Tom's Blog

I have often thought over the past couple of years about the difference between being rich and being wealthy. Is there a difference? If so, what is it? And how do we become wealthy?

It seems to me that there is a big difference between being rich and being wealthy. When I think about someone who is rich, I think about someone with a lot of money. And I typically think about someone who is quite showy with their money. They drive fancy cars and live in a fancy house. They wear fancy clothes and eat at fancy restaurants.

Rich people come into their money in a number of ways. They may inherit it. They may win the lottery. They may earn it in a few short years as a professional ball player or entertainer. Or they may invent a new mousetrap that is worth millions of dollars. Or they may simply earn it over many years as a professional or a business owner.

But doesn't this also describe a wealthy person? Is there really a difference? I believe there is a major difference between rich and wealthy. The difference is in duration. How long does the money last? Will it be gone once the person's earning power is gone? Will it be passed on to future generations?

The difference between a wealthy person and someone who is simply rich is that a wealthy person has sustainable wealth. In other words, a wealthy person will always be wealthy, whereas someone who is merely rich will only be so for a short period of time until the money is gone.

Think about people in history who everyone would consider wealthy, and you can begin to see what I mean. The Rockefellers, Carnegies, and Campbells are all wealthy families. Their wealth has lasted multiple generations. Why is this? What makes them so different from the lottery winner or professional athlete who has money for a short time and then it's gone?

The difference between rich and wealthy is very simple. It's knowledge. Wealthy people know how to make money. Rich people only have money. Once you know how to make money, you can build sustainable wealth. The money never stops coming. If you have a reversal of fortune, it's not a big deal. You just make it back.

Think about Donald Trump. Several years ago, Mr. Trump was deeply in debt. But, oddly, he didn't change his spending habits and didn't go away. Why not? Because Donald Trump understands how to make money. He is a wealthy individual.

There are many examples in history of wealthy people who obtained their wealth through knowledge and valued knowledge more than money. The most obvious one perhaps was King Soloman, king of all of the Israelites. He was extraordinarily wealthy. And he was extraordinarily wise. When he first became king, the prophet came to him and asked what he would ask of God. Solomon asked for wisdom. And throughout Solomon's writings, he lists wisdom and knowledge as the two most important gifts to ask of God. Wisdom and knowledge are what created Solomon's great wealth.

Wisdom and knowledge can create great wealth for anyone who desires it. Last week, a vendor of ours came to me and asked what he could do to create wealth. My immediate response was to learn everything he could about wealth. Once he had the knowledge, then he could begin formulating a strategy and work with a coach to build the wealth. But the knowledge needs to come first. Otherwise, if we do happen to get rich, the money is not likely to last.

I am most grateful to my mother who instilled in me and my siblings an unquenchable thirst for knowledge. This is the greated gift (other than life itself) that my mother gave me. It's this thirst for knowledge that drives me to teach others about wealth and how to attain it. Our new website, www.provisionwealth.com, has tremendous resources and information about wealth. Particularly important to us is WealthStrategyU. Our goal for WSU is to become a major repository for wealth knowledge. Please let us know what you think about this resource and how we can continually improve it.

Warmest regards,

Tom

Even though I am not an investment advisor and never hold myself out as one, clients continue to ask me what to do to prepare for retirement. Should I max out my 401(k) contribution? Should I do an IRA? Should I put more in my profit sharing plan or pension plan?

Contrary to popular belief, none of these are wise investments. Why? Among other reasons, they all involve putting money into an investment vehicle over which they have little control as to investment and timing and most people end up choosing Mutual Funds as their investment within these plans. In fact, putting your money into the Lottery would be a better investment.

Really? The Lottery as an investment vehicle? Sound crazy? Gamble my retirement funds away in a government-sponsored game of chance where I have little chance of winning? Where millions of other people are putting in money in hopes of winning the big one? Where most of the money goes to someone else and the chances are strong that I will lose part or all of my money?

Wait a minute - are we talking now about the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little chance of winning. Sounds like a lot like Mutual Fund investment in a 401(k) or IRA. After all, what are my chances of retiring on Mutual Fund investments? Not very high, actually.

A couple of years ago, I was listening to a financial program on the radio on my way into work. The interviewer was asking the representative of a large Mutual Fund about the performance of the Fund. The Rep responded that the Mutual Fund had risen in value by an average of 20% per year for the prior two years. But when the interviewer asked about the average return to the average investor in the Fund, the Rep responded that the average investor had actually lost 2% per year. Why? Because of the timing of going in and out of the market. Compare this to the Lottery, where everyone knows the exact chances of winning and the exact amount that could be won!

But what about the great tax advantages of putting my money into a 401(k) or an IRA? Yeah, right! Get a tax deduction when you are young and in a relatively low tax bracket so you can pay taxes on the money you take out when you are retired and in a higher tax bracket? Yeah, that's a good deal. Or, consider the difference in tax rates on capital gains and dividends if you are not in a 401(k) or IRA versus the ordinary income tax rates on the earnings when you pull them out of your 401(k) or IRA.

So now you are thinking that you should just invest in Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds result in capital gains taxes when the Fund Managers trade them even though you don't see the money! You have to pay taxes even though the Fund may actually have gone down in value! And what about the lost opportunity cost of that money that you are now paying in taxes that you could have put into other investments? At least with the Lottery, you know the exact amount of taxes you can expect to pay if you win and you only have to pay taxes if you do win.

Yes, you say, but the Lottery is gambling and I have no control over whether I win or lose. You are right. The Lottery is gambling. But so is a Mutual Fund. You have no control over the stock market and neither does the Fund Manager. The market goes down, so does your Fund. At least you recognize that you are gambling when you play the Lottery. You don't have the government, financial institutions and your employer telling you that the Lottery is a good investment. And your employer doesn't go so far as to match the amount you put into the Lottery like it might with your 401(k). Nobody is lying to you about the Lottery being gambling, but those in positions of authority are lying to you about the chances of success in a Mutual Fund!

But surely, you say, there is a better chance of making money in a Mutual Fund than there is in the Lottery? Hardly. There may be less of a chance of losing all of the money you put into a Mutual Fund than there is losing all of the money you put into the Lottery. But you are never going to win big in a Mutual Fund. In fact, Mutual Funds are designed to minimize your returns by creating a "balanced portfolio." If they could minimize your risk of the market itself, this might be okay. But the problem is that nobody can minimize the risk of the market without sophisticated hedge strategies that are not typically used in Mutual Funds. At least with the Lottery, you have a chance of winning big. And you can sleep at night, because you aren't wondering if the chances of winning are going down overnight because of something that happens in Tokyo.

