The road to financial independence from Bodo Schaeffer (Part 2)
This is the second part of the abstract of the book by Bodo Schaeffer, The Path to Financial Independence. I am writing notes from famous books from this list from Milfgard and this is just one of these notes. In the first part, we talked about what you need to understand in order to begin your path to financial independence. Now it's time to figure out what to do.
Bodo Schaeffer compares the money-laying mechanism with the hen that lays the golden eggs. You need to grow capital in such a way as to continue to live on interest. Below we look at how to calculate how much money and where to put it. In the meantime, we decide that we need to save money. Bodo Schaeffer calls this economy, but the expression “save money” is closer to us, and that is exactly 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 good reasons why most people don't get to save money. First, they set aside too much. 10% is really not much, however, if you start putting off 15 or 20%, it will be much more difficult for you. Secondly, they set aside at the end of the month, when they have already spent everything without reserve and nothing to postpone.
')
What if increased income? —Transfer 50% of the increase in your income to the “golden chicken” account. Example: you earned 10,000 rubles a month and set aside 10%, i.e. 1000 rubles. You have been paid a salary of up to 15,000 rubles, i.e., for 5,000 rubles. Take 50% of these 5000 p., I.e. 2500 and start putting them off. As a result, you spend monthly 11500r., And save 3500r. Thus, the level of consumption will grow more slowly, and the level of savings faster. These 50% of you are not greatly affected, 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, postpone every month twice. It turns out this row: 1 + 2 + 4 + 8 + 16 + ... +131072 = 262 123 rubles. It will take 18 months to complete, and during this time you will learn to look for new sources of income, train the “earning muscle”, and create fixed capital for a large state.
Elementary truth: if you want to collect two million, you can put off 400r for 35 years. monthly at 12%. If you want to achieve the same result, but for 25 years, you will need to postpone six times more: 2400 r / month. But the same result can be achieved in 10 years, but you will have to save 10,000 p.
If you invest 1000 rubles, in 30 years you will receive:
It seems it makes 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 governed by two questions:
Make sure that the numbers with which you answer these two questions are maximized.
What makes inflation with money? She devalues ​​them! For several years, you will lose half the value of money if they lie just like that. But what happens to the goods? They are becoming more expensive, i.e. their cost increases. Thus, at a time when money depreciates, goods are becoming more expensive. Maybe worth investing in goods? The most acceptable option is to buy a share of an enterprise producing goods; and there is a fairly simple way to do this: purchase stock.
We often hear the expression: "he plays on the exchange." The key word here is “playing.” In fact, what most players do, which for some reason we call investors, is called gambling. They are trying to win on instant exchange rate changes. However, the “games” with money are not included in our plans, for we will invest them.
Fundamental rules:
Stocks have always been and will always 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 stocks of the most reliable enterprises. These should be the best banks, the best oil producing companies or IT companies. Anything but the best.
Secondly, you must have the correct composition of the mixture. Think not only about companies, but also about industries, countries or regions. For example, the Asia-Pacific region is actively developing.
Third, you should invest no more than 50% of the capital. Buy when the selected stocks are 10-30% cheaper and no more than 50% of your money. You need sufficient reserve capital to purchase at the right time. Additional purchase can occur no earlier than the share will fall by 30% of the original purchase price and can be re-purchased no earlier than 6 months from the date of the first purchase. Not following this strategy is threatened by the fact that the shares are bought in too quickly and with a really deep fall in the exchange rate, there is nothing more to buy.
R. Kiyosaki writes that mutual funds (in Russian realities, these are mutual investment funds) cannot be regarded as a good investment, for it is strange to trust the management of your money to other people. However, Bodo Schaeffer writes the opposite: he says that if you don’t want to deal with all these actions and don’t want to follow everything that happens with your chosen enterprises, you can entrust this business to professionals. They have specially trained analysts who read books and become smart. They follow events, receive information from public and private sources. As a result, the yield on some mutual funds for 2014 amounted to 60-70%. Compare this with today's maximum bank rates of 16-17% and make a conclusion.
The idea is to give your money to manage the one who earns with you. The interests of banks are directly opposite to the interests of customers: when a customer receives a large percentage, the bank loses its profits. Back: the lower the interest on deposits and the greater 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 along with you. They get commissions from the profits that you get. So they crawl out of their way to make you well. Of course, this is not always the case, but the long-term statistics show that the top 10 mutual funds of Russia show quite good results.
Bodo Schaeffer is considering stock funds, i.e. those who invest in stocks.
Is it possible to lose money in funds? Yes, you can, if you sell your shares at the wrong time and you can do it only if you urgently need money. You urgently need to get cash and you sell units at a price that is unprofitable for you. If you are not in a hurry, there will be no such problem. Yes, there are seasonal or “crisis” recessions, but each recession is followed by a rise and you just need to have patience to wait for this rise.
