by Katie Adams
Have you ever watched an infomercial or seen an item in a department store and thought “I could have thought of that!” Have you wished you had invested money early in a blockbuster invention? Learn the stories behind some (seemingly) ridiculous ideas that have made inventors and investors very wealthy, and find out what you, as a potential investor, should look for and consider before putting up capital for a potential funding opportunity.
The Koosh Ball
You’ve may have never heard of Scott Stillinger but somewhere in your home or office you probably have one of his inventions – the Koosh ball, which made millions of dollars. Stillinger came up with the idea for the Koosh ball when he tied rubber bands together to create a smaller, easier-to-catch ball for his young children in 1987. He founded OddzOn Products Inc. to distribute the small, simple toy, and within just 12 months it was flying off of store shelves as that year’s hottest Christmas gift.
The company expanded, and in 1994 Stillinger sold OddzOn to toy manufacturer Russ Berrie and Company Inc., which in turn was bought by toy behemoth Hasbro in 1997 for more $100 million
And it all happened a mere 10 years after the first ball was created.
Santa Mail
Every year, millions of children around the globe pen letters to Santa and hope for a response. Byron Reese realized the potential in this market. In 2002, he launched “Santa Mail,” a service that allows kids to send letters to the North Pole. Parents enclose a small fee of just $9.95, and little Johnny or Jane receives a personalized letter back from the “big man” himself. By 2009, Santa Mail had responded to nearly 300,000 children. At close to $10 a letter, well, you can do the math – needless to say, it was a little idea that has earned Reese a big return.
Lucky Break Wishbones
Are you still a little bitter that, at last year’s Thanksgiving dinner, you lost out to your cousin Ned in the annual fight over the lone turkey wishbone? Well, thanks to Ken Ahroni, those days are long over. In 1999, he had something of an epiphany at his family’s Thanksgiving dinner table: a family with multiple people would like multiple wishbones. He shuttered his previous consulting business and launched Lucky Break Wishbone Corp. in 2004, in order to sell his one-of-a-kind breakable plastic wishbones. Within two years, the company was generating nearly $1 million in sales through distributors in more than 40 states nationwide.
Antenna Balls
You’ve seen them; maybe you even sport one on your car. Those ubiquitous, yellow smiley-faced balls perched atop antennas in parking lots nationwide have made Jason Wall a very wealthy man. Inspired in 1997 by a commercial for the fast food chain Jack in the Box, Wall created some antenna ball designs and began selling them locally through auto stores in California in 1998. Within a year, he had earned more than $1.15 million in sales and quickly won major accounts to sell his product through national chains, including Wal-Mart. In 2009, the multimillionaire is president and CEO of In-Concept Inc.
Investing in Far-Out Ideas and Inventions
If you can’t come up with your own idea – or don’t want to put in the time – you can always invest in another inventor’s ingenuity. Inventions can come from anywhere and anyone – friends, family members or even coworkers. But before you start writing checks out to just anyone who promises they have “the next BIG idea,” there are five key tips to consider:
Learn about the industry. If you don’t personally know a potential investor in whom to invest, you can learn more about opportunities through industry trade magazines, like Investor’s Digest or America’s Inventor Magazine, or through organizations like the National Congress of Investor Organizations.
2. Are there competitors?
3. Have similar types of inventions failed in the recent past?
4. What is the inventor’s time line to get to market?
5. What is his or her business and marketing plan to not only sell products but realize a healthy profit margin?
6. Are there any other potential patents pending on a similar type of product?
It takes a team of skilled professionals with the right product working in the right market to make your investment realize its potential.
The Bottom Line
Realistically, the odds are stacked against most investors looking to make their fortune by backing an inventor. The U.S. Patent Office notes that, “approximately 2% of patents earn significant dollars for their investors.” Still, there are future Koosh balls and Lucky Break Wishbones to be made and profited from. Perhaps with some hard work and careful investing, you too could find a ridiculous idea that gets you laughing all the way to the bank.
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Ridiculous Ideas That Made People Millions
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The RICH DAD’s apprentice help me to reveal myself, soon I realized that I am just another POOR DAD in this world.
My head non-stopping thinking about it.
RICH DAD - I must become rich & wealthy because I have a family & children to take care.
POOR DAD – I cannot become rich & wealthy because I have a family & children to take care.
So different the way of thinking.
