Buying versus Renting: Which is the best choice for you?

This age old question has been debated by experts for years now. Some come to the conclusion it’s cheaper to buy while others proclaim renting is easier on your wallet.

When it comes to homes most people assume buying is cheaper than renting.  Tell that to the residents of San Francisco or New York. In those cities it’s almost always cheaper to rent than buy.  But if you live in cities like Detroit or Cleveland your answer may be different.

Truthfully deciding whether to rent or buy should be based on a lot more factors than geography and the price of the home.

An old boss of mine recently wrote an article where he debated whether to buy or rent a home in New York City so he could be closer to two of his sons.  His letter detailed all the costs that go into buying an apartment there like property taxes, maintenance fees, association costs and insurance. In fact he went through a detailed cost analysis of both scenarios before deciding on which way to go.
This got me thinking about my own house. Mr. Patterson and I bought our home about four years ago.

When Mr. Patterson and I bought our first home we were so excited! I thought I finally found a place where I could paint the walls whatever colors my heart desired and put as many picture holes in the wall as I liked.

We went to closing with our heads full of ideas on where we would place our furniture and the upcoming parties we couldn’t wait to throw. That is until we saw the paperwork. We quickly realized that although we were buying a home we didn’t really own it. After putting down enough money to cover a 20 percent down payment and closing costs we saw that we only owned one fifth of the home and the bank owned the other 80 percent.

The thought that the bank could take our home if our financial situation changed for the worse scared the crap out of us. So we have made paying off our mortgage an important priority. After we have maxed out our retirement accounts for the year we put whatever extra money we can towards the mortgage.

Fast forward to four years later and $55,000 in additional payments and we now own somewhere closer to 40 percent of our home. I think that works out to where we own our dining room, study, family room and master bedroom. Just two more bedrooms, a kitchen, living room and another bathroom to go before we own it all!

Ever since Mr. Patterson and I calculated how much of our home we actually own I’ve been thinking about what it will feel like to own our home outright. No more monthly payments to make ever again!

Oh wait, that’s not true I thought. Even after we pay off the mortgage and officially own the title to the house doesn’t mean this house won’t still cost money us each and every month.

No matter when I pay off my house I will continually receive bills for property taxes and insurance. Not to mention the monthly maintenance costs I’ll still be responsible for our utility bills, yard maintenance, and pool.

We quickly realized that “owning” our home will still cost us tens of thousands of dollars a year. Even when we get the title to our house that tells us we now owned our home outright, we won’t be able to control future costs (we know our property taxes will go up eventually).

It dawned on me that these same principles applied to more than just my house. The same is true for furniture, exercise equipment, boats, and nearly everything else you buy. Just because you buy something doesn’t mean you own it and owning it doesn’t mean your item won’t cost you more money down the road.

While this financial lesson was an unhappy one, I can’t say it wasn’t all bad. Really it was just the opposite. It showed me how to calculate the true cost of my purchases and has helped me make better purchasing decisions ever since.

From then on when I considered any major purchase like a home or a car I factored in the total cost of ownership (TCO). The TCO of an item is the purchase price plus any and all costs the item will cost me to use it while I own it.

When buying a car, the TCO includes not only the sticker price, but the cost of any necessary repairs, new tires, insurance and such over the length of time I will likely own it for.

Let’s use the example of a car when deciding whether to buy a new or used car. Last year on Yahoo I read about one couple’s experience buying a new car and a used car around the same time. The wife got a brand new Mini Cooper for $24,000 and the husband got a used Jeep Wrangler for $4,000. After five years both cars were paid off.

They financed the Mini Cooper at a rate of 4.5 percent after putting $3,000 down. In the end the new car cost them about $27,000 in principal and interest. The Jeep was bought outright at the beginning so the cost remained the same at $4,000. At the end of the five years, the new car was worth about $10,000 for a net loss of $17,000. The Jeep, after the same amount of time is worth about $2,500 for a net loss of $1,500. In terms of depreciation and cost to own the used car wins.

But there are other factors to look at when it comes to the total cost of ownership, like routine maintenance. The brand new Mini Cooper came with a full warranty and maintenance package. It knocked the maintenance costs for the new car down to $0 over the course of five years. The Jeep was a different story. It came with no warranty and no maintenance package. Over the course of the five years he had to change the oil five times, change the brakes, get a new radiator, and have the tires rotated; all of which cost him about $1,400. So in this category the new car was the clear winner.

The total cost of ownership for the Jeep was $2,900 over five years ($4,000+$1400-$2500). While the total cost of ownership for the Mini Cooper was $17,000 ($27,000-$10,000). In the end the used car has a much lower cost of ownership over the same amount of time.

The next time you are making a big purchase decision, like buying a home or car, remember to think about the total cost of ownership. Look beyond the sticker price.  Always remember to take into account all the costs involved. Then divide them by the number of years you expect to own or use the possession. This will give you the total cost of ownership.

