Neuromarketing-Learn the Secrets to How Your Clients Purchase

December 2nd, 2008


Recent research from the field of neuroscience reveals that humans have a tendency to remember information in sets of three.

A whole chapter in the book, “The book of Numbers” by Peter Bentley is devoted to three and the power it holds on the human mind. Everywhere we see things are done in threes, traffic lights, the Olympic medals, the Holy Trinity, meals a day etc etc…

Psychology of Three
A new twist has been added to this 3 theory by a study by the American Psychological Association. Current experiments show that the human brain tends to remember and react better after repetitions in sets of three.
This innate human reaction to remember based one sequences of three’s directly manifests in the behavior of the consumers in the marketplace both online & offline thus proving correct the theory of 3’s and leading to add to the expanding segment of Neuromarketing.

Neuromarketing
As marketers and researchers, this repetition theory is being used as part of cutting edge marketing to influence the purchasing behavior of consumers. Simply put, it becomes a part of Neuromarketing as our brain seems to respond better to a certain brand after effective marketing in sets of three.
This field of Neuromarketing- the practice of using brain-wave product feedback to target goods and services to our subconscious appetites is fast emerging amongst small and big firms on the look out for effective brand marketing.

While bigger firms are actually using the technology of MRI scans to see the purchasing behavior of prospective buyers, the smaller ones can only rely on studies. This field is relatively new and has no rules or pre set reviews that can determine whether it is correct or not.

Criticism of Neuromarketing
Critics of neuromarketing argue that this field could lead to too much influence and manipulation of consumer purchasing behavior. Imagine a world where big box companies could know what brand, color, taste, and shape of an item you like.
Since neuromarketing research further shows that humans make purchasing choices in a sub-conscious state, too much information in the hands of marketers could be used to influence behavior and sell sub standard or harmful products.

Support for Neuromarketing
On the other hand those in favor of Neuromarketing argue that are a budding science its full implications as a tool for effective brand marketing are not yet known and thus, criticism is unjustified.
In their defense, neuromarketers counter that consumers would benefit by receiving custom tailored marketing messages suited to their tastes rather than being barraged by irrelevant messaging.
Neuromarketing, they say can be used to find out what consumers like, why they like it, thus making a judgement on their preferences but not changing the pattern. This field will tell the marketer what color, shape and taste the consumer prefers as well as how they like the product packaged and what attracts them to a certain product.
By more fully understanding their consumer, marketers would be able to use on demand product creation to make relevant changes to their product to cut down on costs and pass on savings to the end user.

Conclusion
Neuromarketing is still a very young field and needs time to grow. Neuromarketing researchers and marketers feel that with further research and testing will make critical breakthroughs to refine consumer purchasing behavior and thus lead to effective brand marketing. How beneficial it finally will be to the end consumer, only time will tell!

________________

About the author: Darrell Weaver has been working on the Internet since 1993. He is a powerful online marketer and mentor who helps online retailers and individual online marketers dramatically increase their ROI through SEO, SEM, article marketing, and online guerrilla marketing.

His areas of expertise include: Web 2.0 Marketing: Social Media Marketing, Blogs, Craigslist, eBay, Wikipedia, del.icio.us, Ning, & Plaxo. He regularly consults clients on establishing and optimizing their Pay Per Click Marketing Campaigns including Google Adwords & Adsense, Yahoo! Search Marketing, MIVA, Kanoodle, etc.

He is available speaking engagements, consulting, podcast interviews or guest blogging; please reach him at info@alwaysmakingmoney.com

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Rules The Wealthy Follow Everyday-Do You?

November 18th, 2008



Wealth Rule #1 I believe “I create My life”

Wealth Rule #2 I play the money game to win.

Wealth Rule #3 I am committed to being wealthy.

Wealth Rule #4 I think big.

Wealth Rule #5 I focus on opportunities.

Wealth Rule #6 I admire other wealthy and successful people.

Wealth Rule #7 I associate with positive, successful people.

Wealth Rule #8 I am willing to promote myself and my value.

Wealth Rule #9 I am bigger than my problems.

Wealth Rule #10 I am an excellent receiver.

Wealth Rule #11 I choose to get paid based on results.

