We always meet at locations outside of our office when we’re getting ready to brainstorm or evaluate our investments and decisions. There’s something powerful about getting away that gives you clarity of mind. Here’s Nick hiking up Blue Mountain to do exactly that.
The American Music Awards were on earlier this week and my kids caught Bieber Fever.
I’m not sure what exactly ‘Bieber Fever‘ is other than it has different effects on different people.
For instance, my son claims he doesn’t like Canada’s own Justin Bieber – he’s from Stratford, Ontario. But one look at his current hair style would have you believing otherwise. It’s shaped exactly like Bieber’s.
My younger daughter runs around the house humming ‘Baby Baby‘. So her ‘Bieber Fever’ is very different than my son’s. She apparently likes the guy.
My wife seems caught in the middle – she’s somewhat mystified at his popularity but then recently initiated a ‘Bieber Fever’ dance in our living room that had all of us jumping around to his songs.
And I find myself trying to explain to my son that just because all the boys in his class have the hate on for Bieber there’s no need to dislike guy . From what we can observe the kid is a hard worker, dedicated etc. There’s a lot to learn by observing Beiber’s rise to the top of the MTV mountain.
So my own ‘Bieber Fever’ finds me defending the kid.
And because Justin’s so busy making music videos and making young girls faint we thought it we’d take this opportunity to summarize of few of the global economic ‘fevers’ that he should be aware of.
Because although he’s having fun right now he should prepare for a different world ten years from now.
Here’s what we’d explain to the Bieber himself if we ran into him at the airport being chased by TMZ.com paparazzi:
POINT #1: Hey Bieber man … take a few minutes to recognize the importance of what just happened to Ireland this week. I know it sounds boring but it’s a pretty big deal. Read some of the highlights here. This is not a fire drill. This is the real thing.
And there’s more fun right around the corner. According to the International Monetary Fund (IMF) the Gross Domestic Product of Greece was $331 Billion in 2009. Ireland $221 Billion.
And coming up is Portugal’s debt problems. Their GDP? $233 Billion.
But guess who’s on the horizon?
And that’s a big deal Bieber. Why?
If their economy goes wonky then there’s a big elephant in the room because their GDP is $1.468 TRILLION.
Sheesh. To save an economy of that size the Eurozone better just start firing up the printing presses right now.
Bottom Line: Europe is in a financial mess unlike anything anyone’s ever seen in a little while … a very long, little while.
Bottom Line for Bieber: Keep one eye on your music videos and another eye on where your financial dudes are telling you to park your money.
POINT #2: We’d also tell the Bieber man that this all has implications to Canadians. He’ll likely notice over the next twelve months that his friends and family will be reading and watching more about ‘budget measures” and “getting Canada’s deficit under control” up here on CBC and in the Financial Post.
Just like our Finance Minister, Jim Flaherty, did this week in Oakville.
Why the sudden discipline talk in Canada by our government after years of stimulus spending?
Because Jim Flaherty doesn’t want to go down as the Finance Minister that causes the IMF to come into town and force “austerity measures” (fancy term for ‘control your spending people!’) on us nice Canadians.
It’s an epic battle for him though.
At the same time that Flaherty is talking budget controls the Bank of Canada has interest rates at historic lows … encouraging people to spend, borrow, to have fun!
It’s like the left and right hands of the country and giving different hand signals.
Bieber, this is important stuff, let’s hope that one day your friends in Stratford aren’t watching their Prime Minister on TV handing over financial control of their country to the IMF … like these Irish were doing earlier this week in their country:
POINT #3: Here’s what you need to know right now:
As a real estate investor it’s important to know the basics.
You need to have a long term goal for your real estate business. You must decide on some strategies. And you need to figure out what tactics to use.
For example, “I want to create $10,000 a month in cash flow so that I can focus on my true passion and I’m using a combination of single family homes and commercial real estate with long term leases in growing communities to do it.”
Having a blueprint for your business is key.
But there’s something that’s often missed.
And it’s a big deal.
Too many investors ignore anything outside the world of real estate.
In the past we’ve shared how important it is to know how the economy works. How things like interest rates and inflation can monkey with you assets.
Why it’s important to understand the impact of changes to banks overnight lending rates.
And there’s something else you should know.
You must know how currencies work.
Well if you’re investing in Canada but plan to retire in Tuscany, Italy it’s a big deal.
Let’s say you invest in some nice cash flowing Canadian real estate. It goes up in value 50% over 10 years.
What if the Canadian dollar loses value against the Euro over that same time period.
You think you’ve made 50% on your money and you’re planning to use that cash to help you buy that dream villa in Tuscany.
But when you go to convert those Canadian loonies to fancy dancy Euros you realize that you’re losing out because the Canadian dollar has lost value against the Euro.
You’re $170,000 Canadian dollars no longer gets you the $100,000 Euros.
It only gets you $75,000 Euros.
Not good news for your Tuscan getaway.
So currency is a big deal.
The example above isn’t any kind of forecast, just an example.
And to be clear the Canadian dollar is likely in much better shape than the U.S. Dollar right now.
But there are ways to make currency forecasts for yourself if you know what to look for.
