Most parents and teachers would tell you: “Study hard in school, get a good job, receive a good salary, and live happily ever after.” In fact, when I was a senior at Stanford, the only thing my friends could talk about was how to get a good job at a consulting firm or at an investment bank.
There is nothing wrong with getting a good job if you just want a stable life. A good job, by definition, pays well and has good career advancement opportunities. You will save up and eventually will be able to buy a nice place to live in, own a car, and send your kids to school. Although you will most likely always have to be careful with your expenditure to make sure you can pay the mortgage and the school bills, you will still be somewhat comfortable. You will most likely be in the good solid middle or slightly upper middle class.
However, to most Harvard Business School (HBS) students, “getting a good job” is a means, not an end. HBS students do not think of “getting a good job” as the ultimate goal for several reasons:
I was one of the earlier employees of a start-up back in the late 1980s. It was very small when I was there. I got some stock options but I did not think much of them as I was not very senior and the value did not seem much. Then I left the company. After the company got listed some years later, I would check the newspaper once in a full moon on the stock price. For years, it always seemed to be about the same level every time I looked. So I would sigh and not pay attention. One day I decided to sell the shares as they were not going anywhere. It was then that I found out the company had had many stock splits over the years and my stocks were worth a lot of money.1
(Working for the others) may actually put you at greater risk . . . Having a single source of income . . . not being given the opportunity to learn how to make thousands of decisions . . . decisions you would have mastered if you were self-employed . . . you are not doing things that are in your own best (economic) interest for you to become successful in terms of becoming wealthy. . . . You are merely doing what is in the best interest of an employer.2
Here is a very simple but powerful way to look at money: see each dollar as your employee. This idea is well captured in the best seller Rich Dad, Poor Dad: “The poor and the middle class work for money. The rich have money work for them.”3 You have to put your employees to work, that is, invest your money.
Another way is to see every dollar as a seed that can grow into a huge tree. This is the power of compounding. You probably already know about compound interest. It is similar to what banks tell you when they say your money will “grow” if you leave it with them. You leave the interest in the bank along with the original investment. Over time, the interest earned on the interest on your original investments makes your return multiply like a seed growing into a tree and tree developing more seeds and more trees. But of course, savings accounts provide one of the lowest rates of return. So how much is one of these seeds really worth at a higher rate of return? Well, if you invest a dollar a day at 20 percent return per annum, you get your first million after only 32 years. At $10 a day but 10 percent return a year, you still get your million in less than 35 years. This is the power of compounding! Albert Einstein is believed to have described compounding as the “greatest mathematical discovery of all times.” Ben Franklin, one of the U.S. founding fathers, is believed to have described compound interest as “the stone that will turn lead into gold. . . . Money can beget money, and its offspring can beget more.”4
Once you see cash as employees or as seeds that can grow into trees, you will of course want as much cash as possible. You will want to invest the cash so you can put the employees to work and grow the seeds into trees. So how to make sure you have as much cash as possible to invest? You can do so by clearly differentiating between investments and expenses, and by saving before spending on expenses.
An investment is something that generates or has the potential to generate cash income. An expense is something that will not generate cash. Investments turn cash into employees and get you more cash. Expenses mean you are killing your employees. For example:
| Investment | Expense |
| Bonds | New car |
| Stocks | New LV bags, new Armani shirts, and so on |
| Real estate | Food, restaurants |
| Companies | Movies |
| Collectibles | Vacations |
| Your home | Your home |
Why mention homes twice? Most people see their home as an investment. But what do they do?
By contrast, early in their careers, most HBS graduates I know look at their home as an investment. They buy at discounted market price and then trade up when they can sell at a good price. They will exploit leverage wisely and make sure they have enough cash left over after paying their mortgage to make other investments. Then when they accumulate enough wealth, they buy their dream home.
Many people save whatever they have left after their expenses. But looking at cash as your employees, this would be like “first sacrifice the ones you need to kill and then try to put the leftover ones to work.” It should be the other way round. You should always save to invest before you spend on expenses. In The Richest Man in Babylon, George S. Clayson highlighted one of the key success secrets of the ancients: “A part of all you earn is yours to keep.”5 But many people only save what is “left over.” Prosperous people often save first and then live on what is left over. This makes a big difference. It not only makes sure you have cash to invest, it also forces you to plan your expenses and be more resourceful If you find that your cash after savings is not enough to cover your expenses.
So if dollars are your employees, where should they be put to work? If each dollar is a seed, then how to grow the seeds into trees? In other words, where to invest?
