Isaac Becker "Don't lose it! What did “papa” Kiyosaki keep silent about? Common sense philosophy for a private investor,” M.: Alpina Business Books, 2008

Personal finance management. We all want the same thing

Professional look

There is such a thing as a “professional look”. For example, a tailor, seeing a man, willy-nilly determines whether the suit fits him well, paying attention to all the flaws or, conversely, noting that the suit looks great, made by a good craftsman from very beautiful expensive fabric. Likewise, a dentist, looking at a person, pays attention to his teeth. But this can only be seen by a specialist.

A fashionista will always, whether she wants it or not, scan a woman who comes to any reception. She will note how she is dressed, whether she matches today's fashion, what is new on her, and what is from the previous collection and which fashion house, she will appreciate her handbag and especially jewelry. People who value wealth and understand it will try to determine your well-being and financial capabilities by looking at your car.

This is people's professional view of the world. The financial advisor also has it.

When I talk to my clients, answer their questions, I see some kind of floating craft in the ocean. It shows the person who came to me, his family, close people, his house, car, bank accounts, business, children from other marriages, perhaps a mistress. Everyone who is connected financially with this person, whose well-being depends on his financial condition.

What are you sailing on?

As a rule, people start their swimming journey with something simple. Over time, the young man's "raft" can turn into a ship or an ocean liner. In any case, it is difficult for me to imagine the “ship” of Bill Gates, Warren Buffett, Roman Abramovich or other super-rich people. But we are not talking about them, but about the principle, about the professional view.

I often ask myself why I have developed this view. The answer is simple: a person constantly needs money, no matter what he wants to buy - food, medicine, goods, services. That's how life works. Figuratively speaking, money keeps a person and his family afloat. Family personal finance is the float that helps people navigate the ocean of life.

Of course, money cannot buy health or happiness, but we will leave questions about the meaning of life to philosophers.

Everyone has their own personal finance system, whether they have thought about it or not, whether they make efforts to improve it, or whether there is no such phrase as “personal finance management” in their vocabulary. A poor student who is just starting his life's journey already has his own financial system: his parents give him part of the money, he receives part of it in the form of a scholarship, and he may also work part-time. Intuitively, without resorting to complex calculations, he knows his needs: his parents will buy him one thing, and he will have to save for another. The scholarship is not much more than the cost of going to a club with a girl, which means you need to earn extra money. Even at such a primitive level, when a person is still connected by a financial umbilical cord to his family, but has already begun to take serious steps towards an independent life, there is already a financial system that he has to plan.

The personal finance system is our “ship on the sea of ​​life.” It must be sustainable and effective. No adversity, no storm should interrupt the journey. The system must be designed so that even if the ship is damaged, family members do not “drown”, but continue to go about their business, eat, dress, study, work, etc.

Why don't I like the "financial plan"?

In order for this mechanism to work, there is something called financial planning, a “personal financial plan”. This is an established name, a set of financial instruments and procedures that, ideally, enable a person to financially ensure the achievement of the life goals that he sets for himself.

I never liked this name, because it does not reflect the essence of the process, especially for a person who was born and raised in the Soviet Union, in Russia. For us, the word “planning” will be quite dubious for many years to come. First, it has discredited itself thanks to many years of planning practice in the Soviet Union. Secondly, making a plan is only part of any business. What is more important is managing personal finances, following this plan, being reasonable about it, constantly monitoring it and, possibly, changing it.

It is from this point of view, it seems to me, that it is better to consider all these issues.

Main goals

As a rule, the following tasks of personal finance management are distinguished:
increasing personal wealth and standard of living
savings for specific needs
protection of family members and real estate
loan payments
tax minimization
inheritance
investment

Among the main tasks that must be solved to successfully manage personal finances, I would highlight the task of increasing your personal wealth and improving your standard of living. Sometimes these two tasks are separated, but I believe that they should be considered together. A person always strives to improve his standard of living: to eat well, improve living conditions, receive good medical services, etc. The desire to have more capital, to expand opportunities in business and creativity is understandable. Perhaps for many people these tasks are not recorded anywhere, but when a person has a family and children, a natural intuitive desire to live better arises.

