REIT - Real Estate Investment Trust

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Real Estate Investment Trust also known as REITs were created in US when president Eisenhower signed into law the REIT act. The purpose of the law is to give an opportunity for common investors to invest in large scale diversified portfolio of money making real estate asset by buying and selling securities from a publicly traded market. Since then, more countries around the world cleared way in investing in global real estate securities paving way for individual investors to invest in large scale commercial and residential real estate securities.

Buying and selling REIT securities is one of the best way an individual investor can safely invest in real estate, and expect a decent return on their investment.

Let's say you have $25,000 in cash and you are interested in investing in real estate. It is not possible to buy a real estate property for that money and expect a decent return on your investment in the form of rent. Moreover it is not safe for an individual investor to loan money to an unknown home owner who requires a home mortgage loan, and expect an income from the interest earned on the loaned money. This is were REITs come into play. Real Estate Investment Trust is an investment security that buys and sells its stock in major stock exchange. They invest in real estate properties and make money through interest earned from mortgage loans and through rent earned from the real estate properties. These are known as publicly traded REITs. This provides an opportunity for individual investors to earn a share of income through ownership of commercial and residential real estate properties and mortgage loans. The income producing real estate properties include apartments, home mortgages, shopping malls, office building, resorts, golf courses, storage facilities etc.,

For a company to qualify as REIT, it must have most of its investment in real estate, and must distribute at-least 90% of its income  to shareholders in the form of dividends. This results in higher dividend yield to the shareholders ensuring a good cash flow and a decent return on their investment. Since most of the taxable income is returned to shareholders directly, the dividend is subject to higher(ordinary income tax) tax rates. REIT shares are bought and sold on major stock exchanges. In contrast, buying and selling real estate property directly involves higher expenses, property tax liabilities and great deal of effort.

In general, there are three types of REITs. mREIT or Mortgage REIT, eREIT or Equity REIT, and hybrid REITs.

eREIT - Equity based REIT primarily invest their money by owning real estate properties. The primary source of income comes from rents generated by the real estate assets. As years go on, the rent and the property values goes up, resulting in higher dividend and higher stock value. This is one of the safest and the popular choice of investment.

mREIT - Mortgage based REIT invest their money by owning real estate mortgages. They loan money to real estate investors in the form of mortgage loans. They also purchase existing home mortgage loans and mortgage based stock investments. The primary source of income comes from interest earned by these mortgage loans.  Mortgage based REIT has a higher dividend pay than the equity based REIT.  Mortgage REITs are highly volatile and subject to high fluctuation due to interest rate changes, whereas equity based REITs have a stable growth and less volatility. Due to its high yield dividend, the investment pays itself off to the investor in few years. Even though these trusts seems attractive because of higher dividend yield, it carries higher risk because of the exposure to interest rate. If the interest rate goes up, the value of the mortgage REIT goes down. Best time to invest is during recession time, because that's when the interest rate is expected to go down, and spread-rate (net interest margin) between their income from their mortgage asset and the cost from their borrowed money widens,  resulting in higher profits.

Hybrid REIT invest in a mix of above both strategies. Income gets generated though mortgage interest and real estate rents.

REITs Advantages:

1. High dividend - It is a great source of cash flow for investors focused on high yield dividends.
2. REITs are liquid assets - The assets can be bought and sold in the public stock exchange without affecting the asset price. You can sell your shares online, and get your money back immediately.
3. Diversified real estate portfolio  - Money invested in REITs by the investors like you allows the trust to purchase more real estate properties than an individual investor would be able to buy on their own.
4. Hassle free Investment - Provides investment access to real estate assets without the overhead of property taxes, management fees and legal issues.
5. Asset Appreciation - REIT equity assets appreciate in value over time.

REITs Disadvantages :

1. Not qualified for tax breaks - Most of the REIT dividends are not qualified for tax breaks, so they are taxed at ordinary income rate.
2. Dependent on real estate market - When the real estate market goes down, the asset value goes down. This will reduce the share value of the stock.
3. Dependent on occupancy rate: Less renters will lead to decrease in occupancy rates and that leads to lesser revenues. This will get reflected in the dividend payout.
4. Stock Fluctuations: The shares are subjected to fluctuations caused by short term traders.
5. Interest rate risk: Increase in interest rate will hurt the dividend payout for mortgage based REIT.

How To Get Rich ?

