How to be of Value – Lead a Life of Freedom and Adventure in Good Times & Bad


Enjoy the lifestyle you’ve always desired.  Be of value so life can always be good.

Become a Pruppie.   Pruppies are Yuppies who are also unusual Preppers.

Pruppieism is realism based on the power of good value. 

Yuppies integrate your earning with investing and enjoy peak living, everlasting wealth and natural health in the year ahead.

Pruppies also expect everything to expand… the economy… wealth… technology…. lifespan… opportunity.

All of it.  Though modern times may seem bewildering… dangerous even, the fact is humans, overall are richer now than ever before.

Pruppies take advantage of this fact and embrace every new benefit, technology and benefit they can.

However Pruppies are also prepared in a special Prepper way, just in case everything, everywhere goes to pieces.  If the economy, security, income and savings fails and the fabrics of society disintegrates into an unknown veil.  The preparation is not a sacrifice, but a joy as you will see.

Pruppies enjoy using the fruits of our ancestor’s deliberations and labors to earn in this advanced technological world.  They also engage in activity that they love in case society and the incredibly intricate weave of the global economy and society fail.

Hope springs eternal and it should.  One of the key themes in my first book, Passport to International Profit, (published in the 1970s) was “The Sun Always Shines Somewhere”.  This thought has been in and remains a foundation of everything I do.

Sometimes this sunshine is hard to see because the press focuses so much on doom and gloom.  Current news often makes the world seem about to end.  We cannot blame the press. Bad news sells.  The majority wants to worry instead of learn about what’s good.  This does not make doom and gloom right. This is why the majority are also not the rich portion of the population.

Despite all the negative headlines, we have lived through the Cold War and MAD, Y2K, GridX II, the Peak Oil Crisis, the recession of the 1970s, 1980s 2007, etc. etc. etc.  Chicken Little is always out there, selling the falling sky.  Don’t buy into this story!

History suggests that there will always be opportunity.   The sun always shines somewhere.

Wealth and economic opportunity is pushed by supply and demand.  We are part of a growing global population.  New technology makes more people as a whole more productive every day.  The world has increasingly larger markets creating more supply in increasingly efficient ways.

Greater prosperity ahead is a solid but mostly hidden fact.  There is a brighter future ahead, for the entire world.

More wealth for all is almost for sure.  The almost is created by a factor of timing and the Prepper part of Pruppies deal with the almost).  The simple laws of supply and demand guarantee that a strong global economy will continue to increase wealth.

Technology is making people more productive.  This fact increases supply.  There is a growing global population. This fact increases demand.

Those are the basics.  We really can’t argue with that.

More supply… more demand… more wealth.

We can see this fact in play in the Wall Street Journal article, “U.S. Household Net Worth Pushes Further Into Record Territory” (1).

The article says:  Household wealth rose more than $2 trillion in the fourth quarter with help from rising stock and home prices.

Americans’ wealth pushed further into record territory in the final quarter of last year, hitting nearly $100 trillion thanks to rising stock markets and property prices.

Household net worth—the value of all assets such as stocks and real estate minus liabilities like mortgage and credit-card debt—rose more than $2 trillion last quarter to a record $98.746 trillion.

Soaring Wealth Hitting Lofty Levels Rising property and stock valuations have pushed net worth well above peaks seen before prior recessions.

The sad tragedy is that most people will not share in this growth and prosperity.

According to CNN’s article “America’s wealth gap is getting even bigger” (2) wealth inequality has skyrocketed with the growing prosperity.

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The article says:  In 2016, median household net worth improved across all income brackets — up 16% overall since 2013 — but those on the higher end of the income spectrum did the best. The top 10% of earners saw their household net worth increase 40% over the three-year period, according to the Fed.  That has increased the nation’s already large economic divide.

Here’s one way of understanding the difference that makes. The median upper-income family (those who make more than $127,600) now holds 75 times the wealth of the median low-income family (those who make less than $42,500), according to an analysis of the data by the Pew Research Center. In 2007, top earners were worth 40 times as much. In 1989, the multiple was 28.

The richest 1% of families controlled a record-high 38.6% of the country’s wealth in 2016, according to a Federal Reserve report.

There’s a couple of reasons why wealth equality is growing.

First, the system is “rigged” in favor of the rich.  It takes money to make money and the big growth in wealth since the last recession has been in stocks and real estate.    Stocks had a banner year in 2017 with the S&P 500 rising 19% and the Dow Jones Industrial Average gaining 25%.  Household wealth in the stock market climbed by $1.346 trillion in the fourth quarter.  In 2018 the stock market and the US economy continued to rise.

Meanwhile, the value of households’ real estate increased $511.2 billion, reflecting continuing increases in home prices. U.S. house prices rose 1.6% in the fourth quarter, according to the Federal Housing Finance Agency’s house price index, and rose 6.7% on the year.

The lower half of earners in America do not have the money to invest in either real estate or shares.  As prices rise, those who are not investors become relatively poorer.

Second, as wealth rises, so too does prices.  The lower end of earners not only cannot invest, they save less.   Though wealth has grown in the last years, Americans are overall are saving less.  The US saving rate was 3.74% for 2017, down from 5.98% a year earlier and 7.19% in 2015.  This is because the lower income earner is saving less while the upper income earners are growing increasingly rich.

Growing wealth disparity is a never ending story.  The likelihood such disparities going away are dim.  There is not much, as individuals,  we can do at a global, national or even regional level.

We can however make sure we are not caught at the lower end of the distribution of wealth.

Pruppies avoid the traps that ambush freedom and wealth opportunity.  They grow richer and become truly free. 

Yes there is a lot of bad news in many places.  There is inequality.  There is crime.  There is war and hate and injustice.   Despite these negatives there is even more that is positive.

Opportunity grows.

Pruppies tap into and use every bit of the good news they can.

The Pruppie prepper backup is unusual because its positive.  Pruppies do something the love, that will prosper if everything goes wrong.  Pruppie backup is more than just a shelter from bad news.

Imagine this example of Pruppism.  The Tiffany lamp casts an amber glow, rich, ivory and warm in the grey gloom of early dusk.  The gold knobbed mahogany desk, its deep patina waxed and smooth, shines with reflections of ancient leather Chesterfields stuffed full, but rumpled with age and of maritime shots that hang in brass frames on the wall. The room speaks of settled tradition, the kind that might never end.  But thoughts instead are on the demise of the business that has supported this room.

The late Jim Slater of Slater Walker, a British industrial conglomerate turned bank in the 1970s was in that room.  I recall his bank’s collapse well as I was living in Hong Kong and Slater Walker was a huge going concern in what was a British colony in those days.  The Slater Walker crash was big news that unsettled the entire British banking system at the time.

Slater, the founder, had been a really high roller, using every modern banking tactic available including cheap loans.   Then in the the mid 1970s banking crisis interest rates skyrocketed and his bank was unable to refinance its debt. The company failed and Slater had to resign.  Numerous charges were brought against him and he spent considerable time defending what he had done.

In the end he was fined a nominal sum but despite this his banking career was well and truly dead. However he had already moved on.

He wrote about this in his autobiography, “Return To Go”.  He had always had a hobby making puppet shows and telling stories to his children, so he wrote some children’s books.  His first effort sold a respectable 35,000 copies. His next a monster series for younger children, became a huge hit.

He had also maintained a hobby of salmon fishing so set up a business that bought up fishing rights and resold them as time-shares.  He had quite a success.

Some day a catastrophe beyond our control could redirect the course of our lives.  We might lose a job, learn that our pension won’t pay or that our dollars won’t buy as much as they must.

Though Jim Slater was a banker, outside economic forces beyond his control, caused his business disaster.  Yet he had options because he had been doing things he loved that were not related to his banking activity at all, but could be useful income generators in difficult time.

I do not know if Slater understood Pruppism but that’s what he was practicing.

Pruppism is a positive realism based on the knowledge that much of our lives are directed by events that we do not expect and could not change even if we did.   There is always something we do not know and that’s okay.

Years ago I was speaking at an investing seminar in Marbella Spain.  One of the speakers was a brilliant strategist, Johan Peter Paludan, of the Copenhagen Institute for Futures Studies.  This institute has a large interdisciplinary staff with expertise in economics, political science, ethnography, psychology, engineering, PR and sociology.  They identify and analyze global trends that influence the future.   Paludan was speaking of these trends and answering questions that delegates had about the world’s economic future.

One delegate asked what to do if there was a global nuclear exchange.  Paludan replied that the results of some events are so unpredictable that it is not worth trying to plan for them.

This thought has stuck with me for decades because it helped me realize that no matter how cautious, how defensive and careful we are, there are events that we cannot even imagine that can turn our lives upside down, for the good or bad.  With this in mind my wife Merri and I have created a lifestyle where we turn our passions into profit but in a way that whatever happens we are likely to be in a position to spot the positive and the opportunity.

A PIEC Experience

Pruppies gain the benefits of PIEC wealth.  PIEC is an acronym for “Personal Income Earning Corridor”.  PIEC income and wealth come from doing what you do for love, rather than just the money.

Traditionally people get jobs to create income.  They work to live and support their lifestyle while attempting to spend less than they earn.  Maybe the savings will bring, some time in the future, a lifestyle of doing something enjoyable without work.

Pruppies reverse the priorities.  Instead of working for money to save and invest, they focus their prime effort on doing something they enjoy right now.  Then they learn how to enjoy the effort in some profitable way.  They learn to create “Avenues of Abundance” that combine lifestyle with the necessary task of accumulating wealth.

If economic circumstances tie them to an existing income effort, they create hobbies that are income starters.

For example, if a Pruppie  loves golf; instead of working six days a week, 50 weeks a year just to golf on Sundays and during short vacations, instead he or she will create a business in some aspect of the golfing trade.

In another example, a client of mine, who loved animals became a vet.  But he learned that the vet’s lifestyle was not one he enjoyed.  He wanted to travel and move around, which is difficult for a professional who needs to stay at his office and build a practice.  So he built a business that prepares special animal foods for race horses.  Now he travels globally visiting horse breeders and makes much more money as well.

Pruppies combine money with time, energy and desires.  They generate income doing something desired.  Desire and fulfillment become at least as, if not more, important as the money.

Do What You Love!

The reason PIECs work well is that when we love to do something, we do it better, for longer and with greater enthusiasm.

These are wealth building attributes that cannot fail.  Yet Pruppism does not mean we should suddenly abandon our jobs and try becoming golf pros, when we have never been able to break 100.  Smart Pruppies start small and gradually expand into their passion.

For example, as a writer and lecturer, I was never fully satisfied sitting behind a desk or standing on a podium all day long, even though I was making over a million bucks a year. I’m the physical, outdoors type and yearned for exercise and the wilds of the deep woods. “What good’s the money if this isn’t fun?” I often asked myself.