This buying principle has the potential to save you tens of thousands of dollars, perhaps more if you begin using it now. My old boss used this principle to save himself about $200,000 over the course of ten years by realizing it’s cheaper to rent an apartment than to buy one. And I intend to use it the next time Mr. Patterson and I buy a house, car, or any other major purchase. I hope you will too.

Keeping Money in Your Pocket,

Nancy Patterson

The Effective Newsletter: Your Gateway to Success

When a marketer or entrepreneur like you is trying to get a business started, the key to success is to get the attention of and build relationships with prospects and potential customers.

Sure, it's obvious. But I wanted to mention that simple fact right at the top, as many businesspeople in startup mode seem to forget it. Anyway, there are hundreds of methods for marketing your business, especially online.

But one of the best ways to promote your online business is actually a simple “updating” of a form of marketing in use for decades in the offline world.

I'm talking about a newsletter, which is simply a publication sent to a group of subscribers. The forms of newsletters we're talking about today are free – you'll see why in a moment.

The newsletter contains specific information and advice that they are interested in. But as a marketer, you're not sending your prospects this newsletter out of the goodness of your heart. Your goal is to get these folks to know, like, and trust you and your company so they'll buy your paid products.

You see, for many companies, it's quite difficult to convince a prospect to spend money on their first visit to a website. With the newsletter, full of valuable and useful free content, you have regular contact with those people, allowing them to get to know you well enough to actually spend money.

What can you talk about in a newsletter?

There are tons of financial and investing newsletters, for example, that offer investment advice and news. Natural health newsletters are also huge. But really a newsletter can be about any subject that people have an interest in – and you're willing to publish.

No wonder there are dog training newsletters, organic tomato growing newsletters... Pretty much anything you can think of... there's a newsletter.

In the old days, newsletters were sent out via snail mail. If you had thousands of subscribers, postage could be pretty expensive. That expense was a barrier to entry of many businesses that wanted to put out a newsletter but couldn't afford it.

But in your case, the newsletter is online and sent out by email. It could come in the form of the body of an email, an attached PDF, or even in “page turning” software that replicates the experience of reading a print publication. However you deliver your newsletter, your delivery costs are very cheap because it's all digital.

As you can see, a newsletter is many things: an informative document, a sales opportunity, a call to action, and an introduction of your business to potential customers. A well-crafted newsletter can mean the difference between your business breaking even and breaking the bank.

In this article, I'm going to tell you how to craft the perfect newsletter. You'll learn to grab the attention of people and get them to buy what you are selling. Whether you're selling advice, widgets, or a lifestyle, an effective newsletter is the first - and arguably the most integral - step in securing those all-important sales with your online business.

The Email Newsletter as Marketing Tool
A newsletter introduces potential clients to you, your business, and your products. For this reason, it's longer than a banner ad, more detailed than a sales email, and gives the potential client just enough information for them to want more. Remember, in the newsletter model we're discussing today, your newsletter is free and offers valuable free information. But you're NOT giving away all your secrets.

The best information – and the product itself – has to be paid for.

An effective newsletter is not selling your product directly – although you might include some ads in your publication; it is selling yourself and your competence. Present a newsletter that hits all the right notes, and it literally doesn't matter what you're selling; people in that audience will be interested and be willing to pay to learn more.

So what goes into powerful newsletter?

First, you need to identify your audience. Are you targeting wealthy retirees in the market for Mexican vacation villas or are you going after work at home moms?

Once you know who your audience is, research them. What topics are trending in your targeted demographic? What are their concerns? Identify them and address them. Let your reader know that you know exactly what they're going through. And then - and this is critical part - let them know you have an answer. Don't give them the whole answer in your newsletter; just assure them that you possess the answer, whatever that may be.

This is the essence of an effective marketing newsletter. You want to come off as not only competent, but authoritative. Your clients need – and want – to trust you.

This brings me to step two: research.

Research is your friend. Research will make you money. Research will grow your client base, because nothing lends you credibility like accurate information. Throw in figures; not complex equations, but throw some numbers around. Add a visual element to your newsletter – whatever is appropriate to your niche. It could be a graph or pie chart or a sidebar with fast-facts or illustrations.

Incorporating visible statistics and data not only adds a dash of graphic stimulation to what could otherwise be a block of text; they are also easy to understand and pack a load of important information that could sway an on-the-fence client to a paying client.

An Integral Part of Your Marketing Package

While a strong newsletter is a vital part in any marketing campaign, it's just one piece of the puzzle. So, accordingly, it must fit in with the others. Other pieces of your marketing campaign might include a promo videos, email blasts, banner ads, social media campaigns, and so on.

The thing to keep in mind is that they should all push the same message. Ask yourself what you’re selling whenever you create an ad or content. Staying on topic is vital to your success.

Telling a Story

Above all, an effective marketing newsletter needs to engage the reader's interest. You could have the greatest product for sale since the electric light bulb, but if your marketing newsletter reads like the owner's manual for a lawnmower, well, all I can say is, "Good luck!"