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Before going any further, I would like to disclose that I am not rich, or to be more accurate - not rich yet. I am a richer person than I used to be, but I am definitely not rich or financially independent yet. It is a work in progress, and I certainly and sincerely feel that sharing this information to everyone will help others better their lives. If information you read here energizes you, questions your understanding, and challenges your thought process, then by all means please consume this information. Otherwise you can ignore this article. Either way, I would like to thank you for your time and effort.

Most people wanted to get rich, but don’t know how to get rich. There are many ways to get rich. Each and every way requires lot of hardwork, passion, technical expertise and dedication.  Starting a business is the fastest way to get rich in a short period of time. Investment is another way to get rich, but takes time and money. Having a good paying job is another way to get rich, it just happens to be the hardest and most expensive way to get rich. Getting lucky by winning a lottery, or by inheriting wealth is another way to get rich, but it is also the most common way to lose lot of money in a short duration. 

Here are the few steps to get you rich:

Increase Your Income:

Wealth creation should be easy, but it requires patience, time and the right mindset or knowledge. Some say money is the root of all evils, others say poverty is the root of all evils. Do not get  into who said what, and who is right. When you get to experience life with and without money, you will know for sure that life with money is lot better than life without money. Life needs money, and the need starts with your food, cloths, shelter, education, and the list goes on. If you do not have enough money, you will face hardship in life. It is even harder when someone have to go through this hardship with their family. If you are suffering, it means you are doing something wrong. Remember hardship is not a bad thing, as long as you can find your way out. It is a human condition, it is  the reason we change and adapt to new things. It is key to our evolution. It is life’s way of saying to change your course. 

Time is more expensive than money. You can earn money, spend it and you can earn more money, but it is not the case with your time. Time is precious, you can start from there. The more time you got, the more money you can make. If you can bring in more people to work for your cause, then you accumulate more money in a short duration. There are other ways to build bigger wealth, and one other way is by attracting financial Investment. Investment is a way to attract other people money to work for your cause in building your wealth. Generating new income sources requires time, money and knowledge. What do you like to have the most? If you can have all three of them, then you are on your way to accumulate unlimited amount of wealth. If you have time and knowledge, but not enough money then you can become an investor.  With time on your side, you can convert the investment into unimaginable source of income.  If you have time and money, and do not have knowledge then you will end up losing both. So be careful what you wish for, because it can happen.

Save, Save and Save money:

Saving money is one of the hardest thing to do if it is not part of your habit. It requires lot of self discipline in order to save money. It does not matter how old are you, it is always a good thing to start saving money. If you are not a saver, then start with saving 10% of your income. You can increase the percentage when you are able to save more money, but start with 10%. If you are not able to save at least 10% of your income, then find ways to increase your income. If you are a working person, try to switch jobs or get a promotion to increase your income. I will never suggest anyone to take up a second job to increase their income. Money is important, but health is more important than money. There are many ways to save money. Just being cautious in spending your money, you can save lot of money. If you are renting, find ways to reduce the rent. If you have a mortgage, try ways to reduce the monthly payment. If you eat out a lot, then try to reduce it, this will improve your health and your account balance. Avoid expensive addiction such as smoke and drinks. Never ever have a credit card loans, and try to avoid car loan. If possible, consider buying preowned car instead of brand new car. Do not compromise your life style, try to get the same comfort at a reduced price. For example, you can get the same service but for a reduced price if you can talk to your cable company, mobile company, internet service provider, your phone company, home security service and the list goes on. Pay all your bills on time, and be a responsible citizen. If the service is good, continue your service with the same company. Most good business knows how to treat their loyal customers. You will feel good, you will get better service everywhere and it will improve your credit rating as well. Consider your saving as your first expense, and make it a habit.