Rather than quit writing and teaching, I looked for ways to combine these professions with the outdoor life. Through research I learned that many city folk like myself yearn to be in the primitive outdoors.  So I bought an isolated farm high in the Blue Ridge Mountains and an Andean plantation high in Ecuador where I developed seminar centers with charming but simple dwellings, set in rustic surroundings, with clean water and pure air.   Now I live in nature so after I finish the writing or talking, I can walk in the woods or take my axe and chop firewood or something physical.  I’ve combined my writing with physical work and have blended the life I want, with my readers’ needs in a way that makes great financial sense.  The cabins bring more profits than most stocks or bonds could ever return.

The process took six years to shift and we are far from finished. But while I’m doing what I love, who cares? This is one of the great benefits of PIEC investing. We can slow down and enjoy the work instead of always rushing ahead, looking for something more.

Those who work nine to five can start PIEC businesses part time if they are too uneasy to quit their jobs. Others, who like myself, already have a business can slowly shift their product or service in a sensible way and let it evolve toward their PIEC.

But where do we start?

There is a seven step process we can all use whether we have our own careers, a business or even if we are retired (PIEC investing is especially good for retired folks who have found the supposed good life flat or financially short).

The first step is to get a clear idea or vision of our dream.  This is sometimes harder to achieve than it seems.  We are so deluged with false ideals from Washington, Wall Street, Madison Avenue, etc. that we have to stop and really take stock.  What do we sincerely want?

There is a very practical economic reason to look inwards for wealth.  Warren Buffet recommends that we only invest in what we understand. What can we understand better than ourselves?

This inner search will lead us to an ideal that begins the second step which is gaining enthusiasm.  How can we be anything but enthusiastic about finally fulfilling our deepest dreams?  The enthusiasm leads to the third step; gaining an education.

We need to find out everything we can about our idea.  To succeed we must become real experts in the product or service we offer.

Fourth, this educational process allows us to develop an intelligent, focused business plan we can act upon and the action is the fifth step which brings us the experience. Experience gives us the sixth step, a financial loss or profit.  Remember we always profit in increased knowledge which creates the seventh step, more ideas.  Then the entire cycle starts all over again: Idea, Enthusiasm, Education, Action, Experience, Financial Profit and New Ideas.

This is a way to keep adding new opportunities into our lives.  Business is rarely static. It is an ever evolving process instead.

This seven step cycle may take days, weeks, months or years, but the moment you begin you’ll start moving into an avenue of affluence where you love your work, so though money isn’t your main goal, it comes more easily.

Do what you love, but also be of service. 

Do something that is of importance to you.

We all have a purpose in life and when we are filling it, we feel fulfilled.  Wealth and fulfillment is the goal.  Fulfillment is important because of the law of diminishing returns.   A 2008 study that analyzed Gallup surveys of 450,000 Americans suggested that day-to-day contentment  improves until income hits around $75,000 per annum.  After that, it is just more stuff, with far less gain in happiness.  Income beyond $75,000 is not going to do much for their daily mood.

This is a pretty general study and regional differences in costs, inflation and life circumstances will create many fluctuations from this norm, but the point is when money is the main goal, the better you get, the harder it will be to gain satisfaction.

Giving, on the other hand, there are never limitations on that especially when the giving helps complete a purpose that is part of your destiny.

This is true in business and investing.  A study of investors for example found that investors with socially responsible ideals gained the best returns.  A dual goal of profit and achieving some social benefit  provides a purpose beyond returns.  This brings comfort and determination to the investments and the added stick-to-it-ness helps increase profits.

The financial giant State Street Corporations Center for Applied Research did an 18 month study of 7,000 investors to get a better understanding of the role motivation plays in making investment decisions.   Based on this study a new measure of investment performance called “Phi” was created.   Portfolios were previous rated by their Alpha, Beta, and Gamma. Phi is the newest measure of performance.

A deep sense of purpose is what caused a high phi score.

The article says:  “It’s not about outperforming markets or peers, and it’s not an asset-gathering measure of performance.”  The performance has to be defined as sustainable and with a deeper sense of purpose.”

People who invested with socially responsible ideals did best in the study.  The dual goal of profit and achieving some social benefit  provides a purpose beyond returns.  This brings comfort and determination to the investments.

The study helped define three aspects of investing that are generally ignored, purpose, habits and incentives.

Purpose. Purpose requires some soul-searching questions about what we each want our life to be.   This purpose is more important than the investment goal.   The purpose of the money we have becomes more important the amount in the portfolio.

Habits. Habits come next because we need to create habits and routines that keep us on the path of our unique purpose.  The market place does all it can to distract us from our goals.  There is an endless stream of news, rumor, conjecture, facts figures, ideas and  tactics generated by every part of  every stock market aimed at getting us to act in ways that benefit the agenda of others.

Incentive.  Changing incentives to accomplishing a purpose instead of a numerical (percentage or profit) goal helps us adopt better behavior.  We react to accomplishing our meaningful purpose instead of drama created by media as well as manipulation and short term whims in markets.

These three steps lead to the path of everlasting wealth.  Having greater fulfillment as well as more wealth is a bonus that Pruppies call “Everlasting Wealth”.

Figure out what is really important in life for you and then find ways to work in our invest in that purpose.  When you do, you’ll be on a solid path to everlasting wealth that is not so easily diverted by the daily drama that seems to be unfolding in the modern world.

What kind of business can I have?

Here are some of the global income experiences and business secrets that Merri and I have used that can help set you free.

I began my international business over 50 years ago and have been creating and running international micro businesses since.

During that time Merri and I have been able to live, work and earn all over the world… literally anywhere we wanted because of seven secrets we gained which we share here with you.  We have been blessed with global earning experiences that helped us make millions… but were fun as well such as with British Lordships…see below.

Global Earning Experience #1:  Lepers.  These businesses have been fulfilling.   Merri started her international business in her 20s (long before she knew me) importing Italian clocks to the USA. This earned so much ($80,000 in the first year) that she created other micro businesses helping 0rphans in the Yucatan and Haitian lepers (at the Albert Schweitzer Hospital) produce crafts she sold for them in the USA.

Excellent income ($80,000 in the 1970s was a lot of cash)…  Incredible contacts… working with Dr. Larimer and Gwen Mellon who created the Albert Schweitzer Hospital in Haiti… and enormous satisfaction.  Merri still cries almost 40 years later when she tries to speak of the gratitude of the lepers and her time and life in Haiti.

Plus she gained lessons that allowed her to live and earn… in many places and many ways.

Then we got together.

Global Earning Experience #2:  Lords.  Another of Merri’s ideas (in the mid 1980s) was to broker British titles to wealthy Americans.  We made a ton from that.

I ended up owning this 18th century manor house. Princess Anne was my next door neighbor.

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We even gained 15 minutes of fame when Gary Trudeau learned about this business and immortalized it by having B.D. Zonker buy a title!

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Merri’s business was featured in Doonesbury.

What fun… profitable, plus stimulating, meeting and working with the Blue Bloods of Britain… visiting their castles… invited to their events and affairs.

Before I get ahead of myself, may I ask you a question?

Would you like to have a lifestyle and a front yard like this… almost a thousand acres of hacienda overlooking the Andes?

This was the view from one of our home for several years.

Would you enjoy living in two, three or even more places wherever and whenever you chose?  Would you be happier with more freedom, lack of debt, and a life of riches, adventure and travel?  Would you be glad to feel confident that you can discover interesting and fun business ideas again and again that not only bring in extra income but also help the poor and improve the environment?

If so then read on… because… that front yard above is ours in a remote Andean hacienda.  This is only one of numerous homes that we have gained (to live and use in business) from the secrets we’ll share below.

In the summer, we retreat to our 250+ acre farm high in the Blue Ridge mountains of North Carolina.  Here’s our front yard in these mountains and the view from my home office.

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Home offices in all your homes are important by the way. They are part of one global micro business secret.

When you have an international micro business that involves your home, the…

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tax benefits can be fantastic.  Here is a group of our clients visiting our Blue Ridge home. We’ll see why (in a moment) an at-home international micro business can be especially liberating… profitable and good for the environment as well.

While we enjoy these views, we become richer by the day as we also enjoy helping those less fortunate and also saving natural resources. You can also enjoy such a lifestyle because after years of search, I found these micro business secrets that you can enjoy too.

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Global Earning Experience #3: Hospitality.  Here’s a hotel we owned and operated in Ecuador.  Once we sold this we joined the sharing economy and began offering rentals in our in cabins North Carolina and Florida  through AIRBNB.   We became designated super hosts within months.  If you want to provide genuine care and hospitality you can beat out any big business in your niche because big business has created an uncaring world and we all crave care.

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Global Learning Experience  #4:  Citrus and Innovation.

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This is the entrance to our Florida home. This is a gated community but with just one residence!  This is our 16 acre home and…

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most of it is in citrus which I improved with BioWash

BioWash is the “Hi-Yield” solution developed and blended by 1st EnviroSafety that we have been writing about at our website for almost 20 years.  The original solution was a degreaser developed to help save birds fouled with oil in the Valdez Oil Spill.  We used this solution called Ted’s Stuff, (we named this after our friend Ted Tidwell who manufatures this wonderful stuff) which we used as a cleaner for just about everything. Then we discovered that this was a spray that removed a blight called Wooly Adelgid, from the hemlock trees at our farm in North Carolina.

Biowash and Biowash Soil Amendment were formulated based around this degreasing solution and has created some wonderful stories of agricultural success.

Here is my own story about Biowash.

I followed my own advice and invested in agriculture buying an orange grove.

The year I made the purchase the grove harvested just over 1,800 boxes.

In our first year we sprayed the grove once with BioWash.   Production rose to 2,400 boxes despite the fact we eliminated a third of the trees.

This means our yield per tree doubled.  The next year we sprayed twice with BioWash and this year our production rose to to 3,400 boxes.

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BioWash made the oranges sweeter and larger as well.

This year I am testing BioWash on our highly acidic mountain soil to see what it does for our tomatoes and squash in a greenhouse.

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There are special advantages to greenhouse exploring as there are grants that have been offered to new farmers.

Global Earning Experience #5:  Import-Export.   Here I am at our Florida house showing clients how to import…

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hand tailored, made to order, high quality wool suits from Ecuador into the US for as little as $135 .  We import Ecuador roses year round as well, all from our US homes.

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The secrets we’ll share below are not about how to buy suits or flowers though.  The secrets show ways to make money (also helping others) marketing and much much more…. globally.

