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Thursday, 09.02.2010 |
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| Automatic Wealth for Grads |
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Product Details
Notes
three questions for new grads:
1) what do i want to do with my life? (career)
2) where do i want to live? (location)
3) who do i want to spend my time with? (relationships)
Michael Masterson increased his income from $35k to $150k in one year
wealth is not your income, but your net savings
buying more expensive toys doesn't give you more gratification
$150k can get you everything you need and want
above that is just more expensive stuff, but not any more happiness
under $50k family income is tough to cover all expenses
$50k to $150k is average, you are okay but you don't splurge
over $150k is affluent, the only difference is the price of your luxury items
$150k to $350k means you pretty have everything you need and want
$350k to $1M means you have really elaborate toys and vacations
over $1M is more income than you can really spend
the goal is to accumulate 10 times your yearly expenses in net worth
then you can live off 10% interest on your savings
conservative ROI is around 8%
average is between 9% and 17%
aggressive and optimistic ROI is around $18%
compound interest works on money, but also on time and effort
if you invest your time and effort into something worthwhile, you get big returns
the three components of compound interest are:
1) how much you invest
2) what return you get on your investment
3) how long you stay invested
time seems to speed up as you get older
average starting salary for grads in 2005 is $30,337 or $22,753 after tax
save 15% of your pre-tax income, or $4,550 for the first year
the average increase in salary for most people is 4% per year
just because you like something doesn't mean you'll enjoy it as a career
but it's hard to really know what a job is like without experiencing it
don't just focus on a specific business or product that you like
think about activities you like to do, analyze your personality and skills
look for unique talents or a combination of skills that you have
ask yourself what you really want to get out of your career
do you want money, the feeling of helping others, flexible hours, etc
think about your ideal environment, coworkers, atmosphere and pace of work
research any career ideas at the library or online to get more information
try to find an internship if possible to experience the job firsthand
ask people you trust about the jobs they have loved and hated
expand your options to think creatively of how your interests fit other jobs
think about how you handle change, interacting with others, and being the boss
be willing to do some trial and error to try out different job paths
most people will hold between 8 to 10 jobs in their lifetime
four types of business: retail, service, wholesale, manufacturing
retail is usually in one location, less flexible about hours or travel
service allows you to interact with people, and it's a good starting business
but your income is limited to the number of hours you work, and your rate
wholesale can have big sales, but requires a lot of trade shows
manufacturing includes anything where you create the product
so this includes information publishing and direct sales
when looking for a job, don't do what everyone else is doing
remember that the person hiring isn't really interested in you
they are interested in solving their own problems
research the industry first and find the top companies that are growing
understand the difference between competitors
find the company's annual sales and primary profit center
contact your future boss directly, don't go through human resources
write a job application letter in the same way you would do direct marketing
1) say something good about the company and the potential boss
2) let them know that you understand their problems and goals
3) make the claim that you are the person to solve their problems
4) prove that you are the right person
5) make a specific request to ask for the job
you can also try to get an informational interview
get a few minutes of their time to ask about the industry
an ordinary worker does what most workers do
an extraordinary worker does substantially more
an invaluable worker can't be lost by the company
if you want a higher salary, you have to perform at a higher level than others
it's not just what you do at work, it's with whom you do it
apply the same principles in a faster growing company for big results
make sure you're working for a boss who's willing to promote you
generally a smaller, faster growing company is better than a large slow one
in the past 35 years, the average wage increase in the U.S. was 5.8%
during that same time, inflation averaged about 4.8% per annum
to become an extraordinary worker:
1) get in early
2) understand your responsibilities
3) focus on what's important
4) never say no
5) improve your skills
6) communicate your progress
to become an invaluable worker:
1) master a financially valued skill
2) apply that skill to your company's core profit activities
for every $1k in salary increase, add $10k to your company's profits
learn about your company's core profit strategies
if nothing else, learn sales:
1) what is the most cost-effective way to attract customers?
2) what is the best way to keep them buying?
if you start a business, devote 80% of your time and resources to profits
spend most of your time on marketing your business
don't overbook yourself and spend too much time on clients
book less in order to focus your marketing efforts to build the business first
the average self-employed small business owner doesn't make much
they make about the same as employees, median income of $30k
but there are a lot more business owners making over $100k
things to know about business:
1) business doesn't happen until you make the first sale
2) one way to enter a new market is to offer a popular product at a lower price
3) it's ultimately about selling
4) choose a business that can grow without your personal involvement
5) know how much you are willing to lose, and get out if you hit that point
6) first improve your strengths, then eliminate your weaknesses
7) focused effort is more effective than a diversified approach
8) let your winners run and cut your losses short
9) 80% of your success comes from 20% of your resources
in any business or personal transaction, make sure everyone benefits
consider the advantages and disadvantages for everyone involved
real estate historically provides a 6% ROI
this is from 4% equity appreciation and 2% in net rental income
but with leverage from the mortgage, you can make 25-30%
generally the range of house prices in a neighborhood is within 30%
never buy a property if the total cost exceeds 9 times the rent
square footage can be "total" or "under air" (heated or cooled, not the garage)
read the Tax Equity and Fiscal Responsibility Act of 1982
that pretty much blocked most tax shelters
now the best tax benefits come from real estate and owning a business
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