Monday, November 24, 2008

Finding Your Magic Investing Formula

People often ask me, "How do you find great investments? " My standard reply is, "You have to train your brain to see them. Great investments are all around you.

"I know that's not a very satisfying answer. Most people want something more specific and concrete. But my reply is as accurate as possible. If we could've seen all the great investments just in the past decade, we'd all be multi-billionaires.

Missing Out on Millions

There have never been more opportunities to become rich than in the last 10 years. And there'll be even more opportunities in the next 10. Let me explain. Like many investors, I didn't see the power of eBay almost a decade ago. If I had, I'd be a billionaire today. Nor did I see the power of YouTube, or Google, or MySpace. Being an old guy, my brain isn't trained to see investing opportunities in cyberspace. So I missed them.

Thirty years ago, when my business career was just starting at Xerox, I was introduced to a new type of computer. I wasn't tuned into computers at the time, so little did I know that I was looking at the early version of what was to become the Macintosh. So I also missed that billion-dollar opportunity, too. How many billion-dollar opportunities have I missed? Maybe millions.

If I've missed so many million- and billion-dollar opportunities, why am I writing articles and speaking worldwide about financial independence? That's a valid question, and the answer has to do with helping you find great investments.

Perseverance Pays Off

I took my first real estate investment course in 1974 in Honolulu. The cost was $385, and I believe it was two or three days long. Toward the end of the class, the instructor said something I've never forgotten: "Now you know the difference between good real estate investments and bad real estate investments. Now you all know what to look for.

"He paused and then added, "The problem is, most people will tell you such investments don't exist. Your friends will tell you so, and so will real estate agents." Truer words were never spoken. For the next few months, I went from real estate office to real estate office, looking for investments. As promised, the real estate agents told me what I was looking for didn't exist. My friends and co-workers at Xerox told me the same thing, and said I was either dreaming or smoking funny cigarettes.

Finally, in a small, obscure real estate office in downtown Waikiki, I met a scruffy little broker who said, "I have what you want." The next weekend I was on a plane to Maui, where he'd found an entire condominium development that was in foreclosure.

I purchased my first piece of investment real estate for $18,000, putting the $2,000 down payment on my credit card. The one-bedroom/ one-bath condo paid me a positive cash flow, even after all the expenses and mortgage payments. My investment career had begun. More important, I was training my brain to see what most people don't see. That $385 real estate course has made me millions of dollars over the years.

Keep an Open mind

Earlier this year, around tax time, I wrote an article, "Think Rich to Lower Your Taxes." It was about an investment strategy known as the "velocity of money," and how I use it to invest, make a lot of money, and then legally use the tax laws to minimize my own taxes. I suspected it would spark some controversy, and it did.

For a couple of weeks, I kept track of responses. Some of the less-complimentary comments reminded me of what those real estate agents and my friends at Xerox said to me back in 1974.

You see, our brains are either our greatest assets or our greatest liabilities. As I said, when it comes to investment opportunities in technology, my brain is a liability; I just don't get it. When it comes to investment opportunities in real estate, gold, oil, and silver I'm above average, but not great. And that's because I've trained my brain to see opportunities in those areas.

So, instead of criticizing the readers who were close-minded (or even mean-spirited) about my advice, I encourage them to keep an open mind and find their own way of seeing investments most people miss. That's how you get rich. People who refuse to open their minds to new strategies seldom become rich — which I guess is why there are more critics in the world than rich people.

Finding Your Magic Formula

One of the most important things my rich dad taught me was to never say, "I can't do it" or "I can't afford it." Those thoughts are self-limiting, and it's hard to find great investments when you're basing your behavior on limitations. In today's world, there are more investing opportunities than ever before. Why would anyone want limited financial results in an unlimited world?

One of the reasons I write about financial independence is so I can put forth ideas that challenge the way people think about investing. If you want the same old financial-planning dogma of "work hard, save money, live below your means, get out of debt, and invest in a well-diversified portfolio of mutual funds," then my philosophies are obviously not for you.

My job is to stimulate your thinking, inform you about why rich people get richer, and encourage you to find the magic financial formula that works for you. I found mine, and I want you to find yours.

- Robert Kiyosaki.

Friday, November 14, 2008

Global crisis to hit India more in 2009: World Economic Forum (WEF)

The global downturn will pressurise the Indian economy more next year and the government has to speed up reforms and boost investment to sustain high growth rates, a report said on Friday.

The report jointly prepared by World Economic Forum and Confederation of Indian Industry also said India could see a sharp outflow of capital, and a fall in share and asset prices due to the global financial crisis.

The report was released ahead of the annual India Economic Summit starting Nov. 16 in New Delhi, where top government officials are expected to interact with heads of global firms.

"India's dependence on capital flows to finance its current account deficit is a macroeconomic risk and the global crisis could generate a sharp increase in capital outflows and a reduction in the availability of finance," it said.

"Clearly, the global economic picture will be harsher next year and there will be greater pressures on Indian economy."

The global credit crisis has rattled Indian markets as foreign investors sold shares worth more than $12.5 billion so far this year while the rupee fell by more than 20 per cent.