You say you don't like the idea that most of your Lottery gamblings are going to support government programs? Where do you think most of the earnings from your Mutual Fund are going? No, not to support government programs, but rather to support your investment advisor's and the Mutual Fund manager's retirement? You take all of the risk, you put in all of the capital, but most of the earnings from the Mutual Fund go to the Fund manager and your investment advisor. At least with the Lottery, the funds are going to worthy causes, such as the Arts.

Of course, I would never advise a client to rely on the Lottery for their retirement. But neither would I advise them to rely on Mutual Fund investments. For my dollar, the Lottery is a lot more fun and at least I know I'm gambling. But if you want to retire, look at other investments and work with someone who is willing to put in the time to help you retire soon and retire rich. Financial freedom is available to those who are willing to work and learn about it, but not likely for those who want to rely on such risky investment strategies as Mutual Funds.

For more information about how to obtain your financial freedom fast, visit our website at www.ProVisionWealth.com.

First, I want to thank all those who commented on my recent entry, "Why the Lottery is a Better Investment than Mutual Funds." This entry is a follow up to several of those commentators, many of whom were asking the question, "If mutual funds are not a good risk, what is."

To those who were concerned about Yahoo plagerizing me, I appreciate your concern but suggest you re-read Robert Kiyosaki's introduction to the article where he states that he was having a conversation with me about mutual funds and this article is what I said. Indeed, Robert and I did have that conversation. I memorialized it in my blog and gave him full rights to publish it on Yahoo or anywhere else he would like to publish it.

With that cleared up, let me clear up one more possible misconception. While the article was meant to be tongue in cheek (I would never suggest anybody buy lottery tickets), I do have a fundamental problem with "typical" mutual fund investing. Most people who invest in mutual funds subscribe to the ridiculous notion that is promoted by many financial planners and financial advisors that you should put you money into the stock market, hold it for a long time, and pray that the market and the mutual fund goes up. There are others who make the even bigger mistake of getting in and out of mutual funds without a consistant, well-thought out strategy of what type of mutual fund, when to buy the mutual fund and when to sell the mutual fund.

One of our commentators suggested that they have consistently received 15% on their mutual funds. That's amazing and I sincerely congratulate that individual. I have never known anyone to do that well consistently in mutual funds and I suspect the reason for the return being that high and that consistent is that this individual spends a lot of time learning about mutual funds, the stock market, trends in the stock market and economic conditions generally.

But I would add that a 15% return is not great!!! This same comentator suggests that his mutual funds have outperformed most real estate. I would answer that he is probably correct on an absolute basis, meaning that most real estate does not appreciate at 15% per year consistently. In fact, average appreciation in real estate in the U.S. over the past 90 years is around 7%. THE FALLACY IN THIS ANALYSIS IS THAT IT IGNORES THE LEVERAGE OF REAL ESTATE.

Most real estate investment is highly leveraged. And the best type of investment real estate provides positive cash flow as well as tax benefits, principal reduction and appreciation. But let's just focus on appreciation for now. Suppose that we acquired "average" real estate and made an average return of 7% on that real estate. If we leveraged that real estate by letting the bank put in 90% of the money, then our true return is 70%.

Let me give you a simple example. Suppose you buy a single family home for $200,000 and rent it for the amount of your expenses, including your debt service. There are many parts of the country where this is possible even now. I personally own several of these properties. Let's also suppose that you put 10% down, or $20,000. At 7% appreciation, that house will be worth almost $400,000 in 10 years. That's a $200,000 return on a $20,000 investment in 10 years. If you put the same amount into a mutual fund and it returned 15% a year for 10 years, your return would be about $61,000. The difference of $139,000 is simply because of leverage.

The fact is, leverage is also available in the stock market. In the stock market, leverage is obtained through options. Many people hear the word, option, and they immediately think "risk." But a good option strategy does not have to be risky. In fact, a good option trader will tell you that a strong option strategy is much LESS RISKY than a "buy, hold and pray" strategy of holding stocks or mutual funds for a long time.

The other opportunity for substantial leverage is business. In business, you not only get to leverage the bank's money and investors' money, you get to leverage your time, technology, contacts and knowledge.

The key to all investing, of course, is knowledge. Learn all you can about investing and the principles of compounding, leverage, and velocity. Then, develop a wise strategy and implement that strategy with a good team and a strong wealth coach. (For more about leverage and velocity, I would refer you to my company's website, www.ProVisionWealth.com, and the free webinar that is available on leverage and velocity.)

If you think that mutual funds may be too slow and too risky for you and would prefer to build a solid wealth strategy that can accelerate your wealth creation, contact ProVision at cs@ProVisionWealth.com and find out that your financial freedom is closer than you think.

Multiple Streams of Income has become the catch phrase of the new century. This can be a terrific idea, since it means that we are receiving income from multiple sources and should mean that if one stream dies, then we will still be okay financially.

So the question arises, how do you create multiple streams of income and still focus on one or two asset classes for my investing? After all, if you are not focused, how can you possibily achieve success since your time and effort will be scattered such that you in effect become a "jack of all trades and master of none?"

Let me respond by referring to a trio of famous wealthy individuals - Donald Trump, Warren Buffet and Bill Gates. Each of these men become rich and famous by becoming a master in one type of investing. For Mr. Trump, it was commercial real estate development. For Mr. Buffet, it was fundamental investing and for Mr. Gates it was computer software. So clearly, these three were very FOCUSED on one asset type and that is how they became wealthy.

But did their focus really keep them from also having multiple streams of income? Not at all. Donald Trump has income from multiple real estate projects. Warren Buffet has income from multiple corporations in which he has invested. And Bill Gates receives income from a wide variety of software products.

The key is that each of these people specialized in one investment or asset type and created multiple streams of income within their chosen specialty.

The problem I see with many investors is that they misunderstand the concept of multiple streams of income and think this means they have to be in multiple types of business and investments. I honestly do not know any really successful investors who have spread themselves thin throughout a number of different types of assets. I'm sure they are out there, but they are rare. Far more common are the wealthy individuals and families (e.g., Hilton, Campbell, Rockefeller) who have developed multiple streams of income within a single asset class.

