Sunday 19 April 2015

Risk vs. Risky



By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

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But isn't Investing Risky?

I love the pictures I chose for this week's post. Are the mountain goats doing something risky? What's your opinion? It certainly looks risky, doesn't it? Would it be risky for you to make the jump either goat is making?

I met with a friend for lunch this past week and we discussed what risky means. It's something I find many people struggle with, especially when it comes to investing. So we will define both terms; risk and risky and my earnest hope is that you come away from today's post with an understanding that will serve you better in the investing world.

Risk

There is risk in absolutely every action we take every day of our lives. A worst case scenario that would be catastrophic for ourselves and our families. For example, did you drive to work today? The risk involved in driving on a street with other vehicles is I could die or I could kill someone else. It is the same risk that exists each and every time I drive. With driving there are other, less substantial risks as well. My car could blow a tire and I could be late for work. Something could go wrong with my engine and I could get stuck on a main street and have to pay both for a tow truck as well as for an alternate way to get to work.

What about the risks of a relationship? There are massive emotional and psychological risks involved in relationships (as most of us know too well even before leaving our family of origin) including feeling abandoned, physical or emotional abuse, even financial ruin.

Lastly, what is the risk of investing no matter what type of investing you do? You could lose money. Period. That's the risk of investing.

My point is that risk is involved no matter what you do and that the risk remains no matter how you attempt to change how you drive, who you spend time with, or what you invest in. The risk is always there.

Risky

While risk is a term that I'm using to describe the potential difficulty or struggle or discomfort that always exists, risky is a term that refers to how much control we have over risk. Whether or not something is risky depends on 3 things: our experience, our skill, and our knowledge. Let's refer to the three scenarios above for examples.

Driving: I have driven for over 20 years now in multiple countries and invest in AMA insurance just in case I do have car trouble (my experience). I have learned to check my mirrors and be aware of both the driving conditions of any day as well as potential erratic behavior of drivers around me (skill). I have also taken driver's courses to learn how to drive safer and know that driving a certain distance behind others at certain speed affects the potential of getting into an accident (knowledge). In these ways I mitigate the risk of dying or killing someone else on the road. Do these ways take away the risk? Absolutely not. They simply mitigate the risk; decrease the chances of realizing these risks.

Relationships: I have experienced both healthy and unhealthy relationships with others. I have listening to others and relating to others in healthy ways including assertiveness and using boundaries which help both parties. I have worked with various groups of people in the three countries I've lived in and have studied 5 languages now. All of these activities have contributed to my skill in relating to others. And I have learned in many ways how to relate to others well through a master's degree in counselling psychology. Does this mean I can't hurt others or be hurt by others? Definitely not, but it does change the possibility of my getting into a relationship without knowing that there are some red flags screaming danger.

Investing: I invested in my first property when I was 20 years old and have invested in multiple properties since that time. I have learned, often through my experiences, how to manage tenants, set up accounts to take care of surprise maintenance costs, and negotiate with sellers in order to get great deals. And I have spent more money learning about investing than I have spent on both my bachelor and master's degrees. Does this mean I can't make a mistake or lose money? Again, no. It does mean my chances for making money rather than losing are constantly getting better. In fact, I have a mentor in real estate who has never lost a dollar on any investment he has made and he has purchased almost 200 properties in his investing career! You don't have to lose money to learn to invest well.

For me, driving, relationships, and investing in real estate all contain risk. They aren't very risky however because of my own experience, skills, and knowledge. The difference isn't in the car, the person, or the property, the difference is with me.

Final Thought

Look again at the pictures above. I'll ask again: are the mountain goats doing something risky? My guess is that the mountain goats, even the kid, have been making leaps from rock to rock multiple times a day for months or years already. These mountain goats have the same risks as I would making the same leaps. The difference is that the goats are experienced mountain climbers and jumpers with a different skills set than myself. My guess is that these leaps aren't very risky for the mountain goats and I know they are much more risky for me. Again, the difference isn't in the distance of the rocks or the height but rather the individual taking the action.

I encourage you to grow in experience, skill, and knowledge when you make any investment. If you lack in these areas, work with someone who is strong in these areas to start with. My suggestion is that if you have little to no control over your investment you are doing something very risky because you are depending on situations and people outside yourself to invest unless you know and can trust that person and they are accountable for their actions. Did you know that a mutual fund manager makes you pay the same percentage of money regardless of how the portfolio preforms? That's risky to me (also because I don't know each and every stock in the portfolio intimately). Grow in the areas we've covered this week so that you can become an investor who consistently mitigates your risk.