Wealth Rule #12 I think “Both”.

Wealth Rule #13 I focus on my net worth.

Wealth Rule #14 I manage my money well.

Wealth Rule #15 I have my money work hard for me.

Wealth Rule #16 I act in spite of fear.

Wealth Rule #17 I constantly learn and grow.

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Wealth Affirmations & Vision Statements: How to manifest money

November 18th, 2008


I been working on fine tuning the correct manifestation affirmations that I use.

Currently I feel that when you sit & meditate, pray, etc (whatever is your preferred method) that you should speak as if the object or event is in the now & currently exists in your life rather than stating something such as…

“I hope one day to be a millionaire,” or “I’d love to be wealthy.” I even personally feel that stating “I intend to be wealthy” is still not positive & faithful enough as it’s still a future tense statement meaning you’ll never achieve your goal as you ‘intend’ to do or have whatever it is that you’re desiring.

If you’ve been reading my blog, I was once on my way to being a millionaire & a financially secure life however; I lost it. I was making my fortune in investing before I knew anything the Law of Attraction however; as we all know, the Law of Attraction still operates whether you know about it or agree with. I lost my fortune because I grew prideful & began to fear losing the money.

Now after having done extensive work with the various Laws Of The Universe such as the Law Of Attraction, The Law Of Reciprocity, etc., I have come to the conclusion that in order to manifest properly in your life you must do the following steps:

1. KNOW WHAT YOU DON’T WANT: Know what it is that you don’t want in your life. This is controversial because people will say that you’re focusing on the negative but, I would disagree because there must be opposition in all things & knowing what it is that you DON’T want helps to more fully define what it that you DO want.

2. KNOW WHAT YOU DO WANT: You need to figure out what it is that you want in your life; health, wealth, knowledge, love, friendship etc.

3. FULLY CLARIFY YOUR DESIRES: I personally sat down & created 101 goals for my life in each of the 5 major areas…Physical, Spiritual, Financial, Social, and Intellectual. I am currently writing Vision Statements for each goal; here’s an example:

Goal: Personal Net Worth of 4.5 million by 2013.

Vision Statement: My business is booming. I have a monthly net income of $60,000 dollars coming from various sources.

I see myself I coming through the gate onto my short, private drive that is lined with beautiful, full-leaved tress. I pull up in my G500 Mercedes into the circular driveway of in front of my 6,200 square foot Mediterranean style home that’s nestled in the foothills on 5 acres of private land.

It’s evening & the sunlight is hitting the copper highlights of my roof. I can see 2 of my children are out back playing on the play equipment. I come into the side of the house into the kitchen; my wife is there working with our oldest daughter on homework.

The tile in the kitchen is large & well-laid; the lighting is bright & the home has a welcoming feel to it. I have been meeting with clients for a few hours & I’m getting ready to take a short vacation with my family. I head into my home office. On my glass & Mahogany desk I have two large monitors that display a new website I’m working on. I drop off my laptop & head through the door into our master bedroom. Etc. etc.

In this vision statement I am explicit in details. I really want to fully intend all the aspects of my goal not simply say ‘I intend to have nice home.’ This type of statement is worthless & will get you a ‘nice home.’ I grew up in a simple, 1900 square foot rambler in east Texas; it was a simple, little home but, nothing like the home I used to have before I lost it.

In this step you need to go into detail on each goal you intend to manifest. God, the Universe or whatever you believe in needs the details.

4. MAKE A SIMPLIFIED VERSION OF THE MAJOR GOAL: In my case, “I am a multi millionaire. I have a net worth of $4.5 million dollars & make $65,000 dollars a month.”

5. SET THE INTENTION: You need to fully state the intention to the Universe. You need to state the intention in its fullness so that there’s no mistake about the intension.

6. WORK TOWARDS THE INTENTION: You need to work towards the intention. I can’t get back my home that I once had if I choose to sit in the living room of the home we’re currently renting & ‘dream of my millions.’ Faith without works is DEAD. You need to work towards your goals & continue to manifest.

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The Real Secret of Success

November 12th, 2008

The Real Secret of Success

By Brian Tracy

More than 5,000 years ago, in the ancient mystery schools of Egypt, the mental and spiritual laws and principles of success were taught to students who dedicated their entire lives to learning in what was called the “Esoteric Arts.”