Always remember to maintain your focus. With focus, knowledge, wisdom and protection, you can become as wealthy as you desire.

Warmest regards,

Tom

Wendy from our Financial Freedom Now teleseminar (link to sales page) asks the following questions:

What is the best way to get started when you don't have a lot of income to work with/invest??

Should I borrow/get a loan to be able to invest and get started?

This is another question that ultimately needs to be handled by your own personal wealth coach. However, I may be able to provide a few insights.

First, remember that financial capital is only one form of capital. There is also time capital and intellectual capital. I find when I am coaching, that people who are successful in accumulating great amounts of wealth have employed all three of these types of capital. But what if you don't have much money and you are working full time so you don't have much time capital either?

That's where you really need to take advantage of your intellectual capital. In my article on WSU on Financial, Time and Intellectual Capital (link), I use the example of Bill Marriott, chairman of the Marriott Corporation of hotel and hospitality fame. When I lived in Washington, D.C., it was my great privilege to meet Mr. Marriott on several occasions and even to work with him on some church-related matters. At the time, Mr. Marriott, besides being chairman of one of the largest corporations in the world, was also responsible for the spiritual well-being of a few thousand members of the LDS Church.

I often wondered how he found time to do both of these seemingly monumental tasks. I learned that Bill was a master of leveraging time and intellectual capital. He was not only using his own time and considerable intellect, but solicited help from hundreds and thousands of others. He had mastered the ability to leverage other people's intellectual capital to help him build his wealth. What I also learned was that he had a passion for helping others achieve their financial success. At one time, he went so far as to tell all of the LDS bishops in the area that he would be willing to employ any member who was without a job. He would find a place for them in one of his companies. I have always remembered this and believe this desire to help others as one of the reasons for his considerable business success.

By employing others, he helped them, but he also received the benefit of leveraging their time and their intellectual capital. Now, I do not believe that is the reason he made the offer to employ any unemployed member. I firmly believe he made this offer for completely unselfish reasons. But we can learn from this great example. We help others when we employ their intellectual and time capital and at the same time help ourselves.

So, whether or not you should borrow to get started is a matter to discuss with your wealth coach, as that answer is different for every individual. But don't forget your other capital - time and intellect. And don't forget the capital of your team members. Many people have built fortunes with little or no financial capital, through their own and others' intellectual and time capital.

Warmest regards,

Tom

I am frequently asked about specific investments. For example, recently, I received the following questions from one of our teleseminar participants.

I have $200,000 coming as soon as my investment property sells, what would be the best way to reeinvest? If I do a 1031 exchange, should I try and buy several properties or just a single property?

I have $300,000 which is currently invested in Dodge&Cox funds; $60000 in an international fund and $240,000 in a balanced fund. Is there a better strategy to invest without more risk?

The answer to these and all other investment questions is the same - It depends. It depends on your personal wealth strategy. What investment characteristics are most important to you? Is a high rate of return more important than the level of risk? And what are your investment criteria? Do you have a particular loan to value that you are trying to maintain in your real estate investing? Do you have a price range you are trying to meet? What cash flow level is important to you?

The magic of creating a personal wealth strategy is that you can answer all of your own investment questions simply by referring to your strategy. You have determined what types of assets you will invest in. You have determined the investment characteristics that are important to you. Most of all, you have set specific criteria to meet in order to make an investment.

Most investment mistakes come from not following a well thought out wealth strategy. I know several people right now who are struggling with their financial situation. Why? When I look at what they have done, it is clear that they did their investing without a clear strategy. Or, they had a strategy and deviated from it.

So be sure to create and follow your personal wealth strategy. If you need help, take a look at the ProVision teleseminar, Proven Strategies for Financial Freedom Now (http://ProVisionWealth.com/seminars), where we show you how to create your own personal wealth strategy. Then, get a wealth coach to help you implement your strategy. For more on strategic wealth coaching, go to http://www.provisionwealth.com/strategic_wealth_coaching.asp or email us at cs@provisionwealth.com.

Warmest regards,

Tom

I get a lot of questions from seminar participants about building a wealth team. For example, Anita from our Financial Freedom Now teleseminar recently asked the following:

Is there a particular on-line brokerage firm that you recommend?

Do you recommend using any particular stock advisory newsletter?

These seem like simple enough questions. But without knowing Anita's personal wealth strategy, I would be remiss in making a recommendation. Why? Because it will depend on how Anita wants to invest. Assuming she wants to invest in the stock market, how does she want to invest? Does she want to invest in mutual funds or other funds or does she intend to trade in options? These questions should be answered as part of a well-conceived wealth strategy.

I would submit that these are the perfect questions for a strategic wealth coach. Your coach knows and hopefully even helped devise your wealth strategy. They should be able to either give you a specific recommendation or help you find the best answer for you. For more on building a wealth team, see my article at WSU on wealth teams. (link to article)

Warmest regards,

Tom

Janet, one of our participants in our Financial Freedom Now teleseminar, asks the following excellent question:

How does your philosophy of spending 20% of
your time planning before taking action mesh with
Harv's mantra of "ready, fire, aim" (ie, take action
then adjust as necessary).

I'm sure Janet is referring to T. Harv Eker, one of my favorite authors and speakers. On our part, I frequently suggest that you should have your wealth strategy in place before you begin investing. While these seem to be conflicting points of view, I think they work very well together. It's all a matter of timing.

When Harv suggests that you need to take action and then adjust as necessary, he is likely referring to making an actual investment. But remember that making the actual investment should still come after we have our wealth strategy in place. Let's take an example of someone who has chosen single family home rentals as her asset category.

Suppose that her real estate finder discovers an opportunity to acquire a property that may or may not fit within her investment criteria. She wants to check out the investment before committing herself to it to make sure it really does fit her criteria. The simple way to do this is to go ahead and put a contract on the property. Just make sure that there is a window of opportunity to get out of the contract. Typically, any real estate deal has a due diligence period. This is the time to find out if the property fits within your investment criteria. If it doesn't you have the opportunity of making a counter offer or withdrawing from the deal.

In this case, you have fired before aiming. You have tied up the property (taken action) and still have time to make sure it fits within your strategy. Of course, this is just one example. But the key is to still be sure as you can that any investment fits your criteria before closing on the deal.

