How The Rich Get Richer: Tips for the Beginner Investor

The Nest Egg vs Play Money

When it comes to investing in the stock market my philosophy is: the serious money i.e. retirement, nest egg, etc. goes into index funds. Index Funds are investment vehicles that try to match the risk and return of the total market. By investing in them I don’t worry about idiosyncratic risk associated with any particular company. The return on investment is whatever the total U.S. equities market does year over year, which historically has averaged around 10%. This can add up over time.

Benefits of Index Funds are:

  1. Ultimate in diversification
  2. Low expense to fee ratio
  3. Strong longterm returns

Below is an an example of how compound interest works investing $10K:

Let Your Money Work For You!

Parking $10K and not touching it for 5 years @ 10% interest.
Investing $10K and contributing an additional $500/per month over 5 years @ 10% interest.

Play Money

Now that we’ve got our serious money carefully invested, it’s time to see if we can beat the 10% return we’re getting on our index funds, by selecting individual stocks. When picking stocks I tend to invest in companies that I know pretty well. If I use their products daily, my philosophy is I might as well get a piece of the action, instead of being a mere customer.

Before I jump in and make a final decision on whether or not to invest, I do some research. I seek to learn how the company is being managed, are they laden with debt? What’s their profit margin? What’s the competition like? What are the products in their pipeline? These are all questions I look to understand before making the plunge (Google is my friend when it comes to research). If they check out, I head over to my favorite trading app and execute the trade. And voila!

What’s your trading philosophy? Hit me up on IG and share the wealth!

MogulGrind Reading List

A running list of books the Mogul Grind team has read (or is currently reading) that are packed with gems and we highly recommend checking out. 

The list will be updated often so check back often. 

Peace!

How To Become a Jedi Master in Anything

When I was in grad school many years ago I had a very tough finance professor. He had an accomplished career holding top positions in international banking, in addition to this he was a Symphony Hall concert pianist. One day after a number of students didn’t do as well as they had hoped on an exam, he posed a question to the class along the lines of: “How do you get to symphony hall?” The answer was, “Practice! Practice! Practice!” Effectively he was saying if you want to truly understand the financial concepts he was teaching it would require repetition on our part. There was no way around it. That comment has stuck with me to this day. The answers to tough challenges aren’t just going to come to you. You have to really roll up your sleeves and deliberately practice in order to level up.

Side Note: I ended up getting an A in the class (don’t ask me how).

Repetition is what creates habits, and habits are what enable mastery. Nothing is more important for mastery than practice and drills. Studies have shown that practicing as little as 5 minutes a day is better than practicing once a week for 3 hours. – Gene Kim

This 5 min Ted Ed video does a good job summing up the science behind how habits, deliberate practice and mental imagery are key to mastering any skill.

Enjoy and share the wealth with a friend.

The Power of Thinking Positive

“Whatever is true, whatever is noble, whatever is right, whatever is pure, whatever is lovely, whatever is admirable—if anything is excellent or praiseworthy—think about such things.” – Philippians 4:8

Dwelling on positive things as opposed to negative is a good practice to develop. Science has shown a number of psychological and physiological benefits of positive thinking. Research suggest that positive people lead healthier lifestyles. By coping better with stress and avoiding unhealthy behaviors, they are able to improve their health and well-being. This could be a factor in why they tend to lead healthier, happier and more productive lives.

2 Key Benefits of Thinking Positive:

  1. Improved Physical Health
  2. Higher Overall Success in Life (Personal and Professional Goals Reached).

Check out this article on the link between health and positivity.

Remember: Shyt happens to everyone, it’s all about how we respond.

Below are a few videos that illustrate the impact positive thinking can have on the physical body and your life overall. They also suggest things you can do to start thinking more positive such as reframing negative events with a positive spin and the impact small things such as changing your physical body posture can have on your mindset and confidence.

Enjoy MGs and spread the word. #eachoneteachone


Journaling: A Key Habit of the Super Successful

“Keeping a journal is one of the best strategies for learning about yourself and improving your professional performance over time.” Teresa Amabile Harvard Business School Professor

In my professional circles and in the literature I’ve been reading of late, I’ve been hearing a lot about the benefits of keeping a daily journal. The word is it’s a habit that successful people have been leveraging for years to improve their productivity. So a few weeks ago I decided to give it a try. In the short time that I’ve been journaling I noticed a number of key benefits, including but not limited to:

Benefits

  1. Reduction of Stress
  2. Improved Sharpness of Memory
  3. Increased Mindfulness
  4. Improved Discipline
  5. Enhanced Overall Productivity

This article does a good job of summing up the benefits in more detail.