Global Earning Experience #6:  Green Produce.   We have an orange grove and lake at our Florida home and are the first to test new organic ways to make citrus farming better for the environment and the consumer.

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In North Carolina we cultivate Wild American Ginseng and goldenseal.   Rural land with north facing slopes are some of the least expensive property one can buy but they are a perfect place to grow over 100 medicinal plants.  These markets are just beginning to grow.

Global Earning Experience #7:  Tipis

Tiny Houses For Income– Start Small – Maybe Even Tinier.

Here are three rules for success in business.  Start small, have staying power and live within your means.

#1: Starting small is nature’s way.  When we ignore nature… oops.

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Most things in nature unfold by the Fibanaci scales of 1.6.  This is how nature expands… always starting small and expanding in measured steps. We are wise to follow this lesson.

When we purchased and started to improve the farm, we kept this in mind.  Even though we had plenty of cash, to begin we did not build a thing.

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Here was our first home on the farm, a Coleman tent.

Our plan was to create an income by producing tiny homes for $29,000 or less.

Yet to start we had five tipis erected for just $10,000.

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The tipi rentals gave us immediate income and tax savings.  Property owners globally are pitching luxury tents, tipis and campers on private property and offering them to tourists. Rentals cost anywhere from $15 to hundreds and many  boast comforts such as heated massage beds, hot tubs and pillow top beds.  Luxury tents have created a new industry called glamping, or glamorous camping. This is a growing trend, with luxury tent rentals and resort campgrounds popping up everywhere.

Then we started building the cabins.

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One of our North Carolina tiny cabins.

These are just a few of the business experiences we have enjoyed to earn globally.

The opportunities we seek have to be meaningful and profitable yet also safe.   They have to work in good times and bad and have to be flexible so they can evolve as times changed.

Our search for opportunity has taught us that most millionaires make their money in business.  This discovery led to a study of rich businesses, ones that generate everlasting wealth. Here are secrets we learned about these businesses:

Secret #1: They must enjoy the multiple effect.  A product once created must produce profits again and again, almost on a never-ending basis. Each investment made needs to make huge returns.

Secret #2: They need to be greater than their owner’s time.  They must produce income even when the owner doesn’t put in day-to-day effort. You may already be wealthy or earning a high income. You may not even need another business or extra income, but some day you might. One surgeon explained it this way. “I am making a fortune because peoples’ lives are in my hands. Once my hands are no longer steady, my income stops. My entire financial well being will then be in someone else’s hands!”

Secret #3: These money making systems should be enjoyable and fun!  Sadly most people make money for the sake of making money. Many spend their lives working, just to have a few precious hours having fun. The most important fact I learned about making and keeping wealth was that those who were richest absolutely loved what they were doing! Money was of secondary importance to their effort. And as things are, this means they actually ended up making more money!

Secret #4: These money making systems need to be flexible.  No matter what the economy brings, your ability to make money should work regardless of inflation, recession or even depression.

Secret #5: These businesses usually start small, but grow quite large.  I learned that good money systems work for large or for small amounts and can be operated on either a full or part time basis. Most businesses start with a learning curve. During that time it is essential they are small. Once the lessons have been learned and the system is operating properly, then it needs to grow for larger and larger returns.

These secrets created a fantastic way to make money with my own international business doing what I love!  Now you too can make a fortune by turning your passion into profit.

Before discovering these secrets I had a business but to be honest could never get ahead. I was almost penniless, in debt and living from month to month, check to check. Then I discovered these seven secrets…and how to apply them around the world.

Since then our international micro businesses have brought in millions. We gained all the physical possessions we desired, plus more than enough money in the bank.

We do not have one penny of debt and we have leisure time… though when you love your business… why not work?

This is most important, we have fun and feel that we do something beyond just making money every day!  Merri and I do what we love and have learned that through our global business we can accomplish far more important goals, gain self fulfillment and be of service to our community. In short we can help make ourselves and the world a better place.

Among our greatest thrills is being able to help others through foundations we have started that help the environment and the poor.

More importantly we have the freedom to do all this from our many locations (some are remote-you have seen the pictures) that we really enjoy.

You too can have the freedom to do what you love from any place you like, even operating (actually preferably) from your bedroom if you wish.

What do you love? Rare cars? You can make a fortune creating a business around them. Do you prefer fine art? Or do you love beautiful jewelry, coins, gems, real estate, furs, model railways, dolls, scientific equipment, war memorabilia, old and rare books, or whatever? Do you prefer social subjects rather than objects?

Are you concerned with the environment or humanitarian problems, with crimes, war or poverty?  Would you like to help wipe these social problems out in the course of your business?

Are you a golfer? Do you love to travel? Why not make all kinds of money in a global business related to golf?

Would you like to help the world be a more spiritual place, help people get along better together? You can do something good for the world, increase your income and live wherever you please in the process!

Whatever your passion you can learn how to make a fortune by creating an international micro business around it.  You can be international if you love to travel or not. Regardless of your skills and position there is some approach that will work for you.

Take fishing, for example. Millions of people love fishing. Here are just a few of many ways that others have profitably matched this passion with profit. Two of my friends, John and Lou, grew up near me in the Oregon mountains. They were outdoor adventure types and moved to Canada, where they homesteaded 1,200 acres on a trout-filled lake in mid British Columbia. They built a fishing camp that attracts fisherman from around the world.

Duncan Kinderman on the other hand loved fishing and castles. He bought a castle on the River Tay, a great Scottish salmon river, and offered time shares for fisherman from Britain, Europe and the US.

Another entrepreneur I know was from Montana. His skills were in marketing so he sold fishing trips for fishing camps. He attended rod and gun exhibitions, met owners of these camps and arranged to sell their fishing trips to the US, Argentina and even in Russia to fisherman around the world.

Ralph Kylloe on the other hand loved fishing and photography so he created the book, “Fishing Camps”, which was published by Gibbs Smith publisher. This allowed Ralph to travel across the country enjoying fishing camps as he photographed and wrote.

Steve Ambrose, another friend of ours, had family commitments at home so he set up a bass fishing business in Florida that served Americans, Germans, Canadian, Dutch and Belgians. Later as his children grew, he used his client base to arrange fishing trips in Argentina.

Each of these people had provincial backgrounds and differed in age, situation and skills. Their common link, the love of fishing, led each to a global micro business. Each was able to blend a unique nature and set of skills to develop a global business that surrounded them with fun, like minded fishing souls.

Also, imagine what an international business means to your world travel. Every trip you take can be tax deductible! You can honestly write off every trip that is related to your business. Every journey becomes a research oriented adventure and a TAX DEDUCTIBLE EVENT.

Learn to focus your investments using purpose as the most important investment goal.  The purpose of money becomes more important than the amount.

Learn how to create habits and routines that keep us on the path of our unique purpose.  The market will do all it can to distract us from our goals.  Understand that many banks, brokers, the media, the government and commerce all have agendas to take our money.   Good wealth habits and routines protect us from this.
Integrate your earning and investing.

Integrate your earning and investing. 

A business is simply an investment that is integrated with our own time and energy.  A Personal Income Earning Corridor (PIEC) begin with a main income generator.  For some this is a job with a salary. For others it is a pension. For many it is their own business.

Integration of business and investing is important because investments are not always good income generators.

Years ago I managed an investment portfolio for Canada’s largest private investment management firm.  One day, during lunch with the president of the firm, while discussing the difficulties of professional fund management, he explained that his biggest problem was the excessive expectation of customers.

I have a retired client who has a million dollars.  The client wants $90,000 a year to live on.  In a good year, we might earn 11%.  The client can take 9%. Our fee is 1% and the client’s fund increase by 1%.  In a bad year, we might earn 5%. The client takes 9%.  Our fee is 1% and the client’s funds drop by $50,000.  In the next year the client has even less to work with so a withdrawal of $90,000 may be more than 9% of the portfolio.   The client tends to take even more in good years, but never reduces the demand in bad years.

The number one golden rule of investing is that there is always something we do not know.  Risk is always our partner.   When we invest, there is always the potential to negatively affect our financial welfare.  Our investments might rise or fall because of market conditions (market risk).  Corporate decisions, such as whether to expand into a new area of business or merge with another company, can affect the value of our investments (business risk).  If we own an international investment, events within that country can affect our investment. There is both political and currency risk.  There is liquidity risk because we may need to draw on an investment when it is down.

Then there are broken promises.

We live in an era of broken promises.   Defaults could ruin most average retirees and even investors.  Fewer will financially survive.

A look at government, social and currency breakdown at its worst can help us see the problem.  Germany is an example when it borrowed heavily to pay WWI costs.  Such borrowing almost always leads to currency and social erosion and this did then.  In the USA and UK too.  Right after the war there was some stability, before government spending began to run wild.  By 1923, it reached the worst in history.  This caused prices to sometimes double in hours. In Germany by late 1923 it took 200 billion marks to buy a loaf of bread.

Hard-working people with modest spending habits could not even buy a postage stamp with their life savings.  All debt was wiped out but so too were all savings.

Businessmen quit and speculated in stocks and goods instead.  Small businesses survived by holding material things such as clothing, food, anything people could consume.  Salaries were paid three times a day yet shops were empty.  Food riots raged. Businesses closed down, unemployment soared.  The economy collapsed.

Anyone on a fixed income was destitute.  They sold everything just to buy food.

Recent news about Social Security, pensions and health care shows that the US government has excessive debt today and that we need tactics to make sure, when governments, pensions and insurers weasel out of their promises, that we can take care of ourselves.

One big broken promise is Social Security and Medicare.  The most recent Social Security trustee report shows that the programs will begin to spend more than they earn within just three or four years.   The Medicare hospital-insurance trust fund, could use all its reserves by 2028. They face insolvency over the next 20 years because Social Security runs totally out of money by 2034.

This is a bigger problem then it may seem because it creates an even bigger broken promise concerning the US dollar.

Medicare and Social Security already account for 41% of federal spending.  That was the expenditure last year.  This is not a static problem.  Each year that percentage is growing worse.  This creates a special risk for the dollar because Social Security’s reserves are not really assets at all.  The purported assets are simply IOUs from the US government.

Social Security assets are a liability of the government, so eventually the money comes from the same place as all other government expenditure, taxes or federal debt.  This means that if Social Security has to sell an asset, then the government, already overburdened by debt, will have to borrow the money from somewhere else.

If the Fed cannot raise enough money to pay Social Security only two options are left, devalue the greenback or don’t pay.

If Medicare stops working then all that’s left for backup is Obamacare and the private insurers in the plan.

