March 2, 2015 at 20:01The path to financial independence from Bodo Schaeffer (Part 2)
This is the second part of the abstract of Bodo Schaeffer's book, “The Path to Financial Independence”. I am writing abstracts from famous books from this list from Milfgard, and this is another of such abstracts. In the first part, we talked about what needs to be UNDERSTANDED in order to begin our path to financial independence. Now it's time to figure out what to DO.
Bodo Schaeffer compares the mechanism of saving money with a chicken laying golden eggs. You need to grow capital in such a way as to continue to live on interest. Below we will look at how to calculate how much money and where to save. In the meantime, we decide that you need to save money. Bodo Schaeffer calls this saving, but the phrase “save money” is closer to us, and that is what he means.
There are only four reasons why people do not save money:
And now, on the contrary, a successful position:
There are two serious reasons why most people don’t get to save money. First, they put off too much. 10% is really not much, however, if you start to save 15 or 20%, it will be much more difficult for you. Secondly, they postpone at the end of the month, when they have already spent everything without a trace and there is nothing to postpone.
What to do if income has increased? —Transfer to the account of the “golden chicken” 50% of the increase in your income. Example: you earned 10,000 rubles a month and set aside 10%, i.e. 1000 rubles. You have been raised your salary to 15,000 rubles, i.e. by 5,000 rubles. Take 50% of these 5000 r., I.e. 2500 and start putting them off. As a result, you spend every month 11500r. And save 3500r. Thus, the level of consumption will grow more slowly, and the level of savings faster. These 50% will not affect you much, because you are not used to a new level of income.
You need to start with a very interesting exercise: try, starting from one ruble, save twice as much every month. The result is this series: 1 + 2 + 4 + 8 + 16 + ... +131072 = 262 123 rubles. It will take 18 months and during this time you will learn to look for new sources of income, train the “muscle of earnings”, create fixed capital for a major fortune.
An elementary truth: if you want to collect two million, you can put aside 400 rubles for 35 years. monthly at 12%. If you want to achieve the same result, but in 25 years, you will need to save six more: 2400 r / month. But the same result can be achieved in 10 years, but will have to be postponed for 10,000 p.
If you invest 1000 rubles, after 30 years you will receive:
It seems to make sense to place money at a higher percentage.
Rule of thumb: Divide 72 by the interest rate and get the number of years needed to double the capital.
So, your money will be regulated by two questions:
Make sure that the numbers with which you answer these two questions are maximum.
What does inflation do with money? She depreciates them! In a few years you will lose half the value of money if they lie just like that. But what happens to the goods? They are getting more expensive, i.e. their value is increasing. Thus, at a time when money is depreciating, goods are getting more expensive. Maybe it’s worth investing in goods? The most acceptable option is to buy a stake in an enterprise producing goods; and there’s a pretty simple way to do this: purchase stocks.
We often hear the expression: "he plays on the stock exchange." The key word here is "playing." In fact, what most players who we somehow call investors do is called gambling. They are trying to win on instant course changes. However, “games” with money are not included in our plans, because we will invest them.
Basic Rules:
Stocks have always been and always will be more profitable than money.
Money is getting cheaper, and the cost of goods and manufacturing enterprises is growing.
The Royal Way.
Firstly, in order not to be in an unenviable position, you need to choose only the most reliable shares of the most reliable enterprises. These should be the best banks, the best oil producing companies or companies in the IT industry. Any, but always the best.
Secondly, you must have the right mix. Think not only about companies, but also about industries, countries or regions. For example, the Asia-Pacific region is now actively developing.
Thirdly, you should invest no more than 50% of the capital. Buy when the selected stock is cheaper by 10-30% and not more than 50% of your money. You need sufficient reserve capital in order to purchase at the right time. Buying can take place no earlier than the stock will fall by 30% of the original purchase price and you can buy no earlier than 6 months after the first purchase. Failure to follow this strategy threatens that the stocks are bought too hastily and there is no longer anything to buy with a really deep depreciation.
R. Kiyosaki writes that mutual funds (in Russian realities these are mutual investment funds) cannot be regarded as a good investment, because it is strange to trust other people to manage their money. However, Bodo Schaeffer writes the opposite: he says that if you do not want to deal with all these stocks and do not want to keep track of everything that happens with your chosen enterprises, you can entrust this matter to professionals. They have specially trained analysts who read books and become smart. They follow events, receive information from open and closed sources. As a result, the yield on some mutual funds for 2014 was 60-70%. Compare this with today's highest bank rates of 16-17% and conclude.
