How to use tax law to protect your wealth?

How to use tax law to protect your wealth?

Taxes steal your life away. Income tax, sales tax, property tax, carbon tax, capital gain tax, interest tax, federal tax, provincial tax, and so on. Some researchers indicate that 25~30% of the wealth is eaten by taxes. Assume the average age of a person in a developed country is 80-year old, the person has to work about 20 years to pay off taxes. Therefore, it is necessary to find a way to protect your wealth.

To protect wealth, most rich people pay little or no tax. Keep in mind, government's responsibility is to improve economy, promote society, provide a good environment for students, reduce patients' medical expenses, reduce workers' public transit costs, job hunting, business startup, investment, market development, high tech innovation, etc. To achieve these purposes, the tax law should benefit the above. Therefore, some incomes related are tax deductible.

To read and understand your country's tax law is a good start to protect your wealth. The following books are worth reading.

 

What is value investing and how to use this strategy?

What is value investing and how to use this strategy?

Wealth is like the water in the sea. When the wind blows: the top of the wave is high, just like the stock price is high; at the bottom of the wave, the water level is very low, just like the stock price is very low. When wind stops, the sea level returns to normal, just as the stock returns to its intrinsic value. It also indicates that price is not able to be always high or always low.

The correct strategy is to buy under intrinsic value, i.e. buy at the bottom of a wave. If you buy a stock, your return of investment should contain dividends, company capital growth, and gain due to price fluctuation. If you buy a real estate, the return of investment should contain rent and appreciation.

To differentiate between intrinsic value and market price, besides the analysis of the company or the real estate, the important recommendations: 1)being unemotional about your investments and 2)taking advantage of other people's emotions. As  Benjamin Graham said " Be greedy when others are fearful and fearful when other are greedy."

Both of the following books are very good and are highly recommended.  

What kind of stocks are safe and have potential to provide steady return?

What kind of stocks are safe and have potential to provide steady return?

Warren Buffett has a clear strategy for making money. He says, "The first rule of investing is don't lose money; the second rule is don't forget Rule No. 1."

Following the above advice, prior to investing stocks, it is recommended to identify what kinds of stocks are safe.Then, to identify which stocks have high return.

Usually, stocks with large cap (above $10 billion) best reserve for the investors who want steady appreciation with great safety.

How to identify these stocks? S&P 500 index (500 companies), Dow Jones index (30 companies) and Nasdaq 100 index (100 companies) are good references. But, I usually identify these kinds of stocks from the 500 larges companies in the list of S&P500.

Once we identify some stocks through S&P 500 index, what is the next step? It should be aware that not all stocks with large cap have good return.All stocks have risk and volatility. Because the growth of a stock is related to management team, market, policy, new technology development, etc. It is difficult to predict the growth correctly. Therefore, I prefer to dividend stocks (dividend yield > 5%) with steady growth instead of high growth stocks without dividend. No matter how the market changes, I can get dividend steadily. This kind of passive income will reduce the loss due to the volatility in stock market. If the price of the stock rises, I can also get the appreciation of the stock. The return of my investment includes the money that I make from the stock's capital appreciation and the money I make from the the stock's dividend.

In summary, the stock of a company with a market capitalization value of more than $10 billion and steady growth dividend may need your attention.

Helping others will make you rich.

Helping others will make you rich.

As long as you are able to provide value to others and help others, you will build your wealth eventually.

There are so many examples. Amazon provides convenience to customers through shopping online and also helps sellers. Microsoft develops software to help customers' office work. Coca-Cola Company makes great nonalcoholic beverage concentrates and syrups.

Therefore, prior to getting rich, think about the questions "what can I provide to others? How can I help others?"

How to become a millionaire?

How to become a millionaire?

Usually, a person cannot be a millionaire overnight. Most millionaires have the following characteristics: thrifty (spending less than earning), good at planning life (saving, reasonable debt), wealth accumulate over time (patience, compound interest, time), and good at investing (keeping study and understanding investment skills).

The following books talk about more about how to become a millionaire. I believe that action is the important thing instead of dreaming only.

