Financial IQ

How to build and keep your asset column strong?

Corporations are the biggest secret of the rich, which became popular in the days of sailing ships – used as a vehicle to limit risk to the assets of each voyage. As the rich invest in corp to finance voyages – if a ship is lost the loss only would happen to the particular voyage.

A corporation is simply a file folder at the attorney’s office – a legal document that creates a body without a soul. The taxes are low, and certain expenses could be paid with pre-tax money. The Capitalists try to delay taxes on gain – by using their financial knowledge, but what are taxes?

Taxes:

• Initially levied against the rich, the poor who got punished 
• Origins in England and America – To pay for wars 
  • Britain 1799-1816 Against Napoleon. In 1874 it becomes regular 
  • America 1861 – 1865 civil war. In 1913 became regular 

Beware of little expenses, a small leak will sink a great ship.” – Benjamin Franklin

The starting plan is simple:

1. Keep your expenses low
2. Reduce liability 
3. Diligently build a base of solid assets
   1. You should mind your own business, that revolves around your asset column.

You are required to overcome your self-doubt and lack of self-confidence, to have brilliance, tenacity, and boldness. Financial genius is great in technical knowledge as well as courage – learning to take calculated risks.

 “An Investment in knowledge pays the best interest.” – Benjamin Franklin

Financial IQ:

1. Accounting – Vital skill
   1. Analytical, as accuracy is required to handle wealth
   2. The ability to read numbers
   3. Financial Literacy = The ability to read and understand financial statements which allows you to identify weaknesses and strengths of a business
2. Investing – The science of money making money
   1. Involves strategies and formulas 
   2. Creative 
3. Understanding of Markets
   1. The fundamental aspect of investing 
   2. “Does an investment make sense in the current market condition?” Supply and demand? 
   3. Technical aspects of the market which are emotion-driven
4. The Law
   1. Tax advantages – (Corporations/..) – Paying expenses before paying tax
   2. Protection from lawsuits 
      1. The rich control everything but own nothing
      2. Hide wealth via corps/trusts

To exit the rat race, you should take calculated risks, recognize different financial options, be creative, and understand the numbers.

Investment strategies:

• Real-Estate – start small and keep trading for bigger properties – Value can increase dramatically  
  • Investment Vehicle with a great tax advantage – as long as you keep trading up in value you will not be taxed on gains until liquidation 
• Stocks 
  • Small companies 
  • Fortunes are made in new stock issues 
  • The risk diminishes with understanding 

 “Know what you own and know why you own it.” – Peter Lynch