Jason Hartman Foundation

Many good business ideas revolve around the idea of tapping into a market that never goes away. That’s why we like investing in residential income properties so much. No matter what else, people want a place to lay their head at night. That makes it a universal demand. Another universal demand you might consider when pondering business ideas is something relating to kids. Adults tend to engage in the activity that creates them on a regular basis. We’re going to go out on a limb and predict that men and women aren’t going to be giving it up any time soon.

You can figure there will always be a market for things relating to kids like:

• Day care
• Personal tutoring
• Secondhand clothing
• Toy kiosk
• Instructional classes
• Targeted amusement parks/restaurants

The first thing to consider is whether or not you actually can stand to be around the little rug rats all day every day. Some people can’t. If this describes you, recognize that fact and don’t even try. For the rest, a bit of research into the possibilities might be in order. The kid industry is not going anywhere and moms and dads tend to open up the wallet when it comes to satisfying little Johnny or Jane’s every mad whim.

It’s something to think about.

The Young Wealth Team

Flickr / Swami Stream

A rising minimum wage is good, right?

Everybody working at or near the bottom of the payment scale likes to think government enforced upward pressure on wages is a good thing. In a perfect world, where small businesses had unlimited resources, that might be true. Unfortunately, that’s not the real world. For several reasons, a higher federally mandated minimum wage is likely to make it harder for young workers’ to find a job.

Why?

It costs a lot of money for an employer to hire, train, and then pay a new worker. Being forced to pay a higher minimum wage makes it more likely they will decide to go with the current work force in place and implement a hiring freeze. It’s easier to toss more work at current workers than bring in new ones. As minimum wage rises, it makes jobs more attractive to retired or out of work people with experience and a proven track record of work. They migrate into the job force and snatch positions from young workers.

Don’t believe us?

Before the last minimum wage increase in July 2009, the rate was $6.55 an hour and teen unemployment was 24.3%. Three months later, with a federal wage of $7.55 in place, teen joblessness has risen to 27.6%, and this was AFTER the Obama administration assured us the worst of the recession had passed.

Minimum wage does not make sense for you.

The Young Wealth Team

Flickr / NIOSH

You’ve got a handful of prospectus’s from your favorite mutual fund companies, and it’s time to sit down and give them a critical read. As a newbie investor, you don’t want to screw things up from the start. When you get to the part that discusses expense ratios, don’t raise your eyebrow and skip past it. This is a big deal and could radically change your bottom line return in the years and decades to come.

The first thing to know is that all funds have expense ratios. The second thing to know is that they are not all created equal. An expense ratio is a percentage of your portfolio that goes back to the mutual fund every year to cover their (mis)management and administrative fees. When you invest in stock funds, you’re not going to avoid this fee. Sorry. Whether you make or lose money, you pay the fee. That’s why we prefer real estate, though we won’t complain too loudly if you want to dip your toes in an index mutual fund first.

Just keep this in mind. Expense ratios vary from 0.75% to 1.75%. Here are some numbers to put it in perspective. If you invested $5,000 in a fund with a 2% expense ratio for five years and averaged 10% return, you would pay the fund a total of $642 over that time frame. While that’s not a bloodcurdling amount, it’s a chunk – a chunk of your money that you handed over to someone else.

That’s why we like the direct investment model of real estate. Cut out the middleman and keep all the money for yourself. Regardless of how you choose to invest, you now know what an expense ratio is.

The Young Wealth Team

Flickr / iluvrhinestones

Here’s an easy way to score some free cash, especially if you’re opening a bank account for the first time. As you might guess, banks are scrambling for your business and some of them will even pay a bonus to get it. The process is incredibly simple. Just open up a savings or checking account, sometimes a Certificate of Deposit will count, and wait for 90 days or whatever other period of time imposed by the bank and, voila, a free cash deposit will be made into your account ranging from $125 to a $1,000 or more.

Keep in mind there are restrictions!

