By Allan Roth | Dec 20, 2010
We all know that this is the season for holiday celebrating, with all the accompanying gifts and goodies and eggnog, but not too many people know that it is also the season for articles on how to get rich in the coming year. You’ll see the top ten stocks to buy, market timing newsletters, and other get rich quickly schemes that, in reality, will only be helping others to get rich. Unfortunately, the odds are virtually certain that following the advice in these articles is more likely a “get poor quick” plan.
Flawed logic
First, allow me to state the obvious by saying that if I truly knew how to get rich in 2011, I wouldn’t be writing about it, and I wouldn’t be selling subscriptions to newsletters at $299 a pop. I would take that rich-making knowledge and apply it to becoming rich, which would remove any necessity for peddling my wares. And even if I were a saintly, altruistic sort who was willing to share my secrets, the fact remains that telling others my secrets would make it that much harder for me to continue making a fortune. More competition means less profit.
The two non-secrets to financial riches
I wish those Rich Dad seminars actually did work, and that I really could make a million dollars a year working four hours a week from my yacht in the Caribbean. The fantasy of investing the fortune I’ve made from my real estate empire, earning the upside of the market without downside risk, would also be good. Life would be sweet under either of those scenarios.
Unfortunately, one must accomplish two things in order to be rich, and neither of these things are quick or glamorous.
Number 1: Spend less than you earn
Unless you are a card-carrying member of the lucky gene pool and born rich, or unless you are in possession of a winning lottery ticket, there is only one path to follow.
To build wealth, you must save. This means spending less than you earn. Obvious as that seems, it’s not always an easy philosophy to apply. It means deferring the gratification of the latest consumer toys, it means realizing that the Ford gets you from points A to B just as fast as the Lexus. It also means you must stop spending your hard earned cash on schemes that claim they will make your rich. With the recession, remember that frugality is now cool, at least in my mind.
Number 2: Invest to get rich slowly
However, saving is only the first step toward building wealth. I see people do a great job in saving, only to make others rich by buying annuities or unknowingly paying two to three percent annually to their financial helpers. To invest wisely, one must keep expenses and emotions in check.
A good way to keep expenses under control is by owning the very lowest cost and most diversified index funds. These funds own thousands of stocks and bonds with annual expenses as low as 0.07 percent annually. With only two funds, you can own the entire US and international stock markets, with far less risk and higher returns than you would get by paying helpers to pick stocks like BP. With only one additional fund, you can own the entire US investment grade bond market.
But controlling expenses is only half the battle. The other half is controlling emotions, and an excellent way to accomplish that is to decide on an allocation between stocks and bonds, and stick to it like glue. Doing so means you must rebalance the portfolio to get back to your target allocation. If stocks go up, as they did between 2003 and 2007, you must sell some of your stock index funds to get back to your target allocation. If markets plummet as they did through March 2009, you must buy stocks.
Picking the allocation is important, but sticking to it is even more important. It’s the only way I know to systematically sell assets after they have done well and buy others after a decline. Here are three examples of different allocations from my book, How a Second Grader Beats Wall Street.
Why this formula will make you rich
Albert Einstein once said that the power of compounding was the most powerful force in the universe. By my calculations, the above “Dare to Be Dull“ investing formula will increase returns by an average of four percent annually. That extra four percent annual return on average translates to about 16 years of earned income. Think of it as a “get rich not-so-quick” plan.
How to get rich
So if you really want to prosper in 2011, ignore those lists such as SmartMoney’s list of where to invest in 2011. If for no other reason, ignore it because their 2010 list turned in half the return of the market. Instead, try using the boring strategy that will get you to your retirement goals roughly 16 years earlier. That should give you an immediate rich feeling that you will be able to pursue your passions and dreams a decade and a half earlier than others.
That’s what I call striking it rich in 2011.
Giannis Giataganas IS Consultant, BPM Analyst Bsc in Informatics, AUEB MscIS, Athens University of Economic and Business
Tuesday 21 December 2010
Monday 20 December 2010
5 Ways to Market Your Business Smarter, Faster, and Cheaper
By Donna Fenn | December 20, 2010
You don’t need an enormous marketing budget to create a killer brand. That’s David Siteman Garland’s message in Smarter, Faster, Cheaper: Non-Boring, Fluff-Free Strategies for Marketing and Promoting Your Business (Wiley, Dec. 2010). Siteman Garland, who is just 26, is the CEO of The Rise to The Top, an online television show and resource for entrepreneurs (full disclosure: I appeared on the show earlier this year). I recently had the pleasure of catching up with him and he shared a few key points from his book. Here they are:
Don’t be a product pusher. “You should shift your mindset away from marketing your product and toward being a trusted resource,” says Siteman Garland. A great example of that, he says, is HubSpot, a company that sells software to small business, but whose website focuses heavily on providing its customer demographic with free resources. “They have a blog that has information on generating leads online and Internet marketing,” says Siteman Garland. “And there’s a weekly TV show where they go over marketing headlines for the week. They’re not saying, ‘how awesome is own software?’ They’re showing you that they’re a trusted resource.”