I still can remember the below from the well-known speaker told us,
1. People should do what they love to do
2. However, most people end up never do what they love to do
The above 2 sentences are contradiction each others, if people know they should do what they love to do but why still end up doing something else.
Why people end up never doing what they love to do?
You must have a lot of excuses or reason to justify it. So do I.
- Dare not take risk
- People do not get what they want due to they do not know what they want in the first place.
- Fear
- People are complacent, do not want to get in trouble in the something new
- Opportunity not there
The reason that people do not end up doing what they want to do is because whatever they are doing now is just too comfortable, it is not great, not fantastic, not they really want but still go to work. Sometimes, they may even hate the job, or the company, or even hate the boss but they still go to work.
It is interesting to know people spend their time & effort doing something they really do not like to do but just because they are just too comfortable, not many changes, – Comfort Zone.
Don’t you think is interesting? Think about that.
Definition of Word “Wealthâ€
Big car? Big house? Possession on oneself? How much he spent? Did you realize that a lot of people have big car big house but also with big loan.
Wealth
Number of day forward you can survive/ maintain your lifestyle if you stop work – forever/ infinity
Which mean if you don’t want to go to work tomorrow, you never ever have to worry a day about the rest of your life because somehow somewhere there will be an income/ money coming to you and you will be taken care of. Isn’t that wonderful?
That’s the stage we are looking for. Financial Independent or Retirement
Retirement normally happen in age of 55/60/65 years. What you can do at age of retirement? Nothing much.
Will it be nice if you can retire in much younger age so called Financial Independent?
You wake up and have a choice to choose whether want to go to work or no. Once you have the choice you have the freedom & vice versa.
The fact is most people don’t have that freedom.
People need to go out there to make ‘MMM’ money making machine. MMM is a machine that you spend some time, effort & resources to create.
It is possible to make your own money making machine. But most of the Malaysia spend their time, money & effort to turn themselves to a money making machine to a company. Too busy in the work, no time for create your own MMM is a killer.
Become a MMM and create a MMM is very different. You might want to write down “how many days you can survive if stop work today?’ The ultimate goal is to increase the number of days.
In nowadays, making money is very easy. The only thing you need to do is working very hard. If you work hard enough sure you will make money, but create wealth is not about working hard is about working smart.
There is thousand of people out-there working very very hard everyday but never found financial independent. Working hard is not the answer for the wealth. Working hard on the right financial strategy then is the way to create wealth. Think about it. But where to start & how?
How come a highly educated people or highly professional sometime do not want to follow good suggestion? Because they think they know it already. Creating wealth also not depending on how high your education is. Our education never teach you about money or creating wealth, the teacher teach you how to become a great MMM (employee) to company.
If teacher teach you about money, I am more worry about that. Because most of the teacher are not wealthy.
About 70% of the population stop work today cannot survive more than 60 days. I start to think more in-dept about the issue now.
~ Darrell Tan
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I am just another “Poor Dad†in this world!
Robert Kiyosaki mentioned in his book “Rich Dad, Poor Dad” that assets put money into your pocket while liabilities take money out of your pocket.
It was with this in mind that I started to acquire more of these assets (e.g. stocks) instead of frivolous stuff like clothes, accessories, electronic devices and stuff.
These stocks I own have been paying me quarterly and yearly dividends. Thus, they have been putting money into my pocket over the years.
However, two stocks that I have recently declared “rights’ issue. For the uninitiated, that basically means that the company is issuing me with more shares and I have to pay for them if I intend to exercise my “rights” or either forfeit them and see my shareholdings in the company diluted.
What an irony. These assets are now taking money out of my pocket! All the dividends that I have earned from them are like useless.
If they are so cash strapped, why did they even declare dividends in the first place over the years?
Didn’t they foresee this coming? Why weren’t they more prudent in calculating the amount of dividends that they were giving out over the years?
So now instead of owning assets, I am like owning two businesses which are asking me to pump in more money into them. I can’t tell whether these are assets or liabilities just yet.
*Big Sigh*
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Aren’t My Stocks Supposed to be Assets?
by Carolyn Bigda and Paul J. Lim
In a world turned upside down, you must re-examine some basic assumptions. A good place to start: understanding the true nature of risk.
Rule No. 1: Risk
Old thinking: If you can stomach the ups and downs that come with risk, you’ll be rewarded.
