Money Secrets of the Rich: Learn the 7 Secrets to Financial Freedom

Money Secrets of the Rich: Learn the 7 Secrets to Financial Freedom

by John Burley
Money Secrets of the Rich: Learn the 7 Secrets to Financial Freedom

Money Secrets of the Rich: Learn the 7 Secrets to Financial Freedom

by John Burley

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Overview

Burley found that the books on money either went one of two ways. They were either too technical that once you were done reading them, you had to do a bunch of research in order to even begin, or they were very motivational but didn't tell you what to actually do. Money Secrets Of The Rich strives to be a  book that does both.


Product Details

ISBN-13: 9781600376191
Publisher: Morgan James Publishing
Publication date: 08/01/2009
Pages: 484
Product dimensions: 6.10(w) x 9.20(h) x 1.00(d)

About the Author

John R. Burley has achieved what most people would consider impossible. From a background of corporate sales and financial planning, John moved to the Phoenix, Arizona area to begin an exciting and prosperous career as an active real estate investor. Starting out with very little money, a workable plan of action and a lot of desire, John used cash flow principles to create wealth.   John has now completed more than 1000 real estate deals and has taught students around the world how to achieve success through real estate investing. John has been an active investor for over 27 years and has been teaching others to invest for over a decade. He has been through several real estate cycles continuing to invest and prosper in each one. John has earned the respect of the investment community because he is out in the "Real World" doing deals on a day to day basis.  John has shared his information with millions of people throughout the world. He has spoken on real estate investing and money at events sponsored by Tony Robbins, Donald Trump and T. Harv Eker. John has also been heralded by Robert Kyosaki in his book Rich Dad’s Cashflow Quadrant as a savvy investor who not only has a grasp of solid financial principles but also a keen awareness of the psychology of investing.  John lives and breathes the concepts and principles that he shares with those who attend his training programs and invest in the educational products he has made available. John gives you first hand knowledge in a straight forward, easy to follow step-by-step way that makes learning how to become rich fun and easy. John knows his stuff. John does what most real estate instructors are afraid of, answer student’s questions, live, on the spot. He is a full time real estate investor and part time educator.
 

Read an Excerpt

CHAPTER 1

The 7 Levels of Investor

* * *

"If you reach for the stars, you might not quite get one, but you won't end up with a handful of mud, either."

Leo Burnett

What type of investor are you? Have your investment experiences been positive, negative or mixed? Would you like to know why you get the results you do when you invest? Of course you would! And the good news is that I am here to tell you!

Over the past 25 years, I have devoted myself to the study of money. I have driven myself to know exactly how it works and why. I have read almost every book, watched so many videos and DVDs, and listened to countless tapes and CDs. I have also interviewed, counseled and trained many thousands of people in the practices of wealth building.

During this in-depth study of what I refer to as the Money Game, I made a startling discovery: despite the many and varied personality types in the world, there are really only seven basic types (or levels) of investor. And while it is common for an individual to drift a little from one level to another, most people stay fixed at the same level for their entire lives. The bad news is that they are often stuck at a level that prevents their financial success. The good news is that with a little effort anyone, including you, can easily upgrade his or her skills and investor level.

What "level" investor are you?

Knowing this will give you a clear understanding of why you get – or do not get – the investment results you desire. Armed with this new awareness you can then adopt (or maintain) the attitudes required for your desired level. You can then empower your awareness and attitude with the appropriate action to give yourself the results you so richly deserve.

As I mentioned, the great thing about your investor level is that it can be easily changed. So as you read on do not despair if you are currently operating at one of the lower levels. You can always upgrade. Think of the process as a financial evolution. The key to your evolution is to first determine where you are and then where you want to go.

People often get caught up in the "I need to make more money" trap. In fact, your income actually has very little to do with your ability to obtain Financial Freedom. Let me be clear, the 7 Levels of Investor have nothing to do with your income. Rather, they relate to what you do with your income. I know people who make millions of dollars every year who are financial failures (I know, I agree this is ridiculous, yet it's true). I also know a guy who was a student of mine who is a multimillionaire, yet he never made more than $18,000 a year from his job.

So don't get hung up on your income. Concentrate instead on understanding that it is what you do with your income that makes all the difference!