One of these “secrets” was the Law of Attraction, which said that your mind is a magnet and that you invariably attract into your life people and circumstances in harmony with your dominant thoughts, especially your dominant thoughts emotionalized.

Today we say, “Like attracts like” and “Birds of a feather flock together.” From ancient times, it was known that your mind sends out vibrations, like radio waves, that are picked up by the minds of other people who are tuned into the same rate of vibration.

The force that determines the sending power of your mental vibrations is the amount of emotion, positive or negative, that you put behind a thought. If there is something that you intensely desire, something that excites you and enthuses you, you will send out powerful, high-frequency vibrations that can travel large distances in split seconds and cause your phone to ring from someone you have not heard from for months or even years.

Because your mind is so powerful, especially when backed by emotionalized thoughts, you must handle it carefully, like a child handling a gun. The Law of Attraction is neutral. It works on both positive and negative thoughts. It brings into your life whatever you are thinking about on a regular basis with either fear or desire.

When the book, “The Secret” came out, along with the movie, I was happily surprised to see that the first half of the movie comes from my audio program and seminar, “The Psychology of Achievement” which was produced initially in 1981. We videotaped the live seminar which explains the Law of Attraction along with thirty-one other laws, plus how this law is applied in every area of life, and then distributed the video seminar world wide, including New Zealand, where the Author of The Secret comes from.

The weakness in The Secret is that it is “necessary but not sufficient.” Of course, it is important that you think positive thoughts and that, by so doing, you will attract positive people and circumstances into your life. But it is not enough.

In response to The Secret, I decided to write a book which is called “Flight Plan — The Real Secret of Success.” In this book, I explain that life is very much like a long distance flight. When the plane takes off, it will be off course 99% of the time. But nonetheless, the plane will eventually arrive at its destination, even thought it was off course most of the time.

In my experience, the real secret of success consists of three major factors: First, you must be absolutely clear about your destination. By this I mean that must have clear, written, specific, measurable goals, committed to paper and organized into specific, step-by-step plans of action.

Before you can set your goals, you must know exactly who you are and what you want. You must do a thorough analysis of yourself, your life, your hopes, your dreams, your ambitions, and where you want to be sometime in the future. Then, you create a “Flight Plan” to get you from wherever you are today to wherever you want to be in the months and years ahead.

The second part of Flight Plan is that you must “take off!” You must have the courage to step out in faith with no guarantee of success. You must be prepared to launch in the face of your fears, doubts and natural reluctance to break out of your comfort zone. “To achieve something that you have never achieved before, you must be prepared to do something that you have never done before.” (Les Brown).

Once you have launched toward your goal, like an airplane, you will meet with unexpected turbulence, headwinds, updrafts and downdrafts, lightning, storms and every sort of mechanical problem. You must be prepared to make continual “course corrections” as you move toward your goal.

Perhaps the most important quality for success is, and always has been, the quality of persistence. You must resolve in advance to persist in the face of any difficulty or problem that you experience. You must resolve in advance that you will never give up. You must resolve in advance that you will view every temporary setback or difficulty as merely a signal that you need to make a “course correction” as you move inevitably toward your goal.

This is a great time to be alive. The very best days of your life lie ahead of you. The highest income of your life is still to come. The greatest experiences of your life are still to be experienced.

There is very little that you can not accomplish if you will file your flight plan. Determine exactly what it is that you want to achieve, take off toward your goal with no guarantees of success, and then make continual course corrections until you finally succeed. If you resolve to do these things, nothing can stop you from creating an extraordinary life.

Want to Learn the REAL secret of success?

The Real Secret of Success. Make more money now, Work smarter not harder, Spend time with your family. Learn the secrets today.


Flight Plan Plus Bonus CDs

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The Practice of Discipline by Brian Tracy

November 5th, 2008

The Practice of Discipline

By Brian Tracy

Discipline yourself to do what you know you need to do to be the very best in your field. Perhaps the best definition of self-discipline is this: “Self-discipline is the ability to make yourself do what you should do when you should do it, whether you feel like it or not.”