Reinvest Your Savings:

Reinvesting your savings is a big step in creating more wealth. There are many ways to reinvest the savings to grow your asset. You can start building wealth by opening  high yield saving account, investing in real estate, investing in real estate investment trust(REIT) security, investing in bonds, gold assets,  stock investment etc.,. In the case of stock investment, this is a classic case of money making more money. There are pros and cons in all the investment strategies. If you know what you are doing, then it will get lot easier. Understand and educate yourself on how it works, then the world of investment opportunity opens up for you. Flipping real estate properties looks good from the outside, but taking into the consideration the  taxes and risk involved, it is better to stay away from it. Similarly in stock investment, you can either be a trader buying and selling stocks for a short duration, or be an investor and invest your money in the long term. Similar to flipping real estate, shot term trading activity results in higher risks and higher taxes. Considering the reward you get after taxes, it is not worth the effort. If you are interested in real estate properties, but do not have enough money to buy real estate property, then you can consider REIT. It is a type of business that sells stocks on a public stock market exchanges that invest in real estate either through owning the real estate properties, or mortgage loans. They make money from the interest earned from the loans, and by rents generated by the underlying asset. These are stocks you can buy and sell directly in the stock market.  Moreover by law, these firms are required to distribute 90% of their income to their shareholders in the form of dividend.  You get the benefit of owning the real estate properties without the overhead of property tax, and that’s big deal.

Create Wealth:  

By being a creator, each and everyone of us are creating wealth. Whether we know it or not , we are creating stuff all the time, some are tangible and others are intangible assets. Just providing some kind of service to others alone is a multi trillion dollar industry. In most cases we are working for others in creating wealth. This is part of the reason we do not see the impact of our work. Opening a business and convincing others to work for you is the fastest way to accumulate wealth. A team of people working on a common goal can produce something that no single person would be possible to create even in the wildest dream. Most people work for a business to make the business create more wealth, but the ownership of the business is owned by entrepreneurs and investors. Investors use their money to work for them, and Entrepreneurs convince other people to work for them to accomplish their vision and goal. It is two different strategy to amass more wealth.

Business has a lot of tax advantages when compared to common people. One of the most obvious one is, business pays taxes on the money left over after it has paid all its expenses, where as working people pay taxes first, and then spend it for their expenses on the remaining left over money.  You can get rich by working in your day job as well. There are lot of pretty high paying jobs out there which can make you feel rich, but to stay rich is all together a different game. Getting rich through your day job is one of the expensive way to become rich, considering the taxes you have to pay on your income. It is not recommended mainly because of high taxes, and less incentives to keep your hard earned money.  Most of the top level management in multi national companies are paid pretty well by calling themselves visionaries and leaders, but in-fact they are just highly paid employees. 

Learn to Take Decision:

Learning to take a decision is key to get you rich. It is a three step process, and they are as follows:

Step 1: Take a decision.

             First and the most tough part is to take a decision. To begin with, next time when you are looking at the restaurant menu, make a decision and select your menu item without getting help. It can be easy for some, can be tough for others, and be downright terrifying to few. I am not kidding and I have been in all the situation before, and yes we are still talking about selecting a menu item. So next time when you are looking at a restaurant menu, try to evaluate the situation, the pros and cons of your selection, and go with it, understand it is one of the toughest step in the whole process. Most people avoid taking a decision, or postpone decision making process as much as possible to the extend where the decision is either taken by the circumstance they are in or by someone else on behalf of them. What they don’t understand is, they are missing an opportunity to grow, and also missed an opportunity to understand the impact of their decision. Not taking a decision is a decision by itself. By not taking a decision, you are allowing someone else or the circumstance to take the decision for you. It may or may not be favorable to you, but it was your decision to take that step. 

Step 2: Take the right decision.

Taking the right decision is as important as learning to take decision in the first place. Sure, everyone will have their share of bad decision in the beginning, thats not important. What is important is, learning from your mistakes and also from other people mistakes in order to get better at taking the right decision. It is not easy to begin with, but it gets better and better every time you practice taking the right decision. In some cases, there are no right and wrong decision, and when it boils down to selecting your choices, your selection will come to you naturally.

Step 3: Take the right decision at the right time.

Every decision is bounded by time. You can stretch out only to some extent, after sometime the circumstance changes. Consider every situation that demands a decision comes with an expiry time. If you don’t make it, then the situation will force a decision that may or may not be favorable to you.  I am not saying it is easy in any way, it requires lot of logical and emotional thinking, evaluate a list of available options,  understand the data in hand and process it into useful information that you can use, weigh the possible outcome - risk vs reward of your decision, and also come up with a back up plan when something goes wrong. I know it is hard, I never said it was easy. Nevertheless you should know to take a decision on time.