This is another broken promise.  When United Health Group, the nation’s largest health insurer, recently announced that it was pulling out of Obamacare insurance the public learned that it will face higher premiums.  Many will need to choose a new plan, change doctors and hospitals as well.  United Health is not the first or only insurer to quite.  A dozen nonprofit health insurance cooperatives shut down just last year.  The giants Aetna and Blue Cross Blue Shield are even considering a drop out.

If Social Security and health care promises are broken that just leaves our pensions. Right?

Yet if we look at the Pensionrights.org website we see hundreds of corporations that have reduced pension benefits including the likes of Honda Motor Co., Ltd., Allstate Corp., Coca Cola, Boeing, Caterpillar, Kraft Foods, Hewlett Packard, Fedex GM and GE to name a few of over a hundred.

This problem is not limited to corporate pension.  An Economic Budget Issue Brief issued to Congress from the CBO (Congressional Budget office”) says:

“By any measure, nearly all state and local pension plans are underfunded, which means that the value of the plans’ assets is less than their accrued pension liabilities for current workers and retirees” CBO.

The report shows that even five years ago the short fall of State and Local Pensions was over 3 trillion dollars , more than all other state and local debt

That leaves the Pension Benefit Guaranty Corporation (PBGC)  as a safety net.  In the 2o15 PBGC’s annual report the Director’s message says:  “One of the most important functions of PBGC is assuming responsibility for pension plans when their sponsors can no longer keep them going. We insure the benefits of more than 40 million workers and retirees. Currently, we pay more than 800,000 people each month. An additional 585,000 workers are scheduled to receive benefits from PBGC when they retire.”

But if you look at the first paragraph of the Financial Report  in that annual report you see:

“PBGC’s combined financial position decreased by $14,577 million, increasing the Corporation’s  combined deficit (net position) to $76,349 million as of September 30, 2015 an all time record high from  $61,772 million as of September 30, 2014”.

Every step along the way we see shortfalls, debt with little hope of repayment and an economic overhang that will eventually create broken promises at every level from the pensions, healthcare, Social Security and most from a falling US dollar.

These facts will ruin the life styles of millions, but not all.

In short, there is risk in even the safest investments and there is a possibility that a negative financial outcome might occur.

This is why multi dimensional business opportunities make sense.  You can profit from expanding utility.  You can profit tax wise from adding income production.  You can gain from having a source of income in a place where you have the best chances of control.  This is why for centuries… small business have had a home upstairs and business below, so the owner could control their business

Those who profit most in changing times are those who add new dimensions to old time proven ways.  Modern technology offers many exciting ways to create multi dimensional profit…. and can earn income at home.

When you have your own business, you reduce the need to place excessive demands on your savings and you reduce the risks of broken promises especially when your have a multi dimensional business with multiple streams of income.

Merri and I aim to create multi dimensional opportunity wherever we live.

In Florida we bought a house and an orange grove next door.  Then we added a rental unit.

In North Carolina we bought a farm, then we added a seminar center, rental units and a trout raising business.

We make each of our houses multi dimensional…a home and a source of income because governments are going further into debt globally.  This creates serious debt and economic problems everywhere.  These burdens means that governments and societies lose their ability to keep their promises.  Multi dimensional earnings can help overcome the risks these conditions create.

Our website has long shared the idea of multi dimensional business, investing and living.  We have looked at the idea of living as a land lord or the idea of multi dimensional writing and farming or Ecuador farming with B&B, plus Ecuador B&Bs on the beach or in the Amazon to name a few.

Multi dimensional opportunity earns in numerous ways.

Merri and I have always created multi dimensional opportunity in our global travels.  We have united self publishing, seminars, tours, real estate, teaching, currencies, investing and real estate to enhance our income and living.   For example in London we converted a house into an office and bedroom time share.  We found special currency deals that helped.

I came across this (one of my first) multi dimensional opportunities when I wanted to finance a house purchase in London.  My business plan was to create a small office-apartment complex.  I would live in part of the house, have an office in part that I would share with a number of my readers.   The deal was aimed at helping overseas businesses people have an office and a place to stay when they were in London.   I set up a club something like a timeshare. Not quite a timeshare but close enough.

My track record with the bank was good and I had always repaid loans.  Yet the policy at that bank was “timeshares are no-nos”.  I could almost see the glaze come over my bank manager’s eyes as I explained the project.  It was the look that said “No matter what you say, the answer will be NO”.  Once a manager thinks that what you want is against company policy, it is better to do something realistic like climb Mount Everest on a lunch break.  I come from a family of modest means and had no relatives or friends with the cash to start the deal so my alternative was to find overseas investors.

After making the necessary polite motions with my banker and letting him do likewise, I thanked him for his time and was preparing to leave.

Then he said, “By the way let me show you our new American Express Gold Card plan”.   The bank had just started to offer credit cards and they came with a 7,500 pound unsecured overdraft.  He told me that overseas investors could have these as well as local investors and customers.

Overdrafts are a peculiarly British line of credit that allows you to borrow up to the limit of the overdraft without any regular payment plan.  The banker sort of expects to see the amount borrowed rise and fall.  The borrower just pays interest on whatever amount is owed and on occasion the bank reviews the overdraft with you.

At that time one pound equaled about 2.2 dollars so this meant that everyone who obtained this credit card received a $16,500 dollar unsecured line of credit. $15,000 was the amount I was charging each member who joined my London office-apartment club!  I immediately saw how to use this to attract overseas investors.

I wanted 50 members at $15,000 each which was double the $375,000 I needed to buy and develop the property. I saw how to turn my customers into my overseas investors.

My head was spinning as I left the bank.  The bank would not give me a $375,000 loan secured by property.  Yet they would lend my buyers of the club the full price of membership on an unsecured basis.  All I needed was get half my buyers right now on a nothing down pre -purchase deal.  This is exactly what I did. My customers became my overseas investors.

I hustled out, called my customers and offered them this deal they could not refuse.  “Join our club now and you get an American Express gold card.  The bank will lend you the money unsecured for your club membership.  Pay it back when you can.”  That was a deal that few overseas investors could refuse.

This was a much better deal for me than borrowing the money from overseas investors to start.  The original 25 sales were financed by the bank.  My customers had to pay the money back, not me.

My clients really loved me for this deal.  The British pound collapsed shortly after so that 7,500 loan that created over $15,000 became much less expensive…. barely $10,000.  They made about $5,000 (33%) forex profit on the loan as well as the good real estate deal.

They made such a profit on the currency change I wrote a report about it and earned additional income from the report sales.

In that example I used my writing to enhance a real estate deal.  The real estate helped me promote my seminars and a report plus I ended up with a income and a wonderful central London house to live in.

There are many multi dimensional real estate opportunities…. land that offers a low stress, healthy home…  farm income and other profit potential all at the same time.   Merri and I sponsored many Ecuador real estate tours to help readers buy multi dimensional real estate like Ecuador beach farms that provide rentals and farm income.

When investing and business are balanced the building of wealth becomes a more fulfilling, enjoyable process of service.  Great financial rewards are an extra benefit rather than ultimate goals.  Worries about money become less dominant and we gain an inherent power because we want to work harder and longer.  We don’t need to search (and spend) so much for fulfillment and are more likely to excel financially.

Knowing ourselves also helps begin a business with a most powerful business tool I call the Golden Rule of Simplicity.  This rule says there are millions of people just like us. When we truly see ourselves we look into a mirror that reflects an entire market who feel and desire just as we do.  This is a simple rule yet gives us a finely tuned market research system which shows us how to get create our product, get in touch with our market, deliver the product or service and surrounds us with like minded souls.

Self-knowledge is also essential for comfort, and comfort is a vital part of everlasting wealth.  When investors are not comfortable, no profit is enough.  Uncomfortable investors have a never-ending thirst for more that cannot be quenched.  This indefatigable desire gums up the money making process.  Amounts don’t matter.  Even investors with incredible assets suffer this never-ending lust.  A well documented example is Bunker Hunt’s huge losses when he speculated in silver.  He had hundreds of millions yet speculated it all to make even more. When is hundreds of millions not enough?

Three Layer Financial Plan

PIEC business does not mean you should put all your money in just your own business (though at times you may).  Diversification is always good.  PIEC diversification again departs from the financial planning norm.

PIEC portfolios come in three layers, first the business, then a layer of very safe investments over a third, much smaller layer of speculative deals.

The majority of PIEC diversification should be in stodgy, liquid investments such as utilities, CDs and bonds. These investments might pay little in the short term, but are safe and they are highly liquid at a known price. The low return on these investments is acceptable because they support your PIEC business which makes profits like few other investments can. These very safe investments act as reserves if your business hits a sticky patch and can provide ready finance if sudden business opportunities arise. They also don’t take up much time in research, accounting, watching the market, etc. so you can devote your energy doing what you love (your business) instead.

However, if you genuinely love researching and tracking the market and have the mentality, capital and experience for it, just being an investor can be a wonderful PIEC business in itself.

The third layer of diversification can be speculative because modern portfolio theory suggests that safe investments are enhanced and made safer by adding a small amount of higher risk deals. This also allows us to fulfill any casino mentality we might have left if having our own business is not enough.

PIEC investing makes it easier to create and keep wealth.  It enhances our lifestyles now, because it lets us make money being who we really are. It makes life more fulfilling and fun.

Integrating investing and business reduces the risks of placing excessive demands on your savings, especially if we have an anchor of value.

Find your Anchor of Value.

I started trying things in Hong Kong 48 years ago.

Then I moved onto Fiji and after a decade found “New Things” living in London.  While conducting London real estate tours, I spotted distortions in the Isle of Man that led to an Isle of Man business.  Years of real estate tours helped me pick up unimaginable profits… because I tried new things.

However Britain’s gray winters soon drove me to the sun.  Merri and I found ourselves in the sun watching sun rays sparkle on the emerald prisms of cool, spring fed pools in Naples Florida and the Dominican Republic where we found more “New Things”.  We conducted Dominican real estate tours but continued to self publish as well.  Then in the process of trying new places and new things, 20 years ago we stumbled onto Ecuador.

Our business has evolved over 50 years from Hong Kong to London to Europe to the Isle of Man to the Dominican Republic to Florida to North Carolina to Ecuador and back to Small Town USA.   Though each place was very different, we saw opportunity due to our anchor.

While in London in the 1970s, I wrote my first book, “Passport to International Profit”.

Passport-Internatonal-Profit-gary-scott

One chapter in the book was about the “Concept Conversion Trick” and how it creates the “Soil Defense Syndrome”.

Here is an excerpt from that chapter:

“The Concept Conversion Trick begins when people agree on a good concept for working and living together.  The people go to work and if the concept is good they will create a paradise.  The government gives them a flag and a song. Then the government pulls the trick.  The government convinces the people that the flag and song are important.  Then while the people are busy watching the flag and singing the song, the government replaces the concept with a set of ever increasing written rules and regulations administered by bureaucrats and backed up by a police force.