That's why it's so important to craft an engaging newsletter. And nothing engages a reader like a good story. You don't have to be Hemingway, but couch your product and company information in a clean, simple story.

Maybe tell about the first time your product succeeded. Maybe talk about the Eureka! moment when an idea hit you. Or invite well-known experts in your niche to contribute content. Nothing lends you credibility like positive endorsements from third parties. If you don't know anyone in your industry personally, feel free to contact them via email. Most of them will be happy to oblige.

Avoid industry-specific jargon. Avoid cluttered lists of technical specifications.

But DO tell about how your product changed your life and the lives of others. Talk about how it could change the life of your newsletter reader. Include testimonials of people who have already tried your product and found success.

The Writing of the Newsletter

Now, you might be thinking, “Heck, I'm no wordsmith! How am I supposed to write a slick newsletter that will entice buyers?”

Not to worry! Look, most people can write a perfectly good newsletter. You know the subject already. Just write like you talk. Of course, for a busy entrepreneur that responsibility can get time-consuming. So there is no shame in going “outside” in that case.

There are plenty of writers out there – well-qualified marketing writers, no less – who would be more than happy to take on the writing duty for a small fee. All you'll need to provide is some basic information about your product or service, contact information, and any other points you want hammered home. Advertise on Elance.com or Craigslist.com and you'll soon have plenty of offers coming in.

Industries that Love Marketing Newsletters

The beauty of a marketing newsletter is that it can prove effective – and has proven effective – for just about every industry there is. Banking? Check. Retail? Check. Real estate? Check. Small business? Check.

Whether you're selling dominoes or diamonds, a well-crafted newsletter will increase your profit margin, guaranteed.

A Few More Basic Rules for Success

While there is no definitive formula for crafting the perfect marketing newsletter, there are a few tips that will serve you well:

• If it's an email newsletter, keep your subject line enticing, informative, and respectful.
  
• Keep the length to about a page; if you're sending out monthly newsletters, this can be longer.
  
• Use a simple and approachable writing style.
  
• Give enough information to grab your reader's attention, but leave them wanting more.
  
• No fancy fonts, please.
  
• Proofread your newsletter. And then proofread it again. If you have a buddy who majored in English, ask him to look it over.
  
• Remember, first impressions are crucial. Spend time crafting the perfect headline.
  
• Write a number of different newsletters with different sales tactics: some direct, some indirect, some hard-hitting, some soft; then split test to see which was the most effective and concentrate on that type.

If you follow these simple rules and practice, you'll be crafting effective marketing newsletters in no time. But remember, there is no secret formula that guarantees your product's success. Practice, practice, and practice some more. If you do that, you'll be an expert in no time. And that's when your marketing newsletters start transforming into money in your bank.

I wish you the best of luck!

John Hollister

P.S. I just gave you the tips you need to start crafting profit-boosting newsletters. But here are a few more resources to keep you on the right track.

Resources

http://www.informationweek.com/smb/ebusiness/5-tips-for-effective-newsletters/229402140

http://www.startawildfire.com/free-resources/articles-and-hot-tips/8-elements-of-effective-newsletters

http://www.constantcontact.com/learning-center/hints-tips/volume7-issue8.jsp

http://www.ducttapemarketing.com/newsletter
http://www.marketingprofs.com/newsletters/marketing/

http://www.aweber.com/email-newsletters.htm

http://list.ly/list/1gt-must-read-digital-marketing-newsletters

http://www.mynewsletterbuilder.com/

http://wpicommunications.com/articles/

http://www.smallbusinesscomputing.com/biztools/article.php/3879861/Top-10-Marketing-Tips-for-Great-Email-Newsletters.htm

A Beginners Marketing Plan

Hello Friend, 

I went to a conference about a year ago to try to meet more people in the internet marketing industry. I wanted to meet some more joint venture partners and the only way to do that is to ask. 

As someone with a well-established business conferences have been hit or miss for me over the last few years. There are a lot of people I meet who are in the earlier stages of running their own business. When I meet these people I always seem to have the same conversation with them. Here is how the conversation usually goes: 

Me: I love your idea for a new business. How do you plan to market your idea?   

Conference attendee: Oh that won’t be a problem. This is such a cool idea that everybody will want it. 

… And it usually goes downhill from there. 

I am absolutely amazed at how many great entrepreneurs have no marketing plan, no testing budget, not even a clue that they NEED marketing. 

Let me assure you, as an entrepreneur who has started and run not one, not two, but three online businesses that you absolutely need to market your business. No matter how good of an idea you have or how passionate you are about your business, it’s not enough. All the passion in the world isn’t going to make you a dime without doing something to get the message out about your new business. 

When I started each of my businesses I knew I needed a strong marketing campaign to bring in customers. I used six different marketing techniques. Even now, after years of being in business I primarily use these same six ideas. 