As you read through the 7 Levels of Investor I want you to know that at various times in my life I have been at every single one of these levels. It was only as my knowledge increased that I was able to upgrade myself to the level I am at today. At some point in the descriptions of each level you should be able to recognize yourself and the people in your life. I recommend that you write down on the side of the page the people who you know at each level and also where you currently are. It will really help to open up your awareness.

The 7 Levels of Investor

Level Zero: The Non-Existent

This first Level of Investor is actually not an investor at all. These people are the financially Non-Existent. They live their financial lives with their heads in the sand. They essentially have no investments or savings and are completely unconscious or oblivious to money matters in general, and their own spending habits in particular. Their financial lives are often so completely mismanaged that they do not even qualify for the simplest credit products and so, ironically, although their financial outlook is bleak, they are often in a better financial position than the person for whom credit is all too easily available.

When asked what their problem is they will invariably state that they "just don't make enough money"; if they just made more money, they would be okay. The fact is, in many cases, they are now "starving" on what they "dreamed" they could earn five years ago. These people fail to see that the problem is not necessarily their income (or lack of it) but rather their Money Habits.

Level One: The Borrower

People at this level are also not (technically speaking) investors. The Borrower is often in a far worse financial position than the Non-Existent, although his or her potential for change may be greater.

The Borrower often has very high levels of debt – they spend all that they make and more besides. What they know how to do best is consume. When they have money it gets spent, and at best they survive on a month-to-month basis. Their solution to a money crisis is to either attempt to spend their way out of it or to take on even more debt, oblivious to both the short and long-term consequences of their actions. Their idea of financial planning is to get a new credit card, or to refinance their home in order to buy more things on credit.

Like the Non-Existents, Borrowers also refuse to see that the problem is not necessarily their income (or lack of it), but rather their Money Habits. I know of one individual who was making more than $3 million a year and yet was still a Borrower.

Borrowers often get themselves caught in a vicious cycle of spiraling debt, coming to believe that their situation is hopeless, and as a result, giving up. They often live in complete financial denial. Unless they are willing to change, their financial future is bleak and they will accelerate towards financial oblivion.

Level Two: The Saver

The Saver usually puts aside a small amount of money on a regular basis. The money is generally deposited into a very low-risk, low-return vehicle such as a checking account, savings account, money market account or certificate of deposit (CD).

Savers usually save to consume rather than to invest (that is, they save for a new TV, stereo or something else to buy). They are afraid of financial matters and unwilling to take financial risks. And even when they are shown that in today's economic environment cash investments usually give a negative return (after inflation and taxes), they are still unwilling to alter their investment habits.

The Saver's idea of an "aggressive" investment is to start an insurance-style savings plan or buy whole life insurance (a horrible investment that almost no one should ever make – I will tell you why later). From my years in the business, I can tell you that the insurance industry loves this type of person because they can prey on their conservatism and deep-seated need for security, and make huge commissions in doing so.

Although the strategy of saving worked well for my grandfather way back in the first half of the last century when inflation was low and the temptation to consume was minimal, it no longer works in today's economic environment. We need to face the facts: the days of old are gone. No longer do we work for the same company all of our lives and then retire with a nice pension. Few people working today will retire to live in the same home (mortgage-free) that they've lived in for the majority of their working lives. In addition, at retirement, my grandparents' generation was able to receive the benefit of pensions and/or retirement plans that were almost fully funded by the federal government or their employer. And all these benefits of old were provided with only nominal contributions required by the employee. Thus, for them, the strategy of saving for the long term worked well. Over the course of their lives, by diligently saving and only paying cash (except for modest borrowings to buy their home), they were able to live comfortably when they retired.

Would the same be true today? It's very doubtful. Let's look at the main reasons for this:

1. Inflation – in recent times inflation has proven to be very irregular. The luxury days of counting on bank interest rates to keep up with inflation are over.

2. Consumption – throughout the world the level of consumption has exploded. The last two generations have become the ultimate consumers, eating up much of the money they should have saved for retirement.

3. Income taxes – the average family loses between 20 and 40% of their lifetime earnings to local, state and federal governments in the form of direct and indirect taxation.

