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Financial Literacy
Golden rule to be rich – Know the difference
between an Asset and Liability , and buy Assets.
Asset – Puts money in your pocket.
Liability – Takes money out of your pocket.
Improve your financial aptitude .
What you do with the money once you make it
How to keep people from taking it from you
How long you keep it
How hard that money works for you.
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2. Be financially literate [2/4]
Loan a house - Drawbacks
End result in making a decision to own a house that is too expensive
in lieu of starting an investment portfolio early on impacts an
individual in at least the following three ways:
1. Loss of time, during which other assets could have grown in value.
2. Loss of additional capital, which could have been invested instead
of paying for high-maintenance expenses related directly to the home.
3. Loss of education. Too often, people count their house, savings and
retirement plan as all they have in their asset column. Because they
have no money to invest, they simply do not invest. This costs them
investment experience. Most never become what the investment
world calls a “sophisticated investor.”And the best investments are
usually first sold to “sophisticated investors”, who then turn around
and sell them to the people playing it safe.
2.Stocks
Skills Basic Expenses
development income 3.Bonds
source Taxes
4.Mutual
Financial Luxury funds Profits
Skills Job 5.Income
Living generating
Sales and expense
real estate
marketing
skills Taxes 6.Notes(IOUs)
Own
Leadership business
Salary 7. Royalties from
skills Running
intellectual property
such as music, scripts,
patents.
expense
Team skills 8. Anything that has
Luxury
value, produces income
or appreciates and has a
ready market.
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4. Making advantage of taxes and
corporations [1/2]
Financial intelligence
The mental process via which we solve our financial problems.
Synergy of accounting, investing, marketing and law. Combine those four technical skills and making money with money is
easier.
1.Accounting- What I call financial literacy. A vital skill if you want to build an empire. The more money you are
responsible for, the more accuracy is required, or the house comes tumbling down. This is the left brain side, or
the details. Financial literacy is the ability to read and understand financial statements. This ability allows you to
identify the strengths and weaknesses of any business.
2.Investing- What I call the science of money making money. This involves strategies and formulas. This is the right
brain side, or the creative side.
3.Understanding markets- The science of supply and demand. There is a need to know the "technical" aspects of
the market, which is emotion driven; the Tickle Me Elmo doll during Christmas 1996 is a case of a technical or
emotion-driven market. The other market factor is the "fundamental" or the economic sense of an investment.
Does an investment make sense or does it not make sense based on the current market conditions.
4.Law- Utilizing a corporation wrapped around the technical skills of accounting, investing and markets can aid
explosive growth. An individual with the knowledge of the tax advantages and protection provided by a
corporation can get rich so much faster than someone who is an employee or a small-business sole proprietor. It's
like the difference between someone walking and someone flying. The difference is profound when it comes to
long- term wealth.
Search ways to minimize tax burden.
You need to know the law and how the system works
Taxes punish those who produce and reward those who don't produce.
The people who work for Corporations The rich people with corporations
1.Earn 1.Earn