Journaling Techniques

  1. Free Writing – Just let it flow, jot down what comes to mind.
  2. Morning Pages – Free Writing first thing in the morning.
  3. Lists – Make a list of anything i.e. things that make you happy
  4. TLC (Thankful, Learning, Connection)

I tend to note the one big thing that I want to accomplish the next day, both professionally and personally. Then I write about something I’m thankful for and what I learned during the day. After that I often let it flow with a stream of consciousness.

Check out these sites for a deeper dive into journaling techniques, here and here.

I intend to continue the practice. I’ll keep ya posted on the progress. Cheers to more productive and balanced lives MGs!

Peace!

How Record Companies are Making Money in the Digital Era, and Other Cool things I learned at Def Jam’s 2019 Pre-Grammy Party…

MogulGrind was invited to Def Jam’s Pre-Grammy party this weekend. Lots of good music, food and cool people, but educational as well.  
Two gems I gleaned from the night:

1. I was curious as to how people were making money in the record industry these days. Some of the answers included, corporate sponsorships (artist partnering with brands to promote their products on albums, in social and traditional media), streaming, labels promoting their catalogs via curated playlists on various streaming services. A person I spoke with was with a company that specialized in creating global streaming strategies for major labels. She said 4 years ago they couldn’t get anyone to listen to them, it was a struggle but now business has exploded. Lastly, but certainly not least touring/shows is where a lot of money is being made.

2. Product placement can be very powerful. The party was filled with artist, #tastemakers and #influencers, etc. The atmosphere made the products that were given to guest throughout the night seem a little more cooler than norm. Case and point, as I’m drinking Core Natural water. I’m like this water has a 7.4 ph balance?! Say whaaa! (I’m assuming that’s a good thing.) And the bottle looks cool, I might have to cop it next time. Ha. You have somewhat of a connection with the product. You’ll give it a second look when you encounter it in the market.

After doing a little digging I learned that recording artist Juicy J was an early investor in Core Water and the company was recently sold for $525 million. Nice!

What Exactly is Meditation and What are the Benefits?

One day a few months ago, I was making small talk with someone and it turns out they were a guided mediation instructor at the gym we were at. A week later I decided to drop into one of the classes, I’ve been hooked ever since.

Top 3 Impacts Meditation Has Had On Me:

1. Sense of Peace and Calm

One of the major benefits I’ve noticed is the calm peaceful feeling that I have, not only during meditation but throughout the day.

2. Better Focus

A major element of meditation is concentrating on one or two things at a particular time i.e. your breathing and movement or a particular word, etc. This helps in day to day life by enhancing the ability to focus on the important matters at hand, slicing through the distractions. I found myself being “present” and paying attention more intently. Working in corporate America I’m often in countless meetings. Since practicing meditation, I am able to key in on the issues during those meetings, better able to ask the right follow up questions and ultimately make smarter business decisions.  With family and loved ones, the time spent together is enhanced, due to being conscious of the present moment, and really focusing on the time shared together.

3. Higher Patience Threshold

Things that may have bothered me in the past, no longer seem relevant. If someone stepped on my foot or cut me off in traffic and didn’t apologize, I’m not as annoyed as I once may have been.

What Does The Science Say?

According to the Mayo Clinic the emotional benefits of meditation can include:

Gaining a new perspective on stressful situations
Building skills to manage your stress
Increasing self-awareness
Focusing on the present
Reducing negative emotions
Increasing imagination and creativity
Increasing patience and tolerance

Some research suggests that meditation may help people manage symptoms of conditions such as:

Anxiety
Asthma
Cancer
Chronic pain
Depression
Heart disease
High blood pressure
Irritable bowel syndrome
Sleep problems
Tension headaches

Give it a try if you’re not familiar with meditation, there are tons of resources online. You can take in person classes, download apps such as Calm, you can even tune into Spotify for meditation playlists.

Peace and Blessings MGs!

Jay Z Launches New Venture Capital Fund

The Rock is in the building.

Jay Z is launching a new venture capital fund with business partner Jay Brown according to a new Axios report. They’ll be focusing on early stage tech startups. No word yet on the fund’s size. Jay’s had some hits on billboard charts as well as investing. He’s also taken his share of lumps. Let’s take a quick glance at his investment record.

The Wins

He was an early investor in Uber participating in the company’s 2011 Series B funding round, when it was valued at just $300 million today Uber’s valuation is at approx $66 billion. Nice!

He purchased Tidal for a rumored $56 million, and recently sold 33% of the company to Sprint for approx. $200 million.

Jay Z co-founded Roccawear clothing and sold it for $200 million in 2007.

The Losses

In 2012, Jay Z’s Roc Nation invested in a company called Viddy, who was aiming to be the “Instagram for video.” Unfortunately the company failed just a few years into the investment.