The idea is to give your money to the management of someone who earns with you. The interests of banks are directly opposite to the interests of customers: when a client receives a large percentage, the bank loses its profits. Conversely: the lower the interest on deposits and the higher the interest on loans, the greater the difference between them and the more the bank will earn. This is a direct contradiction with the interests of creditors and debtors.
What about mutual funds? They earn with you. They get commissions on the profits you get. Thus, they climb out of their way to make you well. Of course, this does not always work out, but long-term statistics show that the top 10 Russian mutual funds show fairly good results.
Bodo Schaeffer considers precisely stock funds, i.e. those that invest in stocks.
Is it possible to lose money in funds? Yes, it is possible if you sell your units at the wrong time and you can only do this if you urgently need money. You urgently need to receive cash and you are selling units at a price that is not favorable to you. If you are in no hurry, there will be no such problem. Yes, there are seasonal or “crisis” recessions, but each recession is followed by an upsurge and you just need to have patience to wait for this upsurge.
You should choose reliable funds that invest your money in reliable stocks. Look at the package that they manage. This should be a stake in promising markets and industries.
Who allows money to lie on a savings book will be saved to poverty.
Minimum plan: financial protection.
There may be situations where your sources of income may suddenly run dry. The reasons may be different: health, unemployment, market failure, etc. At this time, you should have a safety amount in order to make decisions with a cold mind and look for new sources of income. Make a list of your monthly expenses. Consider what can be reduced and optimized from this. Now multiply the received amount per month by the number of months for your peace of mind. This is the amount of time it takes for you to recover or find a new job. Personally, I multiplied by 6.
It turned out that in order to achieve financial independence I need only six months. I do not live in Moscow and spend very little. Perhaps in the capital such an optimistic result will not work.
The average plan: financial security.
This is what you must do in order to live on a percentage of your capital. Determine how much money you need per month for a comfortable stay. Now you need to understand how much you need to have in order to receive such income per month? Bodo Schaeffer offers a fairly simple formula: multiply your monthly expenses by 150. As I understand it, he proceeded from fairly low interest rates for Germany.
Personally, I am using an online calculatorI calculated for myself at PIF rates at least 20% per year that I need to postpone 4,212,000 p (taken even with a margin). And this amount can really be accumulated, putting aside 36 thousand per month for 6 years. Nice picture: 6 years and you don’t have to worry much about your financial situation.
You can take it into account on the basis of how much you have per month or based on how long you would like to achieve financial security.
Big plan: financial independence.
You should always remember that you should not cut chicken that lays golden eggs for you. In other words, never touch your capital.
The first thing to do is find out how much your dreams are worth. You need to list the main points of your dreams and put numbers next to them. You can write how much you can save and determine how long you can get it. Thus, a completely realistic financial plan can be built.
And the most interesting: how much money do you have to earn per month in order to pay for this whole thing? Personally, it turned out that in order to achieve financial freedom and simultaneously support two projects, I have to earn 115800 p. If you seek financial freedom and support one project, not two, I have to earn 95800r.
You need examples. People whose success you are observing, analyzing and can repeat. They, in turn, also had examples. This is called the "race for the leader." Examples are easy to find: look around and see who is the best in your area. Gather all kinds of information about this person, study the articles, find out his phone number and make an appointment with him.
You need a mentor. 99% of the most successful people had mentors. Bodo Schaeffer's last mentor was a billionaire. From such a person, you can learn more in six months than in normal mode in ten years.
An important point: you should only listen to more successful people than you. Naturally, this is applicable within the scope of the activity in which you want to develop success. In the financial sphere, this must be a very successful person, and, for example, in the spiritual sphere, this person should be, at least, not an atheist.
How to get a good mentor? Bodo Schaeffer tells his personal story (read in the original source). You must be persistent, purposeful and benefit the mentor. Show the benefits and prepare for the question: "Why the hell am I supposed to teach you?" Below are 17 practical tips to help you find a mentor:
Network of specialists.
You can create a very good habit: every month to meet a new interesting person: a professional in his field. Meet new people and before each such meeting, think: how can I help this person?
A lot of people write about this, including and Bodo Schaeffer, however very few of those who read about it do. It's about charity. We all would like to share money when there is enough of it. And so we can wait forever, but we will not decide to give a tangible part of our income. Know: regardless of what our income is, for so many people on the planet our income is fabulously large.
