From the book by Ashok of http://becomerichinfiveyears.blogspot.com
Lot of times, people ask me how I made my money or how did I start. Basically they want to know how they can also make money.
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As regards the articles on MORTGAGE, be careful when taking decision unless you want to become a SLAVE to your debt.
This book is about sharing my knowledge which is worth millions with ordinary and other middle class people who want to become rich but do not know how to do it. I decided to write this book so that millions of people who are not financially independent and are staying poor. All their lives they worked hard but at retirement their social security is not enough to pay rent bills forget about their other living expenses. If they had acted responsibly and saved and at least bought a home they could have easily supported themselves and even left something for their kids and grand kids. Kids and grand kids if you have money instead of them paying you and supporting you at your old age.
Now, if you are ready, let us move on this journey together. I want to take you to a better richer nicer place, where you will feel financially secure and lead a happier life when you retire. In our journey and traveling times, there will be some rough rides and periods. We have to travel long distance. Mind you, we are moving from a poor place to a rich place.
As a kid in India, one time I remember how Europeans used to come to India to climb Himalayas the highest peaks in the world. A lot of them ran out of food or oxygen while they were climbing. A big storm came and they had to camp at a lower peak for a longer time. They lived without food or basic necessities of life sometime for many days. But did they leave their effort of climbing up? The answer is NO. Whatever peak they could reach, they enjoyed it as it was an achievement and experience. Lot of them came back again and again and made an effort to reach the highest peak and some of them finally succeeded. Some of them also quit before reaching few small peaks but at least they tried. Very few also died due to different reasons or when the weather became tough. That did not stop other people to quit climbing.
My journey to make you a rich man, or at least financially independent is not as difficult as climbing the high mountains. Although there will be some effort required from you to initially save some money, and at the end, there is a possibility that some of you will become so rich that you will have so much money— that even if you burn it, you will still be rich. Some of you may not become very rich but will have at least a roof on your head at the time of retirement. Very few might become very rich and then lose everything and go bankrupt it happens sometimes because they over extended and did not invest at the right place at the right time.
Now, if you are ready to become rich, I will request you to pick up a pencil and start reading the book. It would be helpful to underline things, because you may need or like to read them again and again. Once you have finished reading it, start writing what you liked best. Make your game plan. I have tried to write in a very simple language and also have written examples of other people, but if you still did not understand everything, then write me back— I will be more than happy to answer your questions. Your feedback will also help me.
A lot of books in the market will teach you how to buy real estate, hire a broker, find mortgage, leverage, and so on. These things are necessary to learn. Most of these things, people know, but they still cannot do it either because they do not have money and have not learnt how to save and invest their little savings initially. By filling one by one drop you can fill a bucket in no time. Same is about savings by just saving $10 a day you can become millionaire.
This book is written with a purpose to help the real hardworking poor or middle class people who are struggling to maintain or increase their standard of living. There are no quick rich schemes or methods to make you rich overnight.
What is different in this book from others is that I have written case studies of lot of people. In these studies, different people are shown and also shown how they became rich or lost money. There are stories of rags to riches and vice verse- very few stories of riches to rags. Most of rich people are rich because they know how to save and invest right. A common man who has never thought power of saving and investing will benefit from this book. The more you read it, the more it will benefit you. After you read life experiences of some people and how they became rich, you will start relating yourself with one of them. You will be able to see what they did, right and wrong. You will be able to make your game plan to riches.
DON’T RUSH. TAKE YOUR TIME: Please take a few days to read the book, as it is a lot of knowledge. Instead of writing it as a textbook, some places it has been written in the shape of stories to make it interesting or at least less boring.
I have been a very successful investor for 40 years in my life. My experience in investments is worth millions of dollars. I have seen three bubbles when stock market and real estate doubled in no time. When prices go up very fast and are inflated, then the bubble bursts. Real estate and stock prices can loose more then half within years and economy gets into recession. People loose jobs and people don’t have liquidity. Smart people stay liquid never have too much debt. They buy during recession and bubble bursts when prices are low and every body else is selling and panicky.
Most of the people as they don’t understand investments and values will buy when every one else is buying at inflated prices thinking that prices will keep on going higher. Warren Buffet one of the smartest investor and richest man of the world buys when everybody else is selling and sells when everybody else is buying.
As I invest for long term so during recessions value of my properties and some of the best stocks I owned went down, but it was a paper loss as I did not sell them. I did not have too much debt and had good rental income. I lost some tenants during recessions as they could not pay rents and I had to reduce rents for few others so they don’t leave. Even after loosing tenants cash flow from those properties was still enough to pay my bills as well as leave me some profits even in recessions.
When real estate and stock market crashes after few years markets becomes stable that is the time to invest. I invest during recession and buy real estate and stocks at rock bottom prices and within few years have made 100 to 300 percent return on my money. There is still always a risk if prices don’t turn around fast enough or go further down then you need holding power. I only invested in income producing properties at bottom prices with a very good cash flow so even if the prices go down further they still had a positive cash flow from their incomes. For example I bought a home for $62000 in a desire able neighborhood which was originally sold for $190000. House was with a bank and needed some renovations I spent $10000 on renovations and leased it out for $1200 per month. Now if this house goes down in value little bit further for a short time it does not matter as it is paying itself and leaving me $400 per month profit. When markets improve it will be again worth $190000. I bought this house from bank less then price of land.
Governments are never going to be responsible. Every few years because of their fiscal policies people loose. Sometime interest rates are too high other times too low. Sometime Government encourages lending and banks lend money who have no capability of paying it back, then after few years even best people cannot borrow money to run legitimate profitable businesses or buy houses. Many recessions or bubble in the economies happen because of Government policies. In 1979 lot of savings and loans banks failed and were shut down by Government then again in 2008 again banks and other financial institutions failed because Government had wrong policies and no controls.
Real Estate and stock market bubble was nothing else but a big scale fraud and negligence by some financial institutions like banks, stock brokers, hedge funds, builders, contractors, real estate, mortgage brokerage and some dishonest people, who cheated honest hard working people by showing profits and life styles which were short lived and poor people at the end they lost all their savings, credit and instead of becoming rich pushed them into poverty.
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