It is easy to do something when you feel like it. It’s when you don’t feel like it and you force yourself to do it anyway that you move your life and career onto the fast track.

What decisions do you need to make today in order to start moving toward the top of your field? Whatever it is, either to get in or get out, make a decision today and then get started. This single act alone can change the whole direction of your life.

Seven Steps to Success
There is a powerful seven step formula that you can use to set and achieve your goals for the rest of your life. Every single successful person uses this formula or some variation of this formula to achieve vastly more than the average person. And so can you. Here it is:

Decide What You Want
Step number one, decide exactly what it is you want in each part of your life. Become a “meaningful specific” rather than a “wandering generality.”

Write it Down
Second, write it down, clearly and in detail. Always think on paper. A goal that is not in writing is not a goal at all. It is merely a wish and it has no energy behind it.

Set A Deadline
Third, set a deadline for your goal. A deadline acts as a “forcing system” in your subconscious mind. It motivates you to do the things necessary to make your goal come true. If it is a big enough goal, set sub-deadlines as well. Don’t leave this to chance.

Make A List
Fourth, make a list of everything that you can think of that you are going to have to do to achieve your goal. When you think of new tasks and activities, write them on your list until your list is complete.

Organize Your List
Fifth, organize your list into a plan. Decide what you will have to do first and what you will have to do second. Decide what is more important and what is less important. And then write out your plan on paper, the same way you would develop a blueprint to build your dream house.

Take Action
The sixth step is for you to take action on your plan. Do something. Do anything. But get busy. Get going.

Do Something Every Day
Do something every single day that moves you in the direction of your most important goal at the moment. Develop the discipline of doing something 365 days each year that is moving you forward. You will be absolutely astonished at how much you accomplish when you utilize this formula in your life every single day.

Action Exercises
Here are two things you can do to put these ideas into action immediately.

First, decide exactly what you want, write it down with a deadline, make a plan and take action — on at least one goal — today!

Second, determine the price you will have to pay to achieve this goal and then get busy paying that price
– whatever it is.

Training yourself to complete important tasks — even when you don’t want to — is a vital skill that every Top Achiever should master.

Accomplish More in a Month Than Most People Accomplish in a Year. Take complete control of your time and your life. Get more done now–CLICK HERE.

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$700 Billion Dollar Bailout…What Happened To America?

September 30th, 2008



What happened to America?

As of this writing the US Congress has failed to pass the bailout package & President Bush warned B that without it it will created ‘painful and lasting’ economic damage.

We as a country (& especially as individuals) have moved so far away from personal responsibility in an attempt to shift blame to everyone from banks to the President when in fact its OUR fault.
We need to step up, be adults & take 100% responsibility for the fact that we we lied on our stated income loan application & we took that home loan which we knew in 3 years would come due. We were the ones who bought into the consumer mentality by living on credit far beyond our means.

America doesn’t owe us anything; we are responsible for this.

To solve the current economic crisis, we as Americans need to stop buying inflated homes, spending more than our paychecks, using credit foolishly & living beyond our means.

There’s ways to curb & change this tide. Personal responsibility.

The Fall of The Mighty
A company hired me to do sales & marketing consulting. I was tasked with developing a strategic marketing plan that would give the company an infusion of cash to try to keep it alive. I worked long hours, scrutinized their current situation & realized that what I was straightening deck chairs on the deck of the Titanic as the band played on.
Several times a week I would meet with the executive team & cover the current state of affairs; trying to show them that they were hemorrhaging & needed urgent care but, it all fell on deaf ears. The CEO spent his investors money as if it were his own.
Finally, the company’s credit wasn’t any good with their vendors. Critical vendors refused to unload their trucks with desperately needed supplies to make products until their bills were paid. The General Manager would use the deposits taken by clients for their products to pay off vendors to buy enough supplies to build merchandise that was already behind on delivery & yet, the band played on.
Finally, I watched in shock as the CEO & GM traveled to Italy to consider purchasing a $150,000 dollar piece of specialized equipment. Upon their return, the ship tipped dangerously downward & began to take on water in earnest.