How to create passive income through buying dividend stocks?

How to create passive income through buying dividend stocks?

There are many methods to create passive income. One of the easiest ways is to buy dividend stocks of companies that are able to pay you dividend stably. The dividend can be reinvested to purchase additional shares when low price occurs. You may also choose cash other than reinvestment.

Prior to buying dividend stocks, three points should be kept in mind. 1)The company is a healthy and growing business. 2)The company has offered increasingly higher dividends consecutively over the previous 25 years. 3)The price to buy should be reasonable or lower than stock value.

What is good spending habit?

What is good spending habit?

Think about it when you buy something, "is this thing necessary for me, or do I want it?"

"Necessary" means the necessities of life. "I want" means satisfying the desire to shop for a while.

Sometimes when a person notices a product discount, he or she will buy it. After that, the product may only be used 1 or 2 times a year. After some time, the owner may not like it and throw it to garbage can. A person may also buy a big house just because a friend buy a big one. Those are not good spending habits.

A good spending habit is to buy something that can generate more value while meeting the needs of life.

In addition, prior to buying something, think about another question "can I buy it in a lower price?".

The book  The Millionaire Next Door: The Surprising Secrets of America's Wealthy will tell you  more about good spending habits and how to create wealth.

How to create wealth and passive income through smart buy, value improvement, and hold for rental?

How to create wealth and passive income through smart buy, value improvement, and hold for rental?

Buy & sell strategy needs continue work.  Therefore, it is an active income other than passive income. To create wealth and passive income, the correct strategy should be holding asset for rental. A innovative strategy is discussed as followings.

Step 1: Buy under value. Ensure the product has potential value.
Step 2: Improve the value of the product.
Step 3: Hold and rent out to create passive income.
Step 4: Once accumulate enough passive income, repeat Step 1 to buy more.

Example 1: Buy a used bicycle. Repair and upgrade it. Rent it out to create passive income.
Example 2: Buy an old house at a competitive price. Renovate it. Rent it out to create passive income.
Example 3: Buy an industrial warehouse at a low price. Upgrade it for other purposes (such as a children play center). Rent it out to create passive income.

The followings are for your reference.

How to get passive income from real estate without real estate knowledge?

How to get passive income from real estate without real estate knowledge?

Not all people has the experience to handle all concerns caused by real estate. Besides, some people has no money for down payment to buy real estate. To get return from real estate, real estate investment trust (REIT) is one of good choices. A REIT is a company owning many types real estate, such as office, apartment buildings, shopping malls, warehouses, hospitals, hotels, and so on. REIT has the advantage such as higher dividend, liquidity, and professional management.

A REIT stock is a stock that represents the holder's ownership in a business. Therefore, the holder is able to get dividend from the REIT stock. Please note REIT has risk as well because REIT is a kind of stock. The following books are for your reference.

 

  

How to set up passive income streams in 2019?

How to set up passive income streams in 2019?

With the development of both internet and mobile internet, there are so many new opportunities to set up passive income streams. The followings are examples.

1)Sharing information based on audience and marketing, adding ads
2)Sharing expertise online, adding ads
3)Writing blogger,adding ads
4)Prepared podcast, adding ads
5)Affiliate marketing
6)Building lead capturing websites
7)Develop mobile app
8)Integrating traditional passive income with the Internet
9) More... ...

Timothy Iannazzo discussed more details in his book "Passive Income 2019: Claim your Freedom with Passive Income Ideas and Methods that Work in 2019".

Think about it, with new technologies such as Cloud and AI tech, are there any other opportunities will help to create passive income ?

How to get passive income with the investment less than $1000？

How to get passive income with the investment less than  $1000？
Don't work for your money. Let your money work for you no matter how much money you have. You are able to start now. Frank Coles once presented more than 100 methods to create passive income without lots money .There ideas contain affiliate marketing, investment funds, businesses, real estate, publishing services, consultation, mobile applications and much more.  You should believe that you can also obtain passive income with the investment under $1000. Passive income is created by your action other than dreams only. Do it if you have a dream.