Roc Nation also invested along with Ashton Kutcher & Marc Benioff in a private jet startup called BlackJet in 2012, but the company shut down last year.

Too Close to Call

In 2011, Roc Nation invested in Stance, a “premium sock company.” I know it sounds a bit weird, socks son?! Stranger investments have blown up, think Snuggie. Who would have thought a blanket with holes in it would gross over $500 millon? Well the sock company, Stance, has raised $116 million. Let’s see how this one pans out.

In the VC game 75% of venture capital investments fail. All it takes is 1 to pop and you’re a legend. The 1 win can obliterate all of the losses many times over. Scared money doesn’t make money. Be smart though!

Martel

Credit Card Debt is for Losers: 4 Quick Tips to get it Under Control

Debt is a form of slavery. It can be crushing and debilitating, as well as a major hinderence to building wealth, which is why in most cases it’s wise to avoid it like the plague if you can. Check out a few tips to get out of credit card debt.

  1. Stop Spending

When you find yourself in a ditch stop digging. Get a hold of yourself you don’t need that Louis Vuitton belt buckle.

2. Make a Budget

Track your spending, create a budget and trim the fat from expenses. A little here and there can add up.

3. Increase your Monthly Payments

If you just pay the minimum payments it can take years to retire the balance. So pay as much as you can and as often as you can.

4. Make your Payments Sooner Rather than Later

The earlier you pay in your bill cycle the less interest you’ll pay for that month. Credit card interest is calculated based on the average daily balance. By making payments earlier the interest that accrues is reduced.

Those are just a few quick and dirty ways to reduce your debt that have worked for me. What are some of your tips to eliminate debt? Hit me on the Gram.

Martel

Not Every Pro-Athlete Goes Broke After Leaving the Game, Just Ask Jamal “Monster Mash” Mashburn who Owns Over 80 Franchises

80% of professional football players and 60% of NBA players experience financial failure shortly after retirement. The list of horror stories of athletes going belly up when the “music stops playing” seems endless; Vin Baker, Antoine Walker, Lenny Dykstra, Curt Schilling, Mark Brunellthe list goes on.

Jamal Mashburn was a college phenom at the University of Kentucky and the 4th overall pick in the 1993 NBA draft by the Dallas Mavericks. He played 12 seasons in the NBA averaging 19.1 pts per game, before injuries took their toll.

Early in his career Jamal was conscious that the fame and NBA checks would not last forever and conducted himself accordingly. He adopted the philosophy of “always working with the end in sight.” Jamal viewed basketball as a means to an end. It was a vehicle to help aquire the capital and relationships to launch sustainable businesses. He lived well below his means and saved for the proverbial “rainy day.” Mashburn always knew he wanted to get into business and upon retirement he began to immerse himself into developing his empire. As a result of his prudence, he’s proven to be as successful off the court as he was on the court. Today Jamal owns over 80 restaurant franchises (Papa John’s, Outback Steakhouse, and Dunkin’ Donuts), several car dealerships, real estate, a marketing firm and a venture capital firm. Whew! I reckon he’s not too bored in his retirement years.

The key takeaways here are:
  1. Stack your paper, work hard and save for your initial capital in order to invest it.
  2. Don’t invest willy-nilly, take chances but be be smart about them and do your due diligence. As noted above Mashburn invested in tried and true business models such as franchises while also allocating a small portion of his portfolio for moonshots (riskier investments with a chance for higher returns) via his venture capital firm. (Strike the right balance of risk for your portfolio.)
Kudos, to Mashburn we wish him continued success! Are you building an empire? Hit me on the Gram, I’d love to hear about it.

Martel

Lots of gems in this video, hope you enjoy and pay it forward.

Guess What the Average 401K Balance is in America: How do you Stack Up?

Fidelity Investments manages over $5 trillion in investment accounts. According to their most recent analysis of Individual Retirement Accounts (IRA) and 401k accounts here’s what they found:

  • The average IRA account balance for the 3rd quarter in 2016 was $94,100, up from $88,000 in 2015.
  • The average 401k balance for the 3rd quarter in 2016 was $90,600, up from $84,400 in the previous year.

Now Is This A Good Or Bad Thing?

Great question. If you’re young then it’s fine and dandy, but if you’re about to retire then not so good. Let’s look at the math:

$90,000 in an IRA adding $5,500 per year (approx $114 per week) over 30 years compounding at 7% interest rate per year, you wind up with $1.2 million.

On the other hand if you take the same scenario but only have 10 years before retirement you end up with approx. $253k over 10 years.

The Moral Of The Story

Save! Save! Save! The sooner you start saving the better. Compound interest is your friend. Take advantage of it as soon as possible.