Humanize your Web presence. “Be a human being online and not a company,” says Siteman Garland. “People like to do business with people they know, like and trust. There has to be a human behind a brand.” So allow your personality to shine through on your website and allow your employees to have a presence there as well. For instance, Meathead Movers, a San Luis Obispo, CA moving company that employs student athletes, features employees on its website and allows customers to choose their own moving team.
Be a digital schmoozer. “One of the arts we’re overlooking on line is being able to make small talk,” says Siteman Garland. ”I’ve interview 200 plus people who do this successfully and for them, the Web is like a small town where you know the butcher on the corner. The people who build up the most responsive followings on line are connecting with people on a one to one basis that goes beyond business. Business is becoming much more personal.” So ahead and talk about your dog and your kids online, but set your boundaries and stick to them.
Merge your digital and real world connections. Online and offline should not be two separate worlds, says Siteman Garland. “The best online networking happens offline,” he notes. “Companies are always thinking about big conferences. But I like to throw small events, like a dinner - you get a restaurant, invite 20 people and organize the discussion around a theme. It gets people away from the computer and it’s a relationship builder. “Take pictures, pull out your Flip and make a short video, and then post your content on Facebook and tweet about the event the next day.
Cozy up to bloggers. “You should focus on building genuine relationships with bloggers and content creators in your niche,” says Siteman Garland. “That doesn’t mean spamming them with press releases. The secret sauce is start helping them.” For instance, public relations entrepreneur Elena Verlee began making insightful comments on Siteman Garland’s blog and sharing his content on Facebook and Twitter. And she introduced him to potential guest for his show. “She understood what was important to me,” he says. The result: Verlee got her clients some nice media exposure and was herself a guest on The Rise to the Top because she invested time in relationship building.
What are your smarter, faster, cheaper, tricks for marketing your company? Share them with your fellow entrepreneurs.
Giannis Giataganas IS Consultant, BPM Analyst Bsc in Informatics, AUEB MscIS, Athens University of Economic and Business
You don’t need an enormous marketing budget to create a killer brand. That’s David Siteman Garland’s message in Smarter, Faster, Cheaper: Non-Boring, Fluff-Free Strategies for Marketing and Promoting Your Business (Wiley, Dec. 2010). Siteman Garland, who is just 26, is the CEO of The Rise to The Top, an online television show and resource for entrepreneurs (full disclosure: I appeared on the show earlier this year). I recently had the pleasure of catching up with him and he shared a few key points from his book. Here they are:
Don’t be a product pusher. “You should shift your mindset away from marketing your product and toward being a trusted resource,” says Siteman Garland. A great example of that, he says, is HubSpot, a company that sells software to small business, but whose website focuses heavily on providing its customer demographic with free resources. “They have a blog that has information on generating leads online and Internet marketing,” says Siteman Garland. “And there’s a weekly TV show where they go over marketing headlines for the week. They’re not saying, ‘how awesome is own software?’ They’re showing you that they’re a trusted resource.”
Humanize your Web presence. “Be a human being online and not a company,” says Siteman Garland. “People like to do business with people they know, like and trust. There has to be a human behind a brand.” So allow your personality to shine through on your website and allow your employees to have a presence there as well. For instance, Meathead Movers, a San Luis Obispo, CA moving company that employs student athletes, features employees on its website and allows customers to choose their own moving team.
Be a digital schmoozer. “One of the arts we’re overlooking on line is being able to make small talk,” says Siteman Garland. ”I’ve interview 200 plus people who do this successfully and for them, the Web is like a small town where you know the butcher on the corner. The people who build up the most responsive followings on line are connecting with people on a one to one basis that goes beyond business. Business is becoming much more personal.” So ahead and talk about your dog and your kids online, but set your boundaries and stick to them.
Merge your digital and real world connections. Online and offline should not be two separate worlds, says Siteman Garland. “The best online networking happens offline,” he notes. “Companies are always thinking about big conferences. But I like to throw small events, like a dinner - you get a restaurant, invite 20 people and organize the discussion around a theme. It gets people away from the computer and it’s a relationship builder. “Take pictures, pull out your Flip and make a short video, and then post your content on Facebook and tweet about the event the next day.
Cozy up to bloggers. “You should focus on building genuine relationships with bloggers and content creators in your niche,” says Siteman Garland. “That doesn’t mean spamming them with press releases. The secret sauce is start helping them.” For instance, public relations entrepreneur Elena Verlee began making insightful comments on Siteman Garland’s blog and sharing his content on Facebook and Twitter. And she introduced him to potential guest for his show. “She understood what was important to me,” he says. The result: Verlee got her clients some nice media exposure and was herself a guest on The Rise to the Top because she invested time in relationship building.
What are your smarter, faster, cheaper, tricks for marketing your company? Share them with your fellow entrepreneurs.
Giannis Giataganas IS Consultant, BPM Analyst Bsc in Informatics, AUEB MscIS, Athens University of Economic and Business
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