What Color Is the Sky: If You Push the Clouds Aside, The Truth About Investing Will Set You Free.

By Michael Finley

The world of investing is a mystifying mess to many who try to master it. What Color is the Sky will provide you a clear path that pushes Wall Street aside and its many "helpers." Worlds will open where there was darkness!

This will provide you an opportunity to invest with confidence by eliminating most of the costs as you allocate your investments all over the world in stocks and bonds. Once in place, you simply sit back and watch the markets do their magic. Financial freedom will follow.

• Language: English
• Publisher: BookBaby
• Release date: May 19, 2015
• ISBN: 9781483554730

Book preview

Krishnamurti

Stage I

THE JOURNEY

1

BEFORE YOU START

It is very important to get your house in order prior to investing your money. This means dealing with your debt responsibly, protecting yourself with insurance, and putting some money aside for emergencies that you can tap immediately if needed.

First, let’s tackle the debt issue. If you are paying double-digit interest rates on debt, put your extra money toward that debt. It’s a no-brainer. If you are paying 20% on your credit card and you make extra payments to that card, you are earning a guaranteed 20%. No investment will beat that over time. Pay off the credit card!

What if your interest rates on debt are below 10%? It depends. Here is what I would do. If I had debt with interest rates above 6%, I would pay extra toward the debt before investing. (There is an exception. I would always invest in my company retirement plan up to the matching amount of FREE money.)

If I had debt with interest rates below 6%, I would take extra money and put it toward the retirement plan at work and/or a Roth IRA and simply make the required payments on my debt, but no more. You might even do a bit of both if that strikes you as a balanced approach.

Ultimately, it is your call on how you deal with the debt in your life. The key is to identify a specific number that you will use that will help you decide whether to pay down debt or invest your money or both. Whether you choose 6% or some other number, just be sure to give it some real thought prior to making the decision. This will be a BIG decision that will have a big impact on your future. Think it through carefully.

Next, how do you approach the emergency fund? I break this down in two ways. You can go super safe and keep the money in the bank/credit union or you can put it in a money market fund or bond fund at a place like Vanguard (more on Vanguard later in the book). BIG POINT: I am not compensated in any way by Vanguard. They do this investing thing better than most. That’s why I recommend them. Thank John Bogle for that.

Option 1 could be the bank/credit union. This provides you protection from market risk (the ups and downs of stock and bond markets for example), but it does nothing regarding inflation risk. There is NO risk- free investment. If you go this route, try to find ways to increase your interest on the money. Online banks may be one option.

Option 2 (my preferred option) would involve a money market fund or bond fund at vanguard.com. You are taking slightly more risk and in turn, you should see slightly higher returns. Basically, you are trying to stay up with inflation. I recommend money market funds when they are paying 3% and bond funds when they aren’t (currently the case in 2015).

What funds? At Vanguard, I recommend the Money Market Prime and regarding the bond funds, I recommend the Total Bond Market Index Fund (more risk with rising interest rates) or the Short-Term Bond Index Fund (less risk with rising interest rates). How much? I would stick with the usual recommendation of three to six months of living expenses. Next up, the world of investing!

Saving is a bargain compared to spending. Every dollar we earn and then spend will be subject to federal, state, payroll, and sales taxes, so maybe we end up with 60 or 70 cents’ worth of merchandise. Meanwhile, if we stash that dollar in our employer’s 401(k) plan, we get to keep the entire dollar and we can leave it to grow tax-deferred. We may even get a matching company contribution, so our dollar immediately turns into $1.50 or $2.

- Jonathon Clements, The Little Book of Main Street Money

2

THE FINANCIAL LITERACY JOURNEY

This chapter was taken out of Financial Happine$$. I recommend you apply it to your life going forward. It will serve you well as you continue down your path toward success as an investor.

•   I am. I am the answer to my financial future. I can make it a total mess, or I can make it a glorious masterpiece. All of this hinges on me. I am the answer.

•   Knowledge. I must educate myself before making financial decisions. This will involve a commitment to education outside the classroom with teachers, not salespeople.

•   ACTION. I must take action with what I learn. Being financially smart and doing nothing with the information will accomplish nothing. I must get it done!