I’m a strong believer in media buying. Media buying is where you buy advertisement space on other sites to promote your product. You find lists you like and send out an offer to their list for a fee. You can make serious money and bring in thousands of new customers this way. This was the first thing I did to start one of my businesses. One day I had no customers, the next day I had twenty thousand and five grand in my bank account. Not a bad day’s work. If you’ve never done this before I suggest you work with a broker to find lists for you. Or you can check out Hidden Secrets to Internet Wealth. It’s cheaper than working with a broker and it gives you the names of a bunch of proven lists. All of which I’ve used in the past. 

Whenever a person wants to start a business, but doesn’t have any products of their own to sell yet I encourage them not to wait until they are ready. Instead I tell them to try affiliate marketing. This is when you sell other people’s products. You sign up for another businesses affiliate program; they send you all the links and materials you need to start selling for them. I love affiliate marketing because of how easy it is. The other company takes care of fulfilling the order, answering customers questions, taking payment, etc. basically all of the hum drum parts of running a business. You just sell the stuff and sit back and collect checks! This is a good way to make extra cash even if you already have an established business. I still do affiliate marketing in my own business!

One of the most important things to do when running a business is to create content. Content provides a wealth of marketing opportunities. In the internet marketing industry this is mostly referred to as article marketing. Article marketing is the act of providing content, usually a one page article on a timely topic (such as an article on tax tips during tax season) to various outlets that then publish the work. The article contains your business’ name and website address. I have submitted content to submityourarticle.com andfreearticlesubmission.org in the past with good results. Good articles can bring in lots of traffic.  Content accounts for nearly 2/3 of the traffic I get from the three biggest search engines, Google, Yahoo and Bing. It’s cheap to create and converts leads to customers better than search. 

Another cheap way to get your business’ name out there and find customers is to book speeches at industry events. Create a calendar of all industry events for the next year and contact the organizers about speaking at their event for free. Doing this for free is necessary to get your foot in the door. You want to develop speech materials around the theme of your business. For example I speak at internet marketing conferences across the country on making money online and media buying. I don’t charge a fee for speaking, but I do ask the audience if they’d like to hear more from me by signing up at my website. Or I sell a product at the end of my speech that goes into more detail about the topic I’m speaking on. It’s a great way to make some quick money by selling a product, accumulate new customers and establish yourself as an expert in your field. 

A totally free marketing method to get your business’ name out there is to write a press release. You can easily find a template online to show you how to write one. If your press release is timely and uses good keywords for current events it can get picked up by a reporter from the news media or by other online news outlets. This can open the door for more publicity in the form of radio or television interviews, quoting of your copy in newspaper articles, and other public relations activity. And whenever the media needs someone to comment on a story related to your industry, you will be the one they call on. When people search for your company’s name, the press releases will show up in a search. Every press release that is written will get posted on multiple sites. Most of these sites will link back to your website which, in turn, helps your SEO and page ranking results.   

I’ve saved my favorite marketing method for last on purpose. It’s a tactic I use all the time in my own business to get new customers and make a lot of money. Joint Ventures.  A lot of times those words scare business owners, it sounds like a tedious, difficult process. This couldn’t be further from the truth. In its most basic form, joint venture marketing can be as simple as swapping ads with another business. It’s great because it garners sales and new customers for both sides. A win-win situation. Look for complimentary businesses with similar list sizes as you and ask to do a joint venture with them. The worst they can say is No and you move on to the next guy! This is a great marketing technique for a business no matter what stage it’s in. 

Make your own list of marketing ideas for your business. Include some of the ideas on the list above and ideas of your own. Include marketing ideas you've used before and those that you haven't. Add marketing strategies you've seen other companies use. Then start putting them into practice one by one. Aim to try one new marketing idea a week. Keep using the ones that work, discard the ones that don't and watch your business grow. 


Regards, 

Mark Patricks 

Seeing Your Goals Through

Hello Friend, 

A new you starts with a dream... 

Let me tell you up front that if you do not have a dream, you will not become a millionaire other than by winning a game of chance. It's just too hard. 

To make this kind of money you need to be laser-beam focused, and you can't be that if you only have a half-hearted interest in what you are doing. You know this is true. 

How? Just look at some famous multimillionaires who still keep working ten or twelve hours a day, even though they don't need the money. 

Why do they do this? Because they have a passion for what they do. They would probably do it without payment! 

Dreaming is a type of visualisation. It is visualisation plus passion. These are the things that you really want to be, to have or to do. If you do not achieve these things over (say) the next ten years, you are going to be seriously disillusioned and upset. 

You should be able to write a list of six such things. If you cannot think of a single one then you are most unlikely ever to live a life of power and passion. Also, your chances of making big money are vanishingly small. If you’re like, this is your first reality check. 

Can you think of a few things about which you are passionate? One or two things which you care deeply about? Just one would be a start. 

