Why The Rich Get Richer, and The Rest Only Get Poorer: Have you noticed the

weird phenomenon about how the rich keep on getting richer, whereas the rest of the people continue to barely scrape the bottom of the financial bucket? Millions of educated people doctors, lawyers, accountants, MBAs are struggling hard inspite of good education and a good job. On the other hand, there are high school dropouts who are making waves and hiring these educated people. Whats going on? What do a handful of people know, that the rest dont? Why is education unable to guarantee riches? Why does someone work hard for 14 hours a day, only to see someone make the same money in 14 minutes a day? As kids, we are all taught that education will make the difference. And if you are reading this report, chances are that you have already gotten yourself an education. Then why havent you arrived in the land of financial success? What is the reason that you will have to work hard and long for 40 years until you retire? By the way, do you know that according to a recent survey, if 100 people start out even at the age of 25 with similar education, then by the age of 65: 1 is wealthy 4 are financially successful 17 are managing on a reduced lifestyle that pension provides 25 are dependent on their kids for their needs 53 are dead and most have left nothing mentionable in their will to the children

Again, whats going on? Recent reports say that even the financial superpower USA is facing trouble. Out of the 3 million graduates in 2011, 2.4 million will have to return home and live with parents because they will be unable to afford their own home. The situation is similar worldwide. Jobs are hard to come by, and even if someone does get a job, it only pays his bills and leaves a lot to be desired. When people are asked what they really desire out of life, the following answers usually come up: Lots of money Time with family International vacations Success and fame in the society Early / Rich retirement

Good education for the kids Leaving a legacy for the next generation

When asked if their current education and job/business will provide for the same, a few are hopeful that it will but not sure when; whereas most are sure that their current work will never provide those desires. And they are clueless what to do in order to make those dreams come true. Lets look at some global gurus for the answer. First, lets understand the problem. And no one has explained it better than financial educator and Guinness book record holding author Robert Kiyosaki. He explains that we are stuck in the rat-race, where we are simply trying to run around like rats from hole to hole in order to make ends meet. His description is the exact situation of a middle class person anywhere in the modern world: "If you look at the life of the average-educated, hard-working person, there is a similar path. The child is born and goes to school. The proud parents are excited because the child excels, gets fair to good grades, and is accepted into a college. The child graduates, maybe goes on to graduate school and then does exactly as programmed: looks for a safe, secure job or career. The child finds that job, maybe as a doctor or a lawyer, or joins the Army or works for the government. Generally, the child begins to make money, credit cards start to arrive in mass, and the shopping begins, if it already hasn't. "Having money to burn, the child goes to places where other young people just like them hang out, and they meet people, they date, and sometimes they get married. Life is wonderful now, because today, both men and women work. Two incomes are bliss. They feel successful, their future is bright, and they decide to buy a house, a car, a television, take vacations and have children. The happy bundle arrives. The demand for cash is enormous. The happy couple decides that their careers are vitally important and begin to work harder, seeking promotions and raises. The raises come, and so does another child and the need for a bigger house. They work harder, become better employees, even more dedicated. They go back to school to get more specialized skills so they can earn more money. Maybe they take a second job. Their incomes go up, but so does the tax bracket they're in and the real estate taxes on their new large home, and their Social Security taxes, and all the other taxes. They get their large paycheck and wonder where all the money went. They buy some mutual funds and buy groceries with their credit card. The children reach 5 or 6 years of age, and the need to save for college increases as well as the need to save for their retirement. . "That happy couple, born 35 years ago, is now trapped in the Rat Race for the rest of their working days. They work for the owners of their company, for the government paying taxes, and for the bank paying off a mortgage and credit cards.