•   Keep Doing. I must keep doing what is right financially one week, one month, one year, and one decade at a time. I will stay persistent as I develop the right habits (pay myself first automatically at the beginning of the month) that I perform time and time again.

•   Just say NO! I will say no to materialism (defining myself by the stuff I own) and the crocodiles (salespeople who feed off my financial ignorance). This will free up money to be saved, invested, and given away.

•   Patience. Time is on my side. Be patient as my financial plan unfolds over long periods of time. Get rich slowly through compound interest. My money will make me money.

•   Financial Freedom. Financial freedom can be achieved if I am willing to truly commit myself totally to the process of following through on my financial plan. Saving = Freedom = Opportunities.

•   Live MY Dreams. Live the life of my dreams and not someone else’s. Financial freedom provides me the opportunity to do just that. Find my path, and live it!

•   Give. Live to give. Learning to be grateful for what I have and identify ways to give unconditionally, will set me free. Giving to the people and organizations I believe in will bring meaning and inner peace to my life.

•   Happiness. Happiness comes to those who follow their dreams and share what they know and have with others. I want to be happy. I will be happy. The answers to life are found in me.

The opportunities to change the course of your life and achieve the ultimate prize of true happiness are there when you are ready to act on what you learn here and with the books I will reference all along the way. Join me in this journey. It will change the course of your life.

When I was 5 years old, my mother always told me that happiness was the key to life. When I went to school, they asked me what I wanted to be when I grew up. I wrote down happy. They told me I didn’t understand the assignment, and I told them they didn’t understand life.

- Anonymous

3

THE BLANK SLATE

When you start down the road toward becoming a better investor you should first ask yourself, What do I know, and who did I learn it from? I want to ask a favor of you. I want you to take an eraser and clear off that slate in your head that contains your investment knowledge. I want you to start with a blank slate.

Why a blank slate? What many people know has been placed in their memory bank by the financial industry and its helpers who have a conflict of interest with the information they share with you. Translated? They educate you in ways that bring you to them and their expensive products and services that make THEM a lot of money.

Did that sound a bit harsh? I hope so. It was meant to wake you up to the reality of the situation. The financial services industry has built a business model that works very well for them, not you. The faster you learn this key point, the quicker you can move on to better options that have been made available to you.

Let’s go back in time a bit. I was 20 years old when I started learning about investing. Who was teaching me? Two very nice, well dressed, properly registered helpers. One was a fee-based financial advisor and the other was a life insurance agent who really liked whole life insurance. They sold me on expensive products that earned them big fat loads and commissions. My ignorance cost me dearly.

When a person with experience meets a person with money, the person with experience gets the money and the person with the money gets the experience. I screwed up. Shame on me.

I lived with that education for five long years. Why? I saw these men as the true experts. They had age, experience, credentials, suits, and financial knowledge. Here is the truth that I learned years later. They were salespeople! They are not the true experts and they never were. They are given products to sell and they peddle them as best they can. They also spend a great deal of time selling themselves. I fell for it!

Why do I share this story with you? We have all made mistakes along the way. We trusted when maybe we shouldn’t. We jumped in when maybe we should have paused. Life is a bit of a crapshoot, and sometimes we end up screwing up even when we are trying to do the right thing.

Let go of the past. We can start over. That is the past and this is the present as you prepare for your future. I admit my mistakes. I recommend you do the same. Wipe that slate clean and start anew. It worked for me and it can work for you.

Now is when you start educating yourself from independent sources that don’t sell products and services. Get rid of the conflicts of interest. That will push you away from many of the high cost investments that you don’t need and into some very inexpensive investments that you do need. This requires a new way of thinking.

You can do this. As you proceed forward, keep reminding yourself that you are quite capable of learning and applying that knowledge to your life. I will continue to walk you down the path toward becoming the wise and successful investor as you avoid the financial industry and its many helpers. Onward!

A smart man makes a mistake, learns from it, and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid the mistake altogether.

- Roy H. Williams

4

THE ENEMY

I know who your biggest enemy is. How could I know? I have an understanding of human nature and what lies beneath the surface. Your biggest enemy is no different than my biggest enemy. Your biggest enemy (and your best friend with the proper education) is that person staring back at you from the mirror.

