Wealth Building Lessons

In the November 2004 issue of BusinessWeek, Eddie Lampert was called the next Warren Buffett. At the time, he was single-handedly responsible for turning around the bankrupt KMart and making it a cashcow.

Despite having been kidnapped, he negotiated control over bankruptcy proceedings after buying a controlling stake through his hedge fund ESL Capital. Like Warren Buffett, he started it when he was just 25 years. He studied Berkshire’s annual reports and often reversed engineered the data to analyze how the deals took place.

Bookmark / Email This

Read Full Post »

I’ve mentioned previously that in the long run, I think the US Dollar will continue to lose value and I also discussed several ways to profit from this scenario.

One of the ways, was to invest in foreign currencies. Apparently I’m not alone in thinking this might be a good idea. Amongst those who agree with me is Chris Gaffney, of Everbank. I’m a big fan of Everbank’s products, especially their Japanese REIT CD. According to Chris, who incidentally is Vice President of Everbank World Markets,

Bookmark / Email This

Read Full Post »

Continuing on the thread of Mortgages, today’s post is by guest writer Anders Bylund of MortgageLoan.com.

Rampant mortgage fraud has been driving up home prices for years, and it’s not always easy to catch the bad guys in the act. Learn to pick up on the warning signs before it happens to you.

By now, you’ve heard all about the deflating housing bubble. But you might not have heard the whole story. Did you know that some of the inflation in housing prices a few years back came from mortgage fraud on a grand scale? Federal authorities are on the case now, but shady business has been going on for years.

Bookmark / Email This

Read Full Post »

For most people, their home mortgage is the largest financial commitment they will ever make. However, people will spend more time selecting the kitchen appliances than understanding how mortgages work. Considering that your mortgage will likely be over a hundred thousand dollars, getting a sub-optimal mortgage can cost you tens of thousands of dollars over the life of the loan.

Lets go through some of the common terminology used in the mortgage business.

Fully Amortizing Mortgage : You pay interest and principle payments every month.

Bookmark / Email This

Read Full Post »

I mentioned in the previous post that I’m bullish on gold and that I think in the long term I think it will go up while the US dollar will depreciate. Generally, gold and the US dollar have a negative correlation, so if the dollar depreciates, gold will definitely go up.

I previously commented on some of the reasons why the dollar will depreciate, but another reason is that globally, less and less people want to hold it. Its a basic law of supply and demand. As the demand for something drops (while at the same time the supply increases) the value (both actual and perceived) for the product drops. In this case, the product is the US dollar.

Bookmark / Email This

Read Full Post »

Most people think that since Gold was in a bear market for nearly 2 decades (between 1981 and 2000), its a poor investment. They also claim that its speculative, you can’t leverage it, and its highly illiquid. But none of these are really true.

In January 2000, Gold was trading at less than $300/oz. Today its at nearly $700/oz! Its been in a stealth bull market and not a lot of people have been talking about it.

Bookmark / Email This

Read Full Post »

In the previous post on whether the US would experience a depression I said that this was unlikely, but that a recession accompanied by the devaluation of the Dollar resulting in inflation would be more probable.

What are the effects of inflation on conventional investments?
Inflation causes rising prices. It makes money less valuable. If the price of services and goods double, the value of your investments is effectively halved. It’s as if the prices had stayed the same, but you had just lost half of all your assets. Inflation reduces and can eventually destroy purchasing power.

Bookmark / Email This

Read Full Post »

Yesterday, one of my friends asked me if I thought the US would face a depression. He was pretty certain that a depression would occur, and it would be just like the previous depression where there were no jobs, no money and thus no food.

Some of the commonly stated reasons for the Great Depression are unequal distribution of wealth, lack of savings, high tariffs and war debts, over production in industry and agriculture, and the stock market crash and ensuing panic.

Given these reasons and the fact that we’re currently experiencing all of them, I can understand why one would think that a depression is imminent.

Bookmark / Email This

Read Full Post »

In a previous post I discussed the basics of investing in real estate. One of the key steps is having good property management. Property management can make or break your investment. A bad manager will make your investing experience miserable.

Ideally you’d want someone who’s competent, honest and easily reachable. If you can’t reach him or her, your tenants probably won’t be able to either.

Here are the questions you should ask when interviewing property managers or property management companies.

Bookmark / Email This

Read Full Post »

In a previous post, I mentioned why real estate is such a good investment. However, some people commented that they had gotten burnt by real estate. As with all investments, if you don’t know what you’re doing, there’s a good chance you will lose money. Real estate is no different. So I’ll try to go over some of the basics of investing in real estate.

1. Stick to bread and butter homes

Bread and butter properties are just your basic, no-frills 3 bedroom, 2 bath, 2 car garage homes which are usually around 1250-1500 sq ft. These properties will give you the best rent-to-mortgage ratio.

Bookmark / Email This

Read Full Post »