"Then, they advise their own children to `study hard, get good grades, and find a safe job or career.' They learn nothing about money, except from those who profit from their navet, and work hard all their lives. The process repeats into another hard-working generation. This is the `Rat Race'." ~ Robert Kiyosaki So, should you not get education? Well of course you should, it would be silly to think that remaining uneducated is the answer. However, there is a different type of education required. You see, in school and college, they teach us Scholastic Skills and Aptitude Building Skills. What we need to add to this, are Financial Skills. Financial skill means using knowledge in direct connection to wealth-building. Academics are only teaching people to exchange work for money. Financial education teaches people to exchange money for more money. Let me explain this in an easier manner: Academics teaches you that 1x1 =1 Financial education teaches you how 1x1 can be 11 ! Money multiplies itself when invested in the right places, and it even has the power to multiply when you sleep, work, spend time with your family, or go about your personal duties. School does not teach us this power of money, it only teaches us how we can go and work hard for money. Whereas those who have become rich, know the secret of using money to make more money And this is where the basic flaw lies, and why the rich get richer, and the rest of the people dont!

But I Have No Money to Invest! That is the first response I usually hear from people when I suggest them that they need to learn how to use money to make money. The problem is that people want to make millions overnight. If that is the goal, you obviously need to invest millions in order to earn millions. However, if you dont have millions and want to earn millions, you need to start investing wisely slowly but steadily with lots of wisdom. Only fools believe in overnight success. The successful people know that overnight success is the result of years of hard work, education and disciplined application of success principles. The biggest mistake that middle class makes is they invest in liabilities while the rich invest in assets. The middle class uses income to buy liabilities, and then pays for these liabilities for a long period of time hence eroding their wealth. Whereas the rich buy assets which provide more

income and they increase their wealth. The following diagrams make it very easy to understand why the rich get richer:

Balance Sheet of Middle-class: How middle class loses money because it buys liabilities and pays for them every month

Balance Sheet of the Rich: How the rich buy assets that generate income for them every month

The best known paths to invest money for in assets for wealth building are: Real Estate Intellectual Property Stock, Commodity and Forex Markets

Lets take a quick look at all of these. Real estate is lucrative, but very time consuming and needs high involvement. Moreover, you need a lot of money to get started. If you try to use your middle class income to create real estate assets, it might take you more than a decade to create something substantial. Moreover, you are burdened under debt and if you happen to lose your job or income, you will be unable to repay the loans leading to your properties getting confiscated by the bank. The 2008 crash has shown that it is possible that even real estate might get halved in value and hence is no longer a very safe investment as it was earlier believed to be. In nutshell, real estate is a great investment if you already have lots of money, but not otherwise. Intellectual Property (IP) can be created or purchased. IP refers to patents, copyrights etc. which can earn you royalty when you allow other people to use them. But in order to make

money from IP, you need to create or own a spectacular invention or art, and this usually takes a lot of talent or a lot of money. Moreover, you need to know how to market your product or service. A good example is when Indian billionaire and one of the worlds richest man Anil Ambani purchased rights of most of the old bollywood classics. Now he earns royalty whenever a bollywood classic is aired on cable, or a DVD is sold. On the other hand, the son of the late Indian singer Kishore Kumar makes millions per year because of his royalties on his fathers songs. IP is a great asset but it is obvious that IP is not everyones cup of tea. Stock, commodity and forex markets are what I recommend as the middle class persons road to riches. Once you gain the right education, aptitude and experience, you can benefit from these markets beyond your expectations. Warren Buffet has proven how investing in others business makes you richer than owning your own business (Warren Buffet is the top 5 richest people in the world and hes purely an investor). So heres what you need to know: Your job, profession, business earns you enough money to get started on the path to riches. Even if you are a student and earn pocket money, that too is enough! Some people think the stock market is risky. But the same people play lotto and hope for the best, only to return to their dreaded job on Monday morning and remain middle class for the rest of their life. Do you realize that even going out on the street in your car is very risky? However, you do that with confidence because you have learnt how to drive the car. Similarly, you can invest and trade the stock market with confidence once you have learnt what drives the stock markets! (I use stock markets to mean all stocks, commodity and forex markets. For convenience sake I am simply referring to them as stock markets.)