Before discussing where to invest, it is important to first emphasize the difference between speculation and investment and to understand risk. Speculation is when you hope to get a return. Results are subject to chance and are out of your control. Gambling or buying lottery tickets is speculation. Buying real estate on the assumption that whatever you pick will increase in value over time is speculation (which is indeed one of the key root causes of the 2008 U.S. housing market and financial crisis). Investment is when you earn a return. You have a strategy and a plan. You do your research and analysis. You manage your investment accordingly to increase your chance of a return. HBS focuses on investing, not on speculating.
It is also important to understand risk. No one has a crystal ball. Even with all the research, analysis, and planning you can do, when you invest, you always risk losing money. As the saying goes, “no risk, no return.” HBS does not teach you to minimize risk. This is because risk is often proportional to potential return. The key is not to minimize risk but to manage risk. Managing risk means you understand the risk involved and have determined that you can afford it, and the potential reward is worth the risk you are taking.
There are many possible sources of investment income. Three of my favorites are real estate, the public stock market, and private companies. Most HBS graduates I know invest in at least two and many in all three. Investing in multiple sources helps manage risk because of the safety of diversification and wider exposure to opportunities. To manage risks, most people start with simple, small investments and step by step move to more complex and larger deals as they become more experienced. I discuss real estate and the public stock market in this book, but not investing in private companies, which requires sophistication in deal sourcing, industry evaluation, company assessment, valuation, monitoring, and exit. It would take a whole book in itself to explain. Also, it is much riskier and often requires much bigger investments than real estate and the public stock market, though its returns can be substantially bigger.
First, consider real estate as a source of investment income. There is a famous story called “Acres of Diamonds” by Russell H. Conwell6 about a man who dreamed of owning a diamond mine. He sold his farm, took the money, and wasted his life in a futile search. Ironically, the man who bought his farm was looking in the stream behind the farmhouse and noticed a brilliant, shiny stone glittering in the water. Yes, it was a diamond. Thus was discovered the famous diamond mine from which came many of the crown jewels in Europe. The farm was sitting atop acres of diamonds.
Many people are like the man going in search of diamonds. They waste time, money, and energy in endless moneymaking schemes while the greatest source of wealth is under their feet—real estate. If you look at people who are filthy rich, real estate is close to being a common denominator. People such as Donald Trump, Li Ka Shing, and many other billionaires around the world made their fortunes in real estate. Of course, many of them started off with a lot of money and they invested millions of dollars. However the beauty of real estate is that you do not really have to be a major developer. You can start with a small amount of money on small properties and gradually expand.
The attractiveness of real estate comes from a number of key factors:
Archimedes said, “Give me a lever and I’ll move to earth.” As investors, we do not want to use the lever to move the world; we just want to use it to buy as much as we can. In the finance world, lever, or leverage, means borrowing. Because you have to pay interest to borrow, many people wrongly believe you borrow only when you cannot afford to pay all cash. HBS teaches you to use leverage even when you can easily afford to pay all in your own cash. Leverage allows you to increase the amount you earn for each dollar you invest (percentage return). In a way, if cash is your employee, leverage is like borrowing employees from someone else to work for you. You pay for the use of these temporary employees, but they help you achieve more with less of your own workforce.
An example to illustrate of how leverage can improve profitability: say you buy an apartment that is worth US$200,000. The apartment is expected to appreciate 10 percent in one year. You can obtain a loan at 5 percent interest a year. Assuming you can afford to pay US$200,000 in your own cash, would you pay all with your own cash or would you borrow?
Here is the math. Assuming no fees and taxes, if you pay all cash, you make 10 percent on your money invested after one year. But if you take a loan of 80 percent and pay only 20 percent in cash, you would make 30 percent on your money invested:
| Selling price (10 percent appreciation) | 220,000 |
| Minus interest paid | 8,000 |
| Minus mortgage repayment | 160,000 |
| Minus 20 percent deposit paid | 40,000 |
| Net profit | 12,000 |
| Percent returns | 30 percent |
| (12,000/40,000) |
Of course, while leverage is powerful, overleveraging is extremely dangerous, as evidenced by the 2008 sub-prime mortgage crisis; I’ll return to this point shortly.