It took me 3 months & the threat of legal action to get paid on an expense report, I left the consulting gig & moved on.
About 8 months later I watched the former CEO finally lose his employees, his company, & finally lose his home & file bankruptcy. Why? They lived the fat American life… a huge home, season box seats, four cars for two people, lawn care services, etc. etc., etc..
Now he’s living in a 1600 square foot retail, working in a roll up rental unit with one (illegal) employee helping him build product.

American Greed
My family is originally from Europe & having been there a few times you see people living frugally, buying what they need with cash, living in smaller homes or apartments & focusing on other things.

In the past I had the fortune to work with Tibetan refugees seeking a better life in America. We worked with a young boy from eastern Tibet whose parents had given him up to be sent to the US so he could attend school, learn & improve his life. After not seeing their son for nearly 10 years, his family was finally granted visas to leave Tibet & come see him in Utah. While there, the host family took them on a tour of the sites throughout the West, including Las Vegas.

Upon arriving in Vegas they were overwhelmed by the sensory overload. See the lights, glitter & decadence his father, a poor farmer, bowed his head & cried because of the unchecked wastefulness of the city. He watched in horror as water was poured down drains, electricity which could run entire villages back home was used to run strip clubs, he saw the litter, the uncaring hedonism & as a simple Buddhist man who’d scratched out a living in the high desert (similar to Vegas) his senses & sensibility just couldn’t take in the lack of care & complete abandonment.

Learning From The Rich
Unless you’re personally a self-made millionaire, knowing someone who has pulled themselves up by their boot straps is a real treat.

My wife’s family knew Ray Norda, one of Novell’s founders. When Ray died, he was a completely self-made multi-billionaire yet, he stayed in his 1960’s 2500 square foot rambler, drove a used car, mowed his lawn, clipped coupons & rented a VHS when he wanted to watch a movie. He was just ‘Ray’ my in-law’s neighbor. His kids went to school with my wife’s siblings, they attended church & social events with Ray’s family; they were just regular people; no pretense, no jockeying for position or posturing, just average Americans worth billion’s of dollars.

We need to get back to a simpler way of life. I’m not crying for a complete rejection of modern conveniences & technology (for goodness sakes, I’m posting on a blog!) but, we need to be more concerned with the essentials rather than the extravagances of life..do we really need a Cadillac Escalade with spinner rims to drive ourselves to the gym which is a mile away?

So, how do we change?
First, take full responsibility for yourself, your life & your financial situation.
Second, learn to read your financial report. This, like your health should be something you constantly improve upon.
Third, I would strongly recommend that everyone read first T. Harv Eker’s Secrets of The Millionaire Mind & then learn how to apply what you learned through Thomas J. Stanley’s book, The Millionaire Next Door.

Darrell

http://www.AlwaysMakingMoney.com

Learn from experts, Increase your wealth

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Podcast #1 : RJD2 – Making Days Longer

September 13th, 2008

Making Days Longer by RJD2

[display_podcast]

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Entrepreneurs – The Two Top Priorities For Your Start Up Company and Business Plan

September 11th, 2008


As an entrepreneur with your business plan in hand, what are the two top priorities you have on every day’s action list as you start up your start up company?

Starting and running a company can be overwhelming. Endless new action items seem to appear magically on your To Do List as you day develops – with all of them either whispering or screaming to be your top priority. And, when the day is done, it often seems that one or more of those unanticipated priorities won – and the most important action items you originally had on your list when you walked into your office this morning did not get done – again.

So, how is an entrepreneur to decide on their priorities – especially when there is so much that needs to be done? The answer is surprisingly easy.

  1. Priority 1: Absolute top priority for the CEO of a start up company: maintaining a comfortable cash balance. That’s what is in your checking account. It cannot go to zero or go negative. Period.Every morning, everything on your priority list has got to focus on either maintaining or increasing your cash balance so that, as a minimum, it exceeds your comfort level. Everything else is secondary.If this is not your top priority, you greatly increase your risk that you will go out of business.
  2. Priority 2: The only thing that is close in priority…but that is still second to Cash Balance…is generating positive cash flow from operations. If you have this, a lot of #1 is automatically taken care of. Remember, even the smallest of cuts that never stops bleeding will eventually kill you.Get above break-even as quickly as you can and stay there. There are two basic ways to do this: increase sales and cut costs. Running lean and keeping costs low by cutting all fat but no muscle is almost always a good idea.However, you can only cut so much and still have the infrastructure that you need to be in business. That leaves sales as the primary way to get above break-even and stay there. Every day, your Priority 2 should be driving sales – including short-term and long-term revenues. For a start up company, I recommend that the CEO spend half of every day on action items that directly relate to marketing and generating sales.
  3. Priorities 3 – 101? See Priority 1 and Priority 2. Yes, they are that important.
  4. Priorities 102 – 1,001? Items that at least indirectly, but positively, help Priority 1 and 2. Period.
  5. Priorities 1,002 – 10,000? Everything else required to run and grown your company.

