Today I want to discuss with you some fundamental truths about saving and investing. I call them fundamental because since the beginning of time, these truths have not changed. There is one exception. The gap between what you can earn saving money verses what you can earn investing money continues to widen at a rapid pace. In fact, today, saving means losing. Here’s what I mean…

Let’s say you put $1,000 into a passbook savings account at your local bank. As I write this, the national average Annual Percentage Yield (APY) on such an account is a paltry .26%. That means at the end of one year you will have a combined principle ($1,000) and interest ($2.60) of $1,002.60. The highest rates available are in the Los Angeles area. In one year you’d have a marginally better $1,006.80 in your account.

You’d do better with a Certificate of Deposit (CD). The best rate I could find is 1.55%. So in one year you’d have $1,015.55 in your account.

Just as a comparison, the lowest credit card rate I could find (for those with exceptional credit scores) was 10.24%. Borrow $1,000 for one year and you’d have to repay $1,102.40. Quite a difference, huh?

Just as an aside, the difference between what a bank pays out to savers and charges borrowers is called arbitrage. Obviously, banks make a bundle doing this. In an upcoming segment I’ll teach you about arbitrage and how to earn even more on your money than the banks.

But that’s not as important as this next difference. See, you can choose not to borrow money using a credit card, but this next one is unavoidable. It’s the inflation rate. And right now (April 2010) it sits at 2.21% (true inflation is probably 6% or 7%, but that’s an entirely different conversation). That’s about 9 times the passbook savings rate of .26%. That means for every $1 you earn in interest you give up $9 through inflation. I’m serious. In fact, I hope this news pisses you off. Shakes you up a little. Anything to get you to pay attention to this legalized theft.

In the above example you earned $2.60 interest in a year on your $1,000 deposit sitting in the bank. But you lost $22.10 at the same time. It should be criminal but it isn’t. You can’t take the U.S. Government to court over this. You can’t sue the Federal Reserve. But you can…

Educate Yourself!

Robert Kiyosaki’s new tagline for his “Rich Dad” company is “Knowledge is the New Money.” Let’s see why…

Whether you keep your money in a safe, under your mattress, in a bank, or elsewhere, it is continually devalued by the rate of inflation and other Central Bank manipulations of the currency. So at the very least, it makes sense to seek out those investments that will give you a rate of return greater than the rate of inflation. Of course, the higher the rate of return on your investment, the more money you get to keep.

So what, historically, has kept pace with inflation or bested the inflation rate? The investments I’ve been mentioning all along – precious metals and real estate.

What’s Precious About Precious Metals?

Prices fluctuate just like in the stock market. So you need to follow the cyclical patterns, keep an eye out on what Ben Bernanke’s doing with our currency and know when to acquire. Do it right and you may be rewarded with an annual return of 30%, 50%, even 100%. Do it all wrong and you may see 2% or 3% returns, which amazingly is still above the rate of inflation!

Caveat Emptor Dude! (or Dudette)!

There is no limit to the number of people who will want to sell you pieces of paper that say you’ll own a certain amount of gold or silver or that you can control a certain amount of gold or silver if you invest in these paper assets. Don’t do it! Always take physical delivery. Then keep your metals in a safe place…preferably out of the U.S. banking system! Here’s why you need to do this…

Like greedy bankers, precious metals dealers have come to realize that not everyone wants to take physical delivery of gold and silver. In large quantities, these metals can be heavy and cumbersome. They can also jingle in your pocket as you walk down the street. And you’re ceratinly not going to buy a loaf of bread at the corner grocery store with a coin worth $1,200. (At least not today. A year or two from now you may be presented with a totally different scenario.)

Here’s a scenario, if a greedy precious metals dealer had on hand $1 million in various coins, what would he or she do if only 10% of the customers insisted on taking physical delivery? Let’s say this greedy dealer is a ‘he’…HE would still be sitting on $900,000 in gold and silver coin for which he’s already received “payment.” Since he knows only 10% of buyers will take physical delivery of the remaining coins, he’ll just sell the whole lot all over again. Now he’s left with $810,000 in coins which he’s already sold twice. What does he do? Sell them again and deliver only $81,000 in coin. And he keeps repeating the process!

When the bottom does fall out of the global economy, fiat currencies (including the U.S. dollar) are devalued and inflation begins to skyrocket, what do you think people holding those pieces of paper are going to demand? They’re going to want their gold and silver metals. And what do you think will happen when requests for physical delivery exceed the metals in inventory by a factor of 10? There will certainly be angry mobs, a host of lawsuits and of course, the proverbial Congressional investigations. More importantly, now that the public knows there’s a lot less gold and silver than they had imagined, prices will go ballistic. In a flash!

Read the fine print with whomever you deal with. You may discover that rather than owning physical gold or silver metals sitting in a distant warehouse, you are an UNSECURED creditor of the bank or broker. When the economy goes south you will get nothing.

In recent testimony (March 25, 2010) before the Commodity Futures Trading Commission it was revealed that there is only one ounce of gold or silver metal available to fill demand for every 100 ounces sold. That’s what happens when dishonest banks and brokers sell, over and over again, the 90% of gold and silver metal that was bought but never delivered. Take the real money and run!

Investing In Real Estate Risky?

I know. We’re suffering from the after effects of a real estate bubble that popped with a big bang. There’s so much bad news you’d think every homeowner in America is so deep in debt they’ll never recover. Not true. I have business partners actively looking right now for 100+ apartment units to invest in emerging markets throughout our nation. And they’ve been making money all along. You just have to know where these emerging markets are located, how to calculate a good deal, how to put a team together to help you close and ultimately how to manage the property until a calculated resell at a future date.

I’ll tell you, there are plenty of people who invested in real estate over the past 10 years who’ve lost their shirts. Anyone who’s familiar with the southern Florida real estate market knows what I mean. Detroit? It’s almost a ghost town. You can buy an entire city block for a buck and still there are no takers.

It would be misleading of me to offer blanket statements about how much money you can make investing in real estate. I won’t even offer you an example “to make things look good.” There are just too many variables. I’ll tell you this much: Smart investors always make money in an prospering economy AND in a decline. They also know how to protect themselves if things go bad.

Invest In Yourself

This is the best place to begin. To earn outrageous amounts of money (or just more than you’re earning now) you must be absolutely confident in your own ability to fulfill your personal dreams. You will have to take some chances and you’ll better the outcome if you know what you’re doing. Sounds pretty obvious, doesn’t it. But most people won’t take any risks at all if they don’t have confidence in themselves. So now would be a good time to start.

You already took your first step by asking me to send you these email tutorials. The next step might be to contact me personally so I can get a sense of where you are and what your goals are. There are many ways I can help you achieve your goals or perhaps just help you figure out what those goals might be. No obligation and it’s free.

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To YOUR Success,

Business & Marketing Mentor
Phone: 805-874-2410