But they say that if you give back at least 10% of your income, you will return much more. Who gives him more money. There are important reasons to help you better part with money:
To whom to give?
You need to give it to someone who really needs help and to whom your money will help to rise, not to fall. For example, if you were asked for money for beer on the street and you gave, you helped a person to degrade. If you brought 500 children to the film “Battalion”, you give them a chance to think a little about history and heroism. Be honest and evaluate the consequences of your actions.
Who really needs help? The answer will come as soon as you are ready to act. Now, for example, help “Food of life. Donetsk ” or you can help some other really good and important project.
I wish you happiness! Please write below comments and share your experience with the application of the above techniques.
PS:in general, reading books and then applying it is very cool. Personally, I was inspired myself and entered into an agreement with Sber to work with units in their investment funds.
Save money (saving)
Bodo Schaeffer compares the mechanism of saving money with a chicken laying golden eggs. You need to grow capital in such a way as to continue to live on interest. Below we will look at how to calculate how much money and where to save. In the meantime, we decide that you need to save money. Bodo Schaeffer calls this saving, but the phrase “save money” is closer to us, and that is what he means.
There are only four reasons why people do not save money:
- They hope that later they will be able to earn much more, so there is no point in putting it off now.
- They want to live well now and do not want to limit themselves. They say that putting it off is difficult.
- They do not consider saving money important and believe that they cannot change this point of view.
- They think that this ultimately will not work. Inflation, low interest, crises, etc.
And now, on the contrary, a successful position:
- Not income, but saving will make you rich.
Habits are very difficult to change and incomes only increase the scale, but do not change the proportion. If you put aside 10% of income earlier, then after increasing income you can easily do the same. However, the opposite is also true: if you did not save anything, you will not do it even with a threefold increase in income. - Saving everyone brings pleasure and is not burdensome at all.
When you save money you pay yourself. After all, you pay everyone around: to the store, dentist, hairdresser, secretary. But you forget about yourself. Just consider saving as payment to yourself and do it at the beginning of the month as soon as you receive the money, and not when you have nothing left. Set aside 10% of your income. Managing 90% of your income will be as easy (or just as difficult) as with 100%. - You can change your views on saving at any time.
- Saving will make you a millionaire. You will easily get a good percentage.
There are two serious reasons why most people don’t get to save money. First, they put off too much. 10% is really not much, however, if you start to save 15 or 20%, it will be much more difficult for you. Secondly, they postpone at the end of the month, when they have already spent everything without a trace and there is nothing to postpone.
What to do if income has increased? —Transfer to the account of the “golden chicken” 50% of the increase in your income. Example: you earned 10,000 rubles a month and set aside 10%, i.e. 1000 rubles. You have been raised your salary to 15,000 rubles, i.e. by 5,000 rubles. Take 50% of these 5000 r., I.e. 2500 and start putting them off. As a result, you spend every month 11500r. And save 3500r. Thus, the level of consumption will grow more slowly, and the level of savings faster. These 50% will not affect you much, because you are not used to a new level of income.
Compound interest
You need to start with a very interesting exercise: try, starting from one ruble, save twice as much every month. The result is this series: 1 + 2 + 4 + 8 + 16 + ... +131072 = 262 123 rubles. It will take 18 months and during this time you will learn to look for new sources of income, train the “muscle of earnings”, create fixed capital for a major fortune.
An elementary truth: if you want to collect two million, you can put aside 400 rubles for 35 years. monthly at 12%. If you want to achieve the same result, but in 25 years, you will need to save six more: 2400 r / month. But the same result can be achieved in 10 years, but will have to be postponed for 10,000 p.
If you invest 1000 rubles, after 30 years you will receive:
- 7% - 7612 p.
- 12% - 29960 p.
- 15% - 66212 p.
- 20% - 237,376 p.
It seems to make sense to place money at a higher percentage.
Rule of thumb: Divide 72 by the interest rate and get the number of years needed to double the capital.
So, your money will be regulated by two questions:
- How often do you want to double your money? (interest rate)
- How much should double? (saving money)
Make sure that the numbers with which you answer these two questions are maximum.