I totally agree with Harv's mantra of ready, fire, aim. Far to many people spend all of their time researching deals and never act. With the right contract, you can tie up a deal and then do the research.

Warmest regards,

Tom

It's Monday morning and I'm in the elevator on my way up to my office from the parking garage. Another person gets on the elevator at the same time. Trying to be polite and friendly, I ask him how he is doing. His response is, "Ugh, it's Monday."

Is this you? Do you dread Monday's? Do you live for the weekend? If so, I truly feel sorry for you. Wouldn't you rather get up on Monday morning and be able to say to yourself, "Hooray, another Monday and another week of doing what I love to do?"

This is our real mission at ProVision. To teach people how they can change an "Ugh, it's Monday" into a "Hooray, it's Monday!" The secret? Doing during the week what you love to do. And here's another secret. If you do what you love to do, you will make more money!!!

So how do you figure out what you love to do and how to make money from it? That's the secret we share with all of our Strategic Wealth Coaching clients. We show them how to discover what type of investments they would enjoy doing and then work with them to get them doing it successfully. Whether it's a business, real estate or the stock market, there is a type of investing that is right for you.

So hang in there, all of you "Ugh, it's Monday"'s. There's hope for you. I'll write more on this subject in articles that can be found in our Wealth Strategy U section of our website at http://www.ProVisionWealth.com. The articles are all free and full of useful ideas to help you become wealthy and happy.

Warmest regards,

Tom

In our cd, "What Your Financial Planner Will Never Tell You," my partner, Ann Mathis, and I discuss the idea of the velocity of money. The example we use is real estate. The natural question that I am frequently asked is whether you can create velocity in business.

The answer is a resounding YES!!! In fact, it is much easier to create velocity in a business than in real estate and money can move much quicker. Let me give you the example I shared with the folks at Buck Rizvi's Supplement Millions seminar last month.

Suppose you use your money to buy or create a business. You likely will leverage your investment either through a loan from the bank or family members or with a carryback from the seller of the business. Let's say that you are successful building that business in the first couple of years and now you have some good cash flow from it. What do you do with your cash flow?

This is where velocity comes into play for the business owner. You can either let the money sit in the bank, spend the money on a fancy sports car, or reinvest the money. One way to create velocity is to reinvest the money in the business by opening another location. Another way is to reinvest the money into the business either to build the business or to create additional intellectual property. Any of these investments can create velocity in your business.

So don't start spending all of the money you earn from the business once you start creating good cash flow. Reinvest it either in the business, in real estate or in paper assets. By doing so, you can create amazing velocity and seriously add to your wealth.

By the way, there are also tax benefits to reinvesting your money in your business. For more about business tax benefits, visit http://www.ProVisionWealth/wealthu

Warmest regards,

Tom

Yesterday I had the opportunity to volunteer at Deseret Industries in Mesa, Arizona. Deseret Industries, or DI as it is frequently called, is similar to Goodwill Industries and is a despository for used clothing, furniture, appliances and other household goods. All of the employees at DI are disadvantaged and most are handicapped. One of the missions of DI is to provide gainful employment for difficult to employ people.

My assignment was to work with Scott loading the compacting bin. Scott is a full-time employee who is simply down on his luck, recently divorced and trying to get back on his feet. He is taking classes on the Internet for a degree in Business Management. He probably should be in sales, as he is a very warm and genuine person who loves to communicate.

Our job was to sort clothes. Jeans and men's clothing (both very popular to store customers) were set aside. The remainder of the clothes were tossed into a bin that compacted them into large rectangles (similar, I suppose, to baling hay). The compacted clothes are then sent to needy people throughout the world. All in all, a wonderful organization that serves the community and the world in many ways.

While Scott and I were talking, he asked me whether I thought everyone has the potential to be successful. I answered with a very quick and very clear "YES." So long as they are motivated, I believe that everyone can be successful.

When I speak to a prospect for our Strategic Wealth Coaching program, the one question I always have to get a clear answer to is the extent of the person's motivation to become wealthy. I sincerely believe that ANYONE, regardless of resources, can become wealthy applying the principles of leverage, velocity and tax planning. The three keys to wealth are KNOWLEDGE, WISDOM and PROTECTION. You have to learn how to become wealthy, learn how to apply your knowledge (i.e., wisdom) and learn how to protect the wealth you accumulate.

I can also guarantee that anyone without a clear and firm commitment to becoming wealthy WILL NEVER BECOME WEALTHY. They may come into money, either through inheritance, gambling or otherwise, but they will never be able to retain the money and build it into lasting wealth.

My money is on Scott and others like him who are dedicated to their personal success and are willing to put in the time and effort to become financially free. Just imagine Scott, who is single, has three children from his previous marriage to support, is working full time and is taking classes on line. As long as he stays the course, Scott will find the success he is seeking. And so will you.

If you want help with your financial knowledge, wisdom and protection, contact us at cs@ProVisionWealth.com or visit us at http://ProVisionWealth.com.

Warmest regards,

Tom

One of my favorite activities is to attend the Rich Dad http://www.richdad.com staff meeting. I really appreciate Robert allowing me to come. He has a way of opening my mind to new ideas that I cannot really describe. He is definitely on the cutting edge of whatever he does and constantly is thinking of new ideas.

One of the ideas Robert presented yesterday was about how important it is that we feel productive. This idea may not be cutting edge in the traditional sense of the term, but it a very important concept for business owners and investors like myself to think about. Everyone in the organization needs to be and feel productive.

Productivity does not just mean you are busy. It means that you are busy doing something that you are good at and you are being successful at what you do. The first question I asked myself on my drive back to the office was whether each of my employees was productive. This is a fairly challenging question that all business owners should ask themselves every day.

People who are not productive simply are not happy. They don't feel like their life is fulfilling or that they are contributing to the organization. And, in fact, they probably are not contributing to the level that the should and could.

Some of the business owners reading this may feel like I used to, i.e., how can anyone not be or feel productive? Can't they generate their own productivity? After all, entrepreneurs by definition are idea generators and never lack for productive work. Sometimes, however, we feel like everyone else should be just like us.

In my experience, there are relatively few people are idea generators. And most of these people own their own business and/or are working diligently to create their own wealth. As employers, we have to help our employees see our vision and give them direction so that they can be productive all of the time. Not an easy task.

