The Practical Way

Charlie Munger on How to Get Rich

1. Measure risk
All investment evaluations should begin by measuring risk, especially reputational.
In 2003-2007, investors loved banks because they were big and made lots of money. What few asked was how much risk they were taking on. Those who properly analyze how much risk the run-ups have added will end up happiest.

2. Be independent
Only in fairy tales are emperors told they’re naked.
Maybe the hardest part of investing is that the greatest odds of being right come when most think you’re wrong, and vice versa.[...]

10 Ways To Get Rich

Parade
By Warren Buffett
published: 09/07/2008

With an estimated fortune of $62 billion, Warren Buffett is the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a share cost $7.50. Today, Buffett, 78, is Berkshire’s chairman and CEO, and one share of the company’s class A stock is worth close to $119,000. He credits his astonishing success to several key strategies, which he has shared with writer Alice Schroeder. She spent hundreds of hours interviewing the Sage of Omaha for the new authorized biography The Snowball. Here are some of Buffett’s money-making secrets—and how they could work for you.

1. Reinvest your profits
When you first make money, you may be tempted to spend it. Don’t. Instead, reinvest the profits. Buffett learned this early on. In high school, he and a pal bought a pinball machine to put in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000—or $1.4 million in today’s money. Even a small sum can turn into great wealth.[...]

Top tips for business success

If you are looking to start your own business you might want to consider the sound advice of famous business people. These people have already trodden the path to business success and you can take advantage of their wisdom. The following list is a collection of business tips and general words of wisdom:

1. All successful people have a vision. They have the ability the “see” clearly what they want before it exists. – Bill Gates[...]

“Think Big and Kick Ass! in Business and Life” by Donald Trump and Bill Zanker

This is one of the latest books of Donald Trump that he wrote together with Bill Zanker from the Learning Annex. They draw from their experiences in life to provide practical advice on how to think big in your life and achieve what you want. Donald gives many examples from real estate and his experience with dealing with famous people. Bill’s prospective is different. He draws his examples from the struggles that he had in starting the Learning Annex and transforming it into a successful company.

They recommend that is very important to find your passion and follow it. Do not do something for money, but because you are passionate about it. Then the money will follow. You need to go after your passion with 150% focus and to focus on the solutions to the problems that you will encounter and do not be dishearten by the problems.[...]

“The Snowball: Warren Buffett and the Business of Life” by Alice Schroeder

This is a great book for anyone who is interested to invest in the stock market and run a business. The book describes the life of Warren Buffett from the day he was born up to 2008. The lessons are drawn from both his personal and his professional life.

Warren got involved in a very young age in the process of making money and managing other people’s money. When he was a kid he took his sister’s money to invest in a stock. This stock went down and everyday his sister would ask him why the stock is down. Warren did not like that experience at all and from that day on he did not want to manage other’s people money unless he knew he could do a great job. This gave birth to his first rule of investment “Never lose the money.”

You can find a lot of details on his management style in the book and how he pushes his people to get the best out of them.[...]

Be successful like Donald Trump, part 5

I finished watching the fifth series of “The Apprentice” recently and it is time to write the usual summary about Donald’s advice to be successful. The people who are regular readers of this blog should know by know the main themes from the previous series. Series five moves on similar lines. The focus of Donald Trump should be clear by now.

Donald’s advice follows again the main lines of the previous four series. I think that he has made his point in the previous episodes and now he just repeats it over and over again. That is good in a way, because you can understand which points he stresses a lot and which ones are not so vital. And as the ancient Greeks used to say “Repetition is the mother of learning”.

His advice on series five is the following:[...]

Be successful like Donald Trump, part 4

The fourth season of “The Apprentice” was one of the best. The candidates were very strong and you are glued to your couch till the last minute. The final 2 are very both great and there is a little twist at the end of the series.

Donald here repeats his valuable advice through the series again. The topics are similar as the previous ones and you start to understand how he thinks. He focuses again on the importance of money, always thinking big and having a winning team around you. You can see that this is how Donald has built his empire. He combined these 3 elements (and a few more) and he built his empire. The tasks that the teams perform follow similar concepts as the previous series. They range from marketing, to selling, to creating ideas and of course teamwork and leading people.

Here is the advice given from Donald Trump in the [...]

Be successful like Donald Trump, part 3

After watching Series 1 & 2 I was really looking forward to watch the third one. I find the advice that Donald gives valuable and I think it can help people become winners.

