Fokas Beyond - Investing in the Stock Market The Smart Way [Part 4]

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Welcome to Part 4 of this multi-part series of
blogs where I will teach you a better way to
invest in the stock market. Come back every
fortnight for the next instalment. Or, to ensure
that you dont miss any part of it, subscribe to
our blogs to be notified of updates by clicking
here Subscribe to Blogs If you have missed
previous parts, please click on one of the links
below to read it Read Part 1 Read Part 2 Read
Part 3 In Part 3, we revealed to
you the smarter stock market investment strategy
that has been used successfully by banks and
financial institutions for over 40 years. Knowing
how is one thing. A lot of people have ideas for
making money. The ones who actually get rich from
it are the ones that successfully convert those
ideas into action. Having the right frame of mind
is the other key part of the ingredient for you
to successfully invest in the share market the
smart way. That is why I am going to use Part 4
to help you gain a winning mentality that will
open a path to success and financial freedom for
you. Its a bit longer than usual but it is worth
it to invest a bit of your time to reprogram
your mind for success. Its All In Your
Mind-Set You cannot expect victory and plan for
defeat. It really is all in your mindset. If you
believe the autistic economics we are pedalled
through the mainstream media and various
institutions of allegedly higher learning, the
way to make money on the stock market is to buy
and sell stocks, options, securities, futures and
so on. Sure, but where does it say you have to
sell at a loss just because the stock price is
lower than it was when you bought it?
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When you purchase an investment property and you
find within the year that property to be worth
less, do you sell it? No you dont. You are still
earning income off that property irrespective of
its current value, whether higher or
lower. Unless you buy the first stock you see or
you fall into the clutches of an unscrupulous
broker who advises you to buy what he makes the
most commission from, you should be able to buy
stock with the right education and a set of tools
to pick the right stock that will hang around
and enjoy growth, year on year. Modest growth
certainly, but steady, year on year growth or,
at worst, no fall in value not soon offset by a
return to par. I will tell you which stocks fit
these criteria and how to choose them. You become
educated, then you dont need to rely on
others. It is not rocket science but it does
take a little education in what to look for in a
good stock to buy and hold. Buy. And hold. Not
buy and sell, not day trade the penny dreadfuls
or spend your life online watching the markets
and getting ulcers and high blood pressure
thinking youre making money from forex or even
bitcoin. None of that. Select good stock, buy it
for whatever the price is at the time you want in
to enter the market, then hold it and leverage
it through covered calls to make steady, reliable
income each and every month. Take a look at the
chart and see how the stock market has climbed
steadily over the past 100 or so years. Sure
there have been some drops and even plummets,
but overall the direction of change has always
been upwards. I would be so bold as to say it
always will be, overall, upwards. That is the
nature of the market, the economy, the world and
human nature.
I can remember when I was a kid and a can of soft
drink was fifty cents. You could buy it by the
carton in the supermarket for half that per can.
The retail price charged in the milk bars took
into account the refrigeration and the fact the
shop was selling cans one by one. They needed a
mark-up to provide them with a profit. If you
didnt want to pay the retail price you could
buy it for half at the supermarket, but you had
to buy two dozen cans at a time to
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enjoy the cheaper, wholesale price. So instead
of paying fifty cents for one can, you were
paying 6 for 24. A huge saving provided you had
the six bucks, needed the extra cans of drink
and had the means to store and cool them. If you
were out and about and just wanted a drink to go
with your sandwich or pie for lunch, buying an
entire carton of warm soft drink was not a good
solution. The same can be said for waiting until
the stock you want to buy has dropped to some,
for whatever reason, acceptable price to you.
You could be waiting a long time, even forever.
If it doesnt fall but keeps going up then you
will kick yourself for not having bought in way
back when. Not only that, all the time you sit
and watch and wait and hope the price will drop,
the stock is not out there as a covered call
making you money. Think Now, Not When Think
now, not when. Just as those cans of soft
drink are now retailing at 2.50, I can still
buy a carton of warm ones for a lot less per can
but they still need refrigerating and carrying
home and all the rest. If I had bought 1,000
shares in Apple way back when, if I had bought
gold when it rocketed to US900 an ounce, if I
had If has no place in sensible
investing. If is a gamblers word, a
speculators word. Choose your stocks now and
buy them now. Get them out there and making money
for you from now. Not from next month or when
the price falls to whatever, or if this happens
or that occurs. Now!. The reality is the stock
will eventually go up and cost more to buy then
than it does now, so why wait? If you pick a
stock and wait and it does go down, what does
that say about your choice of stock? Either it
is a temporary drop and will soon recover, or it
is on its way out and you shouldnt have bought
the stock in the first place. This usually occurs
when investors get too clever and try to
discover, single-handedly, the next sure thing.