Productivity is also a question that every investor should ask him/her self. Is your investment strategy productive? Do you feel productive with your investment strategy? Are you making the progress you want to make? Is your chosen asset type (paper, business, real estate) something you are good at? If you are not good at it, is it at least something you enjoy doing and are you doing something to get better at it? Finally, do you have someone helping you evaluate your investment strategies whose sole interest is in your success (i.e., they have no personal/financial interest in what investments you choose)?

Just a few thoughts provoked by the master mind of Robert Kiyosaki.

Warmest regards,

Tom

The other day I was doing some wealth training with our ProVision employees. We were talking about Internal Controls. One of our employees mentioned that it seemed like Internal Controls were not just about preventing embezzlement and theft, but about all negative actions, including mistakes with a portfolio. I totally agreed with this comment and we started to discuss what an investor needs to do to prevent simple mistakes in their real estate portfolio.

I suggested that values need to be monitored on a regular basis so that real estate that has gone up in value beyond its "true" value can be sold. What is a property's "true" value? Under my definition, a propertie's true value is any value at which we would buy the property ourselves. So, if the property has appreciated to such an extent that we would not purchase it ourselves, then we should sell it. Let me give you an example.

Suppose you have a single-family home that you purchased for $200,000. The property has appreciated over the years to $400,000. Let's say also that your investment criteria include a requirement that any property you purchase must produce positive cash flow. When you purchased the property for $200,000, the property had strong positive cash flow. But if you paid $400,000 for this property, it would now have significantly negative cash flow. In other words, rents have not kept pace with appreciation.

But, you might say, you paid $200,000 for this property so it still has strong positive cash flow. Wrong! If you own property that is worth $400,000, it's cost to you is about $370,000 ($400,000 less selling commissions and other closing costs). This is because you could have $370,000 to use on other, positively cash flowing properties, if you sold the house. Another way to look at this is to determine whether this house would positively cash flow if you borrowed out the appreciation. If it does, then you should keep it under your criteria. If not, you should sell it.

Most people make the mistake of believing that if they have positive cash flow from their property, then they should hold onto it forever. This is a mistake and ignores the enormous benefits of Velocity of Money. For a simple demonstration of the Velocity of Money, go to our website at http://www.ProVisionWealth.com/wealthcd and download our free cd entitled, "What Your Financial Planner Will Never Tell You."

So don't forget to monitor the value of the properties in your portfolio so you can maximize your investment returns. If you need a source for more properties that positively cash flow, visit our recommended resource, Spectrum Investment Group, at http://www.spectruminvestmentsolutions.com.

Warmest regards,

Tom

The WSJ wealth blog (http://blogs.wsj.com/wealth/2007/ ) recently featured an article about Wealth Fatigue Syndrome. This problem occurs when people spend more and more money on "things" and find that they get bored with their things and need more things.

Unfortunately, this problem is not limited to the wealthy. It's a problem for everybody. If your focus is on things and not people, you will always be bored and will constantly be searching for bigger and bigger thrills. For the wealthy, that may simply mean that they trade in one toy for another. For the rest of the world, this can mean catastrophe, as people get more and more into debt in order to try to satisfy this need for things.

The good news is that there is a tried and true remedy for this syndrome. The remedy? Service. Serving other people and focusing on how to help other people, whether it be our family members, church group, or favorite charity, is the key to happiness and fulfillment. And, it doesn't cost anything but our time and effort.

The other day, I had the great privilege of working on a Habitat for Humanity (http://www.habitat.org) housing project in Guadalupe, Arizona. Guadalupe is a predominently Hispanic neighborhood and historically has been a very low-income area. Habitat for Humanity is building 4 homes in Guadalupe now for needy families.

At the house I was working on, there were over 25 volunteers from various walks of life. All had come to dedicate their time and energy to helping this family build their home. And all were very happy to be there.

Serving others is the great privilege and joy of this life. The more we are focused on helping others, the smaller our own problems become. So, get out of the Wealthy Fatigue Syndrome that often comes during the holiday season and go out and help someone. You will be happier and so will they.

Warmest regards,

Tom

This is a question I get frequently from clients. They want to know when to change their position in an investment, i.e., when to buy more or when to sell. At ProVision, we are not investment advisors, so we don't give specific investment advice. However, as accountants, we are experts at monitoring and managing finances.

Let me share a few thoughts with you on this matter. First, put the proper reporting in place. Reports should do more than just give you raw data. They should also give you information about the status of your investments as compared to a few different standards. They should compare your results to your target. They should also compare your current results to historical results. And, ideally, they should compare your results to the average results of your industry or your region.

For example, let's say you are invested in the stock market. It would be nice if your investment report didn't just give you the current value of your stock. It should also compare your current value compared to your expected value. And your return on investment compared to your target return on investment. Plus, your report should compare your current value to the value a year ago, a month ago and/or a quarter ago. Your report should also compare your return on investment to the average stock portfolio return on investment with your criteria. Your investment advisor or trading house should be able to provide this information to you. If they aren't, then you should ask them to do this or you should consider finding a new investment partner.

Real estate can be monitored the same way. You should have a report that tells you where you are compared to where you have been historically, both with cash flow and with appreciation. Your report should also compare your current value and return on investment to your expected value and return on investment. And, your report should tell you how you are doing compared to the rest of the market in the areas in which you are investing.

There is one ratio that I rarely find tracked at all in real estate - cap rates. See my blog tomorrow for more on this.

Until then, remember that financial freedom is closer than you think. Visit the ProVision website to learn more at www.ProVisionWealth.com.

Warmest regards,

Tom

Some of you know that a couple of years ago I lost a serious amount of weight. I went from 212 lbs to 172 lbs. It's never an easy task to lose 40 pounds, but especially not when you are in your late 40's. Yes, it took a lot of will and determination, but it took one more thing - Accountability. I had to be accountable to someone. I chose my son, who was also trying to lose some weight.

At the time, I vowed that I would never gain the weight back and would continue to work on this until I reached my ideal weight according to my doctor - 165 lbs. Well, I stopped being accountable to my son and here I am two years later with what can best be described as "weight creep." My weight is creeping back up. I'm at 177 lbs. as of this morning. But I am determined not to let this get out of hand. So, I am going to be accountable to someone.

