Sixteen Tips For Making Money
Here are sixteen tips on how to make money. These tips are not “get rich quick” suggestions, rather if you follow this advice you will (over time) significantly increase your wealth.
Tip #1: Buy Low – Sell High
It seems too simple and too obvious, but it is powerfully true. If you buy and sell properties, investments, equities, or anything using this tip, you cannot go far wrong.
Everything moves in cycles, and history does repeat itself. For example, look at the Canadian dollar against the US dollar in the last six years. If you had bought the Canadian dollar at $1.60 and sold it at parity, you would have made a fortune.
Similarly if you buy property when everyone is talking doom and gloom and no-one wants to own investment properties, you will do well.
Do not buy equities (stocks) when everyone else is buying them and the market is at record highs. Similarly do not sell after a crash.
You do not need hindsight to take advantage of this tip. When you see something that is historically cheap (except individual stocks which might be going down the gurgler) for no good reason, buy. If you own something that someone is willing to pay you much more than you think it is worth, sell.
Tip #2: Buy High – Sell Higher
As a corollary to Point 1, it is sometimes profitable to buy strength and sell weakness. Often financial assets that are performing strongly continue to do well, and those that are performing poorly continue to do so.
Tip #2A: You Never Buy at the Bottom or Sell at the Top
It is helpful to remember you pretty much never buy at the very bottom of a market, or sell at the very top. As long as you get the direction and momentum right you will make money. For example, let’s say you want to buy a few ounces of gold as an investment. Assume the gold price has been around US$1,000 per ounce for a few months. You wait until it goes up outside its recent trading range. Say you buy it at US$1,045 per ounce. It then builds on this momentum and gets to US$1,200 per ounce. You decide to sell and in the next few weeks it reaches its peak for the year of US$1,235 per ounce. It then drops to US$1,050 per ounce. You have not purchased at the bottom and you have not sold at the top, but you got the direction and the momentum correct and you made US$155 per ounce.
This is important because it is easy to beat yourself up for not picking the “perfect” moment to buy or sell. The truth is it doesn’t matter, and it is impossible to pick the exact high and low. This relates to almost every type of investment: stocks, bonds, real estate and so on.
Tip #3: When to Sell
Buying an investment is easier than selling one because once you own something you have an emotional attachment to it. This is the reason many people hold investments, for example stocks, well after they should have sold them. I have a critical test I use to help me determine if I should sell an investment:
If I had the cash right now, would I buy this investment at its current price?
If the answer to this question is “No”, I need to sell my investment.
This applies to real estate, stocks, businesses, trading, gold – every investment!
Tip #4: Follow Momentums
When you see momentum building in relation to a particular market, buy into that market. If you get in early enough and take a big enough exposure, you can make a killing. Property markets, stock markets, commodity markets etc move in cycles driven by momentum. Stop buying and/or start selling when you see the momentum slowing considerably.
Tip #5: Pay your Bills Early
People often get this one back to front. They think that if they pay their bills as late as they can they will save a tiny bit of interest. But this is almost always counter- productive. Let’s say you have a $400 bill (invoice) and your average cost of borrowing is 4%. Your bill is due on the 20th of the month but you pay two weeks late. You are saving yourself $400 x 4% x 14/365 (i.e. 14 days out of 365 days a year) = 61 cents.
Yes you are saving 61 cents! You are annoying whoever you are paying and causing bad will instead of goodwill, and you are damaging your own reputation in the community. When you need that supplier in the future, are you likely to get immediate service?
Let me give you an example. Over the years I have owned a number of rental properties. Occasionally I need plumbing or electrical work done. When I get their bill, I pay it immediately. Plumbers and electricians are busy people. But when I call them for an urgent job, do you know what? They always come fast. Why? They know they are going to get paid, and they know they are going to get paid fast. If there is one thing these suppliers love it is getting paid fast. It saves me time and money by paying my bills immediately. And of course word gets around that I am an excellent bill payer. That reputation is gold.
If you are a late bill payer, change this terrible and counter-productive habit now. It will enhance your time, your reputation and your wallet!
Tip #6: Go with Your Strengths
In any business or investment venture go with what you like and what you are good at. For example don’t start a recruitment business if you don’t like interacting with people. Don’t buy an investment property if you can’t stand real estate. Do start a business or invest in things you understand and are passionate about.
Tip #7: Go for Broke if you are Onto a Winner
If you find something that is really “hot” and you have some real successes in that area already under your belt, stop looking for something else and just concentrate on that. Put all of your energy and resources into that. Can you imagine Bill Gates starting out, spending half his time developing software and the other half running a chain of restaurants? No he just went for broke on software.
Tip #8: Think Big
One of my favourite quotes is from Donald Trump’s book “The Art of the Deal”:
“I like thinking big. I always have. To me it’s simple: if you’re going to be thinking anyway, you might as well think big. Most people think small, because most people are afraid of success, afraid of making decisions, afraid of winning. And that gives people like me a great advantage.”
He is right. If you are thinking about a business or a venture have a big dream, think about what might be possible. If you have a successful business, think about franchising it or think about having a presence in every large country.
When I was at university I thought that if only I could think of a product to sell to every person in India that netted me just 50 cents each, I would make $500,000,000. I am still trying to think of that idea!