Now, you may argue that if you invest without borrowing and make 10 percent, you make $20,000, which is higher than $12,000. This is true but then you run the risk of “too many eggs in one basket.” HBS teaches that while many analytical tools can help you understand the markets, no one really has a crystal ball. One HBS graduate I know works for a famous investment bank. He works as a research analyst, writing reports widely read by fund managers around the world. Each report analyzes a particular company and makes recommendation on whether to buy, hold, or sell the stock of the company. I still remember this classic quote: he said, “I am doing well in the firm. I am right about one-third of the time, wrong about one-third, and the rest is neither right nor wrong because the unexpected happens.” Well, so much for predicting the market.
So if no one really knows for sure what is going to happen in the market, what do you do? HBS teaches you to diversify. If you invest your $200,000 cash in five different apartments of about the same price range, putting down 20 percent of your cash as deposit for each and borrowing 80 percent for each, you would generate 30 percent return on your $200,000 instead of 10 percent. You will also be diversifying your risk. Even if you lose on one apartment, you may still be able to make up by success in your other apartments. Instead of investing only in real estate, you can also diversify by investing in other areas like bonds, public stocks, or even collectibles or private businesses.
The second reason why real estate is attractive is the multiple streams of investment income it can generate:
To calculate this cash flow, use the following formula:
| Income from rent | |
| Minus | Operating expenses (rates, tax, maintenance, management fees, and so on) |
| Minus | Loan repayment |
| Net cash flow |
As can be seen in the formula, cash flow is a direct function of the loan repayment. The bigger the loan you take and the shorter the repayment period, the smaller the net cash flow until the loan is paid off. So how much loan should one take to maximize returns? To calculate, use the following formula:
The final decision on how much debt to take on should be based on both percent cash-on-cash returns and the risk involved in the loans. Negative cash flow will happen if the related expenses and loan payments are greater than the rental income, especially since the property would inevitably have no income from time to time as a result of tenant turnover. You must be able to cover that negative cash flow through your net cash flow generated in the past, your salary, or your other investment income. Many people in Hong Kong were forced into bankruptcy after 1997 because they did not plan their cash flow well. They accepted negative net cash flow (rental income that did not cover mortgage payments and expenses) because they believed they could profit when the property appreciated. But property prices continued to fall for a few years after 1997. When some of these people lost their jobs in the 2001/2002 recession, they could no longer make their monthly payments to the banks. Neither could they get cash by selling the property, because property prices had declined so much that the price they could get by selling would be less than what they owed the bank (this is called negative equity). As a result, these people were forced into mortgage defaults or even personal bankruptcy. Overleveraging and negative equity are also key contributors to the 2008 global financial crisis. Hence, while leverage is powerful in increasing profits, you must look at your own financial situation to determine how much you should borrow.
Over time, as you pay down the principal of your mortgage, your equity (your ownership of the property net of debt) will grow.
You can get cash from this increase in equity in two ways: sell or refinance. Selling is straightforward but may not be the best thing to do unless you have a better investment than the property in hand. Refinancing is another option. For example, say you purchased an apartment with 20 percent deposit. Your equity was 20 percent then. Over time, you paid down your loan and your equity increased. Say your equity has grown to 65 percent after 10 years, and assume the value of the property has not changed, and you can refinance and get a new loan for 80 percent of the value of your property. You repay the 35 percent (100 percent minus 65 percent) you owe on your earlier loan. You can use the remaining 45 percent (80 percent minus 35 percent) to make other investments or to indulge yourself by spending on expenses.
Figure 1.1 North American Home Prices
Source: U.S. government statistics.
Among all the lessons history teaches, none is more certain than the fact that real estate will appreciate in the long-term. Figure 1.1 shows what happened to the median price of homes in North America between 1940 and 2000.
Some experts may disagree. Throughout history, there have been many self-proclaimed experts who predicted that “real estate prices have peaked.” Take a look what experts have been saying in the United States during these 60 years (as collected by Gary W. Eldred in The 106 Common Mistakes Homebuyers Make):7
However, history has proven these experts (and many others) wrong. Data indicate that over the long-term, real estate generally increases in value. I emphasize long-term (10 or 20 years or even more) because there will be short-to medium-term ups and downs due to economic cycles and turmoil, but real estate prices tend to go up over the long-term. Of course, it will be years before we can see how the 2008 U.S. housing market crash will play out. But data on median prices so far still seem to indicate that while median price in the United States has declined roughly 20 percent from the peak (around 2005 and 2006), it is still higher in 2008 than it was 10 or 20 years ago.
I also emphasize generally because this does not mean every property will appreciate. Appreciation of an individual property depends on its location, condition, management, purchase price, and other factors. As with any investment (not speculation), you must be prepared to put in time to research and understand the market.
Property generally appreciates for two main reasons: inflation and supply versus demand. While economic growth is cyclical and deflation sometimes occurs, prices generally inflate over the long-term. When there is inflation, prices go up, including those of property.
While it is definitely true that modest inflation over the long-term increases home prices, some people mistakenly believe that the higher the inflation, the greater the increase in price. The logic of high inflation goes like this: with inflation and hence rapidly rising prices for labor and materials, developers cut back on new construction and raise prices. With higher prices for new development, many property buyers switch to the resale market and buy existing homes. With more buyers bidding for existing property, the prices go up.
However, this high inflation, high property appreciation is not so true anymore. The key reason is the way central banks in many countries are now using interest rates to control inflation. Interest rates are often raised when inflation becomes too high. As interest rates go up, home affordability goes down. People who might like to buy are blocked from the market. On the other hand, low rates of inflation mean low interest rates. With low mortgage interest, more people can afford to buy. More demand means higher prices. Therefore, real estate prices may continue to go up even in a low-inflation environment.
In many countries, the government encourages home ownership through various tax deductions. Different countries have different tax deduction allowances. Here are some of the items qualified for tax deductions in various countries:
Tax deductions increase property owners’ cash flows by reducing the amount of taxes they have to pay on their income. This is especially significant in countries where income tax is extremely high.
One key concept about investing I took away from HBS: “Often, you do not make money when you sell. You make money when you buy.” Warren Buffett preaches the same phenomenon: buy at bargain price so you have a margin of safety. Then, even if the market does not appreciate as forecast, you will have built in a buffer because you buy below market price. You may still be able to make a profit (or at least not lose as much money) when you sell. Many people made millions speculating in the Hong Kong property market prior to 1997, but many have gone bankrupt since then. Prices were rising so rapidly prior to 1997 that many people were buying at market prices without bothering to look for bargains, so they had no leeway when the market paused.
One of the key attractions of real estate is the possibility of finding bargains. Bargains are available for three reasons. First, relative to the stock market, where sellers can find buyers at market price with relatively little effort (just call the stockbroker), the property market is relatively illiquid. “Willing” or desperate property sellers may not easily find buyers. They may consent to drop prices just to close a deal quickly (of course, at the same time, such illiquidity might affect you If you need to sell quickly). Second, property is not a commodity like stock. Each property is different (location, floor level, view, condition, number of bedrooms). Hence there is room for negotiation depending on the property seller’s level of desperation, knowledge of the market, and negotiation skills relative to those of the buyer. Third, some property owners do not manage their property well. They do not maintain and configure according to market needs. As a result, there is opportunity to buy such property and then quickly increase the value by renovation (new paint, new pipes, new carpet or floor tiles, an additional bedroom, and the like).
So the key is to find a bargain by identifying either a willing seller or a seller who has not been managing the property very well. By finding bargains and paying below market price, you can be more certain about locking in profit. There are many reasons why a property owner becomes a willing seller: relocation to another city, needing money for another investment or expense, time constraints, debt (including foreclosures by banks), divorce, sickness, or a hundred other factors. A property owner may not be managing the property well due to lack of time, interest, cash, or expertise.
Leverage, multiple streams of cash flow, and availability of bargains are three of the key advantages of real estate investing. There are two strategies in real estate investing: buy and sell quickly (flip) and long-term hold. The former is more risky. Most of the cash flow from flipping will be from value appreciation. Hence flipping requires more sophistication because you need to find bargains and know how to upgrade the property to increase the market value. Just buying at market price and hoping to sell at a much higher value quickly is a risky, speculative strategy. Long-term hold is relatively less risky as you can get multiple streams of cash flow.
Three key questions will guide you to investing in stocks: which stock, when to invest, and when to get out.
HBS offers multiple courses on finance. We spent months learning advanced concepts and techniques for valuing companies (and hence their stocks). But during the very last class of the course, one of my classmates, a very experienced banker, made a comment:
All these techniques are useful tools. But if you plan to use them to pick individual stocks, you should know this data I have read: 75 percent of all the smartest money managers in the world, working 20-hour days, with huge research staffs and the most advanced computers, have not been able to consistently beat the market averages. Of the remaining 25 percent, most were just able to keep pace with the market average. Only a handful of the rest (including Warren Buffett) have beaten the market consistently. But even for these few, many have beaten the market on average over a long-term, not if you look at short-term year by year.
I was shocked to hear this. I later found out from him that he had picked up the information from the book Multiple Streams of Income.8 The book provided further research evidence that in the years from 1990 to 2000 in the United States, out of over 6,000 professionally managed mutual funds, only 20 were able to outperform the market average after expenses and fees.9 Look at all the stock market commentators and so-called gurus around you—if they are so smart in picking stocks, they should be millionaires by now. Why are they still hosting radio shows and writing newspaper columns or research reports?
So what should you do? You can do one of two things. As mentioned earlier, there is a handful of Warren Buffetts around. You can invest in the funds they manage, but this could be tricky. First, past performance is not a guarantee of future performance. Past performance is not even a guarantee of future performance these days, as the people who invested with Bernie Madoff have learned at their cost. Second, Warren Buffett and a number of the other stars like him are quite old. So there is always the risk that their funds may significantly deteriorate after they retire. Third, some of these funds are not so easily accessible. Warren Buffett’s fund, Berkshire Hathaway, is traded only in the United States and at a high per-share price.
The second option is to invest in market average (stock market indexes such as the S&P 500 index fund or Tracker fund in Hong Kong). Most markets include investment funds that will track an index. They aim at providing the same return as the index by buying and holding all the stocks that make up the index. While it would be very difficult, if not impossible, to beat the market average by trying to pick individual stocks, you can still make a handsome profit if your investment performs at market average. Over the long-term (more than 10 years), the United States stock market index S&P 500 averages an annual return of 10 percent over 15 percent. Not a bad rate if you remember the principle of compounding covered earlier in this book.
This is why many HBS graduates invest in stock index funds. Of course, given the great ego many HBS graduates have, many still invest in investment funds and individual stocks. They either believe they can pick the 20 winners out of the 6,000-plus funds or believe they have enough information to pick individual stocks. But the risk involved in picking the right ones and the higher certainty of the index funds make stock indexes a better investment for most people. Also, index funds charge much lower management fees than other types of investment funds since index funds do not require research and have lower churn rates (the buying and selling of securities by fund managers, which incur commission costs and possibly taxes in some countries).
It may seem illogical, but it’s useful to tackle this question first, before going back to “when to buy.” Many people try to time the market. There is nothing wrong with a “buy low, sell high” strategy, except for the extreme difficulty of consistently timing the short-term highs and lows accurately. For example, in the 10 years 1980 to 1989, the S&P 500 index gained over 17 percent per year, with frequent short-term ups and downs. During this period, there were about 2,528 trading days. Almost 30 percent of the entire profit for the decade was generated in just 10 days. If you had tried to “buy low and sell high” but happened to miss those 10 days out of the 2,528, you would have lost almost 30 percent of your gain for the entire decade!10
It is difficult if not impossible to forecast the day-to-day or year-to-year ups and downs because stock prices are driven not only by business fundamentals but also by investors’ sentiment. Ben Graham, widely known as the Father of Financial Analysis and teacher to Warren Buffett, emphasized this element of emotion by comparing the stock market with an allegorical character he created called “Mr. Market.” Buffett shared this story with his investors in the 1987 annual report of his investment company Berkshire Hathaway. The story goes like this: imagine that you and Mr. Market are partners in a private business. Every day Mr. Market offers a price at which he is willing to either buy your shares in the business or sell you his. Although the business that you own jointly is a stable, predictable business, Mr. Market’s offers are rather unstable and often unpredictable. Some days, Mr. Market will offer a very high price because he is optimistic and cheerful. This could be because interest rates are down or another company announces good results or a war has ended and he can only see bright days ahead. On other days, Mr. Market can be very pessimistic and offers a very low price.
So what should you do? Should you be optimistic when Mr. Market is optimistic and be pessimistic when Mr. Market feels down? Graham believed that Mr. Market is very much like the real-life stock market, when short-term market prices are often driven by emotions that are irrational and ephemeral.
This is why Warren Buffett, one of the most famous investors in our time, has made his position on forecasting very clear in his books and speeches: Don’t waste your time. Whether it is the economy, the interest rates, the market, or individual stock prices, Buffett believes that forecasting these parameters is futile. But Buffett does not say the future is unpredictable. Two things about the future are certain:
So what does Warren Buffett do? He invests in great companies and holds them for the long-term. He does not care about any short-term price fluctuation. He will patiently wait as he is certain that the great companies he selects will eventually be rewarded. In fact, Buffett sees temporary price decline as an opportunity to buy more shares in the great companies in his portfolio.
The same approach applies to investing in stock market indexes. Figure 1.2 shows the long-term trend of the S&P 500 of the United States.