The sooner in life you learn this truth, the faster you can proceed toward the life that is waiting for you. Understanding this mystifying world of investing can help you in some very positive ways, but first, you must take the time to recognize who is holding you back.

Now, I know many of you out there might be shaking your head or possibly just be confused by this message. That’s okay. I would have been confused as well many years ago. That is until I accepted the reality of the situation as my education increased. I recognized the fact that I was my own worst enemy. Here is where it gets kind of cool.

It is not a bad thing to understand that you are the biggest enemy in your life. Actually, it’s empowering. Why? Because you can change! There are many things in life that are beyond your control. And when I say many, I mean most. What is within your control is YOU.

You can change. You can change your mindset. You can change your attitude. You can change the way you think. You can even change the way you behave. You can become a new person. Stop and read that last sentence again, please. YOU have the ability to change the course of your life, as you become a successful investor.

Am I overstating the case? No. Actually, I am probably understating the situation. The ability of the individual to overcome the difficulties of life and come out the other side with a new perspective is a very powerful weapon. It’s a transformation.

You allow your old self to die (metaphorically), so your new self can be created. You can take what you have learned from the past and create your new life. You become the new YOU.

Do you think I am a little out there with this kind of thinking? It’s okay. I am crazy and I don’t apologize for that. I am crazy enough to think I can change my life when I am ready to embrace that part of me that is waiting to be released. I am crazy enough to act on what I learn to make that better life a reality. I embrace a new way of thinking and I encourage you to do the same. Being crazy can be very liberating.

Are you open to a new way of thinking? I don’t need an answer at this very moment. I simply want you to open your mind to the possibilities of what your life could be with a new way of thinking. I would like you to demonstrate to all, including yourself that you have left your old self behind as you embrace this new version of who you will become.

Change starts in your mind and then it gradually builds as you develop the habits that drive the behaviors that will cause you to go in a different direction with your life. You can be reborn into the new you as you create your new life. Awake to the possibilities of YOU.

Try to keep your soul young and quivering right up to old age, and to imagine right up to the brink of death that life is only beginning. I think that is the only way to keep adding to one’s talent, to one’s affections, and to one’s inner happiness.

- George Sand

5

THE DEFAULT SETTING

The default setting is fixed at birth. It makes up about 50% of who you are and there is little you can do about it. What is the default setting? Here I am talking about your genetics.

The genes you were born with play a big part in who you are today. There is virtually nothing you can do about that 50% you received from the people who brought you into this world, but that leaves 50% that can be changed and that is something worth thinking about.

The other 50% of who you are and who you’re going to be will be up to you based on the environments you find yourself in, the people you spend time with, and how you react throughout that time. You get to have a major impact on that 50%.

There is quite a bit of research on this subject. We know that genetics tells us a lot about who you are. Your default setting not only tells us about how you look, but also how you think and feel. That is a big deal and I am not about to discount it, but there is more to the story as they say.

Are you a glass half empty kind of person or a glass half full kind of person? Have you given this much thought? Can you provide an answer that is not biased? It’s pretty hard for some people. We don’t always see ourselves as others see us.

Here is an easy way to answer that question without too much effort by you. Ask the people around you. They know you and they will be able to answer this question of ½ full or ½ empty relatively quickly if they are willing to be honest with you on the subject.

Why is it important to identify your default setting? You want to identify how you filter information when it comes into your life. Looking within will help you understand how you came to this moment in time.

Do you see the negative or the positive first when information is provided to you? Is your first thought to criticize others or to praise them? I am not asking you to judge yourself, just identify who you are based on your genetic code. Now let’s look at what can be modified.

Are you open to learning new and different ideas and concepts? My guess is you probably are or you wouldn’t be reading this book. You are probably open to learning. Just keep in mind, many people would never pick up a book like this and read it from start to finish. You are unique!

Once you become open-minded to the possibility of change on a fundamental level, you will change. Take a moment and think about that last sentence. The research tells us that you have the ability to change half of who you are throughout your lifetime. That is