New rule: Risk isn’t about your stomach. It’s about making or missing an important goal.
You know you have to consider risk. But what is risk? Many of us have learned to think of risk as synonymous with volatility. For years, what came down reliably bounced back even higher. You could easily conclude that risk tolerance was just a matter of taste. As long as you had the fortitude to see the occasional loss on your 401(k) statement and not panic, you would capture superior returns over time.
What to do: You shouldn’t run from risky investments just because they lost money – that train has left the station. But the old buy-on-the-dips advice isn’t quite right either. This bear market’s lesson is that how much risk you can take is a matter of how much you can lose and still meet your basic goals. That may mean scaling back on stocks, even if you miss some of the next market rebound.
Rule No. 2: Cash
Old thinking: Keep enough money in ultrasafe accounts to cover life’s emergencies, but no more.
New rule: Relying more on cash can rescue you in an “asset emergency.”
For most of your career you’ll want to set aside about six months’ worth of living expenses in the bank. That money covers the mortgage and puts food on the table should you lose your job. The fact that you’ll earn only about 2% is beside the point. You can’t take the risk.
The simultaneous crash in stocks and houses has taught us that we need to redefine “emergency.”Rande Spiegelman, vice president of financial planning for the Schwab Center for Financial Research, recommends looking at the next one to three years and adding up any big-ticket stuff you see coming: tuition, a wedding, a down payment on a house. Once you have your total, aim to hold that much in a cash account or a low-risk investment such as a high-quality short-term bond fund.
What to do: It’s not easy to build cash savings and a retirement fund at the same time. If you have to make choices, build up that emergency fund first because you can’t expect to lean on your home equity or stocks if you lose your job. And see if you have some flexibility on the big-ticket obligations. Maybe you plan for a state school rather than a private college, or downsize the wedding. If all your assets are in a 401(k), move some of that balance to low-risk investment options as you build your cash funds. That will preserve more to tap via a 401(k) loan in a pinch. Not a terrific option, but it can beat the alternatives.
In the years just before and after retirement, cash becomes even more important. You don’t want to sell stocks during a bear market to buy groceries. Aim for two to four years’ worth of living expenses in low-risk assets as you near retirement.
Rule No. 3: Human capital
Old thinking: The longer your time horizon, the more stocks you should own.
New rule: Time isn’t everything. You must also consider your earnings potential.
It’s one of the basic rules of thumb: The more years you have to recoup losses, the more aggressive you can be. Unfortunately, the math isn’t so clear-cut.
Here’s a better way to think about how aggressive your portfolio should be: Imagine that it includes not only stocks and bonds but also your human capital, meaning your ability to earn income by working. The safer it is, the more chances you can afford to take with your other assets – that is, your portfolio.
This doesn’t mean that time no longer matters. As you age, the value of your human capital declines, and you’ll need to secure more of your savings. So the conventional advice to hold a lot in stocks when you are young and gradually trim back can still make sense.
But not for everyone. The nature of your career may make your human capital more bond-like or more stock-like, says finance professor Moshe Milevsky of York University in Toronto. Tenured professors like Milevsky have human capital that resembles a triple-A-rated bond, especially when they have a solid pension plan. Those lucky souls can dive aggressively into stocks and even stay there as they approach retirement, he says. The human capital of a commission-based mortgage broker, on the other hand, is pretty clearly a stock – and it’s not a blue chip. That person should own a fair amount of bonds, even when young.
What to do: Assess your human capital. A typical worker’s income is about 70% like a bond and 30% like a stock, says Thomas Idzorek, chief investment officer for Ibbotson Associates. Use that as your baseline and then think about how long you’ll be working, the stability of your current job, and your ability to change careers if you have to. You’ve probably realized in the past few months that your human capital is not as secure as you once thought. If you’ve been an aggressive investor, that alone may be a reason to shift more of your assets to safer ground.
Rule No. 4: Borrowing
Old thinking: Borrowing sensibly is a good way to build wealth.
New rule: Borrow cautiously. You have to worry about the other guy’s debt too.
The quarter-century leading up to 2007 wasn’t simply a golden age for stocks. It was also a bull market for leverage. (That’s Wall Streetspeak for debt.) Since 1982, mortgage rates have fallen from 16% to below 6%. The levy on college loans dropped to around 3%. Americans responded to easy credit in a predictable way. The personal savings rate fell from over 12% to zilch, and household debt payments as a percentage of disposable income rose by a third as families “put it on the card” and paid for lavish kitchen upgrades with home-equity loans.
Looking back, America’s borrowing binge was nuts. Families were leaning on housing wealth, and that wealth was shaky.
The obvious moral here is to be conservative. There are always good reasons to borrow, even today. You need a mortgage to buy a house, and a college education provides enough of a lifetime payoff to justify a loan. But you ought to stretch less.
There’s a subtler lesson too. David Ellison, president of the FBR Funds, says that you have more exposure to leverage than you think, especially now that everyone is trying to unload debt. Perhaps your employer borrowed a lot over the past decade and now needs to conserve cash, so it’s laying off staff. Suddenly that HELOC you could easily handle on your salary doesn’t look like such a super idea. You can’t lean on your investments for help, because many of the companies you owned used leverage to pump up profits, and now they can’t borrow, so their earnings and stock prices are falling. And it’s harder to shore up your own balance sheet by selling your house when banks are reining in lending and potential buyers are scared to borrow for an asset that may decline further.
What to do: Be conservative about debt? Make that very conservative. Especially when your neighbors aren’t. Get a mortgage you can afford for the life of the loan, and put at least 20% down.
Rule No. 5: Housing
Old thinking: You can expect your house to appreciate handsomely over the long run.
New rule: Your home won’t make you rich. But it is an important savings tool.
If you live on one of the coasts, you probably guessed sometime around 2005 that home prices couldn’t keep rising the way they were. But the severity of the crash was still a shock: You heard a lot about how the market would have to “cool off” or “get back to normal” – the implication being that slow but steady appreciation was the future.
But the long-run data always told a different story. Yale University economist Robert Shiller looked closely in 2005 at the history of home prices since 1890, using a database he constructed. What he found was surprising. Except for two spectacular booms – the first after World War II and the second starting in 1998 – real estate appreciation has been unimpressive after figuring in inflation. As Shiller wrote in “Irrational Exuberance,” technology has allowed builders to nail up more houses faster, ensuring that supply never gets too far behind demand (and often gets ahead of it).
Even when prices are rising, gains on real estate aren’t as dazzling as they look, once you account for expenses. Maintenance costs typically run at about 1% of a home’s value annually, in addition to insurance and taxes. If you remodel, the most you can expect to recoup is about 80%. You have to pay steep fees when you buy (up to 3% in closing costs) and sell (up to 6% for realtor fees).
What to do: This doesn’t mean you have to rent, just that you should have modest expectations for your house as a wealth builder. There are still financial pluses. First, owning a house gives you a hedge against rising values in your own community so that you don’t risk being priced out as rents go up. (Ask a New Yorker about that.) Second, a traditional 30-year mortgage acts as what economists call a “commitment device,” or a tool that forces you to save. Instead of writing a check to a landlord, you gradually pay off principal. At the end, you own a house. Aside from your 401(k), no other asset enforces such discipline.
Rule No. 6: Diversification
Old thinking: A diversified portfolio lowers your risk.
New rule: Diversification won’t always save you – and you need more of it than you think.
Diversification hasn’t stopped you from getting hurt in this downturn. Both U.S. and foreign stocks are deep in the red. Holding bonds did cushion your losses, but most kinds of bonds still declined. What happened?
Jeremy Grantham, chief investment strategist at GMO, observed back in 2007 that we had a bubble not just in one or two kinds of assets, but in risk. Investors around the world were so confident, and so hungry for even a little extra return, that they were throwing money at anything that might deliver. Now that the risk bubble has burst, all those investors want now is the safety of U.S. Treasuries. So everything has moved roughly in sync, both up and down, for a few years.
Bear in mind, though, that these times are, to say the least, unusual. Over a longer period – as little as a decade – diversification still looks effective. While large U.S. stocks are down the past 10 years, U.S. corporate bonds earned 4.6% a year for the same period.
But in a global economy where money moves quickly, you have to work harder at diversification than before.
What to do: To ensure you are diversified, you don’t have to go out and buy 16 new mutual funds. First, look under the hood of the funds you have to see if you already own some of those assets. An easy way to do so is to plug your holdings into Morningstar.com’s Instant X-Ray tool. And buy funds that kill two birds with one stone. The T. Rowe Price International Bond fund, for example, invests up to 20% of its assets in emerging markets and the rest in developed countries. Put that together with a high-yield fund and a broad U.S. bond fund, and you’ll own most of the bond universe.