4. Social security plans – when Social Security was first set up in the United States there were 15 people paying for every one person receiving benefits. Not only that, but benefits kicked in at age 65, whereas the average American male died at age 62. So there was plenty of money in the system. This is not the case today. Currently, $0.15 out of every dollar paid in wages in America goes to fund this dinosaur. And to make matters worse, Congress puts the money into Treasury Certificates, which don't even keep up with inflation! The Social Security behemoth is doomed. Most experts predict its demise between 2015 and 2025 unless the government increases taxes and/ or radically reforms the system for the better. I don't think for a second that the current youth of America (Generation X and the young Baby Boomers like myself) are going to pay the 20 to 30% Social Security tax that experts say will be needed to keep the system alive long term – there will be a revolution first!

The potential for the failure of over-taxed, under-funded social security systems is being realized throughout the world. Make no mistake, the governments of the world are keenly aware that they cannot continue to fully fund retirement. Many countries have already gone down the path of compulsory employee/employer non-government contribution retirement plans. This is a clear demonstration of their intention for individuals to take responsibility for funding their own retirement.

5. Increased longevity – people are living longer and requiring extra funds to sustain their lives beyond retirement. At the same time, employment opportunities for older people to extend their working lives (at their current level of pay) are diminishing for social and skills-related reasons.

6. Higher cost of housing – housing costs for the average family, in major cities where employment opportunities are most available, have risen dramatically in relation to the wages offered. It takes the average family many more years to pay off their home today than it would have taken their grandparents.

For all of these reasons, unless Savers have already put away enough for their "golden years," they are destined for financial mediocrity. Their retirement will require family, government and employer subsidies (if available) just to provide the basic essentials for living.

Level Three: The Passive Investor

At the next level is the Passive Investor. These people are aware of the need to invest and usually max out their 401(k) retirement-type plans by making the maximum contributions. Sometimes they even have outside investments in mutual funds, stocks and bonds. Generally speaking, they are intelligent people. They are part of the two-thirds of the population that we call the "middle class." However, when it comes to investing they are Financially Illiterate. The Passive Investor typically falls into one of three categories:

The "Gone into a Shell" Passive Investor

This category is comprised of people who have convinced themselves that they do not understand money and never will. They will say things like: "I'm just not very good with numbers."

"I'll never understand how this investment works."

"I'm just too busy to follow everything."

"There's too much paperwork."

"It's just too complicated."

"I prefer to leave the money decisions to the professionals."

Then they follow up with these types of rationalizations:

"But that's okay, because I have a great accountant."

"My stockbroker picks all my investments for me and she's a pro!"

"We have a great financial planner."

"I have the best financial advisor in town, I don't need to understand everything that's going on. He's a great guy."

"The personnel department at work handles everything, it's fine."

The excuses and justifications go on and on. All designed to relieve them from having to take responsibility for their own money ... and future.

Because of their beliefs, they have very little idea where their money is invested or why. These investors blindly follow the market and then squeal (a lot like pigs) before running to their own slaughter. Professional traders actually commonly refer to these types of investor as "PIGS" because of this behavior. The most amazing consequence of this farmyard mentality of investing is that over the last two decades or so, during the greatest Bull Market in history, these "investors" have literally amassed no net returns on their investments!

2. The "It Can't be Done" Passive Investor

This type of Passive Investor has determined that all investments involving anything more than the most basic research, and promising anything more than a 10% rate of return, are beyond them and "can't be done" by anyone other than the most gifted, lucky or connected businesspeople, high-fliers or wheeler-dealers.

They truly believe that high rates of return on investments are extremely risky, probably illegal or available only to the chosen few. They believe that the knowledge and skills required to even recognize such investments are beyond them.

This type of Passive Investor's usual defense to demonstrations of successful investing by friends or high-profile investors is that the successful investors must have known something that they themselves could not possibly have known. They will claim that they are not "privy" to the same opportunities or resources that successful investors use to make their investments so profitable. This is a most convenient justification.

Typically, you will hear them state, even in the face of irrefutable evidence to the contrary, that the successful investment strategy they have just heard described in complete detail, cannot be successfully, or indeed legally, undertaken by them in their particular circumstances or financial position. They are willing to defend their position to the death while their friends (the higher-level investors) continue making great investment after great investment. It often seems as if they take some form of perverse delight in thinking that they are right by trying to poke holes in well-proven investment strategies.