You should choose reliable funds that invest your money in reliable stocks. Look at the package they manage. This should be a stake in promising markets and industries.
Those who allow money to lie on the savings book will be saved to poverty.
Minimum plan: financial protection.
There may be situations where the sources of your income may suddenly run out. The reasons may be different: health, unemployment, market failure, etc. At this time, you should have a sum of insurance in order to make decisions with a cold mind and look for new sources of income. Make a list of your monthly expenses. Think of what can be reduced and optimized. Now multiply the amount received per month by the number of months for your peace of mind. This is the amount of time necessary 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 half a year. I do not live in Moscow and spend very little. Perhaps in the capital of such an optimistic result will not work.
Medium plan: financial security.
This is what you have to do in order to live on the interest of your capital. Determine how much money you need per month for a comfortable stay. Now you need to understand what amount 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. I understand that he proceeded from fairly low interest rates for Germany.
Personally, with the help of an online calculator, I calculated at least 20% per annum at a PIF rate that I need to postpone 4212000 r (taken even with a margin). And this amount is really accumulated, setting aside 36 thousand a month for 6 years. A good picture: 6 years and you can not really worry about your financial situation.
You can count on the basis of how much money you have per month or on the basis of how much time you would like to achieve financial security.
Big Plan: financial independence.
It must always be remembered that you should not cut a hen 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, it is possible to build quite a realistic financial plan.
And the most interesting thing: how much money per month should you earn in order to pay for all this business? Personally, it turned out that in order to achieve financial freedom and simultaneously support two projects, I have to earn 115800 r. If you seek financial freedom and support one project, not two, I must earn 95800r.
You need examples. People whose success you observe, analyze and can repeat. They, in turn, also had examples. This is called "race for the leader." Finding examples is easy: look around and see who is the best in your field. Collect all sorts of information about this person, study the articles, find out his phone number and arrange a meeting with him.
You need a mentor. 99% of the most successful people had mentors. Bodo Schaeffer's last mentor was a billionaire. One can learn from such a person in half a year more than in the usual ten years.
Important point: you should listen only to people who are more successful than you. Naturally, this applies within the scope of activities in which you want to develop success. In the financial sphere, this should 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 the original source). You must be persistent, determined, and benefit the mentor. Show the benefits and prepare for the question: "Why the heck should I teach you?" Below 17 practical techniques that will facilitate the search for a mentor:
Network of experts.
You can create a very good habit: every month to get acquainted with a new interesting person: a professional in your field. Meet new people and think before each meeting: how can I help this person?
Very many people write about it, incl. and Bodo Schaeffer, but very few of those who read about it do. It's about charity. We all would like to share money when it is in sufficient quantity. And so we can wait forever, but never decide to give a tangible part of our income. Know: absolutely no matter what our income is, for so many people on the planet, our income with you is incredibly high.
But they say that if you give at least 10% of your income, you will return much more. Who gives him more money. There are important reasons that will help you to part with money more easily:
Who to give?
You need to give to someone who really needs help and to whom your money will help to rise, not to fall. For example, if you asked for money for beer on the street and you gave it, you helped a person to degrade. If you reduced 500 children to the film “Battalion”, - you give them a chance to think a little about history and heroism. Act honestly 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, the help of “Food for Life. Donetsk " or you can help some other really good and important project.
I wish you happiness! Please write below reviews and share your experience of applying the above techniques.
PS: in general, reading books and then applying is very cool. Personally, I was inspired myself and signed an agreement with Sberbank for work with shares in their investment funds.
Save money (savings)
Bodo Schaeffer compares the money-laying mechanism with the hen that lays the golden eggs. You need to grow capital in such a way as to continue to live on interest. Below we look at how to calculate how much money and where to put it. In the meantime, we decide that we need to save money. Bodo Schaeffer calls this economy, but the expression “save money” is closer to us, and that is exactly 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 reason to postpone now.
- They want to live well now and do not want to limit themselves. They say that it is difficult to postpone.
- They do not consider the postponement of money as important and believe that they cannot change this point of view.
- They think that this will ultimately not give anything. 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 have set aside 10% of your income before, then after increasing your income you can easily do the same. However, the opposite is also true: if you do not put off anything, you will not do it even with a threefold increase in income. - Saving everyone is fun and not at all burdensome.
When you save money you pay yourself. After all, you pay everyone around: to the store, dental, hairdresser, secretary. But you forget about yourself. Just consider saving as a 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. It will be as easy (or as difficult) to manage 90% of your income, as well as with 100%. - You can change your views on savings at any time.
- Savings will make you a millionaire. You will easily get a good percentage.
