<![CDATA[LT Copywriting - Professional Blog]]>Mon, 27 Nov 2017 03:39:17 -0800Weebly<![CDATA[Forget the IRS: Audit Yourself!!!]]>Mon, 17 Oct 2016 22:38:53 GMThttp://ltanswers.com/professional-blog/forget-the-irs-audit-yourself
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<![CDATA[No One Likes You... Learn How to Change That Right NOW!!!]]>Thu, 29 Sep 2016 22:00:04 GMThttp://ltanswers.com/professional-blog/no-one-likes-you-learn-how-to-change-that-right-now
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<![CDATA[Real Estate: The Elite Investment They Don't Want You to Know About]]>Thu, 22 Sep 2016 20:50:26 GMThttp://ltanswers.com/professional-blog/real-estate-the-elite-investment-they-dont-want-you-to-know-about
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<![CDATA[Want to be a Millionaire? You have to think like one. Know these 3 Principals and you will be well on your way. ]]>Thu, 08 Sep 2016 19:32:49 GMThttp://ltanswers.com/professional-blog/want-to-be-a-millionaire-you-have-to-think-like-one-know-these-3-principals-and-you-will-be-well-on-your-way
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<![CDATA[Don't Get Caught with Your Pants DOWN!!!]]>Thu, 08 Sep 2016 19:21:27 GMThttp://ltanswers.com/professional-blog/dont-get-caught-with-your-pants-down
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<![CDATA[The 3 Financial People of the World]]>Fri, 02 Sep 2016 03:12:31 GMThttp://ltanswers.com/professional-blog/the-3-financial-people-of-the-world
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<![CDATA[Thinking like a Millionaire (Part Five): Non-Financial Offerings - Real Estate]]>Fri, 22 Apr 2016 00:06:59 GMThttp://ltanswers.com/professional-blog/thinking-like-a-millionaire-part-five-non-financial-offerings-real-estatePicture
Many people fail to see that skills fade, but assets are forever.

They don’t know their entire financial education in their lives is completely WRONG!

Too many people believe that a good job, good skills, and a positive attitude will make them great wealth. The problem is that it just doesn't work that way. People who make an hourly wage and an annual salary cannot build wealth. This is because their money doesn't work for them, and instead they work for their money. This idea keeps them from understanding that the only way to build wealth is to invest in multiple sources of income that you don’t have to work for, but instead build yourself or purchase from someone else. 

Another misconception of multiple sources of income and passive income is that people assume government and financial institutions offerings such as the stock market, CD’s, and many other financial instruments are passive income. Most of the time however, unless it is a note or bond that pays you regular interest. It is not actually passive income or a stream of income. As a stream of income or passive income is income that you make every day, every month, and every year continuously as cashflow. Stocks and the like only make you money on the sale and never anything in the meantime. Meaning they don’t ever actually cashflow. For example, it is the same as purchasing a piece of fine art and hoping that it appreciates the longer you hold onto it. Which is risky and locks your money up from better uses.

Real Estate as an Investment

Real Estate is the King when it comes to creating people wealth. No other offering has the traits and abilities like real estate does. It is constantly appreciating and gaining value. It is always in demand because people need a place to live. And most important of all, it is a real asset that isn’t going anywhere soon. Allowing you to borrow against it as collateral and even to write off all expenses and costs associated off on your taxes. Now let’s not wait a moment longer to get into Real Estate as an Investment.

Real Estate You Can Buy as Investments

There is so many ways to invest in real estate and the major differences comes to how much capital you will need to put down to purchase them. This could be as little as $40,000 -$50,000 to buy a condo outright, to only $10,000+ to purchase a $100,000 single family home, or to as much as $20,000-$30,000 to purchase a multifamily home (2-4 units). All of which are Residential and can be easily financed. 

Once you get past 4 units, small office buildings, and industrial properties. You’re going into commercial territory and have a lot more hoops to jump through as well as have to start working with commercial lending which can require sizable amounts of capital before they will lend. In the rear, is my personal favorite of mobile homes and parks. Which are hard to sell, but can cashflow in all sorts of amazing ways from lending on the mobiles themselves to charging them for renting the use of the land. All of which is taxed as land which is the cheapest tax rate you can have on property. 