History suggests stock market indexes increase over the long run. This is because indexes are made up of a basket of companies, and over the long-term, the good ones will get rewarded and the poor ones get eliminated from the indexes.
But indexes are going to fluctuate in the short-term, just like individual stocks. In the 50 years between 1950 and 1999, there were 11 years when the S&P 500 recorded a decline. That is roughly one losing year every five years. So if you buy in any one year during this period, and
Figure 1.2 U.S. Stock Market (S&P 500), 1950–2007
Source: Daily closings (S&P 500).
So the answer to “when to sell” is somewhere between 10 and 25 years. In fact, I have heard Buffett quoted as saying, “My favorite holding period is . . . forever.”
If the key is to hold for a long period of time, then the time to buy is as soon as possible. The sooner you buy, the longer you have your money (employees) at work, and the more money you have to compound. If you fully subscribe to the theory that you cannot time the market, then the time to buy will be this moment, since you will not know when the next dip is.
But still, it is in human nature to at least try to wait until the next market dip. You feel you may overpay if you just rush out and buy an index fund right now. There is a sophisticated yet very simple strategy called dollar cost averaging that I find very useful in reducing the risk and anxiety. This strategy is also useful if, like most people, you do not really have a lot of cash lying around or you are new to this idea and would like to try out with small amounts of money at a time.
Dollar cost averaging goes like this. You set a fixed amount you want to invest in a selected index every month. If the price is high in a certain month, your fixed amount of money will buy a smaller number of shares. If the price is low that month, the same amount of money will buy more shares. So over long periods, the average purchase price of your holdings is less than the market average price. Table 1.1 is an example comparing dollar cost averaging (investing the same $ amount each month, say $1,000 a month) to the strategy of buying the same number of shares each month regardless of price (say 50 shares a month for this example).
This shows how dollar cost averaging gives a lower average price per share, hence a bigger profit. In fact, dollar cost averaging would still have generated a profit even if the ending price falls to $18 per share. Dollar cost averaging is even more profitable if there are significant temporary market slumps once in a while as shown in Table 1.2.
This is because the fixed, predetermined sum is able to purchase a greater number of shares during these times, hence reducing average per-share price and increasing profit in the long-term when market recovers. Therefore, dollar cost averaging requires perseverance during poor market conditions. Its advantages will be limited if it is only practiced during a strong market.
Again (I promise this is the last time I mention this in this book), I must emphasize that there is always a risk in any investment. Obviously, dollar cost averaging assumes a long-term appreciation (or a slight decline at most) of the stock market. While this has always been true before, it may not be true for overheated markets or for newly developed markets that may run into a major market correction that never recovers.
Table 1.1 Dollar Cost Averaging Example 1
Table 1.2 Dollar Cost Averaging Example 2
Notes
1. A stock split increases the number of shares outstanding by issuing more shares to current shareholders. Price per share is reduced accordingly, so the total value of all outstanding shares remains the same. For example, say a company has 1,000 shares of stock outstanding at $50 per share. The total value of the outstanding stocks is 1,000 × $50, or $50,000. The company splits its stock 2 for 1. There are now 2,000 shares and each shareholder owns twice as many shares. The price of each share is adjusted to $25. The total value is now 2,000 × $25 = $50,000, the same as before. Companies tend to split stock if the price has increased significantly and is perceived to be too expensive for small investors.
2. Thomas J. Stanley, The Millionaire Mind (Kansas City: Andrews McMeel, 2001), 135.
3. Robert T. Kiyosaki and Sharon L. Lechter, Rich Dad, Poor Dad (New York: Business Plus, 2000), 46.
4. V. P. Sriraman, “The Power of Compounding” Bharathidasan School of Management; available online: www.bim.edu/pdf/lead_article/compounding.pdf (access date: January 12, 2009).
5. George S. Clayson, The Richest Man in Babylon (New York: Signet, 1998), 21.
6. Conwell is best remembered as the founder and first president of Temple University in Philadelphia, Pennsylvania. His famous story, “Acres of Diamonds,” is available online: www.temple.edu/about/Acres_of_Diamonds.htm (access date: January 12, 2009).
7. Gary W. Eldred, The 106 Common Mistakes Homebuyers Make (New York: Wiley, 1995), 38–39.
8. Robert G. Allen, Multiple Streams of Income (New York: Wiley, 2000), 51.
9. Ibid., 54.
10. Ibid., 57.
11. Ibid., 53.