The third series of “The Apprentice” is full with more advice on the same topics. By now you will start to see certain topics repeating themselves. Donald is big on thinking big and leading with authority. This is where Donald places his focus and what has helped him to build his empire.

It is surprising that Donald refers to the same topics again and again. The candidates in the series keep doing the same mistakes. Please make sure that you do not repeat your mistakes. Learn from them and improve.

Here is the advice from Donald Trump give in the third series:[...]

Be successful like Donald Trump, part 2

Last week I covered the advice that was given by Donald Trump in the first part of the series “The Apprentice”. This advice is covering practical ways that can help people become more successful in business and become better leaders. I think that these are steps that Donald has followed and he lives by. These steps have helped him to build his huge empire and become a billionaire.

The second series continues in a similar style. A new group of people face business challenges every week and hope to work for Donald. The tasks are similar to the first series, but the pressure is more and the deadlines are more aggressive. Donald continues to evaluate the performance of the teams each week and give feedback and advice.

Here are his gems of wisdom from the second series:[...]

Be successful like Donald Trump, part 1

I came across the other day a series called “The Apprentice”. I am not a big fun of reality TV, but a friend recommended that I should watch this, because it is different and full of practical advice on how to succeed and run a business. As you know by now, I am very interested in practical advice and I thought of giving it a go and see what Donald Trump has to share.

I was pleasantly surprised by “The Apprentice”. It is all about business and how to be successful. Each week Donald gives the candidates a business task to complete and then at the end he judges them on how they did and gives his advice on what they did wrong. The tasks range from creating products to marketing to creating and running a business. The advice that Donald gives is great.

I was pleasantly surprised by “The Apprentice”. It is all about business and how to be successful. [...]

The practical way to riches, Part 6

This is the last post of this series. By now you must have a very clear idea of the practical way to riches. I have shared with you practical ideas that I have learned over the years. Most of the richest people in the world have followed the exact same ideas to build their wealth. What surprises me is that many people are failing to follow these simple steps and they are struggling so much today.

Today I will share with you the last idea. You might not realize the benefit of this one in the beginning and you might not even understand why this is important. I would recommend that you just look around you and decide if it is something that makes sense and you want to do as well. This is something that I did unconsciously some years ago and now I am happy I did it.[...]

The practical way to riches, Part 5

By now you must have a clear idea of the practical way to riches. To summarise what we said before, you need to follow these practical steps. You must put aside money every month that you will use for investments. You must save money every month that will cover you in case of emergency. You must control your expenses and spend less than what you earn. Finally, you must seek advice from competent people on a way to invest your money.

The above steps must become your habits. Every month you must do them like you brush your teeth every morning. Where most people fail is that they follow this advice for a while and then they relax and skip a few months. In the end, they just do it whenever they remember or when they have money left over. This is a disaster and it will make you to fail. This step will help you to resist the temptation of going down that path. It is a very critical step.[...]

The practical way to riches, Part 4

The last posts have covered the basic steps of the practical way to riches. In order to become rich, you must put aside money every month to invest in projects. In addition, you need to save money every month to cover any emergencies that might happen along the way. The last thing we covered was the need to control your expenses, so you can enjoy life and build your wealth.

Now it is time to get into more depth about the creation of wealth. We have built a good basis by spending less than we earn and saving money for troubled times. We started to build a sum of money to invest to expand our wealth. Now it is time to invest this sum of money and make it work for us. Make the money produce more money without us having to be involved. This is the secret.[...]

The practical way to riches, Part 3

In the last two posts we talked about the first two habits on the practical way to riches. These two habits are putting aside money to invest and save. This first will help you grow your wealth and the second will help you in a case of emergency. We need to plan well and get organized if we want to get rich.

Today’s post is about the third habit. The first two habits talked about managing the money that is flowing in. Now it is time to monitor the money that is flowing out. This is a very painful topic for many people and also an eye opener. If you do not get a good handle on this habit, then nothing else matters. You are moving away from riches fast.[...]

“Think and Grow Rich” by Napoleon Hill

This book is a classic one about wealth creation and it covers practical and theoretical ways on how to achieve this. It is structured in 13 steps that you can follow to achieve wealth. Most of the focus of the book is on the mindset, as the title implies. Think and grow rich, not work and grow rich.