·         Condos/Flats – Condos and flats are some of the best to buy for cashflow as they give the best cap rates. The only issue comes on the resale as many can be hard to finance as an investment property, preventing a large portion of the population from being able to purchase them. 
·         Single-Family Homes – Single-family homes are easy to rent, easy to sell, and easy to finance. 
·         Duplexes/Triplexes/Quads – Small multifamily properties (2-4 units). These property types combine the financing and easy purchasing benefits of a single-family home with the cashflow benefits and less competition found in larger investments. 
·         Small Apartments - small apartment buildings are made up of between 5-50 units, they can make great cashflow, but can be very illiquid on the resale. 
·         Small Commercial Office Space – Buying small commercial buildings and renting out office space to business professionals.
·         Industrial Properties- Manufacturing, warehouses, distribution centers, etc.
·         Mobile Homes - inexpensive way to enter the world of real estate investing and can also experience significant cashflow.
·         Mobile Home Parks - The entire park in which mobile homes are situated on can also be bought and sold. Rent the individual lots to mobile home owners, and as well as have corporately owned and leased ones.

Strategies in Finding Investment Properties

Just as there are a million ways to skin a cat, there is a million ways to find properties for investment. Of the many ways to find the properties for investment. The most common ways are to find the owner directly and give them a cash offer, to find properties that are owned by a lender or bank that they want to get rid of at a discount, or purchase a lien on the property so you can foreclose on the property yourself. 
  • Lease Options – buying the property and “renting” it with the legal right to buy it later.
  • For Sale By Owners (FSBO) – private owners sell their property themselves with a sign or newspaper advertisement, they may want to sell their properties at a discount to avoid paying a realtor
  • REO’s – Foreclosed Property owned by banks can be bought under market if the demand isn’t too high
  • Auction at the Courthouse Steps – During the process of foreclosure, a home is brought to the courthouse steps to be sold to the highest bidder.
  • Buying in Pre-foreclosure - Sellers on the brink of losing their home can be very motivated to sell their home and save their credit and their lives
  • Short Sales - A bank will often take less than the loan amount on a property to save from the hassle and costs of foreclosing and reselling.
  • Tax Liens - When homeowner’s refuse to pay their taxes, the government can foreclose and resell the property.
  • HUD Foreclosures - When a US government ensured loan is foreclosed on, it often becomes the property of the department of Housing and Urban Development.
  • VA Foreclosures – Similar to the HUD foreclosures, the US Department of Veteran’s Affairs sells their homes as well after foreclosing on one of their insured properties
 
Strategies in Buying, Renting, and Selling Properties:

When you finally have the property in your grasp, there are many techniques you can use to maximize your return. Some properties are great for buy n’ holding. Meaning you buy them for cashflow, but are expecting to also make a sizable return on the resale due to appreciation. Next up is Fixing N’ Flip/Hold, which is finding properties undervalue and fixing them up to either hold onto for cashflow or to sell immediately for instant profit. Then there is Turn-key-Investing, this is where you find the property, turn it into a profitable cashflow and sell it as a source of income to a big fish investor. For Big Commercial, there is NNN leasing that entails having the company renting the property takes care of all the trimmings of the property and pays you for leasing the space. Another Buy N’ Hold strategy that can make decent money is to turn your Buy N’ Hold property into a Vacation Rental and charge 3x as much than a normal lease. Then there is hard money lending, where you finance others in their fix n’ flips, buy n’ holds, or primary residence. 

  • Buy-N-Hold – Buy real estate, rent it, and hold it until the market is up and a great buyer comes along
  • Fix-N-Hold– Buy below market value, remodel to force appreciation, and held until the market improves and sell it
  • Fix-N-Flip – Buy well below market value, remodel to market prices, and sell it immediately to get your return.
  • Turn-Key-Investing – fix-and-flipper, but sells remodeled properties to out-of-town individuals seeking a good place to keep their money moving.  
  • NNN Lease – Big Businesses rent the building and pay all costs associated with the building such as maintenance, taxes, insurance, and more. We can own these buildings for highly-passive income.
  • Vacation Rentals – Buying vacation property and renting it out off and on season (Snowbirds)
  • Cash Purchase, Sell on Contract - buy properties and immediately re-sell them to buyers who may not be able to conventionally qualify for a mortgage. Collect a large down payment when using this method.