This time I am going to be accountable to you, my readers. It's a very scary thing to be accountable. You don't know for sure whether you will be successful. And failing in a public forum such as this blog could be disastrous. But when you really want to be successful. When it's more important to you than any possible embarrassment. That's when you want to be truly accountable.

So, I'm going to be accountable to you. I will share my progress every Monday morning. Of course, I will be measuring my weight on a daily basis. And I don't expect it will go down every day. There are variations such as water retention and muscle growth that can make it go up. But I do expect weekly weight loss.

Along with accounting for my weight to you and measuring it, I need a goal to go along with it. You might think that a specific weight, 165 lbs, might be the goal. But I have found that I need a goal that is more rewarding than just this one number. In this case, I have two goals beyond the weight that require the weight loss to accomplish. The first is a size 32 waist. I have always wanted to fit into a size 32 since I first started putting on weight.

The second goal is to complete an olympic length triathlon in less than 2 1/2 hours. I did my first olympic triathlon this past October and completed it just under 3 hours. So, I have a 1/2 hour to trim off. Since my run was horrible, most of this will come from a reduction of my running time and the rest will have to come from my bike time. My swim time was pretty good and realistically I can probably only shave off a few minutes on my swim time.

I am counting on you, my readers, to hold me to these now very public goals. Let me know what you think and hold me accountable for my results.

You may be wondering what all of this has to do with business and wealth. After all, this is a business and wealth blog, not a health and fitness blog. Stay tuned tomorrow for more. For now, ask yourself this question - ARE YOU ACCOUNTABLE?

Warmest regards,

Tom

Yesterday, I opened myself up to the world and committed to being accountable for my weight to you. Today, I answer the question of what being accountable for my weight has to do with you and your wealth.

The answer is quite simple. In order to achieve ANY goal, you must be accountable. The question is - to whom? Are you going to be accountable to your spouse? To your children? To a friend? Ultimately, of course, we need to be accountable to ourself and to God. Unfortunately, these two are the people we lie to most easily. We lie to ourselves every time we spend money on some doodad that we don't really need or even want that much. And we lie to God constantly - whenever we do something we know isn't right.

When it comes to wealth, may I suggest you be accountable to your wealth coach? And who better for a wealth coach than someone who actually knows something about being accountable for wealth - your accountant? What? Be accountable to my accountant? At once, this seems odd and obvious at the same time.

After all, your accountant is the expert at accountability. The problem for most people is that we spend lots of money on our accountant at tax time and we never use the information our accountant produces for anything productive. That's right - tax returns are not productive. Of course, with the right accountant, properly prepared tax returns can reduce your chance of being audited by the IRS and can even reduce your tax bill. But the fact of preparing a tax return is not productive in and of itself.

But the information that goes into the tax return is valuable information and with the right reporting, you could use this information to measure the results of your income and wealth creation and to be accountable for your financial actions.

Stay tuned for more on how to measure your financial activity and how to use your accountant as a wealth coach so you can be accountable and, as a result, successful in achieving your wealth and income goals.

Warmest regards,

Tom

P.S. - Someone asked me yesterday for the target date of my weight loss. My goal is to be 165 lbs on May 3, 2008, the date of my next triathlon.

So it's been a week since I started my diet. Thanks for all of your positive comments to me and encouragement so far. I am happy to report that after one week, I am down almost 2 pounds. That means I have accomplished 15% of my goal in just the first week. And I owe much of it to the accountability factor.

Everyone who has ever been on a diet knows how easy it is to begin a diet and how hard it is to stick to it. Accountability is all about sticking to it. Because I am accountable to you, I think twice before eating a cookie or piece of chocolate. Not easy at any time, but especially difficult during the holiday season when we are bombarded with great food and treats.

I found two other effects of being accountable to you. First, I found that I did not put off my work outs. Knowing that this morning I would have to account to you, I made sure that I got in my work outs last week. Second, I was careful to weigh myself every morning. I did miss one morning, but 6 out of 7 is pretty good. By weighing myself I received a report each day of my progress. I also found out just how bad I am over the weekend. I was showing more weight loss on Saturday morning than I did this morning. (Weekends have always been a problem for me - too much proximity to the kitchen on weekends.)

Later this week I will talk more about reporting and its effects on our wealth. Just like my report from the scale, the proper report on our finances can keep us moving and can tell us a lot about when we are doing well and what activities help us or hinder us in our progress.

SPECIAL ALERT! - Tonight I am doing a FREE teleseminar on 5 Simple Steps to Permanent Tax Savings. I encourage all of you to register at http://www.provisionwealth.com/seminars. I am confident that you will find this to be very educational. While you are at it check out our new Tax Strategy product that is being offered for a very limited time (10 days ONLY) at http://www.provisionwealth.com/products. Our Accelerated Winter Course for the School of Tax Strategy is a wonderful opportunity for you to learn how to create your own personal tax strategy and create thousands of dollars of permanent tax savings. So, join us this evening for the FREE teleseminar and REGISTER NOW for our Accelerated Winter Course.

Warmest regards,

Tom

I continue to get many comments about my weight tracking and goals. Peggy, a friend of my friend, Lois Tiedemann, recommends a tracking device put out by NuSkin using a GoWear armband that measures your calorie burn throughout the day. Michael sent me a comment (see comments under my entry "Are You Accountable) asking about my specific goals. I agree with Michael that specific, measureable goals are essential.

I mentioned a few of them previously, but here are a few more. My next triathlon is set for May 3rd in Rocky Point, Mexico. That is the date for my weight loss goal (down to 165 lbs) and my waist goal (32"). I also have a goal to cut my time to under 2 1/2 hours from just under 3 hours. Most of this will come from the run, as I did not train for the run on my previous triathlon and was hobbled by swollen tendons in my heals.

Michael also asked what products he can buy from me. What a great question!!! Please go to http://www.provisionwealth.com/products. We have a terrific product, our Accelerated Winter Course for creating your own personal tax strategy, that is only available until tomorrow. So act now, and get this amazing course that gives you the power to dramatically lower your income taxes.

Now for the report. Despite going on a business trip this past weekend, I am down to 173 lbs. I'm pretty happy with that, given that I went to two family holiday parties and twice ate at my favorite burger joint, Crown Burger. (If you ever get to Salt Lake City, you really have to go to Crown Burger and try their specialty burger, called the Crown Burger.)