Ignoring this pecking order of priorities is why most start up companies fail…so slay those dragons every day by focusing on Priority 1 and Priority 2.

How do you know what a comfortable cash balance is for your company? How do you know where real break-even occurs with your current products and services?

You have a realistic business plan – and you measure actual versus budget every month.

Too many entrepreneurs make a huge mistake throwing together their business plan with sweeping generalizations that skew their projection so badly that their whole plan really is a case of GIGO – Garbage In / Garbage Out. The only thing worse than going the wrong direction based on Garbage Out – is to go the wrong direction, enthusiastically.

A bad business plan usually gets you going the wrong direction, often enthusiastically. The result is that most entrepreneurs don’t recognize this problem until it is too late to change direction and save their company.

What makes much more sense is taking the time to generate realistic and meaningful start up, revenue, personnel and operating cost numbers for your new start up company. If you need help, get experienced mentoring from someone who has the expertise you need – someone who can ensure your underlying assumptions make sense for your company in the real world.

Then, you can use your business plan to know how much start up capital you will really need, where your cash balance will be each month and each year…and when you will get to sustained positive cash flow from operations.

With this knowledge, you will know how to best invest your Priority 1 and Priority 2 time on your start up company to get you maximum results.

Bonus: For more on funding documents, business plans, articles, tips and tools for entrepreneurs and start up company CEOs, you’re invited to visit my blog and web sites…and ask your own questions. While there, I invite you to download both a sample comprehensive business plan and a complete Reg D private placement memorandum (PPM) for FREE…

http://www.ShouldYouStartACompanyToday.com <~~~ The Blog + Free Sample Business Plan / PPM / Audio / More…

http://www.Virtual-Exec.com <~~~ Virtual Executive Mentoring and Consulting Services

Robert Lee Goodman, MBA, Ceo & Chief Dragon Slayer

© 2008 – Robert Lee Goodman. All Rights Reserved Worldwide

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Three Dragons That Steal Your Financial Wealth – And How to Fight Them

September 9th, 2008


Do you believe in dragons?

No, I didn’t think so.

While I do not believe in dragons as actual, living beings – I do believe that they exist as three harmful things that can steal your financial wealth.

Just like the King Arthur tales of old, these dragons will steal your wealth. Yet evolution has taught these dragons to be more subtle and sneaky and take from you without you even knowing it.

Like a Knight of the Round Table you need to challenge these beasts to protect your financial kingdom. The purpose of this article is to tell you about these dragons and how you can fight them.

Meeting the Dragons

1) The first is known as “The Dragon of Taxes”,
2) The second dragon is known as “The Dragon of Inflation”, and
3) The third and most important dragon is known as “The Dragon of Poor Performance”

Why is the third dragon the most important?

Well, the first two dragons you cannot defeat. The Dragon of Taxes and the Dragon of Inflation are immortal!

You see, the Dragon of Taxes represents the government’s ability to levy taxes on your earnings and wealth. Governments are always hungry for more revenue and will happily find ways to spend your money. You may elect somebody who will reduce your taxes, but you will always pay some kind of taxes. You cannot slay the Dragon of Taxes.

The Dragon of Inflation represents the demand of the marketplace for money and the interest policy of governments. Inflation may be high in some years and low in others, but it will always erode your spending power and your wealth. You cannot slay the Dragon of Inflation.

The third dragon known as The Dragon of Poor Performance is the only dragon that you can tame. The good news is that if you manage to tame this dragon, it will help you fight the effects of the other two dragons!