Lets look at some of the unique benefits the Stock Market bestows: Beats Inflation: Inflation is a devil of the modern times. Earlier only luxuries were out of reach. However these days even necessities are becoming out of reach! Food, petrol, energy, education everything that constitutes the basic expenses of a middle class family is spiraling upwards with an inflation of 7 20 percent per annum. In some cases it goes upto 50 percent per annum. The usual payraise every year in the job scenario is about 7-12 percent, whereas in business you are lucky if you get to earn more next year because profit margins shrink and competition increases. The bank fixed deposits provide 8 percent return per annum which does not beat inflation. In such a world, the stock market provides ample opportunities to the middle class and professionals to beat inflation and grow your wealth in much greater multiple than the inflation. Low Risk: Unlike real estate or other investments, you can start small in the stock market and slowly grow big. You dont have to mortgage anything nor do you have to risk your lifes savings. You can start with buying a single unit of stock in the spot market, or can leverage a small sum of money by using the futures market. This way, you can even afford to make some mistakes

and get trained before getting into the world of making bigger stock market trades or investments. Moreover, a lot of online simulations are available for trading the stock market, you can use these to learn with fake money and then once you gain confidence you can get into the real markets with real money and apply your learning there. These possibilities make stock market a low risk area of investment. Everyone Can Do It: You dont need guts of steel or special talent to get into the stock market. All you need is the will, and the financial education. Also unlike property, stock markets are well regulated by government authorities and so there are no chances of getting duped by forged paperwork or incorrect pricing. The transparency is very high when making stock market investments and this allows everyone to be able to invest in these markets. As discussed earlier, the low cost of investing also makes it possible for everyone housewife, student, professionals, people at all levels of a company hierarchy, retirees etc. to get in and use the stock market to beat the rat race. Global Business: The internet and related technologies have made it easy to invest worldwide. As the stock markets are regulated in each country, you can easily invest without worrying about legalities or about getting duped, or recovering your money. Countries too have opened doors for investors to invest in foreign countries easily. For eg., the Indian government now allows investments up to USD 200,000 without any prior permission in stock markets abroad. Sitting at your home, you can have a global business and make money from the rock bottom prices in the USA after the 2008 crash, the mega 700% rise in Brazilian stock market in the past decade, and all other global opportunities. This is only possible in the stock markets. So why dont people succeed at the stock markets even though the opportunity is so obvious and brilliant? Because they succumb to some highly propagated myths. The myths are the old outdated formulae and why they cause investors to lose money in the 21st century. Here they are:

Myth #1: Stock Market is Risky Reality: Yes, but only IF you DO NOT APPLY risk management methods. There are specific strategies and techniques for managing the risk that comes along with the stock market. And after learning professional methodologies, your risk can be contained as a small percentage of your huge profit potential.

A disciplined approach, timely entry and exit, scam-proofing and advanced stop loss placement strategies customized to your budget and expectations are the keys to minimizing risk in the stock market. The stock market is distributing wealth every single day; all you need to know is how to divert this wealth in your direction. With precise risk management strategies, this can be done more often than you think is possible!

Myth #2: Only Using the Buy and Hold Strategy Reality: This worked well in isolated economies with stable political systems and thin markets. In todays time of global economy, dynamic political systems, liquid markets and high-speed innovation which renders old technologies obsolete, buy and hold is no longer a relevant strategy. As a result, the Dow Jones in 2009 was lower than it was in 2001. A quick look at the returns that could be made by investing in NIFTY, the Indian stock market index, throws up interesting figures. This table shows how much return you can expect if you invested in NIFTY index before 1 week to 5 years:

So looking at this, you can how buy and hold can murder your portfolio. If you invested 5 years ago, your money gives less rate of return than someone who invested 2 years ago. And if you invested 3 years ago, you are weeping as a bank fixed deposit would have given you better returns. Such fluctuations due to uncertainty and changing nature of the economy makes the only-buy-n-hold community a loser and erodes their wealth instead of substantiating it. Exiting the stock is as important as entering it!

Myth #3: Mutual Funds are the Path to Riches Reality: Often described as the lazy mans tool for investing, financial guru Robert Kiyosaki (Rich Dad Poor Dad fame) knocks down the concept of mutual funds as a means to riches. Mutual funds are designed to keep the middle class in the middle class, he says. If you are putting all your hard-earned money into mutual funds and are hoping to retire rich, think again. You may be far from the truth. Heres a snapshot from Time magazines headline on mutual funds during these uncertain times:

So are you going to rely on the fund managers to lead you to financial success? I doubt if you will ever succeed with that strategy.

