Zero 2 Rich

Investing to One Million Dollars or Bust!


Today was the first day that the new index funds became available within my 401k plan. So I switched my investments and contributions over to the index funds. The newly available index funds have dine as well or better than the actively managed funds that I was in.
I switched:

from Victory Special Value Fund-Class A to Dreyfus Mid-Cap Index Fund

from Oppenheimer Main Street Small Cap Fund-Class A to Dreyfus Small Cap Stock Index Fund

from American Funds-EuroPacific-Class R4 to Spartan International Index Fund-Investor Class.

I left my investments in the American Funds Growth Fund Of America-Class R4.

I don’t want to be cynical, but it is interesting that these index funds became available less than two months after we switched from Amvescap to Fidelity. Our funds were switched from the Amvescap funds (a lot of index funds) to the Fidelity funds (mostly actively managed). The switch was all done automatically. Many people might not have bother reading the literature that said that the index funds were going to be available. Many may not bother switching their funds over from the actively managed funds to the index funds. So Fidelity will make more money in management fees. I would rather take a fund that does a fraction of a percentage better due to lower fees. Those small fractions add up to a lot of money over time! I want every advantage I can get. And if it takes me ten minutes to switch my funds, so what!

eBay is one of the best money making opportunities on the internet. It is easy to make money on eBay.
I got started on eBay when it was pretty new. At first I was just buying stuff, but was soon selling stuff as well. My main interests at the time were books. I was buying and selling collectible modern fiction books.
There are people who actually who run businesses that do nothing but buy and sell on eBay.
To start selling on ebay, you will need an account. They are free. Simply sign up. You will probably wanted to get started more as a buyer than a seller to get used to how eBay works.
Once you are used to how eBay works, you need to figure out what you want to sell. The best place to start is with something you know. Do you collect books, fishing equipment, cameras, watches? Look at your own hobbies. You probably know what various stuff is worth. Look on eBay and see what people are paying for things.
You need to know something about what ever you are selling. If you try to sell books, but can’t tell a first edition from a book club edition, you will not do well.
Once you get a feel for what stuff is selling, and for how much, you need to find a source of supply. Maybe you can find the stuff at garage sales, thrift stores, antique stores, etc. If you find an item for $10, that you can sell for $100, great! Go for it! If you find an item that you can buy for $100, and sell for $1000, that’s a $900 profit (minus ebay commissions, etc)! Heck, you can even find deals on eBay. More than once I have bought something on eBay, and turned around and sold it for more.
So try to find a niche. Stuff that you know something about, that you can find a decent supply of for a low enough prices, that is selling enough on eBay, and for prices that allow you to make a proifit.
Another potential source of supply are drop-shippers. Lets say you sell a widget on eBay for $20. But you have a supplier that will sell you widgets for $15. You simply have the supplier ship the widget directly to the buyer. And you make a $5 profit. Sell 100 widgets, and that is $500.
Do whatever you can to keep your customers happy. You want the best feedback rating you can get. Ther better your feedback rating, the more likely people will be to buy from you. People may pay a little more to buy from someone with a great feedback rating than from someone with some negatives. If occasionally you have to refund money, do it. It is just a cost of doing business. If you stiff a customer of $5, you win in the short run, but it might cost you more than $5 in the long run when they leave a negative feedback!

Some people seem to wonder why the rich get richer and the poor get poorer. It is not a secret, or any conspiracy.
There are a couple reasons. The first is that once they learned how to get rich in the first place, they just keep doing more of the same. So they get richer. The poor keep doing the same things that made them poor, and they get poorer. If you keep doing the same things, you will get similar results. To expect any different is the definition of insanity.
If you think of some poor family that has X amount of income, and they spend X, how do they expect to stop being poor? They need to break the cycle. They need to spend less than X, and invest the difference.
Another reason why the rich get richer is that the government taxes income, not wealth. A rich person could own a billion dollars worth of stock, and it could be quickly increasing in value. They don’t have to pay any taxes on it until they sell it. Until the stock is sold, it is just wealth on paper. So if they bought $10,000 worth of stock, and held on to it for years, and it rose to $1,000,000, and then they sold it, only then would they have to pay taxes on the money they made ($990,000). And then it might be only taxed at the lower capital gains tax rate, and not as income.
So the main formula for the rich getting richer, is to spend less than you make. Live below your means! Then invest the difference.

A couple months ago, my company switched their 401k plans from Amvescap to Fidelity. I had mostly index funds in my 401k at Amvescap. But when my 401k plan was converted over, several of the equivalent funds were actively managed. Actively managed means that there is some guy being paid to make buy and sell decisions. To pay the guy, they have to charge slightly higher fees. But the problem is that actively managed funds don’t tend to do any better than index funds. In fact they often do worse due to the costs involved.
So I was forced to switch my 401k holdings into the actively managed funds as they were my best option.
But I got a letter in the mail saying that they are adding index funds to our 401k choices. One of the funds (Dreyfus Mid Cap Index Fund) is the same one I had over at Amvescap. I compared the funds, and the new index funds had done as well or slightly better than the actively managed funds that I currently have. The new index funds will be be in our 401k lineup effective June 30th. So I will look at switching over then.

What are multiple streams of income? It seems means that your income doesn’t come from a single source. The porblem with having your income coming froma single source is that if something happens to that source, you will be left without any income. You should have a goal to set up multiple sources of income. For instance, my primary source of income comes from job as a computer programmer. But I also have income coming from my websites. And even there I have multiple sources. I have money coming in from 8 different websites, and just registered yet another website. And the money from the websites comes from different sources. Amazon’s Associate program has been my biggest money maker for years, but now Google Adsense taken over the top spot for making money. The websites ebb and flow where one may be making the most money, but six months later another website might be doing better. As the affiliate programs change their payment schedules, and the search engines play games with thier algorithms, I have multiple chances to be in favor.
I have sold books on eBay, and Amazon. I have sold shareware programs. I am always looking for new opportunities!
I also have investments in stocks and mutual funds. I don’t generate cash flow from the investments, but they are slowly growing generating more wealth. Any dividends are automatically reinvested.
You want some of your sources to be passive of residual income. If you have multiple jobs, you will be killing yourself over time. Try to set up some self-sustaining sources of income. For instance website that you can build, and will continue to earn money for years as is. Then you can move on to another project. Be sure to monitor the previous projects to make sure they are still going.
Hopefully at sometime you can be stting on a beach somewhere while the money continues to flow in from your multiple streams of income!

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