Don't beat yourself up if you cannot immediately think of something. It is hard to dream up a better life for yourself due to the decades of negative conditioning you have allowed yourself to accept. How often did your teachers, parents and friends encourage you to dream and ask you to share your vision with them? Approximately never? I thought so! How often did someone shoot your fledgling dreams down in flames or pour scorn upon them? Small wonder that your dreams are not on public display. 

Here is a little exercise that might help. 

Imagine walking into a room and meeting the 'you' of ten years from now. What will you be wearing? Where will you be living? What will your lifestyle be like? What car will you be driving? Will you be running a business? If so, how successful will you be? What will your net worth be? 

You really only have three choices here about how the ‘you of the future’ will look, and this is where the power of this exercise lies: 

1.    Somewhere in between how you are now, and a depressed, broke and scruffy vagrant. 

2.     An exact clone of how you are now - absolutely nothing has changed in a decade. 

3.    A happier, wealthier, healthier version of the ‘you of today.’ 

Only a suicidal depressive would visualize number one. Number two is effectively saying that nothing will change; you will not grow over the next ten years, you will not get richer, happier, wiser, healthier - anything. The 'you of tomorrow' will be indistinguishable from the 'you of today.' 

So that just leaves number three, and if you selected this it remains for you to back this glittering vision of the 'future you' with all the force of your imagination. 

Having imagined how you will be in the next ten years, here is a really neat to trick to help you achieve it. 

Ask yourself the following questions: 

“What do I need to achieve in the next 12 months in order to make my future dream a reality?” 

“What do I need to do in the next month to start myself on this journey?” 

“What can I do by next week to prepare myself for the journey?” 

“What can I do right now, today, in order to start this process off?” 

Do you see how this works? 

You need to dream, but this is not enough. Dreams come a size too large so that you can grow into them and this means that dreams are too large to realize all at once. 

Our minds are finite, and so all large projects must be broken down into bite-sized chunks otherwise we become discouraged by the scale of the endeavor. This is one of the secret keys of successful people. They are undaunted by large projects, because they use the trick of breaking them down into simple steps. Each step is easily manageable, and can be completed in anything from a few hours to a few weeks. 

In contrast, it is useful to analyze the situation of people who are stuck, both monetarily and in spirit, if only to allow you to avoid these errors. This is based on my experience of decades of dealing with both winners and temporary losers in the game of life. 

1.    They are frightened. Their lives are dominated by fear. They see the world as a scary, threatening place and crave security, dullness, mediocrity. They long for every day to be the same as the last and become scared and upset if even a small change breaks the monotony of their days. 

2.    They completely lack visualization ability. If asked to visualize their future self, they would stare at you blankly. They are not pretending. They do not even understand what you mean by this exercise. If you force them to try, they'll come back with nothing more than a shrug. 

3.    Assuming that you could drag some sort of dream out of them (for example wanting to be worth a million dollars some day) then they would be wholly incapable of working backwards from that point to the present, and suggesting actions they might have to take in order to make this come about. Again, they are not faking. There is now; there is the future; and in between, a yawning, fathomless chasm - a blank. 

4.    Even if you were to write the steps out, 1-100, with a check box next to each one, they absolutely lack the discipline even to start on the task, let alone complete the steps. At the first slight downfall, or negative comment from a friend, they will give up. In any situation that requires a choice between working for a better future, and instant gratification now, they will unfailingly choose instant gratification. 

But this is not you, hopefully. If you recognize yourself here, then don't worry because it is possible to change and get out of this 'stuck' pattern you are in. 

You need to develop the habits of a winner. You want to enjoy today, but have an even better tomorrow waiting for you. To do this you must model yourself on winners - people who have achieved great things in their lives. I am talking here about 'winners' and 'losers' but I do not mean the term 'loser' in the usual derogatory sense. By a 'loser' I mean someone who, by their own definition of winning and losing, is falling well short of where they want to be. By a 'winner' I mean someone who, by their own definition of winning and losing, is pulling ahead of the game and achieving that which they set out to achieve. 

This is how a winner operates: 

1.    They are brave. Like all human beings they feel fear, but have mastered it and are able to rise above it. While they acknowledge that there are frightening people and places in the world, in general they view the world as a benevolent place, full of great opportunities and wonderful people. This is a vital principle. Winners view the world as mainly benevolent with some bad bits. Losers see the world as mainly malevolent with some good bits. 

2.    They are good visualizers. They have the ability to imagine the future, often in glorious Technicolor detail. They have high self-esteem, and know that they are worth more than they have at present. Life to them is an exciting adventure to be lived to the fullest. In contrast, losers view life as a terrible chore to be somehow 'got through' with as little pain as possible. 

3.    They are intelligent and logical. If they have a dream of the future, they know the secret technique for making this happen. Today's dreams are tomorrow's realities. They know that large projects cannot be tackled by finite human minds unless they are broken down into manageable, bite-sized pieces. They are able to work backwards from a future dream to the present day, and to list the logical steps required to make that dream come true. 