How to Finance:

Financing is readily available to anyone who has a cash for a down payment. Below is the major ways you can finance your Real Estate Investments. 

  • All Cash - property with no mortgage attached is very stable and a safe return.
    • May not be as great as when using leverage (like a mortgage)
  • Seller Financing - seller owns a property free-and-clear (no mortgage), and can be negotiated with to find a finance deal
  • Unconventional Lending – There are many lenders who will lend on any deal you have as long as the number make sense, this can be anything from landlord loans, had money, and much more
  • Self-Directed IRA – if you have a 401(k), throw it out, it’s time to put that money in a self-directed IRA and make that money finally work for you than expecting some money manager who is just trying not to lose your money than make you any. You can use your money in your SD-IRA to do all the strategies in buying, selling, and renting.
  • 20%-25% Down Conventional Investment Mortgage – buy a real estate investment through a bank. Come up with 20-25% down payment and have the bank finance the rest
  • 10% HomePath Investment Mortgage- These loan types are only available on Fannie-Mae backed bank REOs, but can allow an investor to purchase the home for just 10% down payment with other benefits.
  • Home Equity Line of Credit (HELOC) - with significant equity in real estate, M&T can borrow a line of credit off M&T Real Estate equity.
  • Small Business Loans - Banks often will finance a line of credit or loan for small businesses- to include a real estate investment company

Conclusion:


If you have the mind for real estate or want to hire someone who does (Click Here). Then you should forego a large portion of your portfolio to invest in real estate. It easily as one of the highest returns than any other investment in the world, the only caveat, like anything else, is that you need to do it right to be successful. 


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<![CDATA[Thinking like a Millionaire (Part Four): Corporate Offerings]]>Sat, 09 Apr 2016 19:36:23 GMThttp://ltanswers.com/professional-blog/thinking-like-a-millionaire-part-four-corporate-offeringsPicture
Of the many offerings of the investment world from banks to governments, the sexiest and most publicized is corporate ones. Specifically Stocks, Mutual Funds, and ETFs. Each has their own flavors of the month, but they are all simply “equity in a company”. Most are publicly traded and on the largest stock exchanges. There are also private stocks from privately owned companies you can buy, but they have the issue of not having as liquid of a market as publicly traded stocks because the trading of the stock is private as well. Now you have to understand stocks (equity in the company) are the base for everything else in corporate offerings as stocks make up Mutual Funds and ETFs. Understanding this will allow you to understand our list today.

 Corporate/Brokerage Offerings

Corporate Stocks

Corporate stocks represent ownership in a company, the stock’s price is a representation of how valuable it is according to public opinion. If a company is expected to not do as well as hoped, stock prices will go down as people sell off them off. If the company does a lot better than expected, then the stock price goes up as more people buy them. If there is bad news about the company, then the stock goes down. If there is good news about the company then the stock goes up. This is the way of stocks.

Therefore, it’s not a bad idea to think of the prices of stocks as the expectations of the company. Strong prices tell you people expect it to do well while weak prices mean the opposite. And if you disagree, you can buy the stock in expectations that the price will go up or you can short the stock in expectations it will go down. Shorting simply means you’re borrowing shares and selling them, expecting they will be cheaper to buy back in the future. Not only can you short stocks, you have a million other contracts you can have to make money such as options, which is a contract that sets a price that you can either buy or sell a certain stock for at a subsequent time.