It is common for these people to whine and complain about missing out on investment opportunities after the fact, as if some barrier other than their own mindset was responsible.

I have great compassion for this type of investor, but let me be frank. The bottom line is that these people have given in to fear. They are paralyzed by their fear and block themselves from taking appropriate action, even when they are shown exactly what to do and how to do it. Often vocal, they are quick to try to bring others down to their level. Because they are afraid and unwilling to gain the knowledge they need to invest successfully, they choose instead to shoot down and criticize others in an attempt to make themselves, and their beliefs on investing, right.

My advice is to spend as little time and effort as possible discussing money or investments with these people. When they see you moving forward, their natural tendency is to put you down and try to convince you of all the reasons why you can't do it.

Why do they do this? Because if the people around them become financially successful, they believe that this makes them wrong. And thus in their minds it makes them a "loser." As a form of self-preservation, they instinctively strike out to pull down all who are trying to escape the rat race.

Avoid discussing matters of finance with these people at all costs, and if your spouse or significant other happens to be one of them, please don't argue with him or her. Let them be right in their own minds, for the time being. Just go out there and put some runs on the board. As you become a successful investor, and start to "show them the money," they will probably begin to come around to your way of thinking. Again though, if positive results still fuel their negative fires, don't waste your time and energy trying to put the fires out, you will probably only succeed in fanning the flames.

3. The "Victim" Passive Investor

The Victim is the third category of Passive Investor. Like the people who have "Gone into a shell" or those who fight for the truth of "It can't be done," these are intelligent people. However, they have few Principles or Rules for investing. They impulsively buy high and (in a panic) sell low. They look at the stock market about the same way as they look at a Las Vegas craps table. It's all just luck, so throw the dice and pray. They are endlessly searching for the "secret" to investing and continually looking for new and exciting ways to invest.

(Continues…)


Excerpted from "Money Secrets of the Rich"
by .
Copyright © 2010 John R. Burley.
Excerpted by permission of Morgan James Publishing.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Introduction,
How to get the most from your Money Secrets journey,
Part 1 Finding and Following the Path to Financial Freedom – Laying Down Strong Foundations,
1 The 7 Levels of Investor,
2 Committing to Your Financial Goals,
3 Money Secret 1 – Paying Yourself First,
4 Money Secret 2 – Reinvesting Your Investment Returns,
5 Money Secret 3 – Receiving Automatic Investor Rates of Return,
6 Money Secret 4 – Knowing What Your Money is Doing (part 1),
7 Money Secret 4 – Knowing What Your Money is Doing (part 2),
8 Turning Your Old Doodads Into Cash!,
9 Money Secret 5 – The Automatic Money System,
10 Money Secret 6 – Financial Competence (Intelligence and Responsibility),
11 Money Secret 7 – How to Become and Live Debt-Free (featuring The Debt Terminator),
12 Part 1 Review,
Part 2 Know Thy Enemy – Eliminating Financial Traps and Becoming Rich,
13 How and When to Refinance Your Home,
14 Getting the Best Home Loan,
15 Buying Your Next Car for a 20 to 50% Discount,
16 Cutting Your Bank Fees to the Bone,
17 How to Increase Your Take Home Pay to the Max,
18 Getting the Medical and Disability Insurance You Need for Less,
19 Getting the Right Homeowners Insurance for Less,
20 Slashing Your Car and Miscellaneous Insurance Costs,
21 The Truth About Life Insurance and How to Save Big Bucks,
22 Part 2 Review,
Part 3 The Magic of Financial Freedom,
23 Financial Beliefs – How to Attract Riches,
24 The 12 Generalized Principles of Active (Level Five) Investing,
25 My 17 Personal Rules of Active (Level Five) Investing for 20 to 100% + Returns,
26 Quick Cash and Positive Cash Flow with Real Estate,
27 Building Your Financial "Dream Team",
28 Corporations, LLCs and More – The Tax Reduction and Asset Protection,
Secrets of the Rich,
29 Retirement Planning,
30 Final Thoughts – Beyond the Money Secrets of the Rich,
Acknowledgments,
About the Author,
Investor resource materials,
Index,

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