Keeping accountable to all of you and having specific, measureable goals has been great to keep me on track for my weight loss. But how many of us have specific, measureable goals for our wealth? Do you have a goal for your wealth? Do you have a goal for your income? Do you have a goal for your cash flow? Do you have a goal for your tax liability? Tomorrow, I will explore these goals more. For now, just remember that "Financial Freedom is Closer Than You Think" but you have to have goals and accountability to reach your financial freedom.

Warmest regards,

Tom

It's December 31, 2007. The last day of the year and the eve of the new year. Time for some serious goal setting.

My wife reminded me yesterday that I haven't always liked goals. Maybe some of you are the same. I didn't like goals because I felt they constrained me. As many of you know, being the youngest child, I hate being constrained. Personal freedom is my most cherished possession. So, why do I like goals now? Simply because they cause you to focus and focus brings results.

The most difficult part of goal setting for me is prioritizing my goals and making few enough of them to have a reasonable chance of success for all of them. I have had the most success using the system that I learned from my friend, Jayne Johnson. I attended Jayne's goal setting course a few years ago and the results have been significant. I attribute my successful completion of an Olympic Triathlon to Jayne's methods, because it was in her class that I realized that this was a top-5 goal of mine. I believe Jayne has a class coming up (she is doing it with my friend, Blair Singer) and I highly recommend it. You can learn more at http://www.salesdogs.com/pages/workshops/goals_workshop.html.

I recommend that you focus on your top 5 goals, whether they are personal, spiritual, financial or family goals. Most importantly, don't wait to set these goals. Make sure they are measureable and attainable. Be sure to set up a reporting system and an accountability system for them such as my weight goal. (By the way, I'm just under 173 lbs - a bit on a plateau but I'm pretty happy given all of the goodies around this time of the year.)

Tomorrow, I will share my top five goals for 2008. I'm going through Jayne's methodology tonight with my wife and sons while we have some fun playing games and watching movies together. No reason goal setting can't be fun. And doing it with people you care about and who impact your success is important.

Have a Happy New Year everyone!!! Talk to you tomorrow. Be safe in your New Year's revelry.

Warmest regards,

Tom

So just how committed are you to achieving your goals? Will you do whatever it takes to accomplish them? What if you have a hiccup in your plans and take a step backwards - will you quit or keep going?

These questions apply equally to any goal we set. I find a great similarity between goals we set for our physical fitness and goals we set for our wealth. I set a goal to get my weight down from 175lbs. to 165lbs. by May of this year. I started out well, losing 2 pounds in the first two weeks. Then, I stalled for a week or two and this past week I actually gained 2 pounds back. So what now? Do I quit because I had a bad week or do I redouble my efforts and keep after my goal? The real question is just how committed am I to losing those extra pounds?

The same questions apply to our wealth goals. Everyone wants to be wealthy, just like everyone wants to be thin. But are we really willing to commit to being wealthy the way we have to commit to being thin? What kind of commitment does it take to achieve wealth?

I have several clients who I feel are truly committed to becoming wealthy. We meet together twice a month to hold them accountable and to give them new tasks to perform to keep them on the fast track to wealth. We help them create budgets for spending and budgets for investing. I know they are committed because they never fail to do what we ask them to do, they never miss our meetings and they pay us a lot of money to help them become wealthy.

Whenever I talk to a prospective client, the primary qualifying question I ask is how committed they are to becoming wealthy. My experience is that anyone can become wealthy who is committed to it. But that commitment doesn't come easy. Just like it's not easy to pass up on that donut or cookie or piece of chocolate (my personal weakness), it's not easy to pass on buying that new cd, dvd, television or iphone. It takes dedication, commitment and perseverance.

And if you fall one day, just pick yourself up and re-dedicate yourself the next day. That's what I have to do this week. I'm going out of town Wednesday, and I always have a tougher time regulating my calories when I am away from home. It's really going to take commitment. I am committed to my weight loss goal. Are you committed to your wealth goal? If you are not committed, YOU CANNOT AND WILL NOT REACH YOUR GOAL.

So commit today to your wealth goal. Set your goals, your interim targets, and devise your investment strategy. Then get a wealth coach to keep you on track and give you the right advise. For more information about our wealth coaching, go to http://www.provisionwealth.com or call us at 1.866.467.5809.

Warmest regards,

Tom

What do you do when you have setbacks? Do you give up? Do you keep going? Do you buckle down and work even harder? Do you change tactics?

My weight is not coming down at all. But every day I weigh myself and I think about my goals frequently throughout the day. I have come to two conclusions. First, I need to have, as Chet Holmes would say, "pigheaded determination." Second, I need to change tactics.

Actually, I really need to add something to my life. That something is a coach. In this case, it may be a personal trainer or it may be a triathlon coach. Let me know if any of you know a good triathlon coach in Tempe, Arizona.

What do I hope to gain from a coach? A coach should not only make me accountable, but should also have the knowledge and experience to teach me how to train and how to eat in order to accomplish my goals.

The same is true when you are building wealth. A few people can do it on their own. They can read self help books or take a course and then build their own wealth. But, like losing weight, this doesn't work for most of us. Most of us new a personal trainer. We need someone who can keep us focused and give us advice on our spending habits, investing and wealth building.

Do you have a wealth coach? Is it time for you to stop messing around with self help guides? Most of you realize that ProVision http://www.provisionwealth.comsells self help materials. Why? Because many people want to take the baby step of going through some self help materials before accepting the long-term commitment of hiring a ProVision wealth coach. But once you have the confidence in us that we can train you, hold you accountable and keep you focused, you will want to hire us as your personal wealth coach.

Come see us today at http://www.provisionwealth.com or call us toll free at 1-866-467-5809 and see what a personal wealth coach could do for you.

Warmest regards,

Tom

Friday morning, as usual, I got up and weighed myself first thing. The scale read 171 lbs. Good news, right? This meant I was 4 lbs closer to my target of 165. I had a pretty good weekend (eating wise) and Monday morning was anxious to weigh myself so I could report to all of you how much weight I had lost. The scale showed 175lbs. So, either I gained 4 lbs over the weekend (possible, but not likely, even if I were retaining fluids) or the scale was wrong on Friday, Monday or both. Today's weight was 174lbs.

What can we learn from this? The obvious thing to learn is that I might want to try another scale to check the reliability of my scale. (Of course, I might also be retaining water.) So, I'm going to begin weighing myself at the gym and at home a couple of times a week to see if my scale is reliable.