If you have questions please feel free to connect with me, even if it isn't about real estate specifically, through the link below. It will take you right to one of my websites.



Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html

Sunday 12 April 2015

WHY DO I WANT TO BE WEALTHY?


By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

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Money is a Tool

I grew up believing there was something wrong with money. Having too much of it would corrupt and eat me from the inside. While these weren't statements my family or people around me made, it was something we all inherently believed to a degree. Terms and statements such as 'filthy rich' and 'money doesn't grow on trees' in our culture all influence us to a degree.

I've come to understand that money is simply a tool. Nothing more or less. Just like a hammer has the ability in the right hands to create beauty and safety or kill money is powerless without someone handling it. I'm hoping to give you three reasons I sincerely desire to be wealthy. I have not shared two of these desires with a lot of people outside my closest friends and family, but I believe it may be of help on some level for those who read this post to have a differing perspective from those around us whose focus is so much on money every day rather than what money can be used for.

Wealth Frees me to Chase more Important Dreams

Reason #1: Having wealth frees me to think about goals I dare not dream without money. For example, think about Bill Gates and Warren Buffet. They are extremely wealthy... to the point where having a goal for more money is pretty much a complete waste of time and energy. Wealth has freed these individuals to think about larger problems in life than how they will be able to take care of their next bill or overdue debt payment.

When a person or family has little, money takes up a lot of thought time. We tend to place too much focus on the thing that we believe will fix a lot of our problems. People tend to also discredit others who have money and look for the evil in them rather than the good because it helps to vilify those who have something I want; somehow I can feel more content with my situation (no money) if the other situation (having money) isn't all that much better (people become evil).

I want you to think back to when everyone farmed on the planet. What changed culture for the better? Tools for farming allowed one person to cultivate more food, which freed others up to build cities and think of new ideas that had the potential to improve life in many ways. Money has the same ability in the 21st century. If you have enough money to feel safe regardless of bills or payments of any kind, now you will have time and energy to think about greater purposes. Again, money is simply a tool.

Learning to Handle Wealth Allows me to Better Help Others

Every since I was about 4-5 years old I can remember wanting to help people. My ideal jobs were always along the lines of doctor or vet or, one job I have now, a psychotherapist. One beauty of having wealth is that I am not longer governed by how others want to help people. An example is that if I am a psychologist and am employed by the government or some other employer, I need to buy in to what that employer wants me to do and I need to help others in the way the employer tells me to help others. When I am independently wealthy I can now choose to help others the way I believe really best meets their needs.

My greatest purpose for the past 20 years is to become a sage; a person who has wisdom and has learned how to help people so that I can truly offer the help that is needed in various situations. I am passionate about learning about human nature because it allows me to better understand what any person's needs are, often I can see what a person needs and then I help them see it as well. I passionately desire to become someone who young people can come to for wisdom, guidance, and advice without forcing them to do anything. I want to throw myself into other people and how they can improve their lives and the lives of those around them. I also want to do this on a greater scale than simply my own family and friends.

Some people may dream about retirement as a time with no responsibilities on a golf course somewhere. If that is your dream I would like to challenge you today. Humans without purpose tend to lead very empty lives. If the highest purpose someone has is playing golf 24/7 I am willing to place a very large wager that the person feels pretty empty after a brief time of living out that dream (and I have nothing against golf, just in case you are wondering). This is why people with wealth tend to seek out a greater purpose. This is why Bill Gates and Warren Buffet commit their later years and almost all their wealth to making others' lives better.

Wealth allows me to dream big and then pursue those dreams. This has two benefits: It allows me to be satisfied with life knowing I am doing something worthwhile in life and it enriches the lives of others. I meet people daily that struggle with mid life crises or the frustration of living without very much purpose. I believe living without purpose is one of the most difficult things a person can attempt, yet most people do.

While becoming Wealthy I can Enrich Others' Lives

One truly beautiful and almost magical aspect of wealth is that when we begin to work toward wealth we can do this by enriching other people's lives. The more value I bring to others and the more I help them, the more wealth I can gain. I truly believe this is magical on some level because I can realize my dreams that wealth allows me to live out while I help, in part, make the lives of those around me better. This is another reason I am so excited about real estate; shelter is a basic human need and there are a lot of terrible landlords out there. I can actually make more money long term than slumlords when I truly take care of the people who live in the properties I own (this is just one example).