4.    Having written down the steps required to achieve their goals, they know what is required next. Action. Up until this point, all of their plans amount to little more than ethereal hot air. It is action which grounds the circuit and allows the current to flow. They know that the journey will be long and hard. Any worthwhile dream will involve hard work, concentrated effort and some suffering to attain. They need one more quality. Discipline. This keeps them going during setbacks, when the list seems too long, and when others heap mirth and derision upon their efforts. 

Five Tips to Turbo-Charge Your Dream 

1.     Dream of a brighter tomorrow. Your yearning power is more important than your earning power. 

2.     Be rational. Mysticism is your mortal enemy. There are obvious, logical steps between here and your dreams. Write them down in bite-sized chunks and follow them like a route map. 

3.     Act. All is dust without action. Action is the key. 

4.     Be disciplined. Life is tough. Fight. Others want you to fail. Ignore them. The world is against you - go your own way. People will spout nonsense - ignore it. 

5.     Start today. Procrastination is the thief of time. Winners start right now. Losers chatter to themselves that they will start 'one day real soon.' It never happens. 

Regards, 

Mark Patricks 

Are You Really at Risk?

Hello Friend, 

Risk perception is perhaps the single biggest thing that stands between most people and wealth. 

Think about it. How many times are you blasted with the message “RISK-FREE!” in advertising? 

Because advertisers know that risk is the greatest thing that stands between a consumer and a sale- in fact, risk is the single biggest factor affecting whether we do absolutely anything at all. Your mind is subconsciously making risk assessments all the time at ultra-high speed! 

Let me explain just how this happens every day... 

1)    “Shall I walk across the street at this point rather than the pedestrian crossing?” Risk: Getting run over probability increases but will be a quicker route to stores. 

2)    “Shall I buy this new brand of beans?” Risk: May not like this brand, but they could be better than my usual. 

3)    “Shall I drive at 40 mph in a 30 mph limit?” Risk: May get caught but probability is low as no speed cameras. 

4)    “Shall I ask that girl out?” Risk: May get rejected and everyone laughs at me, but she’s got great…er…personality, so could be worth it… 

Shall I?….Shan’t I? On and on it goes! So as you can see, you have vast experience in the field of risk analysis already; all we’re going to do this week is harness and nurture that skill to a conscious and rational level. In that cute example we also mentioned a key word: probability. This is the essence of correctly assessing a risk- i.e. the probability of being in a car crash is higher than being in a plane crash so the rational person prefers to fly. But we’ll come back to that.    

In the world of advertising and promotion this natural human aversion to all risk is called ‘fear of regret’. It’s the one thing going over and over in our mind before we buy anything, and for that matter, before we assess the risk in the millions of decisions we make in our lifetime. And the older we become, the more we know about regret don’t we? This is why older people are seen as more risk averse. 

Unfortunately for most, this weighing up of risk becomes paralyzing- they simply freeze-up out of fear and do nothing. How many times have you said after the event, “If only I’d…..”? And so we constantly beat ourselves up because of this fear of regret when we don’t have to. 

Simply learning to rationalize risk and using fact to see the actual risk instead of the flawed perception of risk, enables us to make the best decision under the circumstances every time. 

Let’s play another game. Okay, I tell you that whatever business idea you come up with and whatever investment you go for, there is absolutely no risk attached to it whatsoever. 

You can invest any amount of money in the whole thing and you’ll get it all back whatever happens once you know the outcome of your decisions. No catches whatsoever. What would you do? 

Clearly, if you’re sane, you would scrape together every cent you could find and borrow, re-mortgage your home, and invest in all you could. You quite literally have nothing to lose and can only gain. But unfortunately our world isn’t like that… 

Everyone would take up this offer, become wealthy, give up work and live happily ever after. Surely then, this must prove my point that perceived risk is the single biggest factor in deciding whether people do anything. More importantly, it’s the single biggest factor that stops people from venturing into opportunities they might prosper from. ‘Opportunity’ is a much nicer word than ‘risk’, isn’t it? 

The situations you are faced with are opportunities rather than risks- it’s just that some are poor opportunities and some are good! 

If you took the other extreme and said that whatever investment you got into, it would fail and you would lose 100% of your investment, clearly no-one would venture into business and there would be no jobs as a result. Another completely hypothetical extreme just to prove a point. 

The reality in our world exists in between these two extremes. The overwhelming majority of people wear a veil of confusion, and it masks their view from the facts, and replaces it with dogma and fear, being unable to separate business from personal superstition. 

The very word ‘risk’ is derived from the early Italian word ‘risicare’ which means “to dare”. In other words, risk is a choice rather than a fate; the actions we dare to take are what the story of risk is all about- and that story defines the very meaning of being human. 

