8 Rules of Building Wealth

8 Rules of Building Wealth

8 Rules of Building Wealth

Forget Performance; look at fees!

Remember that it’s not what you make, it’s what you keep. When evaluating an investment evaluate the cost to generate an investment return. If you are using an investment manager compare the performance of the investment net of fees. Be careful when entering into non-tradition investment vehicles like limited partnership interest. These types of investments tend to have higher management fees and are often illiquid.

Invest when a stock’s earnings estimate is being revised upward.

Investing when a stock is strong is often a sign of good management and strong underlying value. Be focused on stocks that are reaching new highs because the management is committed to increasing the stock value. Look for stocks that announce buyback programs. This is often a sign that management feels the stock is undervalued. If the insiders feel that way, its often a great sign that you should be buying the stock too.

Monitor cash flow to find the winners

Increased cash flow into a company is a great sign that the company is fundamentally strong. With increased cash flow the company has the ability to pay increased dividends and expand without taking on a lot of debt.

Put the right investments in the right places

Don’t just buy an investment because everyone else is. The best investment policy is found in a balanced portfolio and outlines investment objectives. For example, if you are young and starting out your career, you should be heavily weighted into stocks and making investments with greater potential returns. A person approaching retirement should adopt an investment policy that focuses on predictable cash flow and protection of principal.

Forget 1-year outlooks; plan at least 5 or 10 years ahead

Even the best professional investment advisors cannot predict what is going to be the best performer for the next year. The best investment policy is reached by keeping a long term perspective in mind. When you invest, invest for the long term. Be patient and allow your portfolio to experience volatility. If you are worrying about your investments, then you have too much invested. Only invest what you can afford to lose.

Don’t be afraid to hold cash

You should set aside some cash outside of the electronic banking system. If you were to experience a disaster your credit cards may no longer work, but your cash will. Hold enough cash to manage your affairs for at least 4 days (or 72 hours).

Follow the outstanding shares

When evaluating a company be sure to check who is currently holding the stock. For example, how much is owned by institutional investors. Institutional shareholders give more stability to the stock unless bad news is announced. If the stock is quickly dumped by the institution, this will probably result in a large drop on the market. Look for companies that have less than 50% of the outstanding stock in institutions. This may bring a greater up side if you are holding stock and the institutions are looking to acquire large blocks. Also, companies with stock buyback programs are a good sign the company’s stock is undervalued.

Don’t rely on your instincts; they’re probably wrong

Most people learn this lesson the hard way. If everyone is dumping a stock, that doesn’t mean that you should be buying. Do no try to time the market in a stock. Remember the saying: “Lows hit new lows and highs hit new highs”. The best investment policy is one that adopts a slow steady pace.

We hope you found this article about “8 Rules of Building Wealth” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or website www.GROCO.com.

To receive our free newsletter, contact us here.

Subscribe our YouTube Channel for more updates.

Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio

 

 

GROCO.com is a proud sponsor of The American Dreams Show.

 

American-Dreams-Show-Accounting-firm-in-ca-cpa-tax-advisors-groco-alan-olsen

The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

Untitled_Artwork copy 4

MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

Posted in
Navigating High Stakes: Carson Holmquist's Journey in Innovative Logistics

Navigating High Stakes: Carson Holmquist’s Journey in Innovative Logistics

Today, American Dreams host, Alan Olsen, sits down with Carson Holmquist, Co-Founder, Stream Logistics to discuss innovation and navigating high stakes. Transcript: Alan Olsen: Hi, this is Alan Olsen and welcome to American Dreams. My guest today is Carson, Holmquist. Carson. Welcome to today’s show. Carson Holmquist: Thanks, Alan. So, so, so grateful to be…

Sports, Business, and Beyond: A Moment with Alexis Levi

Sports, Business, and Beyond: A Moment with Alexis Levi

Today, American Dreams host, Alan Olsen, sits down with Alexis Levi, a true pioneer in the sports and entertainment industry. As the first African American woman to become the owner and general manager of a men’s professional basketball team, Alexis shares her remarkable journey from being a competitive ice skater to entering the sports world.…

Five Great Reasons to Attend Venture Capital Seminar 2 of 6

Five Great Reasons to Attend Venture Capital Seminar 2 of 6

Impact Venture Capital & GROCO’s “Venture Vision” Seminar 2 of 6 (To register FREE, click here.) This free online instructional seminar on January 11, 2023, at 10 AM is an excellent opportunity to learn more about the risks and rewards associated with venture capital (VC) investments. By covering topics such as the stages of funding,…

Mastering Comprehensive Financial Planning with Bill Gombert

Mastering Comprehensive Financial Planning with Bill Gombert

Introduction: In this interview, Alan Olsen, CPA and featured guest Bill Gombert discuss comprehensive financial planning and much more. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is Bill Gombert. Bill, welcome to today’s show. Bill Gombert Thank you very much pleasure to be here. Alan Olsen So, Bill, you’re…