Final Thoughts

I would like you to take another look at the image I chose for this week's blog post. This is a metaphor of what wealth means to me. Wealth allows a little seed of ideas to become a great tree that, when fully grown, provides shelter and shade and rest and even nutrition and safety for both the people and environment in general around it. This great tree can grow in wisdom through it's experiences of growing fully and then share this wisdom with everyone and everything around it. It can become a pillar of a micro community that helps all. There is magic in every oak, maple, apple, or fig seed and there is magic in ideas that can be given full ability to grow with the tool of wealth.



Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html

Friday 3 April 2015

A SIMPLE RETIREMENT PLAN THAT YOU CONTROL

By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

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The Regular Person's Way to Become Very Wealthy

If you owned even one suited rental property in Calgary that does not have a mortgage did you know it easily generate about $2,000 each month after all expenses (calculated by even strict standards)? What difference would it make to you, your retirement, and your family if you owned 5 of these properties when you decided to retire. It would be the equivalent of $10,000 each month in your pocket! Would this be enough for you to enjoy retirement for the rest of your life?

Real estate is a way many families have become wealthy without having to take on a ton of risk or even worry about the management of these properties. I discuss risk in many of my posts and have definitely talked about having others manage a property for you. Today I simply want to focus on the fact that a 5 income generating property portfolio is something most Canadians would be very envious of. It actually is a lot simpler than most people believe as well.

The Steps

In order to accomplish this I would strongly suggest the first step you take is not to purchase a property, but rather learn more about what you are doing (I assume that is why you are reading this blog post). Beyond little tidbits here and there in blog posts you may want to look at taking a real estate investing course. My mentor and good friend Ken Beaton offers courses like this (he actually has a course titled "5 Homes to Freedom"). Another way to learn how to do this on your own is by partnering with someone who already knows how to safely invest and manage a portfolio of properties. I cannot speak highly enough about a good partner to join with because you will learn, by experience, exactly how someone handles potential risks and problems and deals with property managers well. If you would like to learn more about partnering with someone who already invests and understands how to mitigate risk and manage a portfolio you can call me at 587-315-6433 or 1-866-400-6767.

The second step is simply to take action. Work to find a property that matches the criteria you have set up (if you don't know what kind of criteria you need to think about please refer to step one: education) and purchase a property, or two, or however many you can afford. The beauty of purchasing real estate is that you really don't need an incredible amount of money to do so. For just $50,000-60,000 you can purchase an excellent property that will pay you back hundreds of thousands of dollars over the next 4-5 decades! Again, there are ways to do this will even less money up front. Again, it's best to be educated on how to plan for success by learning from others who do this.

Lastly, have a long term plan in place for how to take care of your assets in your retirement. Some good questions to ask yourself are: 1) How can I maximize the amount of money I can save in taxes by how I structure my company? 2) Do I have children, and if so, do I want to pass my portfolio down to them without them having to lose some of the portfolio to pay my estate taxes? 3) Do I, at any time, want to purchase real estate in the US?

Final Thoughts

Usually when I sit down with a family and discuss their plans I am quickly able to show them some creative ways that fit their plans and allow them to make a significant amount of money in retirement by simply taking some time now to plan (and without finding another 2 part time jobs to come up with the money to do so). One major difference between people who are wealthy and those who aren't is that wealthy people typically are good at making and following plans. Ask yourself right now: Do I have a solid plan for retirement? If so, am I following my plan? I will leave you with a quick challenge to do some homework on your own. I challenge you to purchase a few Forbes magazines or do some research online and find out how most wealthy people become wealthy. This is what I believe you will find. Among the wealthiest people in North America the large majority of them are business owners (or they inherited money from business building parents like the Walton family), you will also discover that there are very few wealthy people who have made money from purchasing stocks in the stock market (the big example would be Warren Buffet, but it is difficult to find a second example) because those who become rich from stocks are those who sell stocks to people like you and me rather than playing the market, the second largest group will quickly be seen as those who built a real estate portfolio from scratch! Here's another interesting challenge... Out of those who have made a lot of money by building a business do you know how many park their money in real estate to both keep it safe and help it grow even more? Last challenge: Find out how many people around you have become wealthy by investing in mutual funds. If there is even one person you can find, ask that person how much money they have invested in mutual funds and you will quickly discover that if you had invested that same money in real estate you would be able to have a much larger portfolio than 5 homes by the time your retire.


Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html