If there was one question that people would pay a million bucks to have the answer to, it would be – How do I get rich? The answer is really obvious – if you have a million to spare then why waste it on a foolish question.

Invest it and over the years you’ll surely get your millions.

But that’s not the answer they are looking for. Surely there has got to be something more to it — some deep insights, some invaluable pearls of wisdom, some magic!

Not really. It’s often just simple common sense. Like Robert Kiyosaki’s best selling book Rich Dad, Poor Dad that should be made the Bible of the financial world. Here are four points from there on how you can do it:

1. The value of learning

Go back to your earliest memory. When you wanted to ride a bike on your street, the first thing you had to do was learn how to ride. Or when you wanted to pass your Maths exam, you had to learn your tables. Then why is it that when we want to make money, do we not understand that we have to learn good investing?

Instead we tend to just pick up the phone, speak to our stockbroker, buy a stock and start dreaming of becoming rich. That’s exactly what rich investors don’t do.

Instead, they ‘learn’ to ‘invest’. They learn all there is to know about the art of investing in stocks. All about the stocks they wish to buy and only then do they take the plunge. Above all, they keep practicing what they have learnt. They keep sharpening their saw. This single factor of learning before hand separates the rich investors from the poor investors,

2. Shop at a discount

Another bit of common sense — What do you do when your neighborhood super market announces a SALE? You flock into the stores and buy up every little item and build up at home piles of grocery, soaps, etc. But when stock markets reduce the prices of shares and announce a ‘crash’ every investor rushes in to ‘sell’ and runs away from the market.

Again, conversely, when Super Markets raise their prices, customers shy away and refrain from buying till the next ‘sale’; but when Stock Markets announce rising prices, every investor rushes in to ‘buy’.

This is not the way rich investors behave. They follow the same principle of buying at the super market. They buy stocks only when the stock markets crash. Ask Warren Buffet!

3. Define asset

If you own it, it’s an asset. If you owe it, it’s not. The rich never keep their wealth in the form of liquid money in a bank account. They always keep acquiring assets while the poor acquire liabilities, which they mistakenly believe are their assets.

A house bought on a loan is not an asset, it’s a liability. The same goes for paying for groceries through credit card. So you need to learn the difference.

In life what is important is not how much money you ‘make’ but how much of that money you succeed in ‘keeping’ and ‘multiplying’.

The rich know how to keep it because they know how to invest it. Money well invested is money well kept. Good investing is often more rewarding than good earning.

4. Make real money

Real money is made when you ‘buy’ an asset and not when you sell that asset is yet another gem from the author. Be careful of the price you pay when investing in an asset.

Don’t rush into buying any investment at any price. Wait till the prices come down the way. The ‘price’ of the asset when you buy is the sole determinant of your profit on that asset when sold. If you buy that asset cheap, your profit on sale is obviously larger.

All these four seems rather straightforward now that you think about it. We known all this instinctively and we only have to apply it to the stock markets — it’s really common sense.

Ack : IBN Live

As Wall Street tottered on the brink of collapse and the US government unveiled one the largest market interventions in its history, stakeholders from every side weighed in with incredibly stark views of the country’s economic future.

The assessments did not just focus on the country’s short-term economic health. Many believe this week’s events could drastically change the way the US does business.

“Capitalism as we knew it – free-market capitalism – seems to be dead,” declared Rob Cox, editor of financial website breakingviews.com.

The extent of the US government’s reach into the operations of private companies has been unprecedented. On Tuesday it took control of the world’s largest insurer, American International Group Inc. The week before it took over mortgage giants Fannie Mae and Freddie Mac, which together guarantee nearly half of the $12-trillion US mortgage market.

If Congress approves the necessary legislation next week, the government could become the biggest player in the US financial sector, taking control of hundreds of billions of dollars in shaky mortgage-related assets that are at the centre of the credit crisis.

Some were calling it “socialized capitalism” and predicting a price tag for the taxpayer as high as $1 trillion , yet even typically free-market Republicans seemed to acknowledge there was little other choice.

