Doing what you enjoy (especially in your work life) is good.

If you don’t, you won’t do it well and you won’t do it for long.

Giving to others without expecting something back is good.

Living your life with this attitude will become pervasive in all you do, and will pay you back ten fold.

Willingness to accept that you’re wrong is good.

(i.e. cut your losses on your losers that you know are never going to come back. Sometimes it’s best to move on).

Willingness to listen and learn from others, especially those with an entirely different perspective is good.

This is critical. Never stop listening to others. You will learn insights into ideas and concepts in ways you never imagined. Never think you know enough or you know it all. The day you do is the day you’re going backwards.

Recognizing that the masses are often wrong and the willingness to deviate from the masses, accordingly, is good.

The herd of sheep heading in one direction are usually heading to the slaughter house. Be willing to go against the grain, especially with your investments. The best deals come when everyone else is selling, not buying.

Planning, budgeting and investing for the future is good, (but only if you’re able to enjoy the now).

You can’t get to where you’re going unless you know where you want to be. However, enjoy the now. Everyday is a new day. Smell the roses. So, this is a balance. Planning is important, but don’t make it your life obsession. Otherwise you will constantly change the plan and never end up anywhere close to where you really want to be. Plan, and budget, and then set it into motion. Trust me, it won’t always go as expected, but over the long-term, you will get there. In the meantime, enjoy life.

Recognizing that some of the best things in life are free is good.

Basic tax saving tips are good.

Recognizing that investing means long term is good (10 years or more).

Staying out of debt is good.

For goodness sakes, before you make one single investment, payoff your credit card bills at a minimum. Credit cards are good, and establishing credit is good. But using it debt responsibly is even better and ore important.

Having at least a 6 month cash reserve is good.

Recognizing that cars are simply for the purpose of transportation is good.

Not living beyond your means and needs is good

Just because your house is bigger doesn’t mean its better, and who cares what your friends have?

Recognizing that real estate is also a wonderful long term investment, but isn’t for the faint of heart or a get rich quick scheme is good.

Obeying the law is good.

Exercise is good.

Remember, number 1 (family, friends and health)? Exercise leads to good health.

Looking for great deals is good.

Not investing in something you don’t understand is good.

I know I’m repeating myself sometimes, but this one for sure deserves repeating.

Selling your house on your own is good.

There are so many services now available where you can sell your house on your own. You pay a flat fee and get virtually every single thing a full service realtor gives you, with the exception of them actually being there to sell your house. Every house I’ve ever sold, I did it myself. Instead of paying a full 6% broker commission, you will usually just end up paying the buyers broker 3%. You still will need to get on the multiple listing services, but this is provided wit these flat fee deals. There are many to choose from. In Google, type “flat fee listing services”.

Traveling abroad is good.

This will open your mind. It’s important to see things from someone else’s perspective. Traveling abroad especially helps with point number 11 above. You will learn how other people think, which I promise will impact how you invest.

Embracing technology and change is good.

Need I say more on how much technology has changed our lives in the past 10 years? Many experts say that the next 10 years will even change more dramatically then the previous 10. This is critical for companies’ efficiency and profitability.

Learning from your mistakes is good.

It’s ok to make mistakes. You definitely will make investing mistakes. But understand what you did wrong, and then implement fixes so you don’t do it again.

Surrounding yourself with smarter people then yourself is good.

Frankly, everyone in my office is smarter then me. That’s what makes me successful. They teach me and I am willing to learn from their expertise. Investing is an expertise. Consider using a professional and interview a few. See if they seem to adhere to these basic principles in their presentation.

Recognizing that history will repeat itself over and over again is good.

Plan for major economic downturns because they’ve happened in the past and will happen again.

Sticking with known, time tested and proven strategies is good

These words sound good, but what the heck are these strategies? Here they are:

Getting in the habit of saving is good. (set aside a portion of your income regularly).

Investing in financial market is good. Nothing over the long term has ever outperformed investing in a well diversified portfolio of stocks and bonds, nothing.

Diversification is good. Considerations for proper diversification are your age, your financial resources, your time frame for investing, your investment objectives, your tolerance for risk and your outlook on the economy.

A sound diversification strategy requires that you spread your assets over several asset classes. Namely, stocks, bonds, cash and equivalents, real estate, precious metals, collectibles, and in some cases, insurance products (be careful with this one and consult a professional before buying any insurance product that involves equity investments).

You can usually do better by investing in equities outside of insurance. Insurance is for providing a death benefit. Within the asset classes, there is further diversification. For example, within stocks, you have growth, growth and income and income stocks. Also, you have different sectors such as defensive (inclusive of utilities and consumer staples) and cyclical (inclusive of basic materials, capital goods, communications, energy, financial, health care, technology, and transportation). They are called cyclical because they tend to move up and down in relation to businesses cycles or other influences.

Maintaining a cash reserve is good. I recommend at least 6 months in most cases. Money markets, CDs or Treasury bills are suitable for this purpose.

Establishing a budget is good. This is so important; I have devoted an entire Chapter on this. See Chapter 5 – “Establishing a sound budget is good”).

Educating oneself as much and as often as possible is good. Ask questions and become informed before making any investments. If you have a professional investment advisor, don’t be afraid to ask him or her why they picked the investments they picked.

Not investing with your emotions is good. Avoid the urge to invest based on simply how you feel.
Never EVER investing borrowed money is good. This means don’t margin your accounts (which is money your broker dealer will lend you on the value of your portfolio with them).

Sticking with investments that you can understand and evaluate is good.

Avoiding get rich schemes is good (i.e. don’t get sucked in by infomercials).

Willingness to keep what you buy for 10 years + is good.

Never accepting an investment that is sold under pressure is good. Don’t buy something where you feel you are doing it just to help out the seller. If you do, you will end up only helping the seller.

Not investing with relatives acting as your advisor is good.

Not risking more than you can afford to lose is good. In other words, if you lost every penny you invested, could you sustain your lifestyle?

Setting investment goals is good (make a budget). Do you want to retire early? Would you like to start your own business soon? Do you need to pay for your child’s education? Would you like to buy or build a new house? What is your time horizon? What is your risk tolerance level? What is your short term, mid term and long term liquidity needs (ESTABLISH A BUDGET)? What are the most appropriate investments to achieve your goals?

Paying attention to your investments is good. Evaluate them regularly. Ask questions about them. Do they still suit your long term goals and objectives? Is it time to re-balance your portfolio?

Focus is good

Don’t get distracted by a million different things, or you won’t do anything well. This especially holds true with investing. Stay focused. Have confidence in your long term plan, and don’t get distracted by the latest and greatest. They usually turn out disastrous. If your plan is an income portfolio, then stay in income products and don’t jump back and force between growth and super growth products just to try and accelerate your returns short term. You will get burned.

Working hard is good (but never to the point where it compromises number 1, the most important aspects of life)

I am all for working hard to achieve a goal and objective. Believe me, I’ve watched all those late night infomercials many times, where they try and convince me that I could work less and make more. Well, take it from my dumb mistakes, none of them work. Anything you do takes focus and hard work. The best and most successful didn’t get their by not working hard. Believe me, I assure you, the Warren Buffet’s of the world are the first to arrive in the mornings and the last to leave at night. However, don’t get carried away. Your success should not be solely measured by how much money you make, but by how much your family and friends adore you. Perhaps you have heard the old saying “I’ve never seen a Brinks truck at a funeral”.

Treating others how you want to be treated is good

In every single situation, please step back for a moment and put yourself in the other person’s shoes. Treating others fairly and honestly all the time, even at your peril in the short run, will always come back to pay you huge dividends. You never know when you may need someone else’s help. Tides turn fast in this world, and just when you think you’re on top of the world, the bottom may fall out. People remember when you treat them fairly especially when your on top.

Conservatism is good

Let me be blunt, DON’T LIVE BEYOND YOUR MEANS! It will be your financial demise if you do. Cars are for transportation, to get you from one place to the next. Buy a used car. Today cars are made so well that they easily can last for 10 years with the proper preventive maintenance. No one cares what kind of car your drive, contrary to what you may think. In facts, I venture to say that the less flashy of a car you drive, the more you will be respected.

Save the extra money that you would pay on a monthly payment to invest and invest it instead in your child’s college education plan, or to increase the amount of your dollar cost averaging in a particular investment. In the long run, you will be much better off. This is especially applicable with your investment strategy and mindset. Don’t try to blow the doors off on your returns. You won’t outperform the indexes over the long run. No one ever has, not even the best of the best.

If you make between 9% to 10% over a 20 year period on your overall investments consider yourself a HUGE winner. Shooting for the stars will crush your returns, I assure you. Things that go up fast fall fast. Systematic, logical, rationale approaches to your investments will achieve the best returns. Stay wit the most well known top performing companies. Stick with the basics.

Remembering the most important aspects of life are family, friends and health is good

When all else is said and done, this for sure has to be the number one basic principle in building a solid foundation for your financial affairs. You must keep things in perspective, and nothing will ever be more important then your family, friends and health. If you lose any one of these three, it will surely have a significant negative impact on your ability, willingness and desire to keep your financial affairs strong.

When you think things are terrible, and the economy will never recover, and your stocks, bonds and real estate will never recover, step back and ask yourself if your life is all that much different then it was prior to these temporary financial set backs. Do you still go home and have your family to eat dinner with, share hugs with, and give each other re-enforcement? Do you still have friends to share a meal, play a sport, and laugh together with? Are you healthy, where you can take a long walk, visit a beautiful beach, listen to birds and the wind?

In other words, keep it all in perspective. Investing is for the long-term anyway. Down times will come and go for sure. But remember, it’s not so easy to replace your family, friends and health.

Using common sense is good

 So many people invest in things they don’t understand, or don’t know why they invested in it. When choosing an investment, think about it from a common sense perspective before putting your hard earned money into it. Here are some common sense principles that should be thought about and applied to every investment decision you make:

Have a game plan:

Do you have predetermined guidelines that recognize the potential or turbulent times to help prevent emotion from dictating your decisions?

Do you know what you own and why you own it? Do you like the product, company, people behind your investment? Does this product or service you’re investing in get used in good and bad times? Has this product or service been around for more then 10 years where it has already proven to be able to weather the storms of bad times? Is this product or service a market leader? Do you buy this product or service yourself? Did you buy this product or service with a game plan in mind (buy and hold, to generate income, time frame for an exit strategy, analyzed its past 10 or 20 year performance)? Does this holding fulfill a diversification strategy in your portfolio? Does a lower price in this holding represent another buying opportunity? Have the fundamentals of this product or service changed justifying selling it (i.e., management change, obsolete product, legal problems, or no longer a leader in their industry).

Remember that everything’s relative. If your portfolio is well diversified, then the overall portfolio should be compared to certain benchmarks, like the S&P 500 index for example (if your goal was to have a diversified portfolio in a variety of common stocks, and growth was your long-term goal). Also, compare the performance of one particular security against the performance of the overall stocks in its industry. If you find that your investments are performing in line with those benchmarks, that realization might help you feel better about your overall strategy.

Tell yourself that this too shall pass (because it will). Stay calm; don’t make irrational, emotional decisions. In fact, look at down times as a buying opportunity if your original investment is still a sound company that’s a leader in their industry. The financial markets have historically been cyclical and they always will be.

Be willing to learn from your mistakes. Remember, in the good times, everyone looks smart and you can start feeling invincible. You may start to believe that you’re a fantastic stock picker and anything you touch will go up. It won’t, no way, no how. The best of the best have never been able to do this and either will you. Don’t get caught up in feeling to good about your choices. Definitely be wiling to let go of a stock that turns out to be a wrong choice for the wrong reasons. If you now realize that you made a bad choice, take the tax loss and move on and think about what went wrong in this decision. “In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten” – Peter Lynch

Consider playing defense. Look at possibly reallocating your portfolio to get a heavy weighting in defensive sectors such as consumer staples or utilities. Seek dividends, and consider preferred stocks as well to better help protect those dividends (remember, common stock dividends will get reduced or eliminated much faster then the preferreds). According to Standard & Poor’s, dividend income has represented roughly one-third of the monthly return on the S&P 500 since 1926, ranging from a high of 54% during the 1940s to a low of 14% in the 1990s.

Stay on course. Consider Dollar Cost Averaging – If you have a budgeted, well designed long-term strategy, then that plan certainly should consider dollar cost averaging. Dollar cost averaging is systematically and regularly buying more of a particular investment. This obviously averages your price, and certainly can help your overall basis in an investment by getting a bargain when prices are down. Remember, this takes discipline. Psychologically, you will not feel like buying more during major down turns. But there is no better time to buy then when everyone else is selling. Dollar cost averaging doesn’t work unless you’re willing to continue investing systematically during the worst of times as well as the good times. Even with an appropriate plan, and proper asset allocation, some parts of a portfolio may struggle at any given time. Timing the market is virtually impossible over the long run. Wildly volatile markets can magnify the impact of making a wrong decision just as the market is about to move in an unexpected direction, either up or down. Remember, even if you’re able to avoid temporary losses by being out of the market, will you know when to get back in? Patience will help you build your nest egg back to the levels they once were at, and perhaps even surpass them greatly as you average into your most solid holdings. Remember these wise words:
“Most of the time common stocks are subject to irrational and excessive fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble…to give way to hope, fear and greed” – Benjamin Graham

Keep a cash reserve. Every sound financial plan should absolutely include the basic principle of keeping a cash reserve. The amount of your cash reserve should be based on your own personal situation. Consider factors such as your job security, the condition of your real estate, the health of you and your dependents, preparing a budget so you clearly understand your cash needs inclusive of your daily living expenses, discretionary spending, and distinguishing between “wants” and “needs”. I suggest a minimum of 6 months cash reserve.

Nothing I have said here is rocket science. Just use good common sense when making an investment, just as you do when you buy a particular product or service. Whatever you do, don’t let emotions dictate your buying decision. Just because a friend or relative is buying a stock, and they try and convince you that their particular investment will make you a bundle of money is no reason to buy. In fact, usually that’s the one I would stay away from. Here are some very wise words to ponder, which sums up the using common sense principle nicely:
“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful” – by Warren Buffett

Sticking to the basics and building a solid foundation as it relates to one’s financial affairs is truly the underlying theme of this entire book. If one constructs a house, building, ship, plane, business, relationship, marriage, family or anything else, and the foundation and frame work is not solid, the ultimate end product will fail. The finished product may look fancy, solid, and of quality, but, if underneath all the glitz and glimmer there are flaws, then the entire product is flawed.

Over a relatively short period of time, these flaws will show, and failure will result prematurely. This metaphor should be applied to every aspect of life. There are no short cuts. The building of a solid foundation by sticking to proven, time tested, basic principles is of critical importance to the success of everything. This basic principle, which is pervasive throughout this book, has been drilled in my head by my partner of 15 years, Mike Reiner. He has taught me over the years that sticking to the basics and building a solid foundation will lead to success in all we do. By applying this principle in managing his client’s assets and as the President of our investment management firm, Capital Investment Advisors, Inc., he can be credited for growing us to become the second largest fee only investment advisory firm in Atlanta, Georgia.

As he has told me over and over again, anything short of applying this principle is destined to fail. Unfortunately, I haven’t always listened to him in this regard, and sure enough, his lesson proved to be right. I failed when not applying this principle. I’m afraid over the past few years, many of us have gotten away from this concept, and now the financial foundation that we thought was solid in this country has collapsed. We must re-build the foundation, and we must do it using basic, time proven concepts. It won’t be easy, and it’s not the quickest way to get things done.

However, it will prove to last the test of time. Applying this basic principal to one’s financial affairs, all the time, without exception, is paramount to financial security and success. But it certainly can and should be applied to every aspect of one’s life.

Get out there and do stuff for free. Walk around your city, go to public parks, swim in the public lakes, swim at the beach, climb the mountains, camp in our gorgeous free national parks, hike in our parks, mountain bike in our parks, go to museums, go to free exhibitions in your city, go to free concerts, go to free public parks, ride your bike, if you live in an apartment or condo that provides free gym equipment – use it for free, go to free exercise classes at gyms you may already belong to, go to free classes and seminars, use your cities free public services, watch HD TV for free by simply buying a antenna to stick on your TV (yes, you can get HD on many channels for free), go to your public library for free, go to Google and type “free things to do in [insert your city name]”. You will absolutely not believe the results from this search on how many free and awesome things there are to do in every city! I think you get my drift, FREE IS GOOD!!!

When I was applying to college, my biggest fear was how the heck I was going to pay for it. The cost of college education is skyrocketing. According to the College Board’s Trends in College Pricing, the 2007-2008 average total costs (including tuition and fees, room and board, books and supplies, transportation and other expenses) was $13,126 for students attending two-year public colleges, $17,336 for students attending four-year public colleges and universities, and $35,374 for students at four-year private colleges and universities. Out of state students attending public colleges and universities pay an average total cost of $27,791. These costs are projected to continue to rise 5% to 8% per year. That’s a lot of money. In Chapter 2, Sticking to the Basics is Good; various different college savings programs are discussed. But what if you could get a college education for free? Well, for the right students, this is possible through Grants. Grants are free money giving to qualifying students to pay for their college. They never have to be paid back, unlike student loans. 

The common sources of grant funding is:

(1) Federal and state governments;

(2) Colleges & universities and

(3) Public and private organizations. 

Because of the emphasis being put on the “No Child Left Behind Act”, more grants then ever before are being awarded. The best website for information pertaining to grants is www.collegescholarships.org. The government encourages you to apply for a grant. Remember, the only way for sure you will know that your not getting a grant is to not apply. So apply! Here you will find detailed and useful information on all types of Federal and State grant programs such as:

(1) The Pell Grant – focuses on funding millions of low-income students;

(2) The Academic Competiveness (AC) Grant – focuses on undergraduate freshman and sophomores with outstanding academic records and with demonstrated aptitudes for leadership and service;

(3) The National Science and Mathematics Access to Retain Talent Grant (SMART Grant) – for undergraduate juniors and seniors studying computer science, engineering, mathematics, or sciences;

(4) State Grants – for resident students based on merit, need and even area of study;

(5) African American Student Grants – focuses on black colleges and universities all around the country offering top notch programs and grants for these programs;

(6) Hispanic Student Grants – Need based grants for Hispanic students;

(7) Native American Student Grants – need based grants for Native Americans;

(8) Asian American Student Grants – grants that are commonly sponsored by ethnic organizations or available as general ethnic minority grants through the government or colleges and universities;

(9) First Generation College Student Grants for Disadvantaged Backgrounds – both Sallie Mae and Coca Cola provide these grants;

(10) Grants for Women – these are designed for women to promote their participation in underrepresented degree programs such as sciences, mathematics and business;

(11) Non-traditional Student Grants – students outside the traditional college age of 18 through 24;

(12) Low Income & Disadvantaged Students Grants – Need based aid awards for the most financially disadvantaged students;

(13) Graduate & Doctoral Student Grants – usually available from colleges and universities and private organizations, and colleges are quite competitive in offering such grant awards to the right candidates;

(14) Grants for Military Students and Families – The Army, Air Force and Naval ROTC offer full tuition to qualified students;

(15) Subject Specific Grants – given by professional organizations for their fields;

(16) High Need Fields Grants – healthcare (especially nursing) and teaching have the most grants in this area;

(17) Nurses and Med Student Grants – numerous federal and state programs available for this;

(18) Teacher Grants – numerous federal and state programs available for this; and (19) Numerous other grants and scholarship information available on this site. Again, the site is www.collegescholarships.org.

Also, many colleges and universities today offer free courses online in the form of podcasts, lectures, tutorials and full blown online classes. Many of them are totally free. Most of these wont award college credit or degrees from these course, but they will sure make you smart.

The government does have amazing resources available for public use. The government has a fantastic website that explains all the programs available for individuals, businesses, non-profits and government agencies. Go to www.cfda.gov. This is the mega site of government freebies This website (called The Catalog of Federal Domestic Assistance (C.F.D.A.), is an on-line catalog lists of almost every government public assistance and incentive grant program available. However, the best part is that it also tells you in plain English what the programs are for, who they’re for, what it takes to be eligible, how much money is allocated to the agency managing the program and (most importantly), who to contact to apply for a grant.

As if that wasn’t good enough, to make things even easier, all the above information is searchable on the site by using a keyword search utility located at the bottom of the welcome page. Just plug in the information you’re looking for and their search engine finds links to details on programs relevant to that subject. For example, in the search by keyword field, I typed ‘Women and Business. 14 program links came up. Each link takes you to an information page with complete details on the specific grant or program. The search utility is fast, easy to operate and very accurate.

The bottom line here is that the government has provided a free resource to access information on just about any federal grant program. However, as with any data resource, you must spend the time to do the research to find what you want. Another great government free site is www.usa.gov. This site even shows the Government’s sales of surplus and seized property.

In my humble opinion (backed by many scientific tests and studies), tap water (in most jurisdictions in the U.S.) is as good as bottled water, if not better. Many experts argue, in fact, that it’s more then fine; it’s actually safer and better for you then bottled water. I’m sure there are exceptions to this somewhere. But in most places in the U.S., your basic tap water is absolutely fine. Save your self a bundle of money, and drink tap water. For some great information on this go to www.thinkoutsidethebottle.org 

Also, John Stossel of 20/20 did a great piece on this in May of 2005. I think you will be shocked 20/20s findings did on this subject. ”20/20″ took five bottles of national brands of bottled water and a sample of tap water from a drinking fountain in the middle of New York City and sent them to microbiologist Aaron Margolin of the University of New Hampshire to test for bacteria that can make you sick, like e. coli. There was actually no difference between the New York City tap water and the bottled waters that we evaluated,” he said.

Many scientists have run tests like that and have consistently found that tap water is as good for you as bottled waters that cost 500 times more.” See the full details of this study and this article at http://abcnews.go.com/2020/Health/Story?id=728070&page=1

There are so many banks that charge for banking. I can’t figure out why anyone would bank for a fee when you can bank for free. I mean totally free. This means no minimums, no charge for your checks, no charge for internet banking, no charge for using any ATM (not just your banks ATM), no charge for writing too many checks, free checks and deposit slips and many even pay you interest on your checking. After all, when you deposit your money into a checking account, you’re giving that bank an interest free loan. It’s only right that they give you something back. My favorite free bank is through Charles Schwab. Their customer service is unbelievable, and it’s totally free, not to mention there are Charles Schwab branches all over the country. For more details, go to www.schwabbank.com I promise, no hidden fees. It’s just a totally free checking account, with no minimums, free checks, free over draft protection, FDIC insured up to $250,000, etc… – free, free, free.