And here is that story… 

The basic roots of risk started in common gambling. In Greek mythology, three brothers- Zeus, Poseidon, and Hades- played a giant game of craps to decide who would have the heavens, the seas, or the underworld. Pontius Pilate’s soldiers cast lots for Christ’s robe as he suffered on the cross, according to legend. The Roman Emperor, Marcus Aurelius, was often accompanied by his personal croupier! Later in England, the Earl of Sandwich invented what became known as ‘the Sandwich’ so he could eat without leaving the gambling table, having one hand free to hold his cards. George Washington hosted regular games in his tent during the American Revolution, and gambling became synonymous with the ‘Wild West’ that followed. 

But that’s just gambling- games of pure chance- in this area we really are talking about pure luck. But as you now know, correct risk assessment is more of a science, and the true story of risk lies with the scholars of the past. 

The ancient Greeks had a word, ‘eikos’, meaning probability. The philosopher, Socrates, defined it as “Likeness to truth” or in other words, a prediction of something that was likely to happen. Advanced for their time, or what? Having said that, the ancient Greeks also sacrificed their children to make the winds favorable! We still have a long way to go… 

Let’s do that then- the first millennium. Just after 1000 A.D., something terrible happened that was to change the world forever- The Crusades. As the Dark Ages gave way to the Medieval Ages about this time, much was changing, but some things hadn’t changed: European knights were still a bunch of bloodthirsty thugs who enjoyed beating the crap out of each other. But now, the Pope gave them a new enemy to focus on: Muslims. So they set forth to ‘free the Holy City of Jerusalem from the non-believers’. The retaliation soon after gave birth to the name, ‘Jihad’… 

Anyway, if there was something positive to come out of this barbaric invasion and pointless clash of cultures, it was numbers- the tools of this thing called probability. The Christian invaders learned much from their enemy, the Arabs, who in turn, through their invasion of India, had become familiar with the first ever numbering system, invented by the Hindus. This transformed the world- everything from commerce, navigation, and science shot forward all due to numbers and probability. Over the next five-hundred years, the abacus was replaced and the belief in pure fate and chance was blown to bits. 

Now we arrive at the period of The Renaissance- the turning point of creativity and education in history. In 1687 a man named Edward Lloyd opened a coffee house on East London’ docks. He offered insurance to people on a number of things including highway robbery, death by gin-drinking, and assurance of female chastity (hey, is that insurance product still available?) The very business that is most renowned for risk assessment was born- the insurance industry- and Lloyds Bank of London is a prominent player to this day, as you may know. 

People were starting to see risk as a science now, not a gamble. In the late 1800s a man named Francis Galton proved something called ‘regression to the mean’ existed and helped in forecasting events with amazing consistency (probably THE best trading strategy in existence). A scholar named Laplace shunned the concept of luck and stated, “Present events are connected with preceding ones by a tie based upon the evident principle that a thing cannot occur without a cause that produces it.” Many other scholars including Bernoulli (the very same man that was to invent the principle that allows an aircraft to fly) and de Moivre concurred. 

We now arrive at a more recent date to see this art of risk as science perfected. In 1979 two people named Kahneman and Tversky, proved the idea that risk perception is flawed, with the majority of people leading to incorrect decisions. The reason being because the overriding factor in human decision is not so much risk aversion as fear of losing, and that people respond to emotion rather than logic. 

Their famous work was carried on by a man named Thaler. One of the experiments he conducted was to ask many different people two questions each (ask yourself these questions too as an experiment): 

1) “How much would you be willing to pay to eliminate a one in a thousand chance of immediate death?” 

2)  “How much would you have to be paid to accept a one in a thousand chance of immediate death?” 

The typical answer was $200 for question one and $50,000 for question two! Clearly peoples’ perception of value for the same item varies wildly. 

This is the very essence of how you can become financially free. Can you see? The questions were asking the same thing but in different ways- the amounts of money given as answers should have been exactly the same! It’s just that question two sounds more alarming. 

A lot of blood, toil, and trouble has occurred to bring you the fact that you can be master of your own destiny, that risk can be measured, and the results capitalized upon. 

Many intelligent people gave up their lives to prove this, and they would be turning in their graves to see how things have progressed: the entire population becoming obsessed with The Lottery and other games of chance; belief in luck and fate are the realm of primitives. 

The discoveries these pioneers made is fantastic news. Now we understand that we aren’t obliged to accept the spin of the roulette wheel or the cards we’re dealt- we are free- our decisions count and we can change our world. So why not start right now? 

Best wishes, 

Mark Patricks 

“Everybody wants to go to Heaven, but nobody wants to die.”

Hello Friend, 

There is a price to pay for getting rich, just as there is a price to pay for everything you attain in your life. Many chatter about being willing to pay the price, but few will actually do so. If you are serious about becoming a wealthy man or woman, you need to be prepared to pay the considerable price tag associated with that blissful state. It doesn't come free. 

So let's talk honestly, frankly and openly about exactly what is involved if you are to make your fortune. You will not read what I am about to tell you in any 'feel good' book.     