Among the tasks of personal finance management, a special place is occupied by the task of saving for certain needs. Savings programs may differ in goals, but essentially they are all the same. For example, a child was born in a family. We know that he will graduate from school at the age of 18, and we want to give him a good education and save money for education. Some parents start doing this immediately after the child is born, some - when he goes to school. The task can be formulated in different ways, but essentially it is one of the tasks of financial management.

People also save money for a car or a house.

Saving money for old age can be considered a separate task. This is one of the most important tasks in planning and managing personal finances. It is solved with the help of so-called pension programs. Each person determines when they want to retire and how much income they want to receive. Based on this, he selects a pension program and begins to implement it. In many countries, pension planning has certain benefits: the state encourages people to prepare for retirement. In Russia, pension programs are not yet very developed, but in the life of every person there comes a time whom he can count only on his pension money.

The set of tasks related to the protection of family and real estate is also extremely important. We can't foresee everything. You can plan for retirement, buying a house in a few years, saving a certain amount for your child’s adulthood, and much more. But personal finances must be protected from unexpected events. A person may become ill, lose his ability to work or lose his business. This can happen to anyone, and we must be protected, we must have enough money to get through these adversities.

Various types of insurance help solve such issues: medical, accident, life, and disability. In the same row there are issues related to home insurance: against fires, floods, accidents. We are talking about a whole range of issues of protecting yourself and your family from unforeseen events.

The next task of protecting personal finances is to pay off loans. In Russia, this problem is not yet very relevant; now the pressing issue is the size of the interest rate. In Western countries, where consumer lending has existed for decades, many families face the problem of getting rid of existing loans. Many, having fallen into this Kabbalah, then work their entire lives solely to pay off their debts. There is a Money Show program on American radio. Its host, Dave Ramsey, tells you every time how to avoid getting into loans and pay off your loans faster. The program is broadcast live, people call in, tell their stories, and the host answers questions. The climax is when those who have paid off all their debts shout into the microphone, and this cry is heard throughout America: “I am free!” - "I am free". These people don't owe anything anymore.

Tax issues are also included and are often considered as part of personal financial management. All over the world it is believed that if a person can legally minimize his taxes, he should definitely do so. Tax consultants specifically advise, train, and educate people on how to do this legally and correctly, and how to do so without overpaying taxes.

Another important aspect, which will become increasingly relevant over time, is the issue of inheritance, the transfer of capital from one generation to another. Russians are just beginning to face all the complexities of this procedure. It is necessary to take into account who and how the capital is transferred, what taxes will have to be paid, and how to train the heir so that he can wisely manage the capital that will be left to him. Which inheritance mechanism will work better in this or that case. These issues need to be resolved without delay. If you don't think about it, someone will think for you.

Last but not least is the issue of investment. Although it stands out separately, it is actually connected to almost all the others. A lot in personal finances depends on how funds are invested—savings, a pension plan, and almost everything. Including how the main task is solved - to preserve and increase what you earn. This is what our book will be devoted to, one of the central issues of personal finance management.

About the importance of the life cycle

To determine financial planning objectives, it is important to answer the question of where we are on the life cycle graph. A person is born, goes through a certain path in life and leaves for another world. During this time, he goes through a number of physiological, spiritual and other cycles.

The British identify seven stages in the life cycle, which are interconnected and determine a person’s financial goals and objectives:
childhood;
period before marriage;
early stage of marriage;
family with children;
family with adult children;
spouses of pre-retirement age;
pension.

Each of these stages has its own characteristics.

For example, taking care of children's financial needs before they become adults and start working typically falls on the parents' shoulders. Childhood is a happy time when you don’t have to wonder where money comes from, although many people now start thinking about it at an early age.

Young people who are not married are usually those who are studying or just starting out. They get their first income. They begin to think that they will someday start a family that will need an apartment, that it would be nice to collect some money for a wedding, for a car, for other things that are necessary for a normal life - family or non-family. But the main thing is that young people strive, if possible, to live independently, to move away from their parents. This requires money. This is largely due to his career, his education, and the aspirations that the young man has.