Think Like a Rich Person:

To think like a rich person is not about how much money you can spend, it is about how much you can earn it. Most people knows too many ways to spend their money, but cannot find more than one or two ways to earn it.  What ever you do, think big. There are many ways to get rich - Starting a business, writing a book, investing in stock market, investing in real estate etc., Take risk and find new opportunity, if you don’t see an opportunity, then create it. Don’t look into your past success or failures, always look in the future. Keep learning in specific areas and be an expert, focus on earning instead of spending. Last but not the least, instead of thinking about life after death, think about your life when you are still alive. 

Why You Should Get Rich ?

Live Your Life On Your Terms

Being alive is not the same as living your life. Our time on this beautiful earth is more important than money. But if you do not have enough money to sustain your life, then you will be forced to spend your time for money. Every life is precious, our time on this earth is priceless, but for others there is a price for our time. It does not matter who you are and what you do. You can be a carpenter, architect or CEO of a multi-national company, everyone has a price tag. We spend our time to earn money to sustain our life and support our family. I am not saying it is bad, all I am saying is that this is not living your life. You should get rich to live your life, enlighten and educate others along the way to your destiny.

Financial Independence

The biggest advantage of financial independence is that it will take you out from the life's trapped rat race. You will begin to live your life for the first time. It forces you to think different. Financial independence means different to different people. My definition of financial independence is, if you can have a source of income that takes care of all your financial needs, plus you have 30-40% left for your savings/investments without you working for it, then you can be considered truly  financially independent. The source of income can be royalties, cash flow from your stock investment, real estate investments, etc., It is important for everyone to know that there are minimum requirement/needs to sustain our life. Financial independence will secure this for the rest of your life for you and your family. 

Be A Creator

Humans are wired to search and grow into infinite. This need pushes us to create wonderful things that will enhance our everyday life. The only way you will be comfortable with your own being is by being a creator. Some say healthy competition is good, it should be noted that there are plenty of unhealthy competition around our life and the sad part is most people accept it is as part of life. Sure, competition is important for our survival, but it is not going to solve your problem to become independent of your insecurities and lead your way to financial independence. Competition is just a short term solution for a long term problem. Don't be a competitor, it lessens your ability to be creative and fight for a finite resource that will not satisfy your needs. By being competitor, you are going against your own power and potential to reach your goal.

Wake Up Your Inner Intelligence

Every human is capable to get rich. All you have to do is to realize the potential that exists within you. You don't have to be an accountant or mathematician to become financial expert. Whether you know it or not, everyone has an income statement and expense statement. Your primary bank account statement is a good example for your income statement, and your credit card statement is a good example for your expense statement (Assuming you put all your expenses in one credit card). Similarly everyone got to have an asset and a liability statement. If you are not rich enough to have one, just start writing up your own asset statement and a liability statement. Now the most important and tricky part is, understanding this raw data and translating this to useful information in order to grow your wealth.

Human  Rights

Poverty is like a disease and it can be eradicated. Poverty violates basic human rights.  Being born as poor is not a mistake, but to die as poor is definitely a mistake.

The Infinite Rule

The universe is expanding and there are no boundaries to it. It is ever expanding and is infinite.  The same applies to getting rich. There is no limit on how much you can get rich. Nature forces us to think beyond and visualize the infinite within all of us. We are trying to contain  the infinite fire within us using the tools we created. The shear act of thinking lets you the glimpse of infinite, where as the knowledge limits our progress. Knowledge is power, as long as it grows and expands, and the day it stops, it is time to look beyond.

Money Power

Money has power, whether you love it or hate it. Money cannot create life, but it can save lives. There are certain things in life that are priceless, but for everything else there is money. People who don't like money are usually the ones who work much harder to earn it.  It is true that power comes with responsibilities. If you misuse the power of money, then you will end up in big trouble, but if you harness the power of money for good use, it can do wonders. You can either follow the money, or you can make money follow you. Be a source of creation, and the money will follow you.

Be A Giver

Don't get me wrong, I am not talking about charity, or giving up your hard earned money for free. What I mean is, you have to spend money in order to earn more money. What goes around, comes around. In the case of money, when it comes back at you, it usually comes in multiples.  If your intentions are correct, you will prosper the society and people lives around you.  When it comes to money, are you emotional or logical ? You have to train to see it as logical instead of emotional for you to get rich.

Be Grateful

Being born as human is a gift by itself. We are not the strongest, fastest or scariest life on earth, but we are the most intelligent species in this universe. Intelligence is a double edge sword, it can be used to kill or create. You choose how to use it, and your karma(your action) will decide your destiny. Our body is a miracle, the way we think and react is even bigger miracle.  We should embrace and appreciate this life during its life time - and that's to me is priceless.