“This trick trades people’s individual freedoms for a shiver up the spine when the song is played the piece of cloth is waved.  The Concept Conversion Trick turns spirit into matter.   Like trading love for a beautiful plastic doll.  When the trick has been pulled and the dust settles, the people realize too late what has happened.  Anyone who steps out of line is called unpatriotic or even criminal.  He is swatted down by the bureaucracy or police force, crushed with overwhelming power or made an example of so others will tow the mark ‘for the good of society’.  All this is done in the name of public interest.”

If this writing sounds prophetic having been written over 40 years ago, it was not.  A simple review of any previous great society shows that this trick was part of its evolution.  Like the Roman Empire, things may get better for a while, then worse and then better again.  In the long term, as societies age, they lose their original vibrancy and life.

That book began my self publishing career because I was fascinated by how societies differ, yet are so much the same.

This is how our business continued to evolve, trying things of interest and fascination to us.  Not once did business turn out as we expected… but always there was some success… happy customers…. good deeds…. great service… profit… fulfillment and adventure all originating from just trying new things or doing old things in new ways.

We live in a fortunate era.  Throughout most of history, life expectancy and requirements of work meant that the most experienced sector of the work force was no longer physically able to continue.  In our high tech environment we have a chance to create their most important pinnacle career at a time when previously we would have retired.  This is the first time in mankind’s history when the value of our experience is worth more than the cost of getting it.

Today we have a global income with a self publishing micro-business with readers around the world, but run from our current homes in Smalltown USA.

Self Publishing has created exactly the lifestyle we desire with a farm in North Carolina, orange groves and home in Florida.

We have also made each of our homes multi dimensional… a home AND a source of income.  This is important because multi dimensional homes help us escape governments that cannot keep their economic promises.  History is littered with stories of serious national debt and economic problems that ruined pensions and retirees.  The burdens of debt and fiscal imprudence cause governments and societies to lose their ability to keep their promises.  Multi dimensional earnings can help overcome the risks these conditions create.

Starting without a penny… deeply in debt, writing and independent publishing have brought all of these material benefits to Merri and me, numerous homes… many investment properties and millions in the bank… all debt free.

We have lived in some of the most crowded cities in the world (London and Hong Kong) and now choose to live in some of the most isolated wilderness one can find.

Our secret weapon has been a personal anchor of value.

Recently as part of our 50th year anniversary I was interviewed on an investment webinar and the moderator asked me this question:

There are a lot of real estate investors who have been successful buying, selling and holding real estate in their own backyards.  A few have been successful investing in 2-3 markets in the USA.

But it is rare to find a successful real estate investor who has been investing in real estate all over the world.

And even more rare to find a real estate investor who has been successfully investing all over the world for FIFTY (50) years!

You are that guy!  What’s the secret?

My secret to freedom has been to use an anchor of value that I developed to invest in American residential real estate.  Though I created this anchor in the 1960s it has helped me invest in real estate, stocks, bonds and business around the world to this day.

The philosophy behind this strategy and tactics can be used to create your own anchor for investing in shares, bonds, currencies or commodities  as well as real estate.

Let’s look at value first.  The anchor helps me understand that I am investing for profit, not to be right. 

Based on the “profit rather than pride” principle  there are two (and only two) reasons why we invest in real estate.   To rent for income or to resell the property for more than we had invested.

Based on this reasoning, there are three ways to spot value in residential property.

#1: The first way to spot value is based on how much NET income can the property generate after taxes, insurance, maintenance and management costs.

#2: The second method is based on relative comparables.  Calculate how much similar properties in the area are selling for.  Also find out how much similar properties in other areas are selling for.

#3: The third method is to calculate how much a property would cost to replace with new construction.

What is the anchor?

We can build an understanding of residential value by understanding the monthly mortgage payment or rent a buyer or renter can pay.  In the USA, for example, the typical bank limit on monthly mortgage payments is about 28 percent of your gross monthly income.  Banks generally will let a borrower devote up to 28 percent of their household income in a mortgage payment and expenses (including taxes, insurance and HOA dues).

If there are many families in an area who earn an average of $4,000 a month, then this will be a good market for rentals at $1,000 a month.

This simple formula provides a basis from which all dependable value can be measured.   This is the science of the valuation.

Using this approach, years ago, Merri and I have been able to spot dozens of contrasts, distortions & trends in real estate value, everywhere.

An added factor to add into the mix is appeal.  You could call appeal the art of the valuation.

Sometimes an investment can be a really good value, but a hard sell.  The best investments are underpinned by appealing good value products and services.

Investing in what you know (and  enjoy) helps you understand appeal and makes it easier to mesh the art and the science of valuation.

For example, Merri’s and my background have a lot in common.  Merri’s formative years were in Georgia and mine in Oregon.  There were many differences between these states.  Yet as baby boomers we have much in common.  We saw the same shows on TV, Howdy Doody, the Cisco Kid, Ed Sullivan, Gunsmoke. Roy Rogers, etc.  We read the same books in school such as the Bridge over San Luis Rey, the Red Badge of Courage.  We saw the same movies, heard the same radio , listened to the same Golden Oldies, read the same news, the same magazines, so it is not surprising that our tastes are pretty much the same.

The fact we are NOT special gives us the ability to understand appeal.  There are 60 million baby boomers who have that same background.  This gives us confidence that if we like a house, others will like it as well.  This gives us good judgement (from an investing point of view) when it comes to appeal.

Our strategy is to buy houses that appeal to us which have a reasonable potential to return a decent income (and likely appreciate) based on rent in the $1000 a month range.

For example, we recently looked at a nice house just offered and with access to a wonderful lake, 2 bedroom, 2 bathroom, in very good shape with an asking price of $169,000.  The house fit the $1,000 profile and because it had a very nice guest cottage as well, meant we could likely charge $1,200 a month rent.  Merri and I looked the place over and felt just fine offering $140,000, knowing we could go up to $145,000.

How did we come to such a price?

The math worked like this.  The house will rent for $1,200 a month.  The rental market is strong and at this price it will rent quickly.  That creates an income of  $14,400 a year.  Our target ratio of price to rent is 10%.  We want a 10% cash flow, so $14,400 a year rent justifies a $14,400 price.

First, the area where we are buying is in a bit of a bubble.  Prices have started to rise beyond a reasonable expectation of return.  We did not think the house would rent for $1,300 or $1,400 a month so we were not willing to rise to the $169,000 price.

We did not get that house.  In fact this was the fifth house in a row on which we were outbid.  Because faith is vital to successful investing, we need to stick to our strategy, and our strategy is based around that 10% cash flow.  That percentage is sufficient to give us a reasonable return on our investment.

Just because everyone else is paying too much for houses, does not mean we should make this error as well.

Anchors of value help us remain logical so we don’t invest in trends that are turning into bubbles.  Anchors of value help us avoid giving back profits because we stayed in a trend for too long.

For example, my real estate anchor of value first created in Portland, Oregon in the 1960s helped me successfully understand good real estate trends in Hong Kong, Fiji and London, then the Isle of Man, Naples, Dominican Republic and Ecuador and eventually led Merri and me to invest in Smalltown USA in Mount Dora, Florida.

Real estate has always been in our blood.  I do not know why but by the age 21, I had already built a $2,000 windfall into seven duplexes and a house  on 14th Ave (mortgaged then to the hilt) in the small town of Gresham, Oregon.  I could have continued to buy, sell and rent real estate in Oregon but the wanderlust bug bit me and when I was offered a job to sell mutual funds in Hong Kong, I began to travel throughout Asia.

Owning those duplexes and that house left me with an anchor of value.  I understood rents (at that time the 1960s) from $125 in Smalltown USA to $250 a month in cities.

When I arrived in Hong Kong in 1968 real estate rentals were about the same as in downtown Portland.

Fear had created good value in Hong Kong.  In 1968 there were communist riots and bombs being set off in the streets.  The first day I arrived a motorcycle policeman had his leg blown off by a terrorist bomb.  The Chinese army was massed on the border and there were continual talks about an invasion. Hong Kong businessmen were fleeing.  Real estate was literally being given away.

Life went on.  We all figured out the fastest route to the British and American war ships in the harbor for a quick exit in case the Chinese decided to invade.  We watched out for boxes in the street that could be bombs.  Then we just got busy with life, working and earning so we could pay our rent.

I rented a huge apartment on Shouson Hill Road overlooking the ocean and the village of Aberdeen.  The owner wanted to sell this block of apartments but I had no money or experience then.  He was so desperate that he made a deal.  Instead of paying him $250 a month rent I invested $250 into mutual funds for him.

Then in 1970 the company I worked for sent me to London to spend a year at its headquarters developing a European sales training program.  I rented a nice house near Golders Green tube station on Finchley Road.  The rent was the equivalent of $250 a month.

In 1971 I was moved to work in San Francisco and I purchased a home in Petaluma, California.

petaluma

I bought this house in Petaluma California for $33,000 and assumed a 5% GI mortgage. Payments were about $175 a month.

In 1972 I returned and worked in Hong Kong for another four years.

The early 1970s was a time of serious inflation.  During that time I watched the prices and rents of real estate at the duplexes in Gresham, the house in Petaluma, and especially in Hong Kong rise… a lot!

In 1976, when I moved from Hong Kong back to London and noticed that London real estate was priced about the same as it had been in 1970.  This puzzled me. Why had London property prices remained flat despite inflation?

On investigation, I learned that there had been a huge real estate crash in 1970 continued to distort and dampen real estate prices six years later despite the rampant global inflation.  The British pound had also collapsed dropping 35% versus the U.S. dollar from 2.4 dollars per pound to a new all time low of 1.52 dollars per pound and at one point hit a low of one dollar per pound.  To my way of thinking, London houses, which I thought were already very cheap by world standards, just became 35% cheaper.

london-house

The house in Bedford Park.

I could not resist and began property shopping and eventually bought a five bedroom house in Bedford Park in West London. I made a 10,000 pound down payment and took a 25,000 pound loan to meet the 35,000 pound asking price.

First, I was right. London property had been under priced.  I was able to sell the house four years later for 115,000 Pounds.  I made a profit of 80,000 pounds.  But the currency change helped enormously too.  The pound had risen to over 2.2 dollars per pound.  My 80,000 pound profit was now worth $215,000.

I was willing to make this  purchase because I could rely on a mental anchor of value… a residential property that a working person could rent in the $250 a month range.  I was investing in what I knew and was comfortable with.