Pros

·         Higher Returns - Stocks typically have the potential for higher returns compared to other types of investments over the long term

·         Pay Dividends - Some stocks pay dividends, which provide extra income or used to buy more shares

Cons

·         Volatile - Stock prices can swing dramatically from high to low meaning your gains today may be gone tomorrow based

·         Uninsured – stocks are the unsafest of all investments as they can become worthless quickly based on investor opinion and if the company goes bankrupt


Corporate Bonds

Next up is corporate bonds. Corporate Bonds is debt issued by a company, and are very similar to government bonds except they aren’t as safe. But because they aren’t as safe, they usually pay out more interest than government bonds. Because when investing, the interest on a debt represents the risk of the investor, called a risk premium. Therefore an investor should be paid more for taking on more risk. Thus, the more creditworthy the company, the less interest it will pay because of the lesser risk. This is not only how corporate bonds work, but all loans from mortgages, auto-loans, and personal loans such as payday loans and even pawn shops. All loans’ interest is calculated based off of how risky the borrower is. The more likely you expect someone not to pay you back, the more interest you will charge to compensate you for taking on the risk.

Pros

·         Pay Higher Interest - Corporate bonds usually pay more than government securities, money markets, and CDs, especially if they are risky bonds

 

Cons

·         More Risk - The Company that issued the bond could suspend interest payments, or even go out of business

·         Commissions - You may have to pay a commission to purchase corporate bonds and affecting your ROI

·         Penalty for Cashing in Before Maturity – cash out before the bond matures, and you may not get back all of your original investment.

 

Brokerage Offerings

Money Market Funds

Money market funds combine a checking account with a mutual fund. When you put money in a Money Market fund, you have all the benefits of a checking account such as high liquidity and the ability to write checks. But while your money is in the account the fund invests it in highly liquid, safe securities such as certificates of deposit, government securities, and commercial money. Meaning you’re making with your money, but because its invested in highly liquid assets that if you want to use your money, you can.

Pros
  • Liquid – gives you access to your money through both ATMs and checks
  • Higher Interest – although they are safe, they have more inherent risk which is why they pay out more interest than other accounts.
  • Safe – legally required to keep the price per share near $1, making it safer than other mutual funds, but not normal accounts
Cons
  • Not FDIC Insured – because they are purchased through brokers and mutual funds, they are not insured
  • Negative Interest - No guarantee that the price per share will remain at $1. Meaning your money is losing value rather than gaining value in your account
 

Bond funds


Bond funds are mutual funds that invest exclusively in Bonds and purchase large swathes of different bonds to diversify and protect your portfolio.

Pros
·         Diversified – owns a little bit in every bond market to minimize risk from one or two bad bonds
·         Balanced Interest – Because the bonds are in many different markets that have varying interest rates, you can have a higher interest rates than just buying only one bond in one market

Cons
·         Fluctuating Yield – being a mutual fund, the yield will change depending on interest rates, buy/sell costs, and other factors that are outside your control. So you never know how much you are going make until you cash out
·         Management Fees - You will pay ongoing management fees, which is fine as long as they make more money than they charge you, as some of the best managers will take all your profits for themselves
·         Commissions – the bane of the financial industry, paying someone to sell you a certain fund. Whether or not the fund is any good for your goals


Mutual Funds

Mutual Funds come in a variety of flavors and each have their own risks and returns. But essentially, you just have to think of them as a basket that holds multiple investments. This basket could have individual stocks and bonds in it or can even have other mutual funds or ETFs. The idea behind them is that you pay someone a management fee to fill the basket for you so you don’t have to do it yourself. And of the many flavors, here are the major six you will see on the market.

 1.    Fixed income funds - These funds fill their basket with investments that pay a fixed rate of return. Usually, government bonds, investment-grade corporate bonds, and high-yield corporate bonds. The purpose of these funds for most people is that they want a guaranteed return on their money so they can sleep well at night.

2.    Equity funds – Equity funds fill their basket with stocks. Unlike fixed income funds, these funds aim to make more money over time by taking on higher risk. These could be growth stock funds that make their money on investing in companies they are expecting to grow quickly over the next few years to sell for a hefty profit at the end. Income funds that pay large dividends and are for people who want cashflow while they own the fund.

 3.    Balanced funds – These funds fill their basket with both fixed-income and growth stocks to try to capitalize on the benefits of both.