When people get married, financial problems increase. A young family needs to run a household, live somewhere, and take its first steps. Much depends on the help of parents, whether they had appropriate savings. Perhaps young people themselves earn well and can take advantage of a mortgage. At this time, people do not yet think about health insurance or pension insurance, and life seems endless.

People move to the next stage with the birth of a child. The situation changes dramatically, responsibility for the baby arises. The child is completely dependent on the parents, on their success, ability to feed, clothe, teach, etc. In this situation, the first priority from the point of view of financial planning is life insurance of one or both parents in favor of the child. This will protect the child until adulthood from the difficulties that may arise from the loss of one or both parents.

The next category is families where the children have already grown up. Here the question of education arises, costs increase along with the child’s needs, more income is needed. In addition, this is already the time when parents themselves should think that perhaps they need better living conditions, a larger living space. At this time, the issue of creating pension savings becomes very acute. Because the next stage that people will move into is the pre-retirement period, when it is too late to collect anything. If you have been thinking about your pension affairs, then, in principle, everything should be fine. If not, then this is the last chance to do something.

The last stage is the retirement period. Only then does a person begin to understand how wise he was, taking care of the financial security of his old age in advance, that he managed to place his money, and it worked and generated income. Then the person and the family will have a secure old age.

This is a very general overview of the cycles that every person goes through. From first steps until retirement, a person's income curve tends to increase. In most cases, retirement income decreases.

Common sense in personal finance

Of course, ideally, it would be great if a person was born with his own financial plan, where everything was written out, and, following it, walked confidently through life. But that doesn't happen. Of course, a financial plan is a good thing, but don’t blindly follow it, but act based on common sense.

You can draw the most blissful and beautiful picture, but life can turn your plan upside down the very next day after it is drawn up. Although there must be certain ideas and intentions.

I read the following example in a personal finance book. A certain gentleman, who increased his income through extreme frugality, from time to time went through his jackets and collected change from his pockets. He calculated how much he collected at one time, then extrapolated it throughout his life. It turned out to be an excellent source of income. I was very surprised how much money you can talk about when you collect money from your pockets. And most importantly, how do they get there?

We are taught to be thrifty and conduct family budgeting - write down how much you spent on travel, on electricity (turn off the lights in the room), not spend money on “snacks” (perhaps take sandwiches to work), buy cheaper things for your child. There are many similar examples; these measures must be taken wisely, without going too far. You can’t turn life into a scrupulous calculation of expenses. It seems to me that there are more prospects not in limiting spending to trifles, but in expanding the possibilities of increasing your income. Only those who see the main source of well-being in expanding the horizon of income from their investments can organize their personal finances correctly. This is the main thing. Although I, of course, do not call for extravagance or thoughtless spending of money. There should be moderation and common sense in everything.

Another example, again quite recent. I read in one magazine: a young family, both simple clerks earn little, but the plans are Napoleonic. In five years, they want a spacious house in the Moscow region, another in the Canary Islands, and an expensive car. And the magazine prints a financial plan for them. I thought this problem could not be solved... How it can be solved is simply that everyone’s salary in a year should increase to $50,000 and the possibility of achieving their goals is calculated using compound interest.

Of course, this fiction has nothing to do with financial planning. You must strive to earn more, perhaps start your own business - without this, no financial plan will help you achieve high goals, but you must be realistic; when defining your goals, you must not forget about common sense.

About the benefits of knowledge

In order to have a normal attitude towards the financial side of his life, in order to succeed, a person needs knowledge. They are even needed to communicate with a professional in order to receive paid consultations on a particular financial planning issue. Adults need to read certain literature, follow the press, listen to what colleagues and friends say. For young people, for children, the issue is more serious. Children in every family, to one degree or another, need to be explained in simple and understandable language what money is, how it is earned, what it is worth spending it on and what it is not, how to save money, how it is invested, how it is saved, what inflation. Using the example of how financial policy is conducted in a particular family, a child should see and learn how to relate to money. Perhaps, over time, this will be taught in school. In any case, parents should do this unobtrusively. Every person should have some level of financial education. The greater your understanding of issues related to personal financial management, the greater the chance that your family's finances will be in order.

