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Alec, a childhood friend and fellow golfer, was irked by my recent characterization of golf as a "terrible hobby." I said I liked Jiu Jitsu better because it is mentally and physically challenging and because it "teaches me about life." Alec reminded me that golf is also challenging -- mentally and physically. "Plus," he said, "if you play it correctly, it too will give you insights. There are no do-overs in golf, as in life. And you can tell much about people by how they react to the bad shots and the unlucky breaks." "In the great macrocosmic view of things, it may sometimes seem meaningless," he admitted, "especially when you calculate the hours you put into it." But that, I suppose, can also be said about Jiu Jitsu. I am always happy to receive letters from young people. And so I was pleased to hear from Mike, a self-described "19-year-old sophomore in college going on 30." Mike has "a strong desire to start making money to pay off college early." But he can't figure out what to do. He doesn't want to start his career with the debt of four years' worth of tuition on his shoulders. If he starts a business now, he figures he can be debt free when he gets his degree. Plus, he'll have a good business that he can either continue running or sell. I like Mike's thinking. That is exactly what I did when I was his age. I worked three jobs (painting houses, tending bar, and doing research for fellow students) while getting my bachelor's degree. And during the summers, I ran a pool construction business that I started with two buddies. As a result, I developed business skills that I parlayed later on. By the time I had graduated, I had paid off all my student loans plus renovated my parents' home as a thank-you present to them. It made me feel good about myself. Mike's question for me is what sort of business he should go into. He is thinking of starting a website related either to "college essay peer-reviewing or documenting life stories online." "I feel like either one of these could be profitable, but I'm not sure," he says. Mike adds that he's also thought about doing some consulting. "But I know no one would listen to a college sophomore." "I understand that you probably don't have the answer," he says. "I guess I'm just looking for a little push in the right direction." Mike -- the particular business you choose doesn't matter as much as the knowledge you are going to get from getting into business. I actually like your idea of going into the advice business. You are, as you candidly admit, young and inexperienced. But so are your college peers. They might be very interested in hearing what you have to say about almost any topic, from music to pop culture to politics to making money. In considering a niche, consider the kinds of products that people might be willing to buy from you. If you decided, for example, to become an expert in a certain sort of music, you'd have to figure out what kinds of products or services kids your age (your market) would be willing to buy from you. If, on the other hand, you decided to become an expert in getting good grades without working hard, the market for your advice might be much stronger. Likewise if your niche was how college kids can make great money starting their own Internet businesses -- i.e., doing what you are doing. Starting your own business now is a great opportunity to have fun while learning the fundamentals of business. If your business starts working well, you may be able to pay your tuition (or pay back your parents) and have something left over for beer money. But the main benefit will come from learning how business works. Then, once you have your degree, you'll be light years ahead of your classmates. Whatever business you choose, you should follow the steps outlined in the first part of Ready, Fire, Aim. In that book, I explain the four stages of entrepreneurial growth. I explain how to spend your time at each stage, and I expose all the myths about entrepreneurship that cost most fledgling business owners lots of money. Don't worry about missing out on frat parties and sporting events. This is the best time you will ever have to focus on your studies and get your new business going. Besides Ready, Fire, Aim, I recommend you read Automatic Wealth for Grads. That book will tell you how to invest the money you earn so you can be sure of becoming a multimillionaire long before your college classmates. A stockbroker I know recently asked me what "my approach" was to investing. I didn't have an answer for him right away. But in discussing it with him, I realized that my approach has always been based on a combination of confidence and fear. Early on, I had the confidence to believe that if I worked hard I could always earn all the money I'd need to live comfortably. So I knew I'd always have a safety net. At the same time, I was smart enough to know that I couldn't beat the market by being clever. So I invested conservatively and diversified. And it worked. Still, I was afraid that something might happen that could devastate one or more of my assets. The government could confiscate gold, as it once had. A lawsuit could wipe out my cash, as it once did. My stocks could disappear in a market meltdown. Or a global warming tidal wave might cover the entire state of Florida and wash away all my Florida real estate holdings. So I created a plan. I would separate my assets into six groups:
Then I set specific goals for each group. (Actually, I set no goals whatsoever for my "other investments" group. I realized that I would never know enough about other investments to hope to make long-term money with them. So my intention was to go into them with the sole purpose of having fun -- expecting to lose every cent.) My goal for cash was to have enough to live on for three years at my current spending level -- which would be enough for six years if I moderated my buying appetites. My goals for gold, bonds, stocks, and real estate were more ambitious. For each of those four investment classes I wanted to eventually have enough money socked away to retire on. In other words, to have four times the money I needed to retire. I know that seems insane. But, as I said, I was always afraid that any one or even two or three of my "nest eggs" could disappear due to some unforeseen disaster. So by having four nest eggs to choose from, I'd reduce my chances of going totally broke. I have never seen this approach in any of the financial planning books I've read. I think the reason it is unique is because it was, as I said, so crazily ambitious. Financial planners don't write books for people as fearful -- and confident -- as I was. That's why most of their advice is so ... so ordinary. They tell you to diversify with stocks and bonds at a 60/40 or 40/60 ratio, depending on your age. And they'd never give you the advice I give you for making lots of money: Work hard, work longer hours, and start businesses on the side. Why? Because the financial media, in general, believe their readers are lazy. They think if they told their readers to work hard, their books and columns wouldn't be read. To make matters worse, these well-known and highly revered financial gurus ridicule writers like me who tell the truth. Everyone needs to own some commodities in this financial environment. That's why I own gold coins and collectible art and houses and apartment buildings. I know those things can't disappear into some electronic black hole. I know where they are. I can see them. I can touch them. I also like the idea of owning other commodities. Lately, some of the best performers have been in the "Energy Asset Class Category." Oil prices have been climbing. And it looks like expensive oil is here to stay. I've been reading Investor's Daily Edge contributor Rusty McDougal's comments, and I am tempted by the possibility of controlling 1,000 barrels of crude oil in the futures market for about $6,600. I'm also intrigued by the idea of buying call options on select energy stocks that could provide double- or triple-digit gains for as little as $200. For me, this type of investing falls into my "other investments" category. Which means I have no expectations for it. I'll invest only what I won't mind losing. But if I make money, I'll be very happy. If speculative investing interests you, I urge you to read more about Rusty's service and see if it make sense for your portfolio. More than 90 percent of U.S. adults have a high risk of heart disease, according to a news brief Melanie Segala sent me. And the implication was that everyone else is in danger. I am distrustful of "news" like this. For one thing, it's usually based on studies funded by some entity that benefits from the sale of statin drugs or heart bypasses. (Both of which, I have come to believe, are mostly unnecessary.) Another reason I am suspicious is because findings like these are so often flawed. In this case, the "danger" is in eventually having a heart attack. But heart attacks are fatal only about 4 percent of the time. Most people who have them go on to live a normal-length life, whether they take drugs, have surgery, or treat their condition naturally. And I am frankly shocked by one of statements in this article. It says that having a cholesterol count of more than 200 is dangerous. That's been disproved. Any person or group still parroting it should be ignored. When it comes to my heart health, I follow the advice I get from Dr. Sears and some of the other doctors who contribute to Total Health Breakthroughs. They recommend:
If you'd like more advice about developing a stronger heart, more pliable arteries, and stronger lungs, check out Total Health Breakthroughs. It has the fitness, nutrition, and supplement information you need to be in the "low risk" minority. Ph.D. in Early to Rise? Reader Jay Annadatha finds parallels between a recent Rich Schefren essay in ETR and his doctoral studies: "I read your piece today and I loved it. "I have been mentoring this concept of 'Communication Is the Key' with my consultant friends and colleagues, as I saw how detrimental ineffective communication can be. Incidentally, I am also doing an ethnographic study of Starbucks as part of my doctoral assignment. I agree that it is just the 'brand culture' which attracts loyalty from customers and gives repeat business. "Lovely articles and personal motivators. Keep up the good work." Jay Annadatha [Ed. Note: Michael Masterson welcomes your questions and comments. Send him a message at AskMichael@ETRFeedback.com.] |
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Saturday, October 17, 2009
ETR: Golf Course Philosophy
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