A typical scenario is this: Be a first time applicant to open a checking account at Bank X. Minimum deposit is $100. You have to make at least five debit card transactions and keep the account in good standing for at least 90 days. Do all this and Bank X pays you $125 in cold, hard cash.

Obviously, the details regarding such an arrangement can vary greatly depending upon the bank you’re using. National chains tend to all have some sort of comparable program but read the fine print closely. If you have to jump through too many hoops for a small return, maybe it’s not worth it. A little bird told us that Internet banks have the best deals when it comes to cash back accounts.

The secret is do your research and don’t go with a bank you have a bad feeling about just because they’re giving you free money. Ultimately, you’re in it for the long haul, so choose a suitable partner.

The Young Wealth Team

Flickr / NCinDC

Have you ever been tempted to forget about investing wisely for the long haul? It seems easier, and possibly more lucrative, to become a reality television star. Let’s take a look at just how much filthy lucre gets tossed to those who make these “unscripted” shows possible. It started in America with Survivor, The Amazing Race, and Big Brother, but quickly deteriorated into a cesspool of personal sludge.

We’re pretty sure our lives would be better having never witnessed the family dynamics of the Osbournes, the Gosselins, or the Real Housewives – not to mention The Bachelor, etc. But just how much money do these attention whores receive?

Smarmy, asexual Ryan Seacrest is the unquestioned king of reality television. He recently signed a three year, $45 million deal to introduce American Idol contestants. Likewise, Idol judge Simon Cowell hauls in multiple millions while Paula Abdul left in a snit because she couldn’t pry more than $4 million from producers. Here are some other various tidbits.

Messed Up Families
The Osbournes (Ozzy and family) were paid $5,000 per episode the first year. Skyrocketing popularity boosted that figure close to a million by year two. Jon and Kate Gosselin were paid $75,000 per episode for their TLC show Jon and Kate Plus Eight. Hopefully, they set some aside for their kids’ therapy bills.

Other Screwballs
1.Real Housewives currently make $30,000 but are negotiating for six figures.

2.The Hills secondary characters get $45,000, while star Lauren Conrad made $2.5 million.

3.Big Brother contestants are paid $750 each week they are in the house.

4.Survivor contestants get a free trip to a tropical hellhole, an awesome weight loss program, and then win a cool million if they’re the last one standing. $100,000 goes to second place.

Ready to chuck it all and take your chances on reality television? Our advice – don’t. If you’re looking for fortune and glory, consider that investment fortune without glory might be better than being the freak of the week.

The Young Wealth Team

Flickr / watchwithkristin

We love entrepreneurial thinking and startup business ideas. It’s the American Dream. If you’re one of those creative types itching to get out of the regimentation of traditional schooling spread your wings, we say – beware! Not because starting your own business is a bad idea, but because sneak attack factors can derail your grand plans faster than we can say, “I told you so.”

Here are a few dangers in particular.

1.Family Concerns – Like it or not, the whole family is going to be involved in your business venture to one extent or another. Keep them in the loop. Let them help if they want. Lay out beforehand the time drain and sacrifices that you will have to make, especially in the early days. This should help nip the “I didn’t know it was going to take THIS much time” whining in the bud.

2.Isolation – When burning the startup candle at both ends, it’s easy to let business and personal relationships suffer. Remember there is a world outside your eternally churning brain. Take time out to participate in it every once in while. And don’t let your networking skills lie fallow. Networking could turn out to be the make it or break it factor in your venture.

3.Don’t network too much – Having just said you need to maintain your business network relationships, that doesn’t entail hitting the golf links every sunny afternoon at 2 pm with a friend. It’s easy to murder productivity. There will be time for that later, after the business is up and running and you hire a competent manager. Then go golfing all you want.

There are, of course, other spots of quicksand to be wary of along the way. Ultimately, it comes down to the fact that a new business needs time, attention, and loving care. Don’t abandon it to the vagaries of the world too soon or you might kill it.

Now get out there and start something!