"It (global crisis) could also weaken the balance sheets of the financial institutions, cause a further fall in share and asset prices, and challenge the macroeconomic situation due to shrinking global growth," WEF said.

Indian policymakers expect a moderation in economic growth to less than 8 per cent in the year to March 2009, compared with 9 per cent recorded in 2007/08 fiscal year.

Earlier this month, Prime Minister Manmohan Singh cautioned that the global financial crisis could be more severe and prolonged, and the government would take all necessary steps -- monetary and fiscal -- to protect growth.

"A tighter environment may also help speed reforms and encourage greater efficiency," WEF said, adding a great deal of political will and dialogue with different stakeholders would be required to take reforms forward.

"...India's growth is still strong relative to other economies and its growth story will continue to be one that will unfold over decades rather than years," it added.

About 20 thousand workers may face axe in Tirupur

With an anticipated 30% decline in export turnover during the current fiscal, there is an apprehension that about 15,000 to 20,000 workers in the knitwear industry in Tirupur will lose their jobs.

Attributing the economic recession sweeping the Western Countries to the dip in turnover, sources in the Tirupur Exporters’ Association, said exports have nosedived during the first half of this fiscal to Rs.5050 crore from Rs.5350 crore registered during the corresponding period last year.

Exporters see a bleak future in the remaining period of the fiscal, since there had been a 25 to 30 per cent decline in orders from different markets, particularly the USA and Europe, the sources said.

This would result in reduction of working days and hours, leading to rendering of jobless to 15000 to 20,000 of about three lakh workers employed in different segments of about 600 manufacturing units in the knitwear cluster, they said.

Some units have already started to function five-day a week and reduced the working hours from 10 to eight hours, from October last, the sources said.

Sensex down by 303 pts; loses 1,000 pts in 2 days

The BSE’s benchmark Sensex extended its losses amid a see-saw trade on Wednesday, succumbing to heavy selling across all counters.

The 30-share barometer gyrated in a wide range before concluding the day at 9,536.33 – a fall of 303.36 points or 3.08 per cent.

Market breadth remained negative with 1,701 losers against 818 gainers. Trading volume remained low at Rs 3,690.41 crore. In the last two days alone, the Sensex has shed nearly 1,000 points.

The NSE’s broader 50-issue Nifty also dropped further by 90.20 points, or 3.07 per cent, to 2,848.45. Marketmen said a slew of factors contributed to the extremely choppy trade: Weak global bourses, fall in the collections of excise and customs duties in October, export growths falling in September and expectations of more capital outflows – weighed on investors’ sentiments.

Additionally, most of the Asian indices ended in the red while European, after surrendering initial gains, were quoting lower this morning following feeble cues overnight from Wall Street.

Credit problems originating from the US are fast spreading to other global markets as many of the developed and some developing economies are heading toward recession.

India’s richest end up poorer by 60%

Latest Forbes list of 40 richest Indians finds that their total wealth has shrunk from last year’s $351 bn to just $139 bn due to weak stock markets and rupee

Sliding stock markets have taken their toll on the much-vaunted personal wealth of India’s richest citizens.

In fact, according to global business magazine Forbes’ annual rich-list for the country, the combined net worth of India’s 40 richest has declined by 60 per cent due to weak equity markets and a volatile rupee that lost much ground this year against the dollar.

In addition to shrinking net-worths of the top captains of India Inc (their combined wealth is now $139 billion, down from $351 billion just a year ago), these factors also caused a major shake-up in the rankings itself.

For one, Reliance Industries’ Mukesh Ambani has overtaken NRI steel tycoon Lakshmi Mittal as the richest Indian in the world, with a net worth of $20.8 billion to Mittal’s $20.5 billion.

They are followed by Mukesh’s younger brother Anil Ambani, whose wealth stands at $12.5 billion.

Telecom czar Sunil Mittal and realtor KP Singh are ranked fourth and fifth with $7.9 billion and $7.8 billion, respectively.

Source: Mumbai mirror

India loses $63 billion in six months

India’s richest are not the only ones who have lost billions in net worth in the midst of the global meltdown. The country’s central bank has seen its foreign exchange reserves shrink more than $63 billion — enough to fund 600 Moon missions — in less than six months as exports slumped, trade deficit widened on a surge in the oil import bill and foreign investors pulled out of the stock market.

Lately, the reserves are falling at an alarming pace, squeezing much of the room for manoeuvre that India had in the face of the ongoing financial turmoil. The fall was a staggering $31 billion in October, or almost half of the decline since May 23, when reserves touched a record $316 billion.

The fast depletion has serious implications, as it could bring more pressure on the rupee, which has already depreciated about 20 per cent this year and made everything from imported machinery to foreign travel and education more expensive. A weaker rupee could also reverse the recent slide in inflation.

“If this trend continues for more than three months, there could be a problem,” said a top monetary policy official, who didn’t want to be named because the issue is market sensitive.

The government, however, is hopeful that the situation would change once its policy responses begin to play out and stability returns to global financial markets. “We are trying to minimise the drawdown on reserves,” said Suresh Tendulkar, who heads the prime minister’s economic advisory council. He said the Centre is trying to induce NRI deposits and tap sovereign wealth funds, especially from the Gulf. Efforts are underway to revive exports growth, he said.