Manx real estate came next.  In the 1980s I had an offshore corporate formation business and noticed that Isle of Man overseas companies were as good as Jersey and Guernsey structures, but cost less than half.  This led me to believe that the Isle of Man would increase in popularity as a financial center.  While visiting, Merri and I discovered that a long depression had forced over 2,000 properties onto the Island real estate market (population was only 60,000).  We began taking real estate buying tours to the Isle of Man because rents and house prices were so low.  Some delegates purchased remodeled beach front condos for $12,000.

Then while conducting a seminar in Florida, we saw that real estate in Naples, Florida was much less expensive than on the East Coast of Florida.  Rents in Miami  and Ft. Lauderdale seemed really high to us, but Naples prices were much lower.  Merri had been living in Naples for some time and found a wonderful old large house just off the beach.  We bought it for a song (compared to the price we sold it for!)

Naples prices skyrocketed while we were living there and in 1995 we visited Ecuador.  Merri and I saw Ecuadorian beach front lots that would cost two million dollars in Naples that were selling for $5,000.   We saw we could buy a house on Ecuador’s beach for a price that we understood and were comfortable with.

By 2009 Ecuador prices has skyrocketed and Florida real estate faltered.  We began selling out our Ecuador real estate and buying again in Florida.

In Florida we saw great rental value.  We also wanted to live closer to our children and grandchildren.  We knew that studies had shown that 80% of adults 45 and older believe it is important to live near their children and grandchildren.  Those 60 million people, just like us, were thinking differently about where they would buy and/or rent a home.

We selected Mt. Dora as a small town to buy rental real estate for numerous reasons, but the first feature was its proximity to our daughter and grandson.

I can look back through this 50 year travel and real estate adventure and see that my decisions and investments have all been linked to that original anchor of value.

We live in a turbulent world and can expect rapid change, hidden agendas, huge shifts in communication.  When we are caught in the currents of such rapid shifts, our anchors of value can help us remain steady and secure.

Find your niche and develop your investment rules.

Whatever your specialty you will need to establish your method – the criteria you will use to select shares for your portfolio.

With growth shares I suggest that your criteria should include a consistent record of earnings growth with forecast growth in earnings per share greater than the p/e ratio.

For example, a company growing at say 18pc with a p/e ratio of 14 would have strong potential to be one of your selections. However, in addition to earnings growth you will also need to establish some protective criteria such as making sure that the balance sheet and cash flow are strong, there has been no recent substantial selling by directors (directors buying is an obvious plus) and the shares are acting reasonably well in relation to the market.

If asset situations become your thing, you should search for companies with shares priced at a discount to their net asset values. Keep an eye on directors’ buying and the recent relative strength of the shares against the market – they can at times indicate that a takeover bid is imminent or there is about to be a significant management change.

You should also make yourself aware of pension fund deficits, which are sometimes mammoth and can make a future bid much less likely.

Whatever your preference you need to establish your key criteria. Once you have your method working well, improvements come from experience and practice – learning from the successes and failures of each and every investment you make. Gary Player, the famous golfer, put it well when he said: “The harder I practice, the luckier I get.”

Your portfolio should contain no fewer than 10 shares, and you could put 10pc of your money in each of your top selections – which many brokers and banks call “conviction buys”. If you have minor reservations, 5pc might be more comfortable. It is always possible to top up the holding later, if and when you become completely confident in your choice.

Diversification is absolutely essential to reduce risk. But too much of it can hinder performance

Diversification is absolutely essential to reduce risk. However, too much of it can hinder performance. Remember that your first selection would be the number one conviction buy in your portfolio. Your 10th would be considerably less attractive and your 30th would not be in the same league as either of them.  Too much diversification can be better described as “diworsification”.

Know when to sell – and when not to.

A key factor in effective portfolio management is to run profits and cut losses. This is counter-intuitive for most people because it is natural to want to grab a profit and rather unpleasant to realize a loss. There is however no doubt that if you run your profits they can become very big and if you cut your losses they will always be relatively small – so much better than the alternative.

To understand this approach better, let me ask a question. What if I offered you a free Mercedes Benz?

You would probably say YES… but would be thinking… “What’s the catch?”  That’s good because we all know there is no such thing as a free lunch… much less a free new car.

Would an answer be harder if instead there was a choice… a FREE Mercedes or $4 million bucks (as in US dollars)?

Most would choose the cash.  Yet of course we would still be expecting a catch.  There is a penny to drop… some risk and the need to ignore the thundering herd and an absolute requirement of discipline.

Let me share a true story about how and why an investor in similar circumstances got the Mercedes and had the $4 million… but then lost it.

The story contains three valuable tips… explaining the FREE car plus how the millions were gained and lost.

Here is the true story… a tale of politics, economics and US debt.

Once upon a time 1981 to be exact… similar circumstances to the current economic and political mess arose across the land.    The story began with unemployment.   In 1981… the US Presidential election was over,  the US economy was crashing and the a new government and president were turning on a money printing machine.

This was a dark and gloomy time… those early 1980s.  Really.   That was the worst recession since the great depression.

You often hear we are living now through the worst recession since the great depression.  This is statistically wrong.

The U.S. economy may seem in bad shape now, but 1982 was worse.

The economy is not as bad as it was after the 1980 election.  It’s not even that close to being as bad. The ranks of unemployed and underemployed were much larger in 1982 than today.

The first big blow to the economy back then was the 1979 revolution in Iran. That glitch sent oil prices skyrocketing.   The bigger blow was a series of sharp interest-rate increases by the Federal Reserve, meant to snap inflation.  Home sales plummeted.  At their worst, they were 30 percent lower than they were when the real estate market bottomed in 2011.  The industrial Midwest was hardest hit, and the term “Rust Belt” became ubiquitous.  Many families fled south and west, helping to create the modern Sun Belt.

Nationwide, the unemployment rate rose above 10% in 1982, compared with 7.9% now.

The times were much darker.  In October 2012 another 6.7 percent of the labor force can be added to the current 7.9%. This group has given up trying to find a job or are involuntarily working part time.  These groups bring the combined underutilized employment rate to 14.6%.

As bad as this number is, it is still not that close to the 1982 peak of 16.32%  (or anywhere near Depression levels, which were probably above 30 percent). The early ’80s really were that bad.

This story begins at the end of the 1980 Presidential election when the US economy was at its worst in 50 years and getting worse.

Debt Growing

There is another similarity in the 1980 story to the here and now… a runaway US debt.

As this chart below shows, the US debt debacle really began after that 1980 election.

zfacts-national-debt-graph

Click on photo to enlarge.  Debt by President graph at zfacts.com

Now the story begins.  The stock market began a 17 year bull cycle that led to the greatest US and global affluence known to the recorded history of mankind.

The chart below says it all.    From that darkest hour, the Dow Jones Industrial average rose 1,410%.

Dow Charts

These stock market bull and bear cycles are based on cycles of human interaction, war,  technology and productivity.

Our hero in the story saw the coming stock market boom… despite the fact that everyone thought everything was bleak and black.   He approached Jyske Bank and said he wanted to invest in the stock market and wanted to leverage his bets.

His goal was to make enough to buy a brand new Mercedes Benz.

He opened the account and bought shares. He used those shares as collateral to leverage these investments with borrowed Japanese yen.

His timing was lucky.  The stock market rose quickly.   The Japanese yen collapsed.  His profits shot past his goal to buy the car.

The Fever

Bubble fever had set in so when the hero’s investment manager called with that great news… “You have enough for your new Mercedes“, the investor changed his mind.   “Let it roll,“… the investor said.  “I want to make a million instead”.

The investment manager left the portfolio alone and soon the investor’s profit rocketed past 1 million dollars.

The investment manger called.  “You have made a million bucks… perhaps we should take some profits.

Let it roll,“… the investor said. “I have decided to make two million instead.”

The investment manager left the portfolio alone and soon the investor’s profit rocketed past 2 million dollars.

The investment manger called.  “You have made two million bucks… perhaps we should take some profits.

Let it roll,“… the investor said. “I have decided to make three million instead.”

The investment manager left the portfolio alone and soon the investor’s profit rocketed past 3 million dollars.

The investment manger called.  “You have made three million bucks… really we should take some profits.

Let it roll,“… the investor said. “I have decided to make four million.”

As the portfolio was nearing four million in value the investment manger called.  “You have made almost four million bucks… perhaps we should take some profits.

Let it roll,“… the investor said. “I have decided to make four million and enough for a Mercedes.”

Shortly after the stock market corrected and the yen strengthened.   Profits fell so quickly the investor lost a million almost overnight.

The investment manager called.  “You have lost  a million bucks… we had better take the profits.

Hold,“… the investor said. “The market will come back”.

The stock market fell more and the yen grew stronger.  The profits fell even faster and the investor lost another million.

The investment manager called again.  “You have lost  another  million bucks… it’s time to take your profits.

Hold,“… the investor said. “The market will come back”.

The stock market continued to plummet and the yen rose more.  The investor lost another million.

The investment manger called.  “You have lost  three million bucks now…  You really should take the profits left.

Hold,“… the investor said. “The market will come back”.

Finally as the market plunged more and profits faded away… the investor, having lost more than 3.5 million, closed his positions and had just enough profit left to buy his new car.

The Mercedez was black and shiny… a big 500 SEL model… king of the road.   The hero never enjoyed it much.

The moral of the story is that when you invest you need a plan, a discipline and to know when to invest.

Remember that there are always three distinct options – buy, sell and hold.

Use every tax advantage you can.

When you have your own business, there are numerous tax advantages.  Here are seven great ones described by our tax preparer Conrad Oertwig.

7 Secrets to Paying Less Tax… for the One-Owner Business

by Conrad Oertwig

There is only one secret to paying less tax: knowledge.

One hard fact of life is that taxes are cash.  It’s a mistake to think of taxes as taxes.  If you want to create more net worth, you need to think of taxes as cash.

How much tax cash are you leaving on the table?  Thousands?  Tens of thousands?

So, let’s explore 7 secrets (great pieces of knowledge) that will enable you to pay less tax, have more cash, and build net worth. I know that’s why you are here, so let’s get started.

Secret 1: Dutch-treat entertainment

Start with a question: If you go to a qualifying business entertainment, but you do not pay for your business prospect and you pay only for yourself (you go Dutch treat), can you deduct the cost of the entertainment that applies to you only?

How did you answer?

The correct answer is that Dutch-treat business entertainment is just as deductible as paying for the other person.

We find that many owners of corporations and proprietorships do not know this rule.  They miss thousands in deductions.

Example.  Henry Miller goes to a baseball game with a fellow business owner.  After the game, they go to dinner together and discuss how to find and hire a great assistant.  Mr. Miller does not pay for his fellow business owner.  He pays for himself only.  His costs of the baseball game and dinner are deductible as Dutch-treat entertainment.