To make a lot of money, you’re going to have to give up many things. A proper family life, a decent social life, friends and many other things besides. Often you won’t even know what the price is when you start out. Nevertheless, you must resolve to pay it. This is the factor which stops most people from getting rich. They want it for nothing and are not willing to sacrifice anything at all to get it. This is a fantasy. 

Most people sign up for a great many of these fantasies which they believe to be 'the truth' and this has a huge impact on their wealth-creating efforts. Often it even threatens survival. 

Most people barely survive financially. Worse still, lacking an iron-grip control on even the basics of their lives, they mumble the incantations of success, expecting magical results. That is, results which do not exact a price or penalty. 

In a society which seeks to crush individualism and make each one of us a worker in the state collective, how can an individual possibly be to blame for his own misfortune? He cannot. This would give the individual some personalpower, and that cannot be right! No. It must be society, greedy capitalists, manipulative industry, bad luck, his upbringing, peer pressure, his race, lack of education, his age, lack of opportunity, or any one of a hundred other factors all of which are out of his control. In short, he is not to blame, according to modern thinking. 

If you doubt this, read the following and see if it has a familiar ring: 

"Yes, I admit it. I'm flat broke and I owe tens of thousands of dollars to other people which, to be honest, I don't have a prayer of paying back. But it's not my fault. I was fired  from my job and thrown on the scrap heap at 40. Those greedy bosses call it downsizing - but I don't notice any downsizing in their fat wallets. Twenty years I've worked there, and that's all the thanks I get. I'm a heavy- motor electrical engineer, and there just aren't that many jobs around for someone of my abilities. I've applied for a few but they always want younger men. I guess losing my job made me kinda depressed and my wife couldn't take it. She wants a divorce and is taking me for every penny. I don't have any savings, and the money I get from the state is a joke. Sure I'm broke, but as you can see it's not my fault." 

Let me translate this litany of blame shifting. 

"I am such a weak and feeble human being, that I have been unable to master one of the simplest and most basic skills of life; that is to spend less than I earn. My greed exceeds my means to pay for it, and so to fuel my desires, I must borrow from the surplus created by others. I have spent every penny of my own money, and squandered the surplus created by others which they entrusted to me on the promise that I would pay them back. I have broken that trust and they are unlikely to get their money. I am not a trustworthy human being, but it's not my fault. 

“I know that the world is a dangerous and uncertain place, but for twenty years I decided to ignore that fact. Consequently I have zero savings, but it isn't my fault. I needed all the stuff I bought, and a lot more besides. I did some training once, twenty years ago, and I fully expected that to last forty years. 

"The world owes me a living, and society should provide jobs for people with my abilities, regardless of whether they are needed or not. Bosses should provide jobs for workers regardless of profits. People need jobs, and it is the duty of bosses to provide them. I have no intention of retraining. I have made a half-hearted attempt to get another job, but because I'm so weak, I get quickly discouraged and so I have given up. Now I get free money from the state. This is nothing like enough for me to live on, and I think the state should give me a lot more free money." 

I know you do not hold the same attitudes as this man - you would not be reading this if you did! 

So given the terrible poverty, both financial and spiritual of the majority of people, what can you do to raise yourself up into the top 2% (by Western standards)? How can you achieve this success?     

It’s all about realizing that you cannot have it all, and that you must pay a big price (give up something) in order to attain wealth. You need to be crystal clear in your own mind that you are willing to pay the price, otherwise abandon all hopes right now of becoming rich. 

It is vital that you apply full focus to this very important area if you are not to drift through life aimlessly. 

So, it's time for some hard truths. The first thing you have to know is that you can't have it all. 

Despite what those slick-suited seminar-gurus tell you, every decision you take in life has a shadow partner - the life you cannot now lead because you took that decision. 

A few simple examples will prove the point. 

You take a career decision to become a surgeon; but doing this precludes you from being a lawyer. 

As a woman you decide to marry and have a family. The consequence is that your career is on hold for a minimum of five years and more like fifteen or twenty. 

You decide to go to the movies; you cannot also spend the evening in a fine restaurant. 

You decide to give up drinking; you now cannot go drinking with your pals. 

You decide to start thinking for yourself; you lose most of your 'friends.' 

Every decision you take has consequences. 

Every decision, no matter how seemingly inconsequential, sets your life on a slightly different course. This is why, as Jim Rohn says, "Everything matters." 

Even inaction has its consequences. 

If you decide just to float down life's stream, and the current sweeps you randomly into the left tributary, you cannot also enjoy the right tributary. If you sleep all day, you cannot also play your favorite sport on that day. 

This tiny handful of examples should prove to you immediately that you cannot have it all. It is so obvious that it is hardly worth saying, and yet there are at least two top seminar gurus on the circuit at the moment who are claiming that you can. In fact, I'm fairly certain that I have seen a book and a tape series entitled "You CAN have it all." Wrong! But far more importantly, every decision you take to improve your life, no matter how trivial, will have an associated cost - a price that you will have to pay in order to achieve that success. 


Regards, 

Mark Patricks