Have Fun

What ever you do, don't forget to have fun. It is true that you don't have control over your birth and death, but you have full control over your life between them. Everyone is born to be rich, only few realizes it and the rest is lost in the noise of everyday life. You should get rich to live your life, and you have a responsibility to educate others to get rich as well. The fun is in the journey of life, and not in the destination. It is like everyone wishes to go to heaven, but nobody is ready to die first. So have fun, enjoy your ride and wish you all success.

Top 10 Benefits of Stock Market Investment

1 - Incremental Investment Strategy

There is no minimum amount required to enter the stock market. Anybody with whatever money they got can start investing right away in the stock market. You can pump in new money, or reinvest the dividend money in order to grow your investment.  The amount of money you make is directly proportional to the time invested in the stock market. Longer you stay with the stock market, the higher your growth potential.

2 - Money Making More Money

This is a classic case of money making more money. The more money you put to work, the more money gets earned. There are lot of blue chip stocks that has a great growth potential, and shares its profits to the investors every quarter in the form of dividends. Stock value goes up during good times and goes down during bad times.

3 - No Limit to Rewards

There is no limit on how high the stock can go.  As long as the fundamentals are correct, the stock will keep raising up in value. This is applicable to both growth stock and dividend stock. When it comes to growth stock,  the value appreciates more rapidly than the dividend stock, but dividend stock has an advantage to bring in cash flow from your investment. The cash-flow when effectively reinvested can grow even bigger investment in the long run.

4 - Liquidity

The biggest advantage of holding the assets in the form of stock is that it can be liquidated pretty easily. Often takes only a couple of mouse clicks to convert huge investment into cash, and vice versa.

5 - Tax Benefits

There are no tax liabilities just owning stock investment. Let me clarify, you need to pay taxes on dividends and other cash flow you receive from your investment, but there are no taxes for just owning the stock. There are no maintenance cost, no property tax to be paid etc., Cash you receive in the form of dividends can have tax benefits as well. Qualified dividends are subjected to lower taxes than the non-qualified dividends.

6 - Improves Emotional Intelligence

In most cases, it is like swimming against the waves. It is tough mentally and physically when the easiest thing to do is go with the flow, and follow the crowd. If you are a serious investor and would like to be in the market in the long run, you know that you should not follow the crowd. It takes great deal of emotional strength to buy stock when everyone is selling, and sell the stocks when everyone is buying. Emotional outcomes are not logical, and so every ten years the market crashes for no logical reason. This is logical time for the new investors to get in. The stock market is neither your friend nor enemy. It is a reflection of the economic condition of the country. It is a system created and maintained by humans. So it has the strength and weakness of a human being.  You are better of using your emotion to think instead of thinking with your emotion.

7 - Cashflow

Dividend paying stocks provides a healthy cash flow for the investors. Dividend money is a portion of a Company’s earnings approved by board of directors to be distributed to the shareholders. Dividends are usually issued as cash payments either quarterly or on a monthly basis. Adding more stocks to your portfolio increases the cash flow from your stock investment. If planned and executed carefully, this can be a way to financial independence for long term investors.

8 - Power of Compound Interest

Power of compounding directly proportional to the duration of the investment. The key to the power of compounding is the snowball effect that happens when dividends and capital gains accumulate over a period of time to make your money grow faster and faster as the years go on.

9 - Beat Inflation

The best way to beat the inflation is to invest in stock market. Historically, stocks have averaged an annual return of over 10% which is much higher than the average inflation rate of 3.2%.

10 - Powered by Main Street

Wall street is not the enemy of main street. In fact, wall street depends on the prosperity of the main street. Wall street focus is on generating money, using money to make more money and globalize business and employment opportunity in order to save money, whereas Main street creates livelihoods, provides employment opportunity needs in the society and advances the human interest. It is the heart and soul of capitalism. Without the main street, wall street is like your shiny mobile phone without the software.

Top 10 Stock Investment Mistakes

1 - Buy High, Sell Low

This is one of the common investing mistake even the so called professionals make stock in market. For most people it is hard to resist the temptation to ignore the stock when it is at all time high, or when it is at its 52 week high. Buying stocks at high price and selling when it falls is justified emotionally, but does not make sense logically. There is a potential loss of 10 -50% of the capital money due to this mistake. So wise up when you make your next investment.