Tip #9: Be Decisive
“Be decisive and make lots of decisions.” – Anthony Robbins
“Decisiveness is a characteristic of high-performing men and women. Almost any decision is better than no decision at all.” – Brian Tracy
These are great quotes. You might be fantastic at business or investments, or writing or creating art, or whatever. But if you never make the decision to really go for it, you will never know if you could be successful, and the world will be worse off for it. Make a decision today and go for it!
Tip #10: Persevere
They say that if it was easy, everyone would do it. You will come up against barriers and frustrations and doubts and nay-sayers. But you have to keep persevering until the breakthrough happens. After a year in my recruitment business, I made a loss and I hadn’t made one really lucrative placement. Things were not looking good and I was running out of money. I almost applied for a full time job. I went as far as downloading the job application form. I sat on the form for a couple of weeks, and I made a big effort to find a teacher for a vacancy I had in England. After lots of emails and phone calls I finally made my first big placement. That gave me the confidence (and some cash) to keep going. Within six months I was making a good profit, and I was on my way.
Tip #11: Win-Win
If you go into business, make sure your business provides a win-win situation for you and your customers. Many people have the mistaken idea that business is about screwing your customers or putting one past them. Nothing could be further from the truth. The more your customers win, the more they will tell others and the more they will come back.
Take a simple example. When you go to a shop to buy milk, you win because you don’t have to own your own cow, or drive to a farm to get milk. The shop wins because they make a few cents on the purchase.
My recruitment company was a good example. When I placed a teacher, the teacher won because they found a good job, the school won because they found a good teacher, and I won because I receive a fee for the placement. It was a win-win-win situation.
Tip #12: Meet a Need
If you go into business you must meet somebody’s need. People will love to do business with you because you meet their needs. Perhaps their need is more time in their day. If you offer them a fast efficient way of doing something for them, they will use your business.
If you see a need that is not being met, start a business to meet that need. People will flock to you to meet their needs.
Look at any successful business – a need is being met.
Tip #13: Work Smart, not Necessarily Work Hard
There is nothing wrong with working hard, and at some times in business you will need to work hard. However this should be the exception not the rule. If you work too hard “in” your business, you will not have time to work “on” your business. For example looking at strategies for growth, looking at trends in your business, or looking at what your competitors are doing.
One of the reasons for starting your own business is lifestyle. If you work too hard, you cannot enjoy a good lifestyle. Further, if you work too hard you can get too stressed and busy and tired to follow up on new opportunities and “great deals”.
Tip #14: Be Entrepreneurial
Entrepreneurs either do something new or provide a new way of doing something that is already being done. Ignore most of what you have learned from text books and go out and break new ground, and make plenty of mistakes. The more decisive you are and the more mistakes you make, the more you learn and the more successful you will become.
Tip #15: Be Generous
I can’t emphasize enough how few people practice this amazing technique. But it is hugely effective!
One excellent example is when I applied for some shares in an initial public offering (IPO) through my stock broker. The shares were very “hot” and were expected to stag (open strongly). The shares did in fact do very well, they went up 40% on the day they listed. I made $6,000 on one day. I was very pleased, and I rang a top restaurant and paid for a $150 voucher which I then posted to my broker with a thank you note. He had been broking for over ten years, and he told me he had never received a gift! Six months later another “hot” IPO came up. Guess who got the highest allocation of shares of all his company’s clients? I did, even though I am a small client.
Another example is when a British Head Teacher flew out to interview a number of our teachers. He interviewed teachers at the local airport because he only had one day in the country. I phoned one of the restaurants at the airport and gave them my credit card number. I said the Head teacher could spend what he liked on dinner, and to give him a nice bottle of wine. I then told the Head Teacher the arrangement. He of course was delighted to have a free dinner during a day of interviews and was happy to take a nice bottle of wine with him. The total bill was less than $100. Soon after, we became that school’s preferred supplier, and we earned tens of thousands of dollars in fees from them.
I cannot emphasize this tip enough times. Whatever you spend in being generous in business will come back to you tens or hundreds of times over. Of course that is not the main motivation. It is simply being a good human being to be generous to those around you. It also makes the world a better place to live.
Try it today! Send your 10 best customers or clients a real gift they will appreciate. Don’t wait for it to be a Christmas gift. Just tell them you appreciate them!
Tip #16: Successful People help other Successful People
This is an amazingly powerful success tip. Successful people help each other to become more successful. Wealthy people help other wealthy people to become wealthier. Fit people help other fit people to get fitter. And so on.
If you want to be successful, help other people to become more successful. Don’t charge people, give your advice for free. The reason is simple - those successful people will help you in return. It will also build your reputation and build goodwill around you. There are tons of successful people you can help with your skill base.
Let me give you a simple example. Say you have great internet skills. There will be a huge number of leaders or gurus in a field you are passionate about that do not have those skills or the time to learn. If you contact them and offer to set them up on all of the social media sites for free, and explain the benefits, they are likely to accept, and they will then want to help you! If you call them two months later and congratulate them on the new internet presence they have and then ask them if you can interview them for a teleconference, they won’t refuse. You then have something of value you can use to raise your profile and give you social proof.