Rule No. 7: Retirement
Old thinking: Retiring early is a prize.
New rule: Retiring early is a problem.
Ever since Uncle Sam set 65 as the age you could retire and collect full Social Security benefits (it’s 66 or 67 for boomers today), workers have been trying to beat that bogey by quitting early. And that seemed well within reach earlier in this decade after a bull market that gave workers confidence that their money could work for them rather than the other way around.
But the reality of early retirement, even before the stock market’s sickening plunge, was never quite that rosy. More than half of early retirees leave work before they intended, and of those, nine in 10 depart because they get sick or are downsized.
And now the financial prospects for those who had a shot at a secure early retirement have dimmed: Long-tenured workers nearing retirement have seen their 401(k) accounts shrink an average of 30% over the past 14 months, according to EBRI. There’s no way around it: The numbers require you to rethink your plans.
What to do: “By delaying retirement just one year you could increase your annual retirement income by 9%,” says Richard Johnson, senior fellow at the Urban Institute. If you can hang on to your current high-paying post, great. The reality, of course, is that in an era of harsh cost cutting, well-paid older workers are more vulnerable. And you might not want to stick it out any longer anyway if the severance is decent. But there’s much to be gained from finding another job, even if it’s a lower-paid or part-time position. If you can earn enough to avoid collecting Social Security benefits early or dipping into your retirement accounts, research by T. Rowe Price shows, you’ll barely feel a hit to your income when you do retire. If your new job comes with health benefits, so much the better. The average health-care tab for an early retiree before he is eligible for Medicare runs to $8,500 a year, says an AARP study.
Despite all those benefits, if you are still many years away from the retire-or-work decision, you should think of working longer as Plan B. As we noted, you won’t have complete control over your ability to work – your health or the job market could make it difficult. That means you can’t afford to assume that you’ll just work a few more years if things go wrong. You will still have to stick to rules 1 through 6.
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7 New Rules of Financial Security
In his Rich Dad book series, Robert Kiyosaki trumpets the benefits of investing, especially those of real estate investing. Those include tax benefits, and the ability to have your money go to work for you without your lifting a finger. It sounds wonderful, doesn’t it? The idea that you can turn a dollar into two just by placing it in what can seem like a magical realm can seem very enticing.
In order to actually turn a good idea into money in your bank account, however, you have to know a little something about how the magic works. It is a good idea, for instance, to take apart this term “real estate.†Just what is real estate, and what are the types of real estate investing that are open to you?
“Real estate†is a term that refers to a piece of land and everything that sits on it, usually meaning structures. In terms of investment, its value is affected by local market conditions more than global conditions. There are several different ways to invest in real estate.
Real Estate Investment Trusts (REITs) allow you to make money by investing in real estate, either by owning the properties themselves or by owning the mortgages on them, or to do a combination of both. The benefits of this type of investing are high yields and tax considerations. This is also a highly liquid type of investing, which means that it is easily converted to cash.
In a real estate partnership, you are pairing with (who or what?) in order to make money from existing structures or to build new ones. You can even make money off the sheer appreciation of undeveloped land itself. This is a good bet because of high growth potential and tax benefits (shelter).
The rental of vacation property is pretty self-explanatory. Your vacation property is one that is used for recreational purposes and is not your primary residence. (Define primary residence.)
Rental property is another almost self-explanatory concept, as we have all done business with landlords at some point in our lives. However, there may be a difference between residential and business rental property.
You may also invest in raw, or undeveloped, land.
It is a good idea to learn about each type of real estate investment to determine which yields the greatest benefits, determined by your particular needs. Kiyosaki named tax benefits as a good reason to become a real estate investor. After all, money you keep in your pocket is just as good as money earned.
If you are particularly interested in pursuing real estate investment because of tax benefits, you may even wish to become a real estate professional, as the IRS allows people who spend at least 750 hours a year to have nearly unlimited tax deductions. If you are not considered a professional, and your salary is high, that can actually cost you deductions on your real estate. You must have the time to participate in your real estate activities yourself, even if you have hired another real estate professional, to qualify for all tax benefits.
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Real estate investing
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