 4.    Index funds – To understand an index, you have to think of it as a very, very large mutual fund that covers a lot of companies in an industry. Although the index is made up, their purpose is to show how well a specific industry is doing within the economy. This could be blue-chip stocks that represent the largest and most established companies, the tech industry that is populated with many tech companies, and any other index of companies that can make up an industry.

Therefore, the mutual fund that follows an index, fills its basket with stocks that best replicate the return you’d get if you had purchased all the stocks in the index. (Usually cheaper because management doesn’t have to work as hard)

5.    Specialty funds – these funds could also be called “Niche Funds” as they focus on their basket with specialized investments such as real estate, commodities, or any other niche they specialize in.

 6.    Fund-of-funds – These mutual funds could be called “Meta-Funds” as they invest only in other funds. Essentially, they fill their basket with funds they believe know what they are doing and getting great returns. Piggybacking off their success.

Pros
·         Don’t Need Plugged In – if you have ever traded stocks, you know at times you have to be plugged in 24/7 to make sure your investment is doing well. This includes reading quarterly and annual financial reports. Deciphering what the company is really saying and making a decision to hold or sell. Putting your money in a mutual fund makes all that the manager’s job, leaving you to enjoy your free time.
·         Different Flavors to Choose from – Mutual funds have an option available for nearly anyone’s investment goals. If you want fixed-income, there is a mutual fund for that. You want to take on higher risk for a higher return, there is a mutual fund for that. If you want a combination of the two, there is a mutual fund for that.
  • Diversified – can own a little bit in every market to minimize risk from one or two bad investments
 
Cons
  • Higher Risk – depending on the mutual fund you
  • Management Fees - You will pay ongoing management fees, which is fine as long as they make more money than they charge you, as some of the best managers will take all your profits for themselves.
  • Hidden Fees - Also be wary of the addition of hidden fees they like to sneak in. Mutual Funds are notorious for getting you in the fund and sneaking additional fees afterwards. Although they are legally required to tell you about these fees, they sneak them in the reports they mail to you, expecting you won’t read it anyway. 
  • Commissions – the bane of the financial industry, paying someone to sell you a certain fund. Whether or not the fund is any good for your goals. Be careful on who is advising you and what their true motives are.
 
ETFs

​ETFs (Exchange Traded Funds) are exactly like a mutual fund in that they are a basket of investments such as stocks and bonds and are managed by a manager who decides what those investments will be. The only major difference is that an ETF is treated like a stock in the way it is bought and sold compared to a mutual fund. As a mutual fund cannot be bought and sold, it can only be invested in or out. This means that an ETF can be bought and sold on the stock market, can be shorted and optioned, and anything else you can do with a stock.

Pros
·         More Readily Traded - Traditional mutual fund shares are traded only once per day after the markets close meaning you can’t speculate on the fund to go up or down in price for a profit. While ETFs are traded all day like a stock.

·         Cheaper than Mutual Funds - streamlined compared to mutual funds as the costs are put on the brokerage instead of the investor.  Making less overhead that equates to more investor returns as they don’t have the legal requirements of having a call center for questions or the need to send out monthly reports.

·         Tax Benefits – mutual funds have more capital gains taxes than ETFs because mutual funds have to pass on the costs of every trade before a year to the investor, while ETFs are only taxed when they are sold.

·         Quickness of Buy/Sell – because it’s sold as a stock, this makes it easier to buy and sell to gain exposure to certain industries. You could get the same result by having a mutual fund, but because mutual funds are designed mostly for long-term investors, it can be a process to get in and out of them.

Cons
·         More Expensive than Anticipated – because the costs are baked into the stock, it can be hard to tell if you’re really getting a deal or not.
·         May not make sense for the Long-Term Investor – due to the nature of how it is traded, it may not make sense for a long term investor who wants to hold onto his investment for years to come. The benefits of being a stock are not utilized for some long-term investors


ADRs

The last offering from the brokerage and corporate world is ADRs (American Depository Receipt). This were introduced as an easier way for U.S. Investors to invest in foreign companies. As the bank would purchase a large lot of shares from the company, bundle them into groups, and reissue them in US currency. Although you don’t have to invest in ADRs and you can invest in foreign companies yourself, you’d have to set up a brokerage account and watch the exchange rate as you move in and out of currencies. Making things complicated quickly.