And we need to start at the beginning.
It’s really important for you to know what some old guys did in 1944.
We believe it’s impossible to have an understanding of how the economy works without knowing what these “gentleman” did in 1944.
Ready for it?
Great, let’s go…
Look, some people reading this will hate what we are about to say but we’ve found that it’s always best to share what you feel needs to be shared.
Here it is…
You can’t depend on other people for your financial well being. Not the company you work for, not the Conservatives or the Liberals, not your family.
A story for you…
A good friend got a promotion a while back and couldn’t hold back his delight. We could understand, we used to be the same way.
But then something hit us in the head one day (maybe the sky was falling that day!) and we realized that if you get a raise your standard of living likely increases along with that raise.
No matter how many books about saving you have read, you’ll likely go out a buy that new cell phone with the larger data package or that 52″ Plasma you’ve been dreaming about since you saw it you friend’s house.
Maybe you even book a little vacation to Cuba and for you Americans reading this…maybe it’s the Bahamas 😉
So you end up spending more money.
You are MORE dependent on your income than you were before.
Your raise has increased your dependence on your income. Not decreased it.
Your raise has chained you even more closely to your job. The shackles grow stronger.
With the family to support and the mortgage on the house you feel locked in. No options.
And then if the financial markets hit some tough times, like they are today, your company sponsored RRSP plan doesn’t look so promising any more.
Look, you need to take control of your own financial future.
If you’re looking to start this process, and it really is a process, here are some ideas to think about:
1. You must read biographies of people who have accomplished what you want to accomplish. They are the most revealing and most instructive because they give you direct insight into the thought processes and decision making used. Start with people like Richard Branson or Warren Buffet or Ted Rogers (Rogers Wireless).
2. If you are at the stage that you really need some motivation then spend a few months on goal setting and reading. Although Robert Kiyosaki’s books get a lot of flack for not being detailed enough they are great for thinking big. Start with Rich Dad, Poor Dad and make sure you read his book titled, Cashflow Quadrant. Don’t spend more than six months on goal setting. Anything longer is a waste of time.
3. Instead of using newspaper articles to make your opinions read the reports that the articles are based on. For example, you can read reports directly from top economists at every bank’s website. Click here to see TD’s weekly bottom line (click Weekly Bottom Line on the right hand side).
We’re 37 and 32 years old respectively and it’s right about now that we’ve noticed a lot of friends second guessing their direction in life.
They’re asking themselves if they really want to be doing what they’re doing for the rest of their lives.
A few are reaching the magical 40 mark and that seems to be having a pretty big affect on them.
Earlier this week we interviewed a real estate investor and developer that’s worth tens of millions of dollars.
It took him 23 years to build his empire. He did it one day at a time and he loved every moment of it.
Did he have doubts, yes. Did you push forward, absolutely.
Recently we’ve been reading, A Cupful of Motivation, Howard Schultz.
It’s the story of how Starbucks started. Howard came from the projects with nothing to his name. He built up an amazing career for himself in New York but decided to leave his corporate gig after only a few years to join Starbucks in Seattle.
At the time Starbucks wasn’t the same place you know today … they focused on selling coffee beans, not actually single espressos and lattes.
He had a vision and decided to leave Starbucks to follow his dream.
The story twists and turns and we won’t ruin how they all come back together but we wanted to share this particular passage of when Howard decided, yet again, to leave what he was doing to continue following his passion.
It’s definitely a strong cupful of espresso motivation…check this out:
If you haven’t seen this it’s worth a while … Bezos gives a great talk.
Skip ahead to the six minute mark to skip the introduction…
Have you ever wondered how the super-rich think?
We’re not talking about “The Millionaires Next Door” here … we’re talking Billionaires.
Do they believe in the law of attraction?
Do they follow their passion?
Do they play nice?
What are the rules of money at the billionaire level?
In the book, The Family Office: Advising The Financial Elite, Keith Bloomfield and Russ Prince, summarize the behaviours of the uber rich.
And you may not like what you’ll find here. And you may not agree with it.
But from our experience with some of the super elite much of it is very true.
The book has a great summary that compares the perspectives of the super-rich with that of the successful middle-class millionaires.
Ready for it?
|Rule||Millionaire Next Door||The Super-Rich|
|Commitment||Seek work/life balance, where money is only one piece of the equation||Creating wealth is regularly the top priority and overarching motivation|
|Self-Interest||Looking to make everyone “happy” or get a fair deal||Pursue only those activities that have significant probability of generating above-average financial returns|
|Believe if they do what they love, the money will follow||Pursue only those activities that have significant probability of generating above-average financial returns|
|Connections||Network with a lot of people for social cultural and|
|Build strong relationships with a handful of strategically valuable people|
|Payouts||Create rapport and look to help others||Ensure each party is duly compensated for his or her|
|Failure||Failure is a major obstacle that can cause setbacks|
reassessments and new directions
|Failure is a learning experience and a motivator|
|Centered||Concentrate on overcoming weaknesses and becoming a|
|Concentrate on their strengths and delegate everything|
Source: The Family Office: Advising The Financial Elite
Here’s what else we’ve noticed…