You might say prove it!  I say, “Sure.”  Here’s what IRS Regulation Section 1.274-2(b)(1) has to say about this type of entertainment:

1)    The taxpayer may deduct business entertainment even though the expenditure relates to the taxpayer alone.
2)    The objective test precludes arguments that business entertainment means only entertainment of others.
3 )   Deductible business entertainment may include an activity that satisfies a personal, family, or living expense.
4 )   An individual in business may deduct the entertainment cost, including his personal benefit, as a business expense.

You can see that knowledge of the Dutch-treat entertainment deduction is worth money to one-owner and husband-and-wife owned businesses, regardless of business form: proprietorship, corporation, or LLC.

Secret 2: Second office in the home

Have you been told that because you have an office outside your home that you may not have an office in the home?  That’s wrong!

IRS publication 463 states, “You can have more than one business location, including your home, for a single trade or business.”

So far, so good: The IRS follows the tax law and says that you can have two offices for your business, one downtown and one in your home.

As a one-owner business, you want your office in the home to qualify as an administrative office.  The IRS in publication 587 says:

Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements:

1)    You use it exclusively and regularly for administrative or management activities of your trade or business.
2)    You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

Note the italics. This is an exact quote from the IRS. Also, note the word “substantial” because that gives you the strategy:  Do your administration at home and don’t do it in your downtown office.

In publication 587, the IRS goes on to say:

There are many activities that are administrative or managerial in nature.  The following are a few examples:

•    Billing customers, clients, or patients.
•    Keeping books and records.
•    Ordering supplies.
•    Setting up appointments.
•    Forwarding orders or writing reports.

You can see that knowledge shows you how you can claim the home-office deduction even when you have a downtown office.

Secret 3: Eliminate commuting

Secret 2 contained a magic word: “principal”— as in principal office.

Why is that important?

IRS publication 463 says:  If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business.

I know you are going to like this:  Step 1: Establish an office in your home that you regularly and exclusive use for administration. That’s it. This is so easy that I don’t have a Step 2.

You have done it: The proper establishment of an administrative office in the home eliminates commuting.  Now, all your trips from your home to your downtown office are deductible.  This could be huge.

John Wilson owns a $50,000 vehicle, but he has only 10% business mileage on it because he commutes from home to office.  Now, with that home-to-office mileage converted to business mileage, his business percentage jumps to 83%.

Do the math.  From a possible $5,000 depreciation deduction (10% times $50,000) to a whopping $41,500 (83% times $50,000).

I know that your vehicle may cost more or less than Mr. Wilson’s vehicle.  That’s okay.  This concept works for everyone.  Apply your newly improved business percentage to your vehicle and see the increase in deductions, not only for this year but for every year you are in business.

Knowledge is the power and the secret.

Secret 4: Charity Sporting Event

Ask yourself this: Could a $300 charitable sporting event ticket produce a bigger tax deduction than a $300 business meal with a client?

In both cases, you spend $300.

Here’s the answer and it’s a stunner: the charity sporting event produces double the deduction of the business meal.  Double!

Are you capturing your double deductions?  Do you have the following line items set out in your chart of accounts?

1)    100% business entertainment deductions
2)    Regular 50% business entertainment deductions

If not, and if you attend or participate in charitable sporting events, you are missing valuable deductions because you are giving your tax preparer only one category for entertainment. Worse yet, you might be deducting the charity events as charitable deductions. Yikes!

Example 1.  You buy two tickets to the local American Cancer Society chapter’s golf outing.  On the day of the golf outing, you collect your business colleague and the two of you have breakfast at the outing.  Over breakfast, you and the colleague discuss new ways of getting more prospects for your businesses.  This gives you a business meeting, and now the golf outing qualifies as business entertainment associated with the breakfast discussion.  With proper documentation of the cost and business discussion, the entertainment cost of this golf outing qualifies for the 100% deduction.

Example 2.  Everything is the same as in example 1—breakfast discussion and all—but you go as a spectator to a PGA TOUR event that gives 100% of its net proceeds to 501(c)(3) charities.  Your cost of the PGA TOUR event is 100% deductible.

Example 3.  Everything is the same as in example 1.  The charity sends you a note saying that the fair value of your golf, food, etc., is equal to the amount you paid and you have no charity tax deduction.  Smile.  You have no problem.  The fair value limitation does not apply to business entertainment.  Thus, like in example 1, you deduct everything.

You might ask me: Where does the law say that I can do this?  Internal Revenue Code Section 274(l)(1)(B) says that the 50% cut in a business entertainment deduction shall not apply to any ticket for any sports event.

1)    which is organized for the primary purpose of benefiting an organization which is described in section 501(c)(3) and exempt from tax under section 501(a),
2)    all of the net proceeds of which are contributed to such organization, and
3)    which utilizes volunteers for substantially all of the work performed in carrying out such event.

Events that use volunteers for substantially all the work and donate the net proceeds to charity include, among others:

•    Golf
•    Tennis
•    Skeet shoots
•    Pheasant hunts
•    Fishing tournaments
•    Bowling
•    Marathons
•    Triathlons
•    Ski tournaments

Here’s another case where tax knowledge produces cash.

Secret 5: Antiques Make the Best Business Assets

Let’s say that you have narrowed the purchase of your business desk to either an antique or a regular desk.  Each desk sells for $5,000.  Which desk gives you the best business result? Is the difference worth thinking about?

First, you should know that some relatively recent appeals court decisions allow you to depreciate and expense the desk, regardless of its antique status.  Thus, you can deduct the $5,000, antique or not, but that’s where the similarity ends.

There can be a huge difference in financial results at the time of resale.

For example, in 10 years, the antique desk might increase in value to $15,000, whereas the regular desk could decline in value to $500.  But to see the true financial results, you need to look at the after-tax numbers.

Let’s say you are in the 35% income tax bracket and the 15% capital gain bracket at the time of sale. On the $15,000 proceeds from the sale of the antique desk, your federal taxes would be:

•    $1,500 on the $10,000 capital gain part of the profits ($15,000 selling price minus $5,000 original basis times 15%);
•    $1,750 on the $5,000 of depreciation recapture ($5,000 depreciated in full, taxed at the ordinary income tax rate of 35%).

After taxes, you pocket $11,750 on this sale of your antique desk ($15,000 minus $1,500 minus $1,750).

On the sale of your regular desk, you pocket only $325 after taxes ($500 sales proceeds minus $175 in recapture taxes).

The antique desk gives you 36 times more cash ($11,750 compared with $325). Imagine an entire office full of antiques!

Tax knowledge says to you: If you can buy an antique car, clock, rug, desk, cabinet, bookcase, paperweight, conference table, chair, umbrella stand, coatrack, library table, or other asset that will function just as well as a new purchase, take the antique.

Secret 6: Use Two Vehicles for Business

In the past, your tax adviser likely told you to drive one vehicle for business and the other vehicle for personal purposes. T his old advice made it easier to claim the one car as a business car because no business mileage log was required back then.  But that’s no longer true.

Today, tax law requires you to keep a mileage log to prove business use.  That changes the game.  With today’s rules, you gain nothing by using only one car. But the new mileage log rule gives you a possible opportunity to increase your tax deductions.

First, you might ask: Will the IRS allow me to use more than one vehicle for business?

Yes!  The IRS official method for computing business use of a single vehicle is to divide business miles by total miles driven.  IRS Form 4562, which is filed by proprietorships and corporations, contains spaces for up to six vehicles. In other words, yes, the IRS recognizes that you can drive more than one vehicle.

Here are the two basics that make the two-vehicle strategy work:

1)    You drive more miles than your spouse, and
2)    Both vehicles are somewhat close in adjusted basis.

To see if you can benefit from this two-vehicle strategy, and by how much (the minimum amount, really), apply the arithmetic from the before-and-after example below to your vehicles.

Before.  You drive 2,000 personal and 28,000 business miles on your vehicle (93% business).  Your spouse drives 8,000 personal miles on vehicle 2.  Each vehicle has an adjusted basis of $24,000.  Your maximum depreciation and/or Section 179 deduction is $22,400 (93% times $24,000) on the one vehicle you currently drive for business.

After.  You switch vehicles with your spouse every week. You now have 73.7% business use of vehicle 1 and 73.7% business use of vehicle 2.  This produces $35,376 in maximum depreciation and/or Section 179 deductions (73.7% x 2 x $24,000).

You gain $12,976 in new deductions ($35,376 minus $22,400).  You did not have to drive one mile further or spend one additional penny.  You simply had to know (as you learned here) that this strategy could work for you.

Secret 7: Travel by Cruise Ship

When you know the rules, it’s easy to travel to a business meeting by cruise ship rather than by airplane or other mode of transportation.

The law provides various ways for you to deduct a cruise.  Let’s examine just one: a trip to St. Thomas in the Virgin Islands and let’s say you live in California or New York.

IRS Regulation 1.274-4 gives us two one-owner business friendly rules that we can use to our benefit:

1)    The United States means the 50 states and the District of Columbia
2)    Transportation cost to a foreign destination for seven days or less, excluding the day of departure, is not subject to an allocation between business and personal days

St. Thomas is outside the 50 states; accordingly, it’s a foreign destination. You are subject to the foreign travel rules on your trip to the business meeting or convention in St. Thomas.

You plan to fly to Miami, Florida, and then board a cruise ship that will take five days to arrive at St. Thomas.

Once you arrive at St. Thomas on day five of your trip, you will:

1)    Depart the ship
2)    Check in for a two-night stay at the hotel where the convention or meeting is being held
3)    Attend the convention or meeting after sleeping at the hotel for the first night
4)    Depart by airplane for Miami on the day after the convention or meeting

Your business tax deductions include the cost of:

1)    Travel to Miami
2)    Cruise ship fare to St. Thomas (not to exceed tax law’s luxury boat limits that range in 2014 from a low of $566 to $680 per day, depending on the dates of travel)
3)    Food and lodging in St. Thomas
4)    Airfare to Miami
5 )   Travel from Miami to home

Note that you have no personal, nondeductible expenses for this trip to St. Thomas. You have to admit, tax knowledge can be fun!

A Few Thoughts

I specialize in “nuts and bolts” tax strategies that bring tax law to life so that business taxpayers and professional tax advisers can put the law to work for them. In fact, my mission is to clarify taxes so that you take control of your money.

Frankly, plucking common sense from the tax law is time consuming and difficult work.  Yet, after more than 25 years, I still get great satisfaction when I can clarify and extract tax dollars from the tax law not only for your pockets but also to add to your net worth.  In fact I have extracted over 400 tax savings tips and would like to share the most important lessons with you so am creating a course that will share seven tax secrets each month for the next year.