Fundamentals of investing. Features in the “little things”

The story of how I offered Scottish Life to everyone

It was the end of the 90s, I started my work in a new company of international financial consultants. I wanted to immediately show my best side. I was the only non-Englishman in the company, it was quite difficult for me. At that time, I believed that the most successful investment product was the offer from Scottish Life Int.. I will talk about this in more detail later, but for now I’m talking about the fact that, in my opinion, a rather interesting product appeared on the market.

Its idea is that an investor can choose an acceptable level of risk for himself and, depending on it, see the results of his investments every three months - positive or negative. For example, you could make a “bet” that the US stock market will rise over the next three months. If this happens, you receive your bonus, which is announced in advance. If you want the premium to be higher, you can choose not a 100% guarantee, but, say, 95%, risking five percent of your capital. Then, if the US market rises, you will receive a large premium, if not, your losses are limited to 5%.

Such programs were also connected to other markets - European, Japanese, and certain combinations could be made. Then it seemed to me that this was a fairly simple product that would be attractive to investors and that I could quickly make big sales.

I held many meetings and presentations, but there was no return. No one bought this product, no one even tried to find out more about it.

Finally, a person appeared who was interested in this product. This was a famous Russian hockey player who played in the NHL for a long time and managed to save a fairly large sum. His career was over, and his coaching work had not yet brought in large fees. He began to think about how to make the money that he had in bank deposits work more efficiently.

Finally, I had the opportunity to prove myself in a new company and at the same time do a good deed for a respected person. This proposal also interested me because at one of the seminars a famous financial consultant said that he had made his career serving only famous athletes. They really value good consultants, because their work does not leave them time to deal with their money, and they are often deceived.

In my dreams, I drew and saw among my clients an army of famous athletes who did not know what to do with the money.

We sat down in the hall. I had the idea of ​​getting his autograph, then I thought that I would do it later. I told him what a great product it was, what company offered it, how reliable it was. I clicked one slide after another, it seemed to me that everything was going very well. The hockey player was silent. I took his silence as agreement and continued. I juggled numbers, showing how great it would be if the money had been invested three, four, five years ago. So we come to the end of the presentation. The hockey player was silent. I asked if he had any questions, maybe I should go into more detail. He looked at me and said: “No, you told me everything. It’s really interesting to invest money and wait for results every three months. But in this case, I prefer Las Vegas. There you also know your risk, but you don’t have to wait three months for the results. Thank you".

To say that I was left bewildered would be an understatement. It was a disaster. But over time, this collapse helped me understand one simple thing, which is discussed in this paragraph: all people are different, each has their own needs, tasks, level of professional training, vision and investment experience, and finally, their own common sense. Based on all this, a person looks for the option that suits him best. There are no universal methods that would suit everyone.

This episode was a turning point for me, a lesson that showed me that you can’t come to a meeting with a ready-made solution, I’m no smarter than the people who need my services.

On the one hand, we are all the same, we want the same thing: to live normally, provide for our children, have a good old age, in case of illness, have money to get through difficult times, and so on. But at the same time, we are all very different. When we have to solve problems related to investing, we must understand that our task is typical in some ways and unique in others. We need a person who does not just sell some product, but who will listen to us, understand our characteristics and make us an offer that will meet our wishes and objectives.

What is investing?

There are many definitions of the concept of “investing”. Let's try to look at this issue from the point of view of common sense. What for each of us, for ordinary people, plays the main role in this process, what do we mean by this concept?

Firstly, we can highlight the following chain here: “money – time – money”. It is very similar to the famous formula “money – goods – money”, which is a kind of modification of the investment principle. Simply put, we invest money. This means that we part with our money for a while, alienate this money from ourselves, expecting that after some time it will return to us, but in a larger amount. Here is the basic principle: we invest D and after some time we want to receive D. And the more D, the more successful our investments are.

Time is one of the essential factors of investing; it determines how effective an investment is. It’s one thing to get 50% of your income in a year, and another to get the same 50% in five years. Therefore, there is a certain connection between the duration of investment and the return we receive.