Far better to jump on the same wagon everyone
else is riding and have been for decades, where
there is a good history of solid performance.
What they call blue-chip stocks and make sure
you do your own due diligence with a Proven
system that has a track record of results and
income generation like Fokas Beyond. So read on
and learn about why I chose to obtain the
education I am about to share with you. I will
tell you precisely why I do what I do and why I
do it this way, and you will understand the
rational behind my method. I am sure once you
learn a little more about me and what has driven
me to get to where I am today you will feel more
confident in reading on and learning my method.
Hopefully by the end of this series of blogs you
will be confident enough to actually apply the
lessons taught. Article continues after the
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New Jobs, New Challenges There are jobs
advertised today that didnt exist ten, or even
five years ago. Computerisation and the Internet
have made sweeping changes to the workplace and
the way we work. Artificial Intelligence (AI) is
also changing the way we work in the future and
in the next 10 to 20 years, we will lose a lot
more jobs to AI. Many of us dont really need to
commute into a place of work, but could be just
as effective telecommuting and working from home,
online. At least, up to a point. Studies show
many telecommuters soon resent the lack of
interaction with colleagues on a face to face
basis. While it is more time and cost-effective
to work from home, not having the chance to swap
gossip over coffee or meet at the water cooler
means more to some than others. Some people
simply cant handle telecommuting. We humans
are, after all, a herding animal in the
main. Australians and Americans do work hard and
surveys in recent years put that commitment at
around 60 hours a week, even though most of us
are paid for 40 or less, 38 hours, 37.5, some
just 35 hours, and that is considered full-time
employment. Few would actually do just the
mandatory minimum, even those in waged positions,
paid by the hour in retail and hospitality,
often find themselves doing unpaid overtime, if
only out of fear of losing their job to someone
willing to work for free, which is what unpaid
hours are. Too many of us are in situations
where, if we lose our job, we are one payday away
from financial collapse and ruin. It is even
worse for many couples, mortgaged way over their
heads and both praying they hold onto their jobs
so as to maintain funding the consumer lifestyle
so many today unwittingly support.
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My dad was fortunate, in some ways, that he lived
and worked (hard) in an era where there still was
some semblance of job security. He only knew one
way to make a living, and that was to go to work
for someone else and to work as hard and as long
as you could. While this is honest and ethical
and to be respected (and I do), it is not
necessarily the smartest or the most effective
way to make a living, and it never has been. The
problem for all those men and women like my
parents is that nobody ever told them it could be
any different. Nobody ever told them how to make
a living working smarter, not harder. One
Hundred and Sixty Eight What if I could make
money without swapping chunks of time? Basically
that is what most of us do. We develop skills
that we exchange for money, usually based on a
dollar per hour rate. I know if I work 40 hours
a week at 25 per hour I can make 1,000 per
week, every week that I work.
Then they take out income tax and of course it
costs me money to get to and from work and I have
my living expenses to cover, so there may not be
a lot left over to save or invest. If I was paid
50 per hour and made 2,000 a week, that doesnt
mean I will have an extra 1,000 now. It just
means my lifestyle adjusts accordingly. Be
honest most of us have taken that pay raise and
spent it. If not right away, over time our
expenses have always crept up to match, and too
often exceed, our income. In any one week there
are only 168 hours, no more, no less. We all get
the same ration, so it really is what we choose
to do with them that makes the difference. Wont
bore you with all that motivational self-help
stuff you can read in countless books it is all
true and everything but this isnt the place to
rehash what most of you no doubt are already
aware of. So lets get back to our 168 hours.
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This leaves just 30.5 hours per week, plenty of
time for a second job, right? I know, I didnt
put in any allowance for watching television,
talking to your spouse, playing with your kids
or anything like that. If I had added just 90
minutes per day for those activities you would
now have 20 hours left for that second job that
is going to make all the difference and elevate
you into the world of wealth and success! If you
make 25 an hour at your main job, how much do
you think you can squeeze out of this second
job? Even if we make this second job pay as much
as our first one, we can only make a maximum of
500. 25 an hour multiplied by 20 hours is 500.
