your investment is benefitting you.

Unless you know whether it is growing in value or unless you know whether the ROI is increasing, it is a wasted investment.  And you may as well take all your cash out and put it in a shoebox and stick it under your bed. Ok.

Inflation will probably do better than some of the investments that some of you guys have on the go. So it’s something that I’m going to speak a lot about over the coming weeks.

One of the absolute key problems that current investors face is they go and invest in stuff and don’t properly track or measure the performance of that investment.  And then when it’s not working are too scared to change anything.

Now Imagine this.  You have an investment – but question it’s validity.  You are unsure whether you should keep it or move it on.  If you cannot decide – it’s either because you are too emotionally attached to the asset OR you have some limiting money beliefs that are blocking your ‘good judgement’ skills.

So Imagine that one night – whilst you are sleeping – your investment in question was replaced with a pile of dollar bills on the floor of your bedroom.  To the amount that your investment is worth on the current market.  So if you had some shares with $55,000 – instead of the shares you now have a pile of dollar bills worth $55,000.

You wake up.  Now!!  You get to make this decision.  Do you:

  1.  Buy the investment you originally had for the amount of money sitting on your floor.  Because you’ve weighed up all your options and you believe that – yes, it IS what you need.
  2.  You realise that the money on your floor can be used for a better or different investment.

This little mental activity is a wonderful way for you to remove yourself from the situation and make a rational decision as if you are ‘starting from scratch’.

So make sure that you understand about lost opportunity cost.  And have you seen the updated FREE Training Videos yet??

JUST USE THIS LINK TO CHECK THEM OUT

It will cost you nothing other than your time.  Or even just drop me and email and say “Duncan I’ve got these assets, it’s kind of doing this, do you think I should keep it? What do you suggest is happening in the world? “And I give you whatever options I can.  So crew take it easy.

A Penny Saved Is NOT A Penny Earned

Dollar Saved Dollar EarnedAs a continuation of our Money Mythbuster series here is another great saying:

“A Penny Saved Is A Penny Earned”.

So what does that actually mean?  Firstly let’s translate this into today speak with Dollars.  “A Dollar Saved Is A Dollar Earned”.

Right – where did that first dollar come from?  Is this the old ‘chicken Vs the egg’ concept??  NOPE!!  You needed to earn the dollar first.  You can’t save something unless you first earn it.

So let’s be clear now.  Firstly we need to earn that Dollar.  Now – how to do that is a different topic to discuss another time.

Now we have earned our dollar.  Now to the ‘saved’ bit.  If we save the dollar and that’s it – then fast forward say 10 years.  Hang on – let’s go forward just 5 years.  In 5 years time what is that dollar worth?  Probably about the same.  But also maybe not.

If you had earned say $100.  Then in 5 years time would that $100 buy you the same thing / product or experience as it did 5 years earlier??  Consider this.  Are there some things today that are worth MORE than they were 5 years ago?

Sure there are – and also some that cost less.

The challenge most people have is once they have earned that dollar – they simply want to save it.  Or more correctly not ‘use it’.

One of our Money Mindset lessons (for those who have enjoyed that) we showed how saving or ‘hoarding’ our money is actually detrimental to not only your ongoing lifestyle but also to your finances.

Once you’ve earned that dollar (or that $100 or $100,000) then consider doing something with it.  You can either:

a.   Spend it on an experience that you know you will enjoy and provide you with amazing memories

b.   Gift it to someone else so they can enjoy their own experience (whatever that may be)

c.   Invest it so that the returns from those ‘Earned Dollars’ can be used for either of the previous examples.  And then repeated over and over again.  Oh – and you STILL KEEP the initial dollars earned.

So what is Duncan trying to say here?  What I am trying to highlight is for us to understand that a dollar saved is not a dollar earned.

A dollar earned and used wisely has the ability to achieve the same as many more dollars ‘saved’.  You can reach out and support so many more people.

You can enjoy the experiences that you feel is fulfilling.

And you can REPEAT the process over and over again.

I don’t know how to make money… I don’t even know where to start

wheredoistartWhilst this may in your mind be a very true and valid thought – please understand it is just that.  A THOUGHT!

This is not really a money myth, but rather an excuse. (WHOA…did I just say that)

Now “Hold On” I hear you say.  “If I knew how to do better with my investments then I would”.  Well, my question simply is “Then why aren’t you?”

This is where there is a direct link between what you are naturally good at and what you want from your lifestyle. 

What you actually crave Versus the types of investments you are making and also how you are managing your finances…your money.

Not knowing the next step is NORMAL people.  It’s a completely normal experience.  What separates the good investors from the not-so-good investors are the ones that seek out education and assistance so they can find out what the next step is.

What is good for your neighbour, your friends or your parents does not mean it’s good for you.

Once you get a plan and you can LINK your investment plan back to enjoyable experiences then you will be able have the experiences you deserve.

All of these challenging mindsets come from two main problems:

a. Not understanding money and how it works.

b. Having subconscious negative associations with the idea of money.

Whether you’re struggling with one, or both of these, you’re going to have a hard time with money til you remediate the mindset.

Just like developing any new skill or getting better at something you are already doing, you’ve got to take the time to understand investing, money and finances so that you can create better positive associations around it.