Myth #4: Market Experts Know Better Reality: Before the television and internet, information was available to a limited few. In those times experts had access to information much before everyone else. But today, information is available in real-time to almost everybody. Also, have you noticed that most experts advise when to buy, but almost never advice when to sell? So if they never make you book profits, why are you listening? Such limitations have led to market experts being no longer as relevant as they used to be. Moreover, they have proved to be wrong again and again. The 2008 crash of the markets is a glaring example. In fact, this crash has been attributed to the failure of ivy league MBA financial experts. If the so-called best brains couldnt save financial giant Lehman Brothers, what are chances that experts will save your portfolio? In the recent case of Aban Offshore Limited, a shipping company based in India, incorrect analysis by a big global brand caused investors to lose over 50 to 80 percent of their wealth in just one year!

Myth #5: Only Bullish Trends Are Good For Making Money Reality: Yea, but that was before they invented derivatives. Today, both directions are good enough to trade. Some investors never turn pro in the sense that they never sell short. They lack the courage and the wisdom. But know this: All trends uptrend, downtrend or sideways trend are good enough to make profits; and professional investors especially love downtrends as they make money faster than an uptrend as price usually falls faster than it rises.

Trading only in bullish trends or investing only for rising price gains means you make money only half the time. If you had a traditional business, would you work only half the time? Or if you are in a job, do you go only for half the days? No, each day counts. Similarly, waiting for only bullish trends is not a smart idea. Sometimes, bearish trends can last for years. During such times, investors who wait for bull runs wither away in frustration.

Myth #6: My Broker Will Always Give Me Correct Advice Reality: On the surface, this one actually looks like a truth. Your broker will give you the correct advice because he only makes a commission on your earnings. Totally False! Lets see how the brokers income works: You Make A Winning Trade = Broker Makes Commission You Make A Losing Trade = Broker Makes Commission

Hence, your broker is more interested that you take a larger number of trades, rather than you taking a smaller number of winning-only trades. Quantity over Quality. And even in a winning trade, he wants you to exit early; because he makes his commission only when you buy and sell ASAP. He doesnt want you to ride a long-lasting bull or bear wave. We are not questioning the genuineness of the brokers intentions, but their business model makes it impossible for them to survive unless you trade too often irrespective of your rate of return. No wonder, dependency on the broker will reduce your ratio of winning:losing trades and may also puncture your bank balance. You need to learn to take your own trades, follow proven strategies for stock market success and know when to enter and exit a trade for maximum returns (maximum returns for yourself, I mean, not for your broker!)

Myth #7: Success In Stock Market = Lots of Hours on Research & Analysis + No Family Time + Tons of Stress Reality: Ha! This is the one that really makes me laugh. It reminds me of what I used to think initially. But once I found the truth; it was exactly opposite to my version. Professionals in the stock market spend more time initially in learning proven time-tested market-independent methods & strategies which can be applied anytime, anywhere. After investing in learning these methods and strategies, they hardly spend 30 minutes a day on stock research and analysis; and spend most of their time with family and friends and have a happy peaceful stress-free life. So, You can become a professional wealthy trader and investor without having to sit in front of a computer or poring your tired eyes into the screen. Ah! What a relief, isnt it?

These proven methods and strategies even have the intrinsic potential to liberate you from a full-time job or business, and help you relish the beautiful freedom-filled life of a full-time stock investor and trader. You can truly do Trading For A Living.

Myth #8: Trading Robot Will Make Me Rich as It Gives 95% Accurate Signals Reality: Sorry to disappoint you, but this is not Neo & Morpheus in Matrix: Reloaded. Software is not yet so intelligent that it can replace the human mind. I have tried and tested many popular software which make large claims but fail to deliver. The only software that really works in the stock market is the human brain. Believing in a stock trading software that will make you rich is like believing in fairy tales. It sounds good, but its never gonna happen for real. If you have succumbed to any of the above myths, dont despair. Just know that its time you climbed above these myths and rose towards your dreams by educating yourself in how to become financially successful using the stock market irrespective of your current socioeconomic position.