MAKING MONEY - THE POWER OF COMPOUNDING

MAKING MONEY:  The most popular piece I've published in 40 years of writing these Letters was entitled, "Rich Man, Poor Man." I have had dozens of requests to run this piece again or for permission to reprint it for various business organizations. Making money entails a lot more than predicting which way the stock or bond markets are heading or trying to figure which stock or fund will double over the next few years. For the great majority of investors, making money requires a plan, self-discipline and desire. I say, "for the great majority of people" because if you're a Steven Spielberg or a Bill Gates you don't have to know about the Dow or the markets or about yields or price/earnings ratios. You're a phenomenon in your own field, and you're going to make big money as a by-product of your talent and ability. But this kind of genius is rare. For the average investor, you and me, we're not geniuses so we have to have a financial plan. In view of this, I offer below a few items that we must be aware of if we are serious about making money. Rule 1: Compounding: One of the most important lessons for living in the modern world is that to survive you've got to have money. But to live (survive) happily, you must have love, health (mental and physical), freedom, intellectual stimulation -- and money. When I taught my kids about money, the first thing I taught them was the use of the "money bible." What's the money bible? Simple, it's a volume of the compounding interest tables. Compounding is the royal road to riches. Compounding is the safe road, the sure road, and fortunately, anybody can do it. To compound successfully you need the following:  perseverance in order to keep you firmly on the savings path. You need intelligence in order to understand what you are doing and why. And you need a knowledge of the mathematics tables in order to comprehend the amazing rewards that will come to you if you faithfully follow the compounding road. And, of course, you need time, time to allow the power of compounding to work for you. Remember, compounding only works through time. But there are two catches in the compounding process. The first is obvious -- compounding may involve sacrifice (you can't spend it and still save it). Second, compounding  is boring -- b-o-r-i-n-g. Or I should say it's boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating! In order to emphasize the power of compounding, I am including this extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306. In this study we assume that investor (B) opens an IRA at age 19. For seven consecutive periods he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions -- he's finished.

9 Ways to Get Rich Quicker

Maybe you’re willing to take some calculated risks in pursuit of the freedom that money (and lots of it) can give you to make choices that can bring satisfaction, whether that means buying your dream home, giving generously to charity or escaping the 9-to-5 grind. In that spirit, we focus on nine faster roads to riches, with varying levels of risk. Essential qualities for success: passion, persistence and patience.

Start a New Business

Risk level: High
What do success stories like Henry Ford, Steve Jobs and Mark Zuckerberg have in common? They all made their mark (and their millions) by coming up with a better idea and running with it. Starting a business is a proven path to wealth, and the best way to get there is to start small and scale up -- which usually means being bought out by a larger company, selling franchises or licensing your product.
An ambitious goal is critical if you want to expand your business.

Create a Product

Risk level: Medium
Creating a product and licensing it or selling it through retailers is another route to making money from your good idea.
One of the biggest mistakes that aspiring inventors make is to create a product before they’ve determined whether there’s a demand for it. Talk to potential customers in person before you develop a products.

Invest Aggressively

Risk level: High
With this approach, you invest in a small number of stocks that you hope can double, triple or even quadruple in relatively short order.
Call this a shoot-the-lights-out strategy. Nobody knows for certain which stocks will surge and which will sink. But if you are hoping to achieve big gains, you’ll need to look beyond large, steady-Eddie types of companies. Small companies that are poised for rapid expansion and firms that serve emerging markets, which are growing more rapidly than developed nations, make for fertile hunting ground for potential winners.
If you go this route, you’ll need to monitor these companies carefully to determine whether to hold them or replace them with better opportunities.

10 Incredibly Beautiful World Heritage Sites

10.Bagan City, Burma (Myanmar)

Similar to Angkor Wat in Cambodia, this location is home to thousands upon thousands of temples. Due to Burma’s inner turmoil it isn’t nearly as crowded as other similar locations.