2 - Going After Popular Stock

Going after the popular stocks is one of the biggest investment mistakes. Popular stocks includes stocks that are new IPO stocks, speculative stocks, big social media stock without any  strong advertising revenue etc., These are sure ways to lose your money in a short period of time.

3 - Focus only on Short Term Growth

Traders usually focus on the short term growth, but a professional investors focus on their long term investment. In most cases, investors have a more stable growth combined with the force of the power of compounding make them better than short term traders. The saying, Slow and steady wins the race is so true when it comes to long term investors.

4 - Not Understanding Taxes

Stock owned for less than a year is considered short term investment, and more than a year is considered long term investment. Profits made by selling short term stocks are subjected to higher taxes than profits made by selling long term investment. Non qualified dividends are subjected to higher taxes than qualified dividends. Understanding tax consequences on your stock market activities is very important in building your wealth. 

5 - Emotionally Attached Stocks

Getting emotionally attached to a stock is not a good idea. Emotion by itself is good and important. You should know how to use your emotion to think, and not think with your emotion. 

6 - One Big Purchase

Volume purchase of stocks leads to a big swing between profit and loss in the short term, and loss of opportunity to lower the cost of investment in the long term. You can avoid unnecessary roller coaster of your emotion by not getting into the habit of buying lot of stocks at any point of time, instead spread the purchase over a reasonable period of time.

7 - Reacting to Day to Day News

Reacting to day to day news increases the trading activity. This will only make money to the brokerage firm, and nothing to your cause for building your wealth. Not all data is information. Some are informational and educational, and others are opinions and noise surrounding the news. Train to ignore the noise and avoid reacting to every news about the stock market.

8 -  No Plan

Having no plan is worse than having a bad plan. To begin with, just having a plan about your goal, growth trajectory  and a exit strategy stabilizes your mental strength and your emotional intelligence. This  provides an opportunity to improve the plans based on the situation and the circumstance of your beings over an extended period of time thereby testing out the plan at good and bad times. Having a plan reduces the possibility of losing money during panic times and increases a healthy profit during good times. Exit strategy is very important even when you don't have any plans to execute it. My advice to you is, have a plan.

9 - Not Questioning Assumptions

Assumption can lead us in any direction. A valid assumption can improve the confidence level in taking an educated pick of long term investment, whereas a wrong assumption can lead to loss of capital and self worth. Always question your assumption and validate your assumption at all times.

10 - Follow the Crowd

Following the crowd is the easiest way to lose lot of money in a short duration of time. In most cases going against the crowd can save you lot of money and help you grow your investment aggressively. There are no short cuts to wealth generation. Do not follow the crowd. The loss is not just your money, but to your identity as well. 

How to make money in stock market ?

Step 1: Create an online account:

Use any of the following online trading company to create your account. The online transaction fees to trade stocks ranges from $6.99 to $9.99 per transaction.Some requires minimum deposit, and others not require any deposit to open an account. All the them provide some sort of access to real-time streaming of stock quotes. So choose the company that you are comfortable, and create an account.

TDAmeritrade   https://www.tdameritrade.com/

e-trade   https://www.etrade.com/

Fidelity   https://www.fidelity.com

Sharebuilder https://www.sharebuilder.com

I use TDAmeritrade account for buying/selling stocks.

Step 2:  Start building your wealth

Login to the account, and navigate to the section where you can buy and sell stocks. The below screenshot shows a typical form to buy/sell stocks. First choose the transaction type - buy/sell option. In most cases fields such as Quantity, Symbol and Price are the only required fields to enter in this form.

Things you should know about this transaction.

Quantity: It is the number of stocks you are planning to buy or sell in this transaction.

Symbol: It is the ticker symbol of the company you are going to buy or sell. For example, Lets say you are interested in buying AT&T - You will enter the ticker symbol T as your choice. Do your research before investing in any stock. On top of my head is AT&T stock. I chose AT&T because, it is currently trading at a fair price of $32.77 per share. It gives an healthy return on investment in the form of dividend yield. To be more specific, it gives out $0.47 per share to the investors every quarter, or a healthy 5.74% dividend yield on the money you invested.

Order Type: The details of the various options of order type are as follows.