I find the same thing happens in business and investing. We may think we are making progress, but it could be that we simply have a scale that is giving us incorrect information. This is why good accounting and good reporting is so important.

Tonight at 7:00p.m. I am speaking in San Diego at The Learning Annex (http://www.thelearningannex.com. The topic is Wealth Strategies and how to get your wealth on the fast track to financial freedom. The event is free to the public. It's not too late, so come join us if you are in the area. I am also speaking in Los Angeles on the same topic on Thursday evening.

One of the most important things I will be talking about is getting a handle on where you are and where you are going. You must have an accurate picture of where you want to go, both in terms of your dream as well as in terms of what it will take to reach your dream (i.e., net worth and passive income). Equally important is knowing where you are now. That's why our website has a tool for analyzing your wealth goals, http://www.ProVisionWealth.com/wealth_evaluator.asp and we offer software in our home study course, Financial Freedom Now! that allows you to create a current income statement and balance sheet. (Go to http://www.ProVisionWealth.com/products.

How good are your metrics? Are you sure you are using the right scale? If not, check out our Wealth Evaluator and Financial Freedom Now! course to find out if you are on the right track.

Warmest regards,

Tom

Last week, I spoke twice for The Learning Annex in Southern California. In San Diego, 98 were registered for the seminar and 11 showed up. In Los Angeles, 198 were registered and 35 showed up. So only 46 out of almost 300 registered actually came to the seminar. Of those 46, 30% purchased our Financial Freedom Now! online course. So what does this say?

There could be many different reasons why so few of those registered showed up and purchased our course. But there is only one result that matters. And that's the number of people who are going to change their life financially. Congratulations to those who made the decision to take control of their financial future!!!

It's not easy to do this. Wealth does not come easy. It takes commitment, dedication and hard work. The good news is that there is no limit to the number of people who can become wealthy. There is no limit to the amount of wealth available in this world. Wealth is a commodity that can expand forever.

So why don't more people take advantage of the opportunity to learn how to become wealthy and then to apply this knowledge to actually do it? Is it a lack of optimism or a lack of willingness to work? I know that attending a 2-hour course on a weekday is something that is not easy to do after a long day at work. But WEALTH IS NOT EASY! It's possible for everyone, but it is not easy. So, for those who are looking for a fast buck, you can stop reading this blog right now. It's not going to happen! You have to study, you have to apply what you study and you have to stay with it.

But remember the good news! Financial freedom is available to all. And, as we say at ProVision, it's "closer than you think!" But you must take that first step. Spending a few hundred dollars to learn how to permanently lower your taxes or to learn how to create your own personal wealth strategy (http://www.ProVisionWealth.com/products) is just the first step. Then, you need to apply this knowledge and take control of your wealth.

To those who attended the seminars last week, welcome to ProVision! I promise you that if you will continue to learn and apply the strategies we talked about, you can have your financial freedom in a few short years. Please let me know how you are doing and how we can help.

Warmest regards,

Tom

The other day at church, one of my friends asked me how my business was doing in this down economy. She was a little shocked when I said it was doing great and, in fact, I was making tons of money in real estate right now.

The problem with the media is that when prices go down, they are all gloom and doom. Serious investors know that you make more money in a down market than in an up market. Two years ago, there were no good buys at all in Arizona. Now, there are hundreds of good buys. And, because people are not buying homes, they are renting and rents are going up.

The reason a lot of investors are in trouble is that they are not really investors - they are speculators. That is, they bet their entire farm on appreciation. Robert Kiyosaki, of Rich Dad fame, and I were talking about this yesterday. Good real estate investment requires 4 income streams: appreciation, cash flow, tax benefits and amortization of principal. Most of the "investors" who are in trouble did not follow this rule and relying solely on the appreciation. That is a very risky play and, quite frankly, they got what they deserved. (This is the reason I don't invest in raw land - all speculation - no other income.)

If you are not investing now, shame on you. This is the best time to invest in real estate since the early 1990's. Personally, I can't buy real estate fast enough right now.

Food for thought.

Warmest regards,

Tom

Corey listened to our teleseminar with Doug Lodmell and asks the following question:

Q: Tom, Thanks for the great information on Asset protection. It seems the more I read though the more confused I become. In the Rich Dad series Garrett Sutton talks about Nevada and Wyoming LLC's and Nevada Asset Protection trusts being great for asset protection. Douglas Lodmell listed these as poor when it comes to asset protection in his teleseminar. I guess the question is who is correct or are they both correct and I am misunderstanding the presentation?

A: As Doug pointed out in his teleseminar last week, there are several levels of asset protection. Doug showed a scale of poor, good, better and best types of asset protection. I don't think there is any question that the offshore asset protection Doug advises is the ultimate in asset protection. But that doesn't mean that you don't want to do at least some of the other pieces as well. As Doug suggested, most of your investments and business interests you want to be held in an LLC. This is what Garrett is talking about. This is good asset protection and is the minimum anyone should do.

The next level beyond LLC's would be a domestic asset protection trust (DAPT). I don't believe Doug addressed these during his presentation. Here is how the DAPT works. In most states, a self-settled trust (i.e., one in which the person who puts the assets into the trust is also the beneficiary) does not protect you against lawsuits. However, a few states have enacted DAPT statutes that do protect you in a self-settled trust. Wyoming, Alaska, Nevada and Utah are a few of the states with these laws in place.

So why go to the trouble and expense of an offshore asset protection trust when you can just form a DAPT? There are two reasons I can think of. First, these trusts have not been tested in the courts. So, we don't really know what will happen when they are tested. More importantly, however, is the situation where you don't live in one of these states or your assets are located in a state other than the state in which your trust was formed. When you are sued, which state's law is going to apply? If I were a plaintiff, I would sue in the state where the property is owned if it is not a DAPT state. Will a court in a state without the DAPT statute protect you? This is a big unknown.

What we do know is that offshore APT's have been tested for over 20 years and have proven to work. Hopefully there will come a day when all of the states have DAPT statutes and we don't have to go offshore. In the meantime, though, if you want maximum asset protection, especially if you own property or live in a non-DAPT state, you should consider an offshore APT as suggested by Douglass Lodmell.

Let me know if you have any other questions about this. Hope it helps.

Warmest regards,

Tom