There are two good reasons why most people don't get to save money. First, they set aside too much. 10% is really not much, however, if you start putting off 15 or 20%, it will be much more difficult for you. Secondly, they set aside at the end of the month, when they have already spent everything without reserve and nothing to postpone.
')
What if increased income? —Transfer 50% of the increase in your income to the “golden chicken” account. Example: you earned 10,000 rubles a month and set aside 10%, i.e. 1000 rubles. You have been paid a salary of up to 15,000 rubles, i.e., for 5,000 rubles. Take 50% of these 5000 p., I.e. 2500 and start putting them off. As a result, you spend monthly 11500r., And save 3500r. Thus, the level of consumption will grow more slowly, and the level of savings faster. These 50% of you are not greatly affected, 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, postpone every month twice. It turns out this row: 1 + 2 + 4 + 8 + 16 + ... +131072 = 262 123 rubles. It will take 18 months to complete, and during this time you will learn to look for new sources of income, train the “earning muscle”, and create fixed capital for a large state.
Elementary truth: if you want to collect two million, you can put off 400r for 35 years. monthly at 12%. If you want to achieve the same result, but for 25 years, you will need to postpone six times more: 2400 r / month. But the same result can be achieved in 10 years, but you will have to save 10,000 p.
If you invest 1000 rubles, in 30 years you will receive:
- 7% - 7612 r.
- 12% - 29960 r.
- 15% - 66212 r.
- 20% - 237376 r.
It seems it makes 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 governed by two questions:
- How often do you want to double your money? (interest rate)
- What amount should double? (money saving)
Make sure that the numbers with which you answer these two questions are maximized.
Promotions are not a game
What makes inflation with money? She devalues ​​them! For several years, you will lose half the value of money if they lie just like that. But what happens to the goods? They are becoming more expensive, i.e. their cost increases. Thus, at a time when money depreciates, goods are becoming more expensive. Maybe worth investing in goods? The most acceptable option is to buy a share of an enterprise producing goods; and there is a fairly simple way to do this: purchase stock.
We often hear the expression: "he plays on the exchange." The key word here is “playing.” In fact, what most players do, which for some reason we call investors, is called gambling. They are trying to win on instant exchange rate changes. However, the “games” with money are not included in our plans, for we will invest them.
Fundamental rules:
- Big profits can be achieved only 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 a maximum of 10 firms. Spread eggs in different baskets. It is desirable that these baskets were in different industries.
- You can talk about profit and loss ONLY when you sold shares.
- Profit is made up of appreciation and dividends
- The fall in the course has positive sides: you have the opportunity to buy stocks at a price much lower than the nominal. Buy during a crisis.
- Do not listen to the crowd.
90% of stockbrokers suffer losses because they do not follow the rules listed above. - Do not rely on intuition. Important moment selection and the fullest possible information about the company.
- Never take loans for investment.
Stocks have always been and will always 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 stocks of the most reliable enterprises. These should be the best banks, the best oil producing companies or IT companies. Anything but the best.
Secondly, you must have the correct composition of the mixture. Think not only about companies, but also about industries, countries or regions. For example, the Asia-Pacific region is actively developing.
Third, you should invest no more than 50% of the capital. Buy when the selected stocks are 10-30% cheaper and no more than 50% of your money. You need sufficient reserve capital to purchase at the right time. Additional purchase can occur no earlier than the share will fall by 30% of the original purchase price and can be re-purchased no earlier than 6 months from the date of the first purchase. Not following this strategy is threatened by the fact that the shares are bought in too quickly and with a really deep fall in the exchange rate, there is nothing more to buy.
Investment funds
R. Kiyosaki writes that mutual funds (in Russian realities, these are mutual investment funds) cannot be regarded as a good investment, for it is strange to trust the management of your money to other people. However, Bodo Schaeffer writes the opposite: he says that if you don’t want to deal with all these actions and don’t want to follow everything that happens with your chosen enterprises, you can entrust this business to professionals. They have specially trained analysts who read books and become smart. They follow events, receive information from public and private sources. As a result, the yield on some mutual funds for 2014 amounted to 60-70%. Compare this with today's maximum bank rates of 16-17% and make a conclusion.
The idea is to give your money to manage the one who earns with you. The interests of banks are directly opposite to the interests of customers: when a customer receives a large percentage, the bank loses its profits. Back: the lower the interest on deposits and the greater 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 along with you. They get commissions from the profits that you get. So they crawl out of their way to make you well. Of course, this is not always the case, but the long-term statistics show that the top 10 mutual funds of Russia show quite good results.
Bodo Schaeffer is considering stock funds, i.e. those who invest in stocks.
