Money Magnets

I am a Money Magnet! We are Money Magnets!

While Robert Kiyosaki wrote in his book Rich Dad's Conspiracy of the Rich that investing in the stock market is actually a financial fairy tale that when done wrongly is actually quite similar to gambling,  he does believe also however that there is a right way to invest in the stock market and that to be truly diversified, one must have paper assets like owning shares of a company.  In his Rich Dad Coaching site, he has these pointers to give for Money Magnets who are interested in investing the right way in the stock market.  After all, he considers financial education as the best tool one can have to learning how to make money work for you!

Let's start with the different investment procedures available for investing in the stock market.  These are:

Among these procedures, Rich Dad Coaching encourages "Buy and sell", "Sell then Buy", and "Option buying and selling" as the proper way to invest in the stock market.  The "Buy and Sell" strategy is buying stocks with a target price in mind.  Once that target price is reached, you sell the stock.  This way you have an Exit Strategy.  This is better than the first procedure because if you just invest and hold it for the long-term, that would be like gambling your money and hoping that prices will rise in the future.  

"Sell then Buy" is shorting a stock.  You earn when the price of a stock goes down.  This is not practiced here in the Philippines so I won't dwell on it much.

Cost averaging, which is very popular here because it is being promoted by a lot of financial advisers is actually considered by Rich Dad Coaching as still fairly risky and is only an improved version of the "Buy, Pray, and Hold" strategy.  In this method, you only make money when the stock prices rise.  

A stock investor can use Fundamental Analysis, Technical Analysis, Stock Options, and Portfolio Management to make money in the stock market.

Fundamental Analysis is "the process of examining the forces influencing financial growth, profitability, and future financial trends at these 3 levels: national economic level, industry sector level, and individual company level."

Technical Analysis is "the practice of determining future stock market or individual stock behavior based on the study of previous price movements."  Using technical analysis highlights the core principle that stock prices already incorporates the sum of the markets knowledge and that price movements have meaning and that it's not necessary to know the reason why such movement exists.  

Genuine Portfolio Management involves the following key elements: 

Portfolio Management Principles for a Success

Risk is not the same as being risky.  Risky investors are risky because they are not financially educated.  As your financial knowledge increases, your risks go down, and your returns increase.  Risky is for the uneducated who don't know how to manage or control risk.  Therefore, it's not the investment that is risky, rather it's the investor that is.  Educated investors know how to use the right tools to make investment decisions!

Keep on attracting wealth Money Magnets!  I hope you continue striving to improve your financial education to increase your investment returns.  You can visit Rich Dad Coaching's site for more information here.