Pros
·         Don’t Need Foreign Brokerage Account – the biggest pro of ADRs is having the ability to buy stocks in foreign countries with your normal brokerage account. This takes the hassle of having to set one up in the country you want to invest
·         Automatically Calculated Exchange Rates – because the bank calculates the exchange rate for you, you can follow the prices of the stock based on your currency and not the foreign companies

·         Diversify your Portfolio – allows you to expose your portfolio to other countries and companies that can increase your return.

Cons
·         Political Risk – with the purchase of an ADR, you now have vested interest in the politics of that country because the government could decide to expropriate the company or your investment.
·         Exchange Rate Risk – may have to be mindful of the foreign companies’ currency, although your ADR is calculated in your currency, strengthening and weakening of the foreign currency and affect the returns you receive.
·         Inflationary Risk – if the government is very poor with their finances, they may print more money and cause inflation. High inflation can make the company becomes less and less valuable each day and your investment worth less and less.

Conclusion

There you have it. Here are the most common offerings from the corporate/brokerage world. Being they are backed by private organizations and individuals, they are the riskiest of all investment as they are not protected from scandal, bankruptcy, or bad business practices. Meaning you need to be careful and understand that with the higher return your expecting, carries with it a higher risk of losing your investment. With that said, INVEST WELL and with DUE DILIGENCE. As they can only get it past you, if you let them. 


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<![CDATA[Thinking Like a Millionaire (Part 3): The 3 Financial Types of People in the World]]>Fri, 25 Mar 2016 05:49:37 GMThttp://ltanswers.com/professional-blog/march-24th-2016Picture
Thinking Like a Millionaire: The 3 Financial Types of People in the World  

There are 3 types of people in this world when it comes to finances. They are the Perpetually Broke Person, the Well-Off Person, and the Highly-Wealthy Person.  

The Perpetually Broke Person never has any money and ultimately lives paycheck to paycheck. This is sometimes due to economic hardship, but these people exist every pay scale as the Perpetually Broke Person is always spending their income immediately after receiving it, and how much income is less important than how quickly they spend it. This is mostly on consumer goods such as clothes, electronics, and other items that can empty a bank account quickly. Another aspect of the Perpetually Broke Person is that they are amazingly good at giving away their future wealth by getting loans on things they don’t need or can’t even afford such as new cars, home improvement projects, and vacations and getaways.  

The Well-Off Person is the next step up and does much better financially then the Perpetually Broke Person as they know how to manage their money by saving it for emergencies and big purchases. They also have good credit scores because they pay their bills on time and know how to take out loans responsibly. This allows them to grow wealth slowly and live well for most of their life. However, because the Well-Off Person usually is dependent on their job, they can find themselves in dire straits if they are laid off, injured and can’t work, or have other costly events that dry up their savings. This mostly due to the fact they are afraid to invest in anything, but sure things.

The Highly-Wealthy Person on the other hand knows how to manage their money by having an emergency fund, has a high credit score by paying their bills on time, and know how to take out responsible loans just like a Well-Off Person. The only difference is that a Highly-Wealthy People know how to make their money work for them with or without them. They understand these 3 Principals of Money.  

Principal One: You can’t do everything yourself.  

When creating wealth, the most important principal you need to take to heart is to understand you can’t do everything yourself. Which is why when you’re creating money with your money, it’s important to know you need to delegate a lot of the work to other people. Especially in hiring people. For example, in real estate you hire contractors to do your fix n’ flips and hire a property manager to manage your buy n’ holds. You do this because even if you know how to do it, it doesn’t make any sense for you. Why focus on only one or two properties when you can have ten working for you by having the right people in charge. In stocks, why would you learn how the market works and plug yourself in when there are people you can hire to do it for you 24/7. Instead, enjoy yourself.

Principal Two: You have to take calculated risks.
 
Principal Two simply means you have to risk money to make money. If you don’t risk anything, then you can’t make anything. This is the pinnacle of investing and what keeps many people from doing it. As they are more worried about losing a hundred dollars on a bad investment and would rather spend a hundred dollars on something worthless they don’t need. This makes many investors afraid to pull the trigger when investing and fall for the fallacy of the perfect deal. Where they will turn down even the best deals because they believe there will be a better one over the horizon. The only way to overpass this fear of losing your investment, is to embody the concept of Sunk Costs. Sunk Costs are costs that you have sunk into an endeavor that will never pay off and you will never get them back. The idea behind sunk costs is that although they are lost forever, it should not affect your decision in shutting down the investment. If it isn’t going to work, it isn’t going to work and you need to accept beforehand that the funds spent were a calculated risk and there loss was expected to happen if it failed. Accepting sunk costs will allow you to avoid throwing good money after bad.

Principal Three: If you can’t understand it, then don’t invest in it.  

Too many people get into the hype of something. They listen to too many experts on the subject. Too many experts on the news. Too many “experts” in their family and friends. And they find themselves putting all their money into something they have no understanding of. This can be from complicated companies, products they use but have no understanding of their business model, and other financial instruments that are hard to explain, let alone understand. This is why for many investors, they need to stick to what they know. If its stocks, stick with stocks. If its real estate, stick with real estate. If it’s a business or company you know through and through, then stick with it through and through. The idea is that you have to have an understanding of an investment, how it works, and its ability to grow in the world we live. This entails having to research the subject, know its past and present, and the major things that can affect it. The only way you can ensure you don’t get screwed is to have at least a basic understanding of what you’re investing in.  

Conclusion:

Knowing what Financial Type of person you are will allow you know where you need to go from here. Knowing if you spend too much money and bust your budget means ou have to create financial discipline. If you are defensive with your money but seem to want more, than you need to start thinking about how to take more calculated risks. If your wealthy, you need to figure out better investments to get higher returns so you can even do more than you ever could have imagined.


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<![CDATA[What If The World Followed a Certain Pattern? (General Systems Theory: Episode 1)]]>Wed, 09 Mar 2016 22:35:14 GMThttp://ltanswers.com/professional-blog/general-systems-theory-episode-1PictureEverything is Connected in One Way or Another
Life is but a system.

A closed system that has so many variables that the human mind sees it as an open system.

But even if the human mind cannot comprehend the system itself, does not mean it doesn’t exist.

As an underlying current in nearly all aspects of life that, it is taken for granted and remains unseen to many. This is the idea of general systems, general systems theory, and general systems thinking. Although it is a simple concept that can become infinitely complex. It is used to identify and understand everything that man has come to interact with. Therefore, if one fully comprehends the ideas emplaced in general systems theory, it will allow them to have a foundation to understand everything else.

Because unlike most people, general system theorists do not create a new system for each thing they learn and understand, but apply what they learn to the tried & true system they have already honed in their learning and thinking process.

In essence, people in general create millions of systems and processes inside their minds as they learn. But a general systems theorist brings all those systems into one and simply moots the outputs and inputs to satisfy the new stimuli or information.

In becoming a Meta Learner, you must stop creating new processes and systems with each new subject you learn. You must instead turn your mind into an information placing machine, that constantly takes in it, places it in the different outputs and inputs, and allowing you to associate it to the patterns, processes, and systems you know previously.

This can be done by training the mind to think in visuals (pictures & flowcharts), diagrams (Venn and Fish & Bone), and webs (ecosystems). As you need to see each new piece of information as a puzzle piece that fits in the general systems in life. As you collect more, the easier it is to get the gist of how the different inputs and outputs affect the system itself. As small pieces make small differences and big pieces affect in big ways.

This can be applied in all aspects of life from markets, economics, sciences, societies, and more.