You can get update tax advice on the new tax law from Conrad Oertwig conrad.taxmart@verizon.net

Make sure you have some liquidity.

You should always keep an eye on the “liquidity”, the ease with which you can sell all or part of your portfolio. If you are invested mainly in big cap stocks you will have little trouble going into cash if necessary.  However, if you have focused on smaller growth shares it makes sense to keep enough of your PIEC portfolio in large companies.

Select shares that can, if necessary, be turned into cash instantly and provide some comfort if the market as a whole turns ugly.

The potential gains on very large companies are not likely to be as high as those from smaller growth companies, but they can and often do well enough to give you a warm feeling.  Remember comfort counts!

Diversify – but not too much

Your portfolio should contain no fewer than 10 shares, and you could put 10 percent of your money in each of your top selections.  Diversification is essential to reduce risk, but too much of it can hinder performance.

One of the best ways to have huge diversification in a small portfolio is with Country Index ETFs.  These ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country. ETFs do not try to beat the index they represent. The management is passive and tries to emulate the performance of the index.

Most country index ETFs are invested in dozens, often a hundred or more, shares.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. With 72 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in Australia.

A portfolio of a dozen country index ETFs represents diversification to hundreds of shares and a dozen currencies.

Diversifying into countries is safe because countries  generally do not go away, go bankrupt or become challenged by changing technology and altering markets.

Diversifying into countries is also relatively simple because, there is sufficient analysis of global markets so every country’s stock market can be compared and markets of best value included in a safe portfolio.

In addition these valuations do not change quickly.  In 2016 our portfolio of 20 good value country index ETFs had only one change, an addition of the Turkey Index ETF, in the year.

This low volume turnover gives us time to put our focus and energy on our business and the passion we love most.  Studies over decades suggests that this simple slow trading, highly diversified approach increases long term profits and increases safety.

Country ETFs provide massive, good value diversification at a really low cost.

Most passive country index ETFs have minimal cost structures.

Keep investing costs down. 

High trading costs are one of the biggest drags on the performance of your PIEC portfolio.

There are numerous costs we need to keep an eye on.

Load fees. Avoid back-end and ongoing load. When looking at mutual funds, we’ll typically see them listed as A shares, B shares, and C shares.  All of these share classes have some type of load.  Avoid them.

A shares include a front-end, a guaranteed loss the minute you buy.  B shares come with a back-end load, a guaranteed reduction of any profit or expansion of any loss.  B shares typically charge 5% if they are sold within a specified time (normally five to seven years). There are also higher ongoing operating expenses for B shares. Fund companies typically charge up to an extra 1 percent a year for B share operating expenses.

C shares charge a penalty (usually 1 percent) if a sale is made within the first year.  They also carry higher expense ratios.

12b-1 fees are fees hard to see internal fees that cover a fund’s marketing and distribution costs. Funds can 12b-1 fees to pay brokers incentives for selling their funds. We should watch 12b-1 fees to make sure our broker is advising this fund because it is a good investment, not because he or she is receiving an incentive.

Management fees. We should make sure we get what we pay for, a good manager who makes us feel comfortable by helping build safety and steady performance in our portfolio.

Churning. Some funds and brokers churn, or buy and sell more than is really required.  History suggests that the less activity in a portfolio, the higher the return. Active management is one thing, but funds and brokers can increase their income with excessive transactions that do little or nothing to help us as investors.

Misallocation. Many investors are misallocated for the benefit of the bank or broker.  There are a remarkable array of unnecessarily risky, undiversified portfolios created to generate fees, and that have nothing to do with a client needs. Beware of complex and expensive portfolios full of bits and pieces that are hard to understand. Low transparency can often be associated with high costs.

Expense ratios in fund doesn’t cover all of the costs.  All investors, whether using funds or not face other costs such as brokerage and bid-ask spreads.

Bid-ask spreads for example are subject to market friction.  Markets are liquid because makers standing ready to buy or sell shares at all times.  They are paid by the difference between what they will buy and or sell for.

Shares that have less liquidity, ie.  Not many buyers and sellers, have bigger spreads between buying and selling prices.

Investing in widely held index funds and index ETFs can reduce this cost gap.  Such investments normally trade within fractions of a cent, keeping this this hidden expense in check.

Trading commissions make active trading an expensive way to increase profits. Trading costs sandbag our profits from the start.

Taxes need to also be considered. Buying and selling quickly increases fees and also creates short-term capital gains taxes.

Be careful of margin account as well. Most brokers will let us borrow money (for a fee) so we can leverage our investments.  This increases any profits or losses created, but also adds the interest cost of the leverage.

If we add up all the potential fees, redemption fees, brokerage fees, back-end load fees, management fees, inactivity fees, 12b-1 fees, transfer fees, minimum equity requirement fees, commissions, the cost of limit orders and consultancy costs, before investing.

We should know what all our fees are.

Passive Funds Usually Cost Less. Because reducing costs is a major factor in investment success, low cost passive funds that do not require high cost managers generally out perform managed funds in the long run.

Over a 15 or 25 year period very few managers outperform the respective benchmarks of sectors where they invest by a couple of percentage points.

It’s an easy way to game the stock market, and getting easier by the day.

While we are sharing this report, I want to make a special offer, limited to the next three days, that can help you integrate your business and investing.

We offer two courses for attaining financial security.

The first is our “Live Well and Free Anywhere Program”.  The program contains  a series of courses and reports that show ways to earn and be free. These courses and reports are:

  • “International Business Made EZ” course
  • “Self Fulfilled – How to Write to Sell” course
  • Video Workshop by our webmaster David Cross,
  • The entire weekend “Writer’s Camp” in MP3,
  • The report “How to Raise Money Abroad”
  • Report and MP3 Workshop “How to Gain Added Success With Relaxed Concentration”
  • Any updates to any of the courses, workshops, reports or recordings for a year.

You can learn all about this program at How to Have Real Freedom, but do not order the program there for $299 .  If you subscribe to the Purposeful investing Course in the next three days, I’ll send you the program free.

I invite you to join me and a small selective group who for the next year will participate in an intensive program called the Purposeful investing Course (Pi).  The purpose of Pi is finding value to increase the value of and protect our savings, pensions, income and wealth in good times as well as devastating economic conditions.

Learn Slow, Worry Free, Good Value Investing

Stress, worry and fear are three of an investor’s worst enemies.  They create a Behavior Gap, that causes investors to underperform in any market good or bad.  The behavior gap is created by natural human responses to fear.   Pi helps create profitable strategies that avoid losses from this gap.

Lessons from Pi are based on the creation and management of a Primary Pi Model Portfolio, called the Pifolio.  There are no secrets about this portfolio except that it ignores the stories from economic news (often created by someone with vested interests) and is based mainly on good math that reveals the truth through financial news.

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets using my (almost) 50 years of global experience and my study of the analysis of four mathematical investing geniuses (and friends).

The Pifolio analysis begins with a continual research of international major stock markets that compares their value based on:

#1:  Current book to price

#2:  Cash flow to price

#3:  Earnings to price

#4:  Average dividend yield

#5:  Return on equity

#6:  Cash flow return

#7:  Market history

We combine the research of several brilliant mathematicians and money managers with my years of investing experience.

This is a complete and continual study of what to do about the movement of international major and emerging stock markets.  I want to share this study throughout 2017 with you.

This analysis forms the basis of a Good Value Stock Market Strategy.  The analysis is rational, mathematical and does not worry about short term ups and downs.  This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

The costs are low and this type of ETF is one of the hardest for institutions to cheat.  Expense ratios for most ETFs are lower than those of the average mutual fund.  Little knowledge, time, management or guesswork are required.  The investment is simply a diversified portfolio of good value indices.  Investments in an index are like investments in all the shares of a good value market.

Pi opens insights to numerous long term cycles that most investors miss because they have not been investing long enough to see them.

For example, in the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

I did well then, but always thought, “I should have invested more!”  Now those circumstances have come together and I am investing in them again.

The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar.  The two conditions are in place again!   There are currently ten good value (non US) developed markets,  plus 10 good value emerging markets.

Pi shows how to easily create a diversified, worry free portfolio in some of these good value markets using Country Index ETFs.

The current strength of the US dollar is a second remarkable similarity to 30 years ago.   The dollar rose along with Wall Street.  Profits came quickly over three years.  Then the dollar dropped like a stone, by 51%  in just two years.  A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  The trends are so clear that I created a short, but powerful report “Three Currency Patterns for 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.  I kept the report short and simple, but included links to 153 pages of  Good Value Stock Market research and Asset Allocation Analysis.

The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

This report sells for $29.95 but when you subscribe to Pi you’ll receive the report, “Three Currency Patterns For 50% Profits or More” FREE.

Plus get the $39.99 report, “The Silver Dip” free.

With investors watching global stock markets bounce up and down, many missed two really important profit generating events.  The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV).   The second event is that the silver gold ratio hit 80 and has remained near this level, compared to a much lower earlier range.

These two events are a strong sign to invest in precious metals.

I prepared a special report “Silver Dip 2015” and updated this in 2017 and 2018.   The report explains the exact conditions you need to make leveraged silver & gold speculations that can increase the returns in a safe portfolio by as much as eight times.  The purpose of the report is to share long term lessons about speculating in precious metals gained through 30 years of speculating and investing in gold and silver.

The low price of silver offers special value now so I want to send you this report because the “Silver Dip 2018” offers enormous profit potential in 2017.

Save $457.95 if You Act Now

Subscribe to the first year of the Personal investing Course (Pi).  The annual fee is $299, but to introduce you to this online course that is based on real time investing, I am knocking $102 off the subscription.  Plus you receive FREE the $29.95 report “Three Currency Patterns For 50% Profits or More”, the $27  report “Silver Dip 2018” and the $299 “Live Well and Free Anywhere Program”.

Triple Guarantee

Enroll in Pi.  Get the first monthly issue of Pi and the report “Three Currency Patterns For 50% Profits or More” and the “Live Well and Free Anywhere Program” right away. 

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through your own purposeful business and slow, worry free purposeful investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  I guarantee you can keep “Three Currency Patterns for 50% Profits or More” and “Silver Dip 2018” plus the Value Investing Seminar as my thanks for trying.

You have nothing to lose except the fear.  You gain the ultimate form of financial security as you reduce risk and increase profit potential.

Subscribe to a Pi annual subscription for $197 and receive all the above.

I am so confident that you’ll gain from this offer that if you are not fully satisfied, simply email me within 60 days for a full refund  and keep the $299 “Live Well and Free Anywhere Program” as my thanks for giving Pi a try.  

Gary

(1) www.wsj.com: US household net worth rises

(2) money.cnn.com: Wealth gap in America