Been seeing and hearing a lot lately about investing.
Got me thinking about what it means to different people.

I know a girl who is 31 year old professional and successful. She works for a big name mining company and earns a pot load. Has a half million dollar mortgage and her own car and some employee shares.
What does investing mean to her? She salary sacrifices some of her money to a broker who everyone in her office uses because he tells her, not everyone lost in the financial crisis.
She has NO idea where money is, how much she has left or even how shares and companies work.
My mother is similar, She gives a planner $6000.00 a year and he invests it for her. Its only when she lost $6000.00 principle she had me look at it and her agent had her paying premium fees on volatile market investments. Risking her money for POTENIALLY high gains, telling her 25% a year return guaranteed.

Been visiting a lot of websites that talk about the ‘basics’ of personal finance.
Some list home ownership as a base skill.
Others talk about ‘good’ debt.
There seems to be no set or agreed basics people should aim for.
For me Investing is something you do with a percentage of your savings when you have NOTHING else owing. A fool puts all his eggs in one basket.
I see people at my work place discussing how they bought shares in a super market in China because the company is posting a good quarterlies and their sales projections look good.
Do you work in a super market?
Do you work in china?
Do you work in a supermarket in china?
Then why would you trust your money to them?

I’m a mechanical fitter.
I work with tools in the heavy mining and engineering fields.
Turning the spanners keeps the money rolling in for me.
What would I invest in?
Rio Tinto mining groups company Pilbara iron because I worked there for four years, I saw the company from the ore pit, to the crushers, the rail network transporting the product to port. The stockpiling and ship loading facilities, the high employee benefits, all the nuts and bolts. This is how you should see the companies you invest in.
I would buy shares in Snap on tools because I use their quality products and enjoy there superior return policy.
Komatsu or CAT companies because I fix their products.
I see the product. I see the companies, I can see the people supporting the whole thing. I can tell you the general industries feelings towards these products.
“Snap on quality”
“CAT engine reliability”
“Komatsu land planes on outback highways to deliver parts”

A soldier would invest in weapon manufactures or military vehicle manufacturers.
A nurse in a pharmaceutical company, a marketing executive a communications or media company.
Having access to unlimited companies is a marketing advantage of brokerage companies to expand sales and companies to secure maximum capital in floats.
It should never affect what you invest in just because the choice is there. Financial reports are massaged by companies who want your money.
You cant trust advice on a product from the sales man trying to sell it. No, you find reviews from people who already own it, experience is the wisest teacher.
I think people forget what investing means. When you have a little something you do NOT need you can lend it out for an agreed rental.
You wouldn’t invest in a vineyard if you don’t drink wine. Why, because the numbers or a broker says so, why would you invest in a supermarket in china?

Seeing is believing. Trust only what you know. Not what your told.

Onto the basics of personal Finance.
Number one, there is no good debt/bad debt.
Just debt. IF a debt is offset by an income this is good income, not good debt.
If you did not have the debt, the income would be even better. That is a debt reducing an income. That’s what debt does.

1. Income and expenditures.
Have an income.
Know your expenditures. Expenditures should never exceed income.
Rid yourself of ALL debt.
Have savings.
In this order.
No if, buts or maybe’s. If you can’t manage this then what makes you think you can manage being rich. Get a rich person and a poor person and have them receive the same income and expenditures and the rich person will always finish ahead of the poor because he understands these basics of finance.

After you have mastered living with in your income and budget, emergency funds, insurance, transport, communications, health care and savings can you even think about investing.

You don’t build the building without a proper foundation. This is true for investing. What good is
$10 000.00 in high yield account if you have to withdraw it to pay for a emergency dental appointment. No, your emergency money should cover this. If it does not then your foundation is not strong enough to support your wealth building.

2. Investing
What do you invest in?
Personally I look for safe return and liquidity. What good is money if you can’t have it when you need it?
I like high interest accounts, stocks in companies you know and trust the products and businesses well versed in their craft.

Don’t invest your entire savings in your higher risk investments. Don’t blindly follow one company or product.
Trust what you see, not what your told.

These are THE two basics of finance.


Master Lewis