 The clear definition of systems, systems theory, and systems thinking is as follows:

Systems - a group or combination of interrelated, interdependent, or interacting elements forming a collective entity; a methodical or coordinated assemblage of parts, facts, concepts

General System Theory - Systems theory is a trans-disciplinary approach that abstracts and considers a system as a set of independent and interacting parts. The main goal is to study general principles of system functioning to be applied to all types of systems in all fields of research.

Systems Thinking – Understanding that everything, to include chaos, has an organization to it and being able to formulate a structure to simplify the inputs and outputs to understand, comprehend, experiment, and enhance it in nature or synthetics


Types of Systems

There are a few types of general systems to include Open vs. Closed, finite vs. infinite, and real vs. theoretical. Each one is in essence on the other side of the spectrum of each other.
 

Closed System - A closed system as its name implies is a system that is not affected by its outside environment.  An example is the chemical reactions and the electrical wiring of a house.


Open System – an open system is one that is affected by its outside environment such as the human body. It is affected by temperature, food/water, shelter, and culture.

Finite System – a finite system is a system that can only be sustained as long as it has input to allow it to run. An example would be a car with a gas tank. The car would be the finite system as the fuel would be the input.

Infinite System – an infinite system is a system that has the ability to run perpetually forever and is nearly impossible to obtain, but is useful in the theory and practice of sustainability. An example would be wind energy through a windmill to power a house.

Real System – A real system is a system that works in reality and given to “human” forces produces a desired result in the real world. An example would be an ecosystem model that monitors and lists every factor that ultimately affects the system.

Theoretical System – Theoretical systems are those that cannot exist, but provide models to simplify and build Real System Models. An example is Closed Systems as every system cannot be created in a vacuum and is affected by process losses and its environment in some way.


How Systems Work

There are three main bodies one needs to know to fully comprehend a system. These are known as the stock, inflows/inputs, and outflows/outputs.

Stock – is defined as a “whole” that has a unit of measure which reacts to inflows/inputs and outflows/outputs.

Inflows/inputs – are defined as units of measure that affect the stock by going into it. The difference between inflows and inputs is the “human” or outside factor. Because inflows natural stream into the system and inputs are added from an outside force with intention.

Outflows/outputs – are defined as units of measure that affect the stock by going out of it. The difference between outflows and outputs is the “human” or outside factor. Because outflows natural stream out of the system and outputs are intended results desired by an outside force. 

Thus, a simple system to understand is a lake. The amount of liters in a lake would be considered the stock. The inflows/inputs would be any flow of liters into the lake that increase the stock while outflows/outputs would be any flow of liters out to decrease the stock. 


The 3 Spectrum Levels of a System

As anything in life if not more so with systems, there is a constant struggle to find balance. In that struggle, there are 3 levels that a system can reach. They are known as Unsaturated, Harmony, and Saturated.

1.       Unsaturated

                This level is achieved in a system by having outflows surpass inflows. When that happens, the system dries up and quits functioning. Like a bank account, if the money spent outweighs the money saved then the bank account quits functioning as you won’t use it. If the outflows are severe enough then the system will implode in on itself as if you begin to charge your bank account into the negative, the bank will close your account down.

2.       Harmony

                This level is achieved by having inflows equal to outflows. This is what all systems want to attain as it will allow the system to function perpetually. An example is temperature, as it gets hot, we use ac, as it gets cold, and we use a boiler, thus trying to maintain that comfortable or harmonious temperature.

3.       Saturated

                This level is achieved when the inflows surpass outflows. When this happens, depending on what type of system it is, the result is beneficial or disastrous. In a system that can handle and sustain an infinite amount of inflow and force such as a bank account, then the system will be infinitely beneficial. However, if the system is unable to handle excess force or overflow. It will explode as it can’t take the intake. An example of this would be an engine that can only handle a certain load. If the load is too much for the engine, the engine will explode as it can’t take it. In all, Saturated Systems are running at full capacity. 



Conclusion

Taking these lessons to heart will allow you to think as a General Systems Theorist. Understanding how inputs and outputs affect stock will allow you to easily take everything you learn from now on and plug it into what you already know. Instead, of reinventing the wheel like most people do. You now can build upon your knowledge to create something even better without having to start from scratch.


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