The Young Wealth Team

Flickr / Cayusa

When you’re a young gun, full of vim and vigor, just out of school, looking for a job is part of the game. You figure you’ll find one sooner or later. But what about those crazy unemployment numbers? The Atlantic Monthly claims there are six people looking for each single job that opens. Without intervention by the federal government, millions of people will have run out of unemployment benefits within a few months, which opens up yet another can of worms – can/should the government be throwing money they don’t have in that direction?

Everyone agrees unemployment is bad but here are some specific reasons why.

1.Outsourcing of white collar jobs to countries where labor is cheaper causes U.S. Unemployment to keep climbing.

2.Higher depression rates, which leads to drinking, drugs, marital stress, poor nutrition and health.

3.Anti-immigrant feelings towards those who will do the job for less money.

4.Residents of high unemployment neighborhoods may turn to illegal ventures (drugs and crime) for income.

5.Less happiness at work because you’re afraid to leave the job no matter how much it sucks.

And the biggest result of high unemployment might be less tax money for states. Think about it. With so many people out of work, less comes into the coffers via income tax, and less is spent by consumers to be collected on the back end of sales tax. This thing is a vicious cycle. That’s why politicians talk incessantly about creating new jobs with every election cycle. It matters to us all that as many people as possible can find gainful work.

The Young Wealth Team

Flickr / Tony the Misfit

Chances are that even the most clueless among us have at least heard the name of uber-investor, Warren Buffett. If you’ve had a few too many margaritas, you might be thinking about Jimmy, who makes a pretty good living himself singing songs about warm places and palm trees. Back to Warren though, who is generally credited as perhaps the most successful investor today.

When Warren Buffett took control of the company Berkshire Hathaway in 1964, its market capitalization was $22 million. 35 years later that has grown to $115 billion. Obviously, Mr. Buffett knows a little about creating wealth through the stock market but where did he learn his tricks?

Turns out that Buffett’s mentor was a man by the name of Benjamin Graham, who was working as a partner in a brokerage when the stock market crash and subsequent Great Depression hit in the 1920’s and 1930’s. He lost all his personal fortune but went on to gain it back and learned a little about investing and human nature in the process. Graham’s skills at financial analysis were superlative. At the age of 25 he was already earning $600,000 yearly – keep in mind this was in early 20th century dollars.

The important thing to remember about Benjamin Graham is that he and David Dodd wrote a book called Security Analysis, in which the pair proposed their belief that investing takes research, training, and experience to be successful, and that speculating was nothing more than irrational gambling.

Though written in 1934, the fundamental wisdom holds rock solid today. You would be well served to begin your investing career by finding a copy of this financial masterpiece.

The Young Wealth Team

Flickr / Art Comments

There is no better time in life for investing than immediately out of college or a few years into your career. The numbers will never be more in your favor. Time is on your side and simple arithmetic can make you rich. You have two decades to save for the kids college fund and probably four decades until you retire.

Yes, we said the “R” word. Retirement sounds so old and settled to young ears full of, well, young stuff. When you hit middle age, wouldn’t it be nice to do so with a stuffed portfolio and not still scrounging coin slots at the local laundromat for beer money?

The beauty about investing early is you don’t have to rely on spectacular returns to retire comfortably. It only takes $7,400 invested annually (beginning at age 20) at 10% to make you a millionaire in 40 years. Actually it will net you $3.26 million, which considering the under-reported government inflation rate of 3%, would allow you to live comfortably in retirement.

If you wait 10 years to start (age 30) you’re going to have to invest $20,000 annually at 10% to hit the same mark by retirement. Lesson? Save early!

The wild card in all this is the 10% yearly return on investment. We can show you a reliable, low-risk way to do better. Conventional wisdom tells you to head for the stock market. That’s a sucker’s bet. When you’re ready to learn how the quietly rich invest, head over to www.JasonHartman.com. You don’t need huge amounts of cash but you do need to be able to unlearn much of what passes for investment advice today.

The Young Wealth Team

Flickr / Epicharmus