It guides you to build a goal for your future in step 1 and then in the following steps it talks about how to move towards that goal. Near the end it starts to focus more on traits that you need to have to achieve the goal and also it has some very nice questionnaires for self analysis. These are useful to see where you are aiming at, but it does not provide steps on how to achieve them.[...]

The practical way to riches, Part 2

Last week, we talked about the first habit on the practical way to riches. The first habit is to put aside some money each month so you can invest it and make the money work for you.

The second habit is as important as the first one. The first one will help you to expand your wealth and start to earn more. What we must pay attention to is that the wealth that we build is built on a strong foundation. The second habit will help to prevent a bad event of destroying our progress.[...]

The practical way to riches, Part 1

If you want to become rich you need to develop certain habits. Being rich is a state of mind and a collection of habits. Money is used to keep count. I have been looking into this area the last few years and I have noticed certain patterns that emerge.

One of the biggest ideas and misconceptions about becoming rich is that rich people are born rich. This is wrong. There are countless examples that prove the opposite, but people think that these are the exceptions. What you must realise is that these people have some habits in common. These habits are not specific to a region/race/sex/age/year. They can be universally applied. In the next series of posts I will discuss these habits in detail.

Habit 1 – Invest your money

Rich people make their money work for them. They do not work for their money.[...]

“Why We Want You to Be Rich” by Robert Kiyosaki and Donald Trump

This is a very interesting book that is written by two great authors. The book is packed with good material about the things you need to focus to get rich. It spends some time in the beginning to tell you why you need to get rich and why depending on a job and the government to look after you is not a wise decision.

I found that Robert is repeating his mantras here, a lot. If you have read some of his other books I do not think you will read anything new here. Maybe some bits here and there, but nothing amazing. Donald is a bit more original than his usual books. His parts in the book are smaller that Robert’s, but I found they contain much more practical steps on how to think big and negotiate. [...]

“Breakthrough to success” NLP seminar with Chris Howard

In June, I went to the Breakthrough to Success seminar by Christopher Howard. It was such an awesome event. Chris rocks. He has studied NLP and hypnosis for years and it shows every minute he is on stage. I have studied NLP as well, but I have never seen anyone put it to practice so well. Every move and every word he says are calculated and full of meaning.

In the seminar he covers the areas of wealth, personal growth, career, relationships and family. The best thing is that he shows you the skills to use to achieve what you want in the areas and you practice them with him. So, you gain a lot of insight on the practical application of these tools. [...]

Setting smart goals

Have you ever set a goal that you wanted to achieve, but it seems to take ages to achieve it? Have you set a goal and after a while you are questioning yourself if it is still a valid goal and if you should put more effort to achieve it? I had this happen to me often in the past and I think that I have found the answer.

Before I give you the answer let me ask you a different question. What is your purpose? What is the big goal? Now, if you do not have clear answers to these questions, this will cause you problems in the medium run. Let me explain.

All of us need a big goal, something that we are moving towards to. For example, I want by the age of 40 to sail around the Greek islands for 3 months. Using this goal for example, we can start to build towards it. You can even say that this goal is not big enough and it is merely a step to a bigger goal. That is good, work to find the even bigger one. For now we will use this example. [...]

“The 4-Hour Work Week” by Timothy Ferriss

This is an amazing book and I believe that it is a must read for people who want to get out of the office jobs and experience life to the full. Tim explains how he went from working 80h per week to working 4h per week while at the same time increasing the profits in his company.

In this book he gives the tools and techniques that he used to achieve this and how other people he met during his travel have achieved similar goals. His main process has four steps and he explains them in great depth. At the start, he recommends that you need to define which tasks are important to you and which ones are not. The second step is to eliminate what is not important. Then you automate the ones that are left and then you are ready for the final step, liberation. [...]

Tony Robbins speaks at TED

Tony Robbins has given an amazing presentation at the Technology, Entertainment and Design (TED) conference. In this presentation he talks about why people act the way they do and what is driving them. It is a 30 min presentation and it is very insightful. Pay attention to his presentation style and also see how in the end he manages to get extra time with a clever technique. [...]

“A Whole New Mind” by Daniel H. Pink

Have you read the “A whole new mind” from Danieal H. Pink? I just finished it the other week and I think that it is a great book. In his book he explains how we will need to start using our right-brain as much as our left-brain in the years to come. There are three reasons for this: the competition from cheap labour in Asia, the power of computers that replace workers and the abundance of goods.

His opinion is that we need to work on the following six areas to be able to compete effectively in the new market:
[...]