Great article for investors.

The journey from passive to active investing





ONE OF my favourite reads is Money Secrets of the Rich. The tips, of course, are no longer secret, since author John R Burley published them in a do-it-yourself book format. The book is lucid and inspiring. It gives the confidence to people that a little effort can really help them become rich. And I can say that from personal experience. I got many practical suggestions from this book, but what stuck in my mind right from the beginning, and what I find practical even today, is the first of the Seven Fast Track Steps: Paying Yourself First. This means investing your money so that it can grow for you.
Burley also talks about the discipline in paying yourself through an Automatic Investment Plan (AIP). The idea seems so simple, yet few of us pay ourselves first. If we do, we do not do it regularly. I started paying myself first regularly and today my AIP account shows a healthy balance... and I can remember Burley’s words: it is fun to watch the account grow. Believe me, I have had that fun in my life.
Burley talks about Seven Levels of Investors, right from noninvestor who consumes every penny, to the capitalist investor, who invests first and uses whatever is left over for consumption. These are extremes, of course. But the five levels in between these two are very important. When I look back in life, I can see how I have travelled through each level, and I am today an “active” or “automatic” investor. An active investor, according to Burley, is one who becomes very clear on his principles and rules for investing. The investments may vary, but the principles and rules seldom do.
For the first half of my career, I was at Level Three, the “passive investor”. Luckily I was never at levels zero through two, maybe because of the profession I chose—life insurance agent—early in my life. The journey from “passive investor” to “automatic investor” was really interesting. At age 35, I had no money in hand. That was when I decided to move to “automatic investor”, one who is actively involved in his investment decisions. I clearly laid out my long-term objectives and started researching my investment options. This resulted in my having a diversified portfolio, right from traditional investment options like equity and debt instruments, life insurance, bonds and real estate, to non-traditional ones like wines. Everyday, spend two hours on researching for your investment, knowing the value of your investments and how they are faring to meeting your objectives.
The best thing about Money Secrets of the Rich is that it is a practical guide, which does not expect you to be a super investor. It just guides you to be more disciplined and clear about your investments, and to see yourself become a savvy investor through the power of compounding, something that Einstein called the eighth natural wonder.
A word about John Burley, the author, who has walked the talk: he has achieved what most would consider impossible—starting out with little money, a workable action plan and the desire to make his investments grow. And the result was that he could retire at 32. I could not do that, or maybe I did not want to, but I did achieve most of my financial goals earlier than expected. Money Secrets of the Rich had an important role to play in that.
Gary Bennett is Managing Director and CEO,
Max New York Life Insurance



Gary Bennett