Stocks are not a game
What does inflation do with money? She depreciates them! In a few years you will lose half the value of money if they lie just like that. But what happens to the goods? They are getting more expensive, i.e. their value is increasing. Thus, at a time when money is depreciating, goods are getting more expensive. Maybe it’s worth investing in goods? The most acceptable option is to buy a stake in an enterprise producing goods; and there’s a pretty simple way to do this: purchase stocks.
We often hear the expression: "he plays on the stock exchange." The key word here is "playing." In fact, what most players who we somehow call investors do is called gambling. They are trying to win on instant course changes. However, “games” with money are not included in our plans, because we will invest them.
Basic Rules:
- Big profits can only be achieved by "forgetting" about your money for a period of 2 to 5 years.
This means that you should never invest money that you may suddenly need. In this case, you will have to sell the shares at any price, just to get the necessary amount for urgent expenses. - Buy stocks of at least 5 and at most 10 firms. Lay the eggs in different baskets. It is advisable that these baskets be in different industries.
- You can talk about profit and loss ONLY when you sold the shares.
- Profit is made up of appreciation and dividends
- The depreciation has its positive aspects: you have the opportunity to buy shares at a price much lower than par. Buy during a crisis.
- Do not listen to the crowd.
90% of stockbrokers suffer losses because they do not comply with the above rules. - Do not rely on intuition. The choice of the moment and the most complete information about the company are important.
- Never take loans for investment.
Stocks have always been and always will be more profitable than money.
Money is getting cheaper, and the cost of goods and manufacturing enterprises is growing.
The Royal Way.
Firstly, in order not to be in an unenviable position, you need to choose only the most reliable shares of the most reliable enterprises. These should be the best banks, the best oil producing companies or companies in the IT industry. Any, but always the best.
Secondly, you must have the right mix. Think not only about companies, but also about industries, countries or regions. For example, the Asia-Pacific region is now actively developing.
Thirdly, you should invest no more than 50% of the capital. Buy when the selected stock is cheaper by 10-30% and not more than 50% of your money. You need sufficient reserve capital in order to purchase at the right time. Buying can take place no earlier than the stock will fall by 30% of the original purchase price and you can buy no earlier than 6 months after the first purchase. Failure to follow this strategy threatens that the stocks are bought too hastily and there is no longer anything to buy with a really deep depreciation.
Investment funds
R. Kiyosaki writes that mutual funds (in Russian realities these are mutual investment funds) cannot be regarded as a good investment, because it is strange to trust other people to manage their money. However, Bodo Schaeffer writes the opposite: he says that if you do not want to deal with all these stocks and do not want to keep track of everything that happens with your chosen enterprises, you can entrust this matter to professionals. They have specially trained analysts who read books and become smart. They follow events, receive information from open and closed sources. As a result, the yield on some mutual funds for 2014 was 60-70%. Compare this with today's highest bank rates of 16-17% and conclude.
The idea is to give your money to the management of someone who earns with you. The interests of banks are directly opposite to the interests of customers: when a client receives a large percentage, the bank loses its profits. Conversely: the lower the interest on deposits and the higher the interest on loans, the greater the difference between them and the more the bank will earn. This is a direct contradiction with the interests of creditors and debtors.
What about mutual funds? They earn with you. They get commissions on the profits you get. Thus, they climb out of their way to make you well. Of course, this does not always work out, but long-term statistics show that the top 10 Russian mutual funds show fairly good results.
Bodo Schaeffer considers precisely stock funds, i.e. those that invest in stocks.
Is it possible to lose money in funds? Yes, it is possible if you sell your units at the wrong time and you can only do this if you urgently need money. You urgently need to receive cash and you are selling units at a price that is not favorable to you. If you are in no hurry, there will be no such problem. Yes, there are seasonal or “crisis” recessions, but each recession is followed by an upsurge and you just need to have patience to wait for this upsurge.
You should choose reliable funds that invest your money in reliable stocks. Look at the package that they manage. This should be a stake in promising markets and industries.
Who allows money to lie on a savings book will be saved to poverty.
Financial protection, financial security and financial independence
Minimum plan: financial protection.
There may be situations where your sources of income may suddenly run dry. The reasons may be different: health, unemployment, market failure, etc. At this time, you should have a safety amount in order to make decisions with a cold mind and look for new sources of income. Make a list of your monthly expenses. Consider what can be reduced and optimized from this. Now multiply the received amount per month by the number of months for your peace of mind. This is the amount of time it takes for you to recover or find a new job. Personally, I multiplied by 6.