Is it possible to lose money in funds? Yes, you can, if you sell your shares at the wrong time and you can do it only if you urgently need money. You urgently need to get cash and you sell units at a price that is unprofitable for you. If you are not in a hurry, there will be no such problem. Yes, there are seasonal or “crisis” recessions, but each recession is followed by a rise and you just need to have patience to wait for this rise.
You should choose reliable funds that invest your money in reliable stocks. Look at the package they manage. This should be a stake in promising markets and industries.
Those who allow money to lie on the savings book will be saved to poverty.
Financial protection, financial security and financial independence
Minimum plan: financial protection.
There may be situations where the sources of your income may suddenly run out. The reasons may be different: health, unemployment, market failure, etc. At this time, you should have a sum of insurance in order to make decisions with a cold mind and look for new sources of income. Make a list of your monthly expenses. Think of what can be reduced and optimized. Now multiply the amount received per month by the number of months for your peace of mind. This is the amount of time necessary 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 half a year. I do not live in Moscow and spend very little. Perhaps in the capital of such an optimistic result will not work.
Medium plan: financial security.
This is what you have to do in order to live on the interest of your capital. Determine how much money you need per month for a comfortable stay. Now you need to understand what amount 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. I understand that he proceeded from fairly low interest rates for Germany.
Personally, with the help of an online calculator, I calculated at least 20% per annum at a PIF rate that I need to postpone 4212000 r (taken even with a margin). And this amount is really accumulated, setting aside 36 thousand a month for 6 years. A good picture: 6 years and you can not really worry about your financial situation.
You can count on the basis of how much money you have per month or on the basis of how much time you would like to achieve financial security.
Big Plan: financial independence.
It must always be remembered that you should not cut a hen 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, it is possible to build quite a realistic financial plan.
And the most interesting thing: how much money per month should you earn in order to pay for all this business? Personally, it turned out that in order to achieve financial freedom and simultaneously support two projects, I have to earn 115800 r. If you seek financial freedom and support one project, not two, I must earn 95800r.
Mentor and network of specialists
You need examples. People whose success you observe, analyze and can repeat. They, in turn, also had examples. This is called "race for the leader." Finding examples is easy: look around and see who is the best in your field. Collect all sorts of information about this person, study the articles, find out his phone number and arrange a meeting with him.
You need a mentor. 99% of the most successful people had mentors. Bodo Schaeffer's last mentor was a billionaire. One can learn from such a person in half a year more than in the usual ten years.
Important point: you should listen only to people who are more successful than you. Naturally, this applies within the scope of activities in which you want to develop success. In the financial sphere, this should 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 the original source). You must be persistent, determined, and benefit the mentor. Show the benefits and prepare for the question: "Why the heck should I teach you?" Below 17 practical techniques that will facilitate the search for a mentor:
- Write down the reasons why you need a mentor.
- Consider what you can do for your mentor.
- You need a good foundation and enthusiasm.
- Demonstrate Stamina
- Highly qualified mentors first test you
- Mentor should support your strengths, not solve your problems.
- Maintain regular contact with your mentor.
- Respect your tutor's time
- Think about what you want to ask.
- Show openness to everything
- Win your mentor's heart
- Always respond immediately to his messages.
- Give Mentor Feedback
- Thank you for doing well
- Imitate your mentor, while remaining true to yourself
- Do not look for pain points
- Return what you received. Pass the knowledge on.
Network of experts.
You can create a very good habit: every month to get acquainted with a new interesting person: a professional in your field. Meet new people and think before each meeting: how can I help this person?
You can sow money
Very many people write about it, incl. and Bodo Schaeffer, but very few of those who read about it do. It's about charity. We all would like to share money when it is in sufficient quantity. And so we can wait forever, but never decide to give a tangible part of our income. Know: absolutely no matter what our income is, for so many people on the planet, our income with you is incredibly high.
But they say that if you give at least 10% of your income, you will return much more. Who gives him more money. There are important reasons that will help you to part with money more easily:
- Nice to give
- By giving, you prove that the money is in your good hands
- By giving, you signal abundant
- Who helps, he realizes that we live in a world where everything is interconnected
- Only the one who gives accepts true responsibility.
- Who gives feels alive
Who to give?
You need to give to someone who really needs help and to whom your money will help to rise, not to fall. For example, if you asked for money for beer on the street and you gave it, you helped a person to degrade. If you reduced 500 children to the film “Battalion”, - you give them a chance to think a little about history and heroism. Act honestly 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, the help of “Food for Life. Donetsk " or you can help some other really good and important project.
I wish you happiness! Please write below reviews and share your experience of applying the above techniques.
PS: in general, reading books and then applying is very cool. Personally, I was inspired myself and signed an agreement with Sberbank for work with shares in their investment funds.
Source: https://habr.com/ru/post/286292/
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