Fighting the Dragons

Let’s pretend that you are a brave knight and you set out to defeat the Dragon of Poor Performance. You attack but barely escape with your life because you misjudged the dragon’s ability. You decide that it’s best of lay low and lick your wounds.

Doing this seems like a wise move except that while you are resting the other two dragons come along and gobble you up!

You see, when you get poor performance in your investments either by picking too conservatively or not picking right, the returns you do get are eaten up by taxes and inflation. Ouch!

If you invest your money into something that is guaranteed to generate 5% a year, you have just ensured that you are not making the money you could have. There are investments out there that have consistently earned 8% a year and though they may be riskier, they should not be avoided.

Should you take increased risk for just a 3 point difference in the return? Yes! A 3 point difference does not seem like much, but when you factor in the magical effect of compounding returns, it is critical to get the better return.

Let us assume you wanted to invest $1,000 for your brand new child for him/her to have as a graduating gift when they turn 18. You invest it, forget about it, and never contribute another penny. You choose an investment that gives you a return of 5%.

Scenario 1 @ 5%
Starting amount – $1,000
Years – 18
Additional contributions – $0 per month
Rate of return – 5.00% compounded daily
Total amount you will have contributed – $1,000
Total at end of investment – $2,459

Not too shabby, but we still have not figured in inflation and taxes. Before we talk about those two, let us compare the result if you had picked an investment that generated 8% a year.

Scenario 2 @ 8%
Starting amount – $1,000
Years – 18
Additional contributions – $0 per month
Rate of return – 8.00% compounded daily
Total amount you will have contributed – $1,000
Total at end of investment – $4,220

Not surprising you would earn more money, but who would have known that the 3 point difference was worth $1,761 more! Taking the greater risk does pay off.

Avoiding Investment Risk is Risky To Your Financial Health

Risk is not a bad thing. You should learn how to manage risk, not avoid it.

Taxes and Inflation are facts of life and will always erode your wealth. Since you cannot avoid them, you need to learn how to manage them just like you need to manage risk. That only way you can do this by choosing investments that generate a higher return.

Want proof?

Using the two scenarios again lets assume that the government taxes you at 25%, for every dollar you earn; you give 25 cents to the Dragon of Taxes.

Scenario 1: A 5% return x 25% tax rate = 1.25 points off your 5% return = 3.75% actual return after taxes. That is just barely keeping above inflation which has typically run between 2% and 4% a year.

Scenario 2: A 8% return x 25% tax rate = 2.00 points off your 8% return = 6% actual return after taxes. Now this is a much better spread over inflation.

Do you see what I mean when I say that the Dragons of Taxes and Inflation will gobble you up when you invest poorly? The solution comes in taming the only dragon that can help us fight the other two.

Taming the Dragon of Poor Performance

One of the simplest ways of taming this dragon is to stop investing in guaranteed investments (CDs in the US and GICs in Canada). Use them as a place to store money for short term periods while you are figuring out where to invest your money, but never use it has your main investing strategy.

Get the best interest rate you can for your short term money. It is always better to get 3% than 2% for the reasons mentioned above, but since it is a place to just park your money, you need to get your money working harder for you.

To find better investments, you want to directly invest into companies on the stock exchange. Unlike interest based investments like bonds and CDs/GICs, the stock market provides a much higher rate of return.

You may think that investing in the stock market is like gambling. And it is gambling for those who do not understand the rules. But just like a knight needs to use a sword and shield properly to fight a dragon, you need to learn how to invest to get your best returns.

Consider at the minimum Exchange Traded Funds which are wonderful instruments that capture all of the returns found in the stock market. They do better than Mutual Funds and should be the shield in every knight’s armor.

But easily, the Excalibur sword of the investing world can be found in stocks and options investing. If you want to not just tame but slay the Dragon of Poor Performance, you want to start doing some research through websites, electronic courses, and books on “Stocks and Options”.

Remember that the greatest rewards come to those willing to manage the greatest risks!

Good luck in your quest to tame the dragons!

Christopher Billows is the publisher of In The Money, the Stock Options Trading Course, a 60 page eBook available at http://www.mandalainvesting.com . The eBook has given hundreds of people the investing edge they need to keep ahead of inflation and taxes.

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