Unfortunately, there is a possibility that by investing our money in this or that project, in certain stocks, bonds, we may receive less income than we expected. You may not receive any income at all. This probability of obtaining or not obtaining the result we expected is risk. Therefore, there are two basic concepts in investing that you always need to remember, which should always be in any of your calculations: time and the risks you take on.

What does “I can” and “I want” have to do with it?

We will talk in more detail about possible risks a little later. Now I would like to talk about the eternal conflict that exists between the two concepts of “I want” and “I can”. This is a philosophical question. This conflict exists in various spheres of human activity. It manifests itself in investing in its own and very interesting way.

When a client comes to me, I usually ask him: “What kind of return would you like to get from investing your money?” Often they answer me: “maximum”. And to my question: “What risk are you willing to take?”, the answer, as a rule, is “minimal.” And this conflict between “I want” and “I can”, between the eternal and understandable desire, characteristic of a person, to invest one’s money and receive maximum income from it, while at the same time not risking, or risking very little of one’s money, is very important. This is the basic conflict.

This is where a financial advisor's work begins. His task, among other things, is to help resolve this conflict, if possible, by directing the client’s desire to invest his money in the right direction, in the direction of common sense, to ensure that the investor invests money with the level of risk and for the period that he can afford. Not higher and not lower. Because if an investor invests his money with a risk lower than what he can afford, then his return will be less and in the end the client will not be happy. If he invests his money at a higher risk than he can afford, he may lose some money.

We will talk in more detail about how to work with a financial advisor and how to choose the right financial advisor in the seventh chapter.

Four factors that influence investor choice

I would highlight four main factors that determine an investor’s choice of a particular investment product:
Investment problem
Risk attitude
Time
Professional preparedness.

Returning to my unsuccessful experience of selling Scottish Life products, I should first find out about all these factors in detail from the hockey player, and only then decide whether to offer him this product.

Main objectives of investing

First of all, I would like to highlight three main objectives of investing. In the first paragraph, we talked about the tasks of financial planning: about pensions, about savings for children, about the tasks of increasing capital, and so on. All these and other similar tasks, from an investment point of view, can be grouped into three main categories. The first is the preservation of capital, the second is the generation of income, the third is the growth of capital. The names themselves already speak about each of the tasks, however, let’s say a few words about each of them.

The task of preserving capital is very important for a person of any age, for any family with any level of income, because every day, a beast called “inflation” eats up a piece of what we have earned. We can talk a lot about how to fight inflation, but we cannot influence it. The only thing we can do is defend ourselves.

In 2007, when this book was written, inflation in Russia was about 12%. This means that with the money you have saved, you can buy 12% less. Moreover, among wealthy people, money depreciates faster: real estate and luxury goods rise in price much faster than those by which inflation is calculated.

In many other countries, inflation is less, but it still exists. In America, inflation has averaged 3% over the past 20 years. Inflation in Europe is at approximately the same level.

Saving money means, first of all, protecting it from inflation. There are many possibilities for this. The most common way is to keep money on deposit in a bank. As a rule, in Western banks the level of deposit rates is slightly higher than the current inflation rate. In Russia, deposit rates now, as a rule, do not cover inflation.

The task of capital growth is related to the first task of conservation: naturally, a person wants money not only to maintain purchasing power, but also to grow. That is, so that income exceeds inflation. This is a slightly different task. It is more associated with risk, and completely different tools are used to solve it. If we are talking about financial investments, then these are mainly investments in shares. We will look at the pros and cons of this approach in more detail further.

The last task is to generate regular income. As a rule, it is typical for people of retirement age or who have left work for one reason or another. They are losing their source of income, and it is important to them that the money they have brings them a regular income on which they can live.

When choosing a particular product or strategy, an investor must focus on what problem he is solving: preserving or growing capital or generating income. Often an investor has all three of these tasks at the same time. Then the task of a financial consultant is to help, correctly structure the problem and offer the right complementary solutions.

Risk attitude

At its core, risk is uncertainty, the possibility that investments will not behave as we expect. Taking risk into account when planning investments plays a key role.

How to determine risk and your attitude towards it? What level of risk can you afford? All these questions need to be answered before investing your money. Often, an investor, influenced by the beautiful promises of a broker, financial advisor, