Fairytales of Money
1. Go to school
2. Get a job
3. Work hard
4. Save money
5. Your house is an asset and your biggest investment
6. Live below your means
7. Get out of debt
8. Invest for the long term in a well-diversified portfolio of stocks, bonds, and mutual funds
9. Retire, and the government will support you.
10. Live happily ever after
The Stock Market Crashed
When the stock market began to crash in 2007, that meant cash was flowing out of the market to other assets.
As the market crashed, it's a safe bet that 90 percent of investors lost money because they were too slow in moving it.
They were slow because they were told the financial fairytale about investing for the long term in a well-diversified portfolio of mutual funds.
The 10 percent who don't believe in financial fairytales, however, had already moved their money to safer harbors such as gold, which rose briskly as the market crashed.
As cash flowed out of the stock market, mutual fund investors lost and gold investors won.
The same thing happened in real estate when the housing bubble burst and cash flowed out, leaving homeowners with lower valued homes.
The name of the game ? Cash Flow.
Knowledge is the new money
Job security is very important for most people because they have little control over their outgoing cash flow.
That is why so many financial pundits advise,"Cut up your credit cards and live below your means."
This is financial advice for the 90 percent who need to control outgoing cash flow to the 10 percent - the 10 percent who know how to have cash flowing in even when they are not working.