Republican Senator Jon Kyl described the effects of Wall Street’s risk-taking as a “cancer” spreading across the wider economy, shutting down the availability of credit to the average consumer and making it unavoidable for the government to take over.

It marks a stark change from the support of deregulation and smaller government that has led economic policy over the last few decades in the US.

Read Complete Analysis of US Capitalism @ Economic Times

Here goes Answers of Questions which relates Financial crisis and WE

The past month has been one of unprecedented turmoil in the financial markets. Each day has brought an extraordinary development that would have seemed astonishing just the day before.

In the largest bank failure yet in the United States, Washington Mutual, the giant mortgage lender which had assets valued at $307bn (£167bn), was closed down by regulators. It was then sold to rival JP Morgan Chase for $1.9bn.

The US investment bank Lehman Brothers was allowed to go bust while one of the world’s largest insurers AIG was bailed out. In the UK, a takeover of the biggest mortgage lender HBOS was approved by the government to forestall a run on it by customers.

To try and put an end to the turmoil, the US authorities have been seeking approval from Congress for a $700bn bail-out plan to relieve the US banking system of its mortgage debts and limits were put on so-called “short-selling” of shares, both in the UK and the USA.

BBC News looks at whether the average person is really in a different position from just a couple of weeks ago.

Is my bank safe?
This is what the UK (and US) government and financial authorities have been worried about – that banks exposed to too many defaulting mortgages might collapse.

With the very fear of this causing the financial system to seize up again, the worry was that this prospect might become a self-fulfilling prophecy, with a domino effect undermining the banking system here and abroad.

Hence the rush to ensure that HBOS was taken over, despite the bank and the authorities saying until they were blue in the face that it had lots of money.

What about my savings?
As long as you have less than £35,000 saved with any one UK financial institution, you will not lose if the worst happens and your bank goes under.

That is because of the protection offered by the Financial Services Compensation Scheme.

However, you might have to wait a while to get your money back.

Unlike in the US, where small banks frequently go bust, there is no mechanism in place yet to effect a swift rescue of a UK bank.

If you have more than £35,000 in any one institution you might consider moving some of it to another one.

Will my mortgage become more expensive?
Most likely yes, if you are looking for a new deal.

The cost to banks of borrowing and lending money between themselves has risen again, driving up the cost to banks of funding and offering new fixed-rate and other mortgage deals.

Libor, or the London Interbank Offered Rate, is the rate at which banks lend money to each other, and the three-month rate has reached its highest level since December, rising well above 6%.

Three major lenders have raised some of their mortgage rates – HSBC, Woolwich and First Direct – and other lenders are reviewing their deals.

The takeover by Lloyds TSB of HBOS will also reduce competition among mortgage lenders, tending to make it easier for the remaining lenders to charge that bit more for their loans – or offer less interest on bank accounts.

So mortgages are likely to be set higher above the Bank of England’s base rate than was the case before.

The Bank of England has said the rate of inflation would soon hit 5%, before falling back. Once it is convinced this is about to happen it may well cut rates to help stimulate the economy and overcome the impending economic recession.

So in due course mortgages should become cheaper; but not just yet.

Will this financial crisis make the economy worse?
Let us assume that no more banks get into trouble and that things stabilise.

Even then, the downturn is likely to be worse than would have been the case just a few weeks ago.

Banks and the money they lend are essential to the normal functioning of the economy.

If they have less money to lend, or do so on much more expensive terms, this will inevitably restrain economic activity, just as if the Bank of England had jacked up its bank rate.

Is my job more precarious than before?
Potentially – and not just for bank employees and others in the financial sector.

In more normal times, the big economic news this month would probably have been the further rise in unemployment.

Let us remember what that story is. Unemployment is now at its highest level for nine years at a rate of 5.5%.

Redundancies have been accelerating and the number of vacancies, and those actually in work, is dropping.

Sadly the trend in unemployment is firmly upwards and will probably continue until the economy starts to pick up again.

Source : BBC