It turned out that in order to achieve financial independence I need only six months. I do not live in Moscow and spend very little. Perhaps in the capital such an optimistic result will not work.
The average plan: financial security.
This is what you must do in order to live on a percentage of your capital. Determine how much money you need per month for a comfortable stay. Now you need to understand how much you need to have in order to receive such income per month? Bodo Schaeffer offers a fairly simple formula: multiply your monthly expenses by 150. As I understand it, he proceeded from fairly low interest rates for Germany.
Personally, I am using an online calculatorI calculated for myself at PIF rates at least 20% per year that I need to postpone 4,212,000 p (taken even with a margin). And this amount can really be accumulated, putting aside 36 thousand per month for 6 years. Nice picture: 6 years and you don’t have to worry much about your financial situation.
You can take it into account on the basis of how much you have per month or based on how long you would like to achieve financial security.
Big plan: financial independence.
You should always remember that you should not cut chicken that lays golden eggs for you. In other words, never touch your capital.
The first thing to do is find out how much your dreams are worth. You need to list the main points of your dreams and put numbers next to them. You can write how much you can save and determine how long you can get it. Thus, a completely realistic financial plan can be built.
And the most interesting: how much money do you have to earn per month in order to pay for this whole thing? Personally, it turned out that in order to achieve financial freedom and simultaneously support two projects, I have to earn 115800 p. If you seek financial freedom and support one project, not two, I have to earn 95800r.
Mentor and network of specialists
You need examples. People whose success you are observing, analyzing and can repeat. They, in turn, also had examples. This is called the "race for the leader." Examples are easy to find: look around and see who is the best in your area. Gather all kinds of information about this person, study the articles, find out his phone number and make an appointment with him.
You need a mentor. 99% of the most successful people had mentors. Bodo Schaeffer's last mentor was a billionaire. From such a person, you can learn more in six months than in normal mode in ten years.
An important point: you should only listen to more successful people than you. Naturally, this is applicable within the scope of the activity in which you want to develop success. In the financial sphere, this must be a very successful person, and, for example, in the spiritual sphere, this person should be, at least, not an atheist.
How to get a good mentor? Bodo Schaeffer tells his personal story (read in the original source). You must be persistent, purposeful and benefit the mentor. Show the benefits and prepare for the question: "Why the hell am I supposed to teach you?" Below are 17 practical tips to help you find a mentor:
- Write down the reasons why you need a mentor
- Think about what you can do for your mentor.
- You need a good foundation and inspiration
- Show stamina
- Highly qualified mentors test you first
- Mentor must support your strengths, not solve your problems
- Maintain regular contact with your mentor
- Respect the time of your mentor
- Think carefully about what you want to ask.
- Show openness to everything
- Win the heart of your mentor
- Always respond immediately to his messages
- Give a mentor feedback
- Thank you for succeeding
- Imitate your mentor while remaining true to yourself
- Do not look for pain points
- Return what you received. Pass the knowledge on.
Network of specialists.
You can create a very good habit: every month to meet a new interesting person: a professional in his field. Meet new people and before each such meeting, think: how can I help this person?
You can sow money
A lot of people write about this, including and Bodo Schaeffer, however very few of those who read about it do. It's about charity. We all would like to share money when there is enough of it. And so we can wait forever, but we will not decide to give a tangible part of our income. Know: regardless of what our income is, for so many people on the planet our income is fabulously large.
But they say that if you give back at least 10% of your income, you will return much more. Who gives him more money. There are important reasons to help you better part with money:
- Nice to give
- By giving, you prove that you have money in good hands
- Giving, you signal abundance
- Who helps, he realizes that we live in a world where everything is interconnected
- Only the giver accepts true responsibility
- Who gives feels alive
To whom to give?
You need to give it to someone who really needs help and to whom your money will help to rise, not to fall. For example, if you were asked for money for beer on the street and you gave, you helped a person to degrade. If you brought 500 children to the film “Battalion”, you give them a chance to think a little about history and heroism. Be honest and evaluate the consequences of your actions.
Who really needs help? The answer will come as soon as you are ready to act. Now, for example, help “Food of life. Donetsk ” or you can help some other really good and important project.
I wish you happiness! Please write below comments and share your experience with the application of the above techniques.
PS:in general, reading books and then applying it is very cool. Personally, I was inspired myself and entered into an agreement with Sber to work with units in their investment funds.