Limit	For buying, it is the highest price you are willing to pay for a stock. For selling, it is the lowest price you are willing to sell a stock. The order will only be executed when the market price (i.e , current price of the stock) reaches your limit price or better.
Market	You use the market order to execute(buy or sell) immediately at the current market price of the stock. In most cases, the order gets executed as soon as you submit the hit button.
Stop Market	Stop market order is typically used to limit the amount of money that a stock could lose by defining a specific price to exit the investment. It can also be used to help define a price to enter into a new position.
Stop Limit	Stop limit orders are made up of an activation price, as well as a separate limit price. As the market price of the stock meets or exceeds the activation price, the limit price will activate.
Trailing Stop %	Trailing stop order help protect gains or limit losses on a stock using a point-based parameter that automatically moves with the direction of the stock price. Trailing stop orders can only be used to close out of a position.
Trailing Stop $	In this case trailing stop parameter is in dollar amount.

Review your order and submit the form to complete the transaction. Once done, You are officially an investor! Congratulations on your first investment.

Step 3:  Grow your investment.

Invest and reinvest more to grow your investment. If you have done your home work, and picked up a good company, the stock price will go up every year pushing your investment much higher, and you will have a positive cash flow every month or quarter in the form of dividends. Try to reinvest the dividend by buying more stocks. In this case, the dividend money is a qualified dividend, so it is subjected to lower taxes when filing for your tax return. Learn about the tax and its consequences when selling stocks for huge profits.

Remember to enjoy what you do, and have fun.

Investment Strategies: Stocks vs Real Estate vs Gold vs OPM (Other People's Money)

 Stocks:

Stock represent a piece of a company. It is wealth that you own. Stock market is driven by mass emotion. Learn to use this emotions to your favor. So if you are in charge of your emotion during its highs and lows, then you can do much better.

Based on my experience, Stocks always outperform other investment strategy. 

Software technology stocks are great in short run, but a drag in the long run. Hardware/telecom equipment stocks are much worse than their software counterparts.  Based on historical data, airline stocks are always bad to own at anytime.  Choose a company that provides service or products that common people like us use everyday, and stick to it for the long run. If you can do so, a good return on your investment is guaranteed.

Real Estate:

Real estate is the next best investment strategy. You have an option to buy the asset with only 20% down payment, and the rest of the payment is usually supported by banks in the form of mortgage loan(OPM). This is great, moreover real estate market crashes very rarely. In most cases, the asset grows up in value every year. This is the only investment strategy where you can lock-in the rate of an asset in today’s value which you will eventually own 20 or 30 years later. 

In case when you don't have enough money to buy physical asset, then you can still make money by investing in real estate investment stocks such as e-REIT and m-REITs.

Where,
REIT - Real Estate Investment Trust
e-REIT means Equity based REITs - Revenues come principally from their properties rent.
m-REIT means Mortgage based REITs - Revenues are generated primarily by the interest that they earn on the mortgage loans.
 

Gold:

After real estate, gold is the next best strategy. To be honest, I do not like this asset class, but there is a potential to make big money in the long run. The problem with physical gold is, you can only make money when you sell the gold, which in most cases very hard thing to do for anyone. Just imagine if you can sell gold every month, and take your profit every month. That will be awesome, so I decided to buy stocks of the number one gold mining company. Now I own an asset(business) that produces another asset(gold) every day, and shares the profit with me on a monthly basis in the form of dividend.

OPM:

Other People Money(OPM) is similar to drugs. There are good use of OPM and there are some bad use of OPM. Home mortgage loan is an example for a good use of OPM, and credit card debt is an example for a bad OPM. Any manageable amount of OPM will help you grow financially stronger, and unmanageable large amount will kill you financially in the form of bankruptcy and foreclosure. Choose wisely on the amount of use of financial OPM that you are comfortable to take, when building your financial nest egg.

I have a habit of listening to audio books. That’s the best use of my iPhone. I connect my iPhone to the car audio system and listen to the audio while driving. I have to tell you, it is much much better than listening to music. In last two years, I have covered more than 30 audio books.

Listed below are the books that influenced me the most.

Rich Dad Poor Dad by Robert T. Kiyosaki

Rich Dad's Cashflow Quadrant by Robert T. Kiyosaki

Tap Dancing to Work by Carol J.Loomis

The Richest Man in Babylon by George Clason

Thanks to all the authors for your efforts. Also search for Warren Buffett speech in youtube. He is one of the biggest inspiration for me. Thank you Mr. Warren.