There is a show that is on every weeknight on CNBC, it is called the Big Idea with Donny Deutsch. If you have not seen this show and you are at all interested in being an Entrepreneur then you are really missing out. This show is full of concepts and ideas about how to successful, how to start your business and how to make that business successful. Look for it.
The flow of investment capital and how to keep it active
Well here is a quick mental exercise. I am going to think about, and share with you, my thoughts about investment money.
Well the main areas of investment I see are:
- Real Estate (Commercial and Residential Property)(I am not counting owner occupied housing because that is not primarily an investment.)
- Securities (Stocks, Bonds, Mutual Funds, Futures)
- Private Equity (Direct investment in private companies)
- Metals and Jewels (Large amounts of money are kept in Gold, Silver and other precious metals)
- Cash (Yes many people keep money in cash, CD’s and deposit accounts.)
- International Investing (All of these areas but outside of the US)
Now, because the total amount of money is VERY QUICKLY increasing, the actual value of a dollar must be going down. This is evident by looking at the price of the dollar verses most any investment. You could have invested in most any are for the last 5 years and had a positive outcome vs. the dollar. Over 90% of this money is owned by less than 3% of the population. The total size of all of this investment money is well in excess of 70 TRILLION dollars. That is more money than most people can even imagine.
One important concept that I have noticed is the fact that money shushes around, from one investment type to another. In the late 1990’s the stock market was all the rage, and most other areas of investment were growing slower than normal, most investment money went there so the values went sky high. Then the hype popped in 2000-2001, and people started taking their money out of stocks, the people who left early took most of the profits.
From 2002 until 2006 the hype was all about Real Estate, as a whole the US made over 6 TRILLION dollars investing in real estate. That is about $40,000 for EVERY adult in the United States, and this number does NOT count the house you live in, only investment properties. By the start of 2007 people made a ton of money and started to see an end to the run-up in prices of Real Estate, so they started cashing out. Again the people who did it first made the most money.
Now this money STILL is out there. Where is it going? The easiest way to find this out is to look at what is going up in value. Metals is one huge area that has seem price spikes from 2007 until now. Another area is Private Equity. Most people who made this huge money qualify to invest in Private Equity and they have done so. They have brought companies private, they have started new companies.
Another area that has seen a huge increase in investment is the INTERNATIONAL segment. New cities are being built all over the world. The rate of investment in much of the world is on record pace.
Because of the vast size of stocks, and the fond memories many investors have, much of the money has returned to stock market. But many people who made a ton of money in Real Estate are looking to return to that market also.
So where should you invest??? The key is to move into the segment first and leave first, but it is hard to predict what will happen. For example I think metals were HOT but they are now near the top, and as we have seen when this happens there often is a fall. A lot of money has gone back to the stock market and more will follow, so there will still be a few years to make money in that area. Real Estate has taken a huge hit but should come up later, the returns will not be huge but at least there will be returns. So the two areas I see, where I would invest my money is in Private Equity and in International. In much of the world the Real Estate boom is just starting.
The best thing would be to start a company in a fast growing nation, and take advantage of the growth. This is hard so the next best thing would be to invest, using Private Equity, in a US company that does a good deal of business internationally.
When we stated Capital Active, this is exactly what we thought about, the fact that there is a huge amount of Capital out there, and that it needs to be kept moving around, kept active doing different things at different times.
Tell me what you think, please leave a comment to this blog, tell me if you agree or disagree.
People with Millions
Well I have been doing some reading and some of it mentioned stats about millionaires. This has been something that I have been thinking a lot about, simply because I will soon be a millionaire, in fact it seems quite easy when you follow the steps.
There are only 9.5 million millionaires in the world. (In Dollars) To put that in perspective that is 3 millionaires for every 2000 people on this planet. These millionaires are worth a total of $37.2 trillion dollars. That is an average of 1.9 million of these folks are in the United States. That means that in the US 2 people out of every 300 are millionaires. Half of all millionaires in the US are retired.
Only 1% of millionaires are worth over $30 million, but of these super millionaires 65% of them are in the United States. Millionaires are rare, but for the people who really want to be a millionaire it is something that can be done with ease. You simply need a millionaire mindset, the drive and focus to achieve it then the idea that will make you your money.
95% of the people in the US do not have a millionaire mindset, and will never become one unless they win the lottery or something like that. The other 5% know what to do, but most of them will never be able to do it because they can not harness the drive or focus because life gets in the way.
It seems that the easiest way to become a self made millionaire is to think of a system, that is easy to reproduce, and allows you to get small amounts of money from many people. The most common way to do this is to sell a product or service, making a small amount of money from many people. The same thing applies to people who sell books, or sports players who make their money from the team when they sell tickets and products. The system is your distribution system, you have to make the system in such a way that you can be removed from the system and it still works. Once you have a system that works without you then you can grow it bigger, as long as you are part of the system, you will always hold the system back, because you have limited time and energy.
For me I have ideas for a few such systems, the only thing is the money required to launch these ideas, so until I have enough I work hard at making the systems not need money, or using my personal efforts to make money to fund these systems some day.
Many others become millionaires by being super executives at huge companies, or by investing the small sums they had in real estate or stocks. These methods so account for many millionaires also but not everyone can be a high level executive, and many people don’t have the ability to save and invest, this is why making a system is the easiest way.
Because I have the millionaire mindset I am always aware when I meet millionaires, and for them being as rare as they are, they seem to be everywhere. Many of my best customers are millionaires, many people I know and find interesting are millionaires. Of the 100 people I have spent the most time with in the last 3 months at least 15 of them are millionaires. When I am in Asia, I am often surrounded by the top .01% of society.
Any thoughts, then please reply. Forward this on if you know someone else who may like it.