9. Göreme National Park, Turkey

Famous for its breathtaking rock formations including the “fairy chimneys”, Goreme is also the name of the main city in the region which is nearly entirely carved out of rock.

The 10 Worst Habits Holding You Back From Success

The path of success is often littered by our own trash, obstacles that we place ourselves. Habits, by definition are behaviors that are so ingrained that we no longer become conscious of them; actions that turn into autopilot. The power of habit is severely under-recognized as driving force toward success. When the incredible Brian Tracy was asked about the key to success, he replied, “Successful people are simply those with successful habits.”
While there are many people that possess many successful habits, these habits are being undermined by toxic habits- it is taking one step forward but then two steps back. Breaking the bad habit could be the game-changer that you are desperately needing.

Here are 10 of the worst habits that are holding you back from success:

1. Waiting for the ‘right’ moment

How many times have you said, “I’m just going to wait until I have enough money saved up,” or “I need to research more.” As the Chinese proverb goes, “The best time to plant a tree was 20 years ago. The second best time is now.”
Stop waiting for the unicorn and take the bull by the horns now. Any action is better than no action.

Failure Is Feedback: How 5 Billionaires had To Fail To Succeed

Every success book, seminar or life coach out there can tell you that failure is just a stepping stone towards success. And they’re right. It is. But that simple piece of information won’t help you. Information is power only when applied in real-life situations. In this case, that means being able to view failure for what it really is: feedback.

You then simply extract different lessons from that feedback and you’re on your way to success. That sounds easier than it really is. Everybody gets caught up in the day-to-day drama of work, family or friends. It’s easy to forget the basic rules and feel like a failure after something doesn’t work out, especially in business.

Failure Beats You Up

It’s the habitual first ‘instinct’ to feel disappointed in yourself when the start-up you’ve invested so much in fails. After such a defeat, you couldn’t care less about the mantra failure equals feedback that those ‘success gurus’ keep chanting. It’s understandable. But let me show you some real-life examples that will actually prove that that very mantra is true.
Here are 5 giant entrepreneurial figures (whose net worth in total comes in at around $90 billion or so) who didn’t succumb in the face of early failure, but rather enjoyed and appreciated it for the lessons heeded. And they aren’t afraid to admit it.

FunBug – Nick Woodman

Net Worth $1,750,000,000
Nick was a ‘B student’ during college and an avid surfer, a hobby which often times interfered with his studies. He wasn’t born a billionaire. Before creating the now wildly successful brand of wearable cameras – GoPro, he failed in great style with two online startups during the crazed dotcom bubble of 2000.

The Failures

First, he created EmpowerAll.com, an e-commerce site aimed at a young demographic which sold very cheap electronics. The company didn’t make any profit, so it was quickly shut down. That didn’t drive our future billionaire out of the business arena; it drove him to try harder, so in 1999 he set up FunBug, an online marketing company.
The site gave users the chance to win cash prizes in return for participating in sweepstakes. It was marketing through games. He even managed to raise $3.9 million in funding from different investors. The company was on the rise, but by 2001, Nick had to admit failure once again. He wasn’t able to create a sustainable user base from which to drive profit via the companies he was marketing.
Here’s what he said to Forbes about failing the second time and losing almost $4 million dollars:
"I mean nobody likes to fail, but the worst thing was I lost my investors’ money and these were people that believed in this young guy that was passionate about this idea… you start to question: are my ideas really good?"

The Lesson

After losing the second company, Nick cleared his head by going on a surf trip, a long one. Once back, he started working on a prototype for a camera which can be used by athletes: GoPro.
‘I was so afraid that GoPro was going to go away like Funbug that I would work my ass off. That’s what the first boom and bust did for me. I was so scared that I would fail again that I was totally committed to succeed.’
Only this time, there was no bust, only the boom. GoPro made him one of the youngest billionaires in the world, and the owner of the fastest-growing camera company in America.