Martel

Multi-Billionaire John Paul Dejoria’s 3 Keys To Success When Starting a Business

John Paul Dejoria is an entrepreneur best known for co-founding Paul Mitchell Systems, a haircare company and Patron Spirits, a world renown tequila brand (I’m sure we all had a few shots). Forbes Magazine estimates his net worth to be approximately $2.9 billion. I think it’s safe to say he’s had some success in business. Paul recently dropped a few gems on the key ingredients to starting a successful business.

1. Be The Best In Your Category

Make the best product you possibly can. The end result should be when the consumer tries your product or service it is something they want again.

2. What’s Your Story?

Have a story behind your product that is true. Be authentic.  Then be willing to tell enough people your story and why your product is the best. You can have the best product in the world but if no one knows about it what good is it?

3. It’s Cheaper to Keep Her

Once you get a customer put your personality into it and really let them know how much you appreciate them. It’s harder to get a new customer than it is to retain your existing customers. Pay great attention to your first customers. They will be your ticket to new ones via word of mouth.

Martel

Meet the 5 Most Valuable Startups in America

5. WeWork

Valuation: $16.9 billion

Coworking startup

WeWork cofounders Miguel McKelvey and Adam Neumann

 

4. Snap

Valuation: $18.19 billion*

Formerly Snapchat, is a social media/camera company

CEO Evan Spiegel

 

3. Palantir

Valuation: $20.53 billion

Data-mining startup

CEO Alex Karp

 

2. Airbnb

Valuation: $30 billion

Home-rental startup

Product chief Joe Gebbia, CTO Nathan Blecharczyk, CEO Brian Chesky

 

1. Uber

Valuation: $68 billion

Ride-hailing startup

CEO Travis Kalanick

 

*Elon Musk gets an honorable mention. His aerospace manufacturing and space transport services startup, SpaceX comes in 6th place with “only” a $12 billion valuation. Poor fella.

Be inspired my friends, be inspired! Are you working on the next big thing? Hit me on the Gram.

Martel

Becoming a Millionaire is Easier than you Think: 5 Wealth Building Tips

1. Pick The Right Profession – You can become a millionaire on a small salary with proper saving and spending habits but it will be a lot more challenging. Look to boost your income either by improving your skillsets through education or supplementing your income via a side hustle/second gig. Check out this list of best and worst jobs for the future.

2.The Stock Market Is Your Friend Bruh… – The stock market has it’s ups and downs but over the long term it returns approx. 7%-8% per year. If you invest $10,000 and let it sit in the market for 3 years compounding at 7% you’ll have $12,250 at the end of that period. Now let that compound for a long period of time and routinely add to the principle to accelerate the growth and you’re on your way to building considerable wealth.

How Compounding Works

Year 1 = $10,000 + ($10,000 x 7%) = $10,700

Year 2 = $10,700 + ($10,700 x 7%) = $11,449

Year 3 = $11,449 + ($11,449 x 7%) = $12,250

Albert Einstein is famously quoted as saying “compound interest is the 8th wonder of the world.”

3. Save! Save! Save! – The sooner you start saving the better. If you save/invest $671 each month at age 35 you’ll have$1 million by the time you turn 65, assuming you earn an 8% annual return. The sooner you start and the more you save, the quicker you get to $1 million just from saving!

4. Step Out Of The Matrix (Live Within Your Means) – If you don’t have it, then don’t spend it period point blank. We don’t need a fraction of the things that we think we need. The realization of this, is what I call stepping out of the matrix. Advertisers are so adept at tricking us into thinking we can’t live without their products. A little discipline and sacrifice now will go a long way toward gaining financial independence. Soon enough you’ll be able to purchase what you want with cold hard cash instead of financing it and building a mountain of debt. Debt is a form of bondage, it can be suffocating so shun it like the plague.

According to the National Foundation for Credit Counseling, one out of every three American households carries credit card debt from month to month. And the average credit-card debt is $16,061, according to the Federal Reserve.

Total owed by average U.S. household carrying this type of debt Total debt owed by U.S. consumers
Credit cards $16,061 $747 billion
Mortgages $172,806 $8.35 trillion
Auto loans $28,535 $1.14 trillion
Student loans $49,042 $1.28 trillion
Any type of debt $132,529 $12.35 trillion

Debt balances are current as of Q3 2016; figures are updated quarterly by the Federal Reserve.

5. Create a Budget – It’s important to know where your money is going. Once you’re able to track how your money is being spent it’s easier to control and make adjustments where necessary. I use both an old fashioned excel spreadsheet and also track my expenditures using Mint.

To paraphrase the late great Biggie Smalls “now you’ve got the manual, a step by step booklet for you to get your game on track…”What are some of the tools & techniques that you use for building wealth and staying debt free?  Hit me on the Gram.

Martel