Once you are better educated – you will make better decisions.  This is different to just ‘knowing more stuff’.  That alone will give you stuff all.

Information is not power.  It’s cluttered and irrelevant until you do something with it.  Until you are EDUCATED extra information will simply bog you down and over-whelm you.

Maybe a simple first step is to learn HOW to align your personal lifestyle goals with your investment goals.

Learn what the different types of investments are and which ones are suited to you.

And discover the effective tools to then track and measure your investment results. 

This is exactly what you benefit from in the 6 Week Online Training course.  CLICK HERE TO LEARN MORE.

Unlimited access to all the training videos, downloads and resources that you can access over and over again. 

And really get educated about developing a STRATEGY that is flexible and suited to your personal needs.

Click HERE to check it out.

How To Select the ‘Right’ Versus the ‘Best’ Investment

which wayAs a Business Owner & Entrepreneur…And as a Father of Two and Loving Husband I MUST ensure my investment portfolio is RIGHT for my family.

RIGHT V’s BEST

As a Successful Investment Strategist I am often asked for my opinion on different types of ‘deals’.

“Hey Duncan, is this the BEST investment for me?”

“What Do You Think Of This Option? Are There BETTER options Out There?”

RIGHT IS MORE IMPORTANT THAN BEST

Because it’s about aligning your personal goals — current and future — with your investment strategy. Therefore your investments must SUPPORT your LIFESTYLE. Too many investor select product or assets based on attempting to analyse the investment as a ‘stand-alone’ item. It’s not!!

It will affect your everyday lifestyle if you muck it up.

Understand which is the RIGHT investment for you and WHY you want it. This is more important than trying to find the BEST.

Because BEST is always about ‘competing’ with something else. To be BEST than something has to be worse — or at least LESS THAN BEST.

So Remember — Select what is RIGHT for you — rather than try and pick the next best thing. The Right investment will give your results, meet your goals and be Authentic with your lifestyle.

Give it a go 🙂

The Investing Roller Coaster – When To Hold On & When To Cheer

Have you ever felt that your financial & investing journey was sometimes like riding a roller coaster?

There are plenty of ups and downs.  Twists and turns.  And sometimes you may feel you are upside down!!Roller-Coaster Picture

Your investing journey is absolutely like this.  This is one of the BEST ANALOGIES I can think of.  So why is our investing & financial journey SO MUCH like a roller coaster.

Well I guess it starts with the fact that we don’t live on a roller coaster.  We don’t even have one in our home (unless you are very special).  It’s something that’s ‘out there’ that we have to plan for to experience.

Just like with your finances – to change your experience you need to get outside the house.  You need to travel to a place or a person that has built something that you want to experience.  And get a feel for it.

Now, have you had the experience of being at the roller coast and just not wanting to get on board?  You watch other people getting on.  And coming back.  Some with huge grins – others with faces of fear.  You are doubtful and uncertain.  You don’t know if you’d enjoy it or not.  And some people never even give themselves the chance.  If you went on and didn’t like it – guess what?  You don’t need to do it again.  But if you do like it – go again!!!

Then you get on.  The journey starts slow and the start is all uphill.  You are not on your own but getting pushed and pulled along until you get to the top.

And whilst it’s been a slow, uphill journey you reach the top.  And what a view.  You could just happily stay up here – no dramas at all.  And then the journey continues.  You gather momentum and dooowwwnn you go.  Getting faster and faster.

Before you know it you are upside down.  Looking backwards to where you were and wondering which way is up.  You get to the bottom and the upside down you go again.  Maybe there’s a twist or two in there just to get you really confused.

You speed up and slow down.  It’s easy to get disorientated and not know which way is forwards and backwards.  You can’t see where you started.  And certainly can’t see the end.  But you are still heading forwards.

roller-coasterAs you look around you there are other people with you – on their financial & investing journey.  Some of them are screaming with delight.  Others are fearful and just want it all to stop.

Some people are hanging on for dear life.  Others have their arms outstretched and fully embracing the new sensations and experiences.  Some other people are doing both – hanging on one second, letting go the next.  Unsure one minute and just loving the journey the next.

Then the roller coaster slows down.  And it can slow suddenly.  You stop.  WHAT!?!?  That’s it.

Time to get off the ride.  Other people want a turn.

Your knees are shaking.  Your heart is pounding.  But you did it.

And for the next few hours (days, months or years) you will ALWAYS remember that journey.  You’ve experienced it and can enjoy it as many times as you like.  The great thing is you can close your eyes and relive it whenever you want.

Your financial & investing journey never fully stops.  It is slow to start and seemingly uphill.  But after time gathers it’s own momentum.  Sure – there are twists and turns.  Sometimes you may be upside down and wanting to get off.

But if you hang on, and follow the course – your experience will be with you forever.  And you can share this with other people.  Let the rails of experience guide you.

Have fun – and remember that it is not the ride that was important.  It’s the experience, the feeling of the ride and who you have been able to share it with.  The memories you’ve created.

Your roller coaster is only scary if you WANT it to be.

Enjoy the ride.  Be guided so you know what to expect in advance.  And remember why you are investing in the first place.