I realise 25/hour works out around 52,000 per
annum, which is a salary in the low to medium
income bracket these days, but lets use this
amount because there are many people making that,
and less, who can and do invest in covered calls
and are making a respectable second income doing
so. Let us ignore for now the reality that anyone
on 52K is really not going to be considered by a
lending institution for a first mortgage of any
size, let alone a second one for an investment
property, but bear with me. The Second Job Myth
Explored Without the second job, our 1,000 a
week nets us somewhere between 700 and 800. On
an income of 60 hours x 25/hour, we gross 1,500
a week, which attracts a tax deduction of
348-482, depending on how we go with our
tax-free threshold. Actually, we could claim the
tax-free threshold on the main job and pay just
178 in tax, then pay the no tax-free threshold
rate on the second jobs 500, which is 126. So
assuming we were living off the first job to
begin with, that leaves us 374 extra per week to
service the mortgage with. Out of that, we need
to get to and from this second job, and there
will be other claims on the extra money so I have
allowed a little over half the gross income from
the additional 20 hours of hard graft to be
available for investing in a property. We now
have an extra, say, 260 a week the bank is
going to love us, throw money at us, beg us to
take out loans with them, right? Maybe. Maybe
not. Presuming you had the deposit, stamp duty
and other upfront expenses under control, at
5.88 interest over 25 years, repayments of 260
a week are usually made on a loan of 177,000.
This doesnt mean the bank will actually lend
that to you, remember my dilemma and I already
owned five properties! A loan of 177,000,
factoring in the 5-10 deposit in cash, puts the
property into the 185,000 to 195,000 bracket.
There is not a lot of property bringing in
rental returns of 260 per week (neutral gearing)
at that price. There is no way you could
positively gear the property in the Australian
rental market and more than likely you would be
relying on a negative gearing strategy to offset
some of that 48 second job tax rate. For those
not familiar with the terms negative, neutral and
positive gearing, they refer to the return on
investment. If you are negatively geared then it
costs you more than it brings in. If it is
positively geared then you make money on your
investment and neutral gearing means you break
even. If you have a rental property bringing in
300 a week in rent, but the mortgage and
property management, rates and so on cost you
310, you are negatively geared. If you are
doing it right you should be able to offset that
10 loss against the income tax you pay. If the
property brings in 310 you are neutrally geared,
and 320 means
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you have to declare that extra 10 a week as
income to the ATO/IRS (taxman) and are positively
geared. Ok? Lets continue. A Lot Of Effort
For For that investment property you are working
60 hours a week, plus commuting time. You have
so few hours for yourself let alone anyone else.
Even if you are single and have dedicated the
next however many years of your life to this
plan how long do you honestly think you can
keep it up? If that second job was what was
keeping you and your family alive, then no doubt
you would hack it as long as it had to be hacked.
So many breadwinners in the USA are working two,
even three jobs, getting paid anything from 2.25
an hour plus tips for some hospitality industry
staff, to just 7.25 an hour, minimum wage, for
adults with families. Many have only 30 hours a
week full-time employment and rely on food
stamps, ironically often spent at the same stores
that employ them on such low wages. They work
the other jobs just to make ends meet and have no
concept of ever breaking this poverty cycle. And
this is the worlds wealthiest nation,
remember. My recent trip to Greece with my
family for 2 months opened my eyes to the current
crisis they face. I saw how average people are
struggling to make ends meet. University students
were earning 1 Euro an hour in jobs working 8
hours a day for 8 Euro. When you take out rent,
food, education, what is left? In Australia we
have it a lot better. Our minimum wage for an
adult full-time employee is currently around 16
an hour, but anyone making that at a job, putting
in 40 hours a week, is grossing just 640 a
week. If they got a second job for the 20 hours
we have decided are available to our
hypothetical example, they might gross another
320 before tax. Tax on the first job works out
at 55 and about the same on the second job.
Lets say you take home 800 for 60 hours of
work, plus however long it takes you to travel
between them and your home. If you are the only
breadwinner you are going to be dependent upon
Family Tax Benefit A and B and any Child Care
Benefit. This doesnt mean it cant be done, the
owning an investment property dream It just
means you would have had to buy a place twenty or
more years ago before the real estate values in
this country went into silly numbers. Or you are
looking at a little cottage in the wilds of
Tasmania where there is no employment for miles
around to provide a first job at minimum wage,
let alone a second one. Sixty hours a week is an
awful lot of effort for not a lot of return when
you take into account factors such as quality of
life, work/life balance, seeing your kids, that
kind of thing. That isnt living, people. If
money is not that important to you, that is why
it is absent in your life. OK,
I admit, that was quite long! But I hope that you
are beginning to see my point. I am trying to
get you to think about wealth generation in a
different way the way successful and wealthy
people do. In Part 5, we are going to conclude
this point and show you the power of being able
to earn money without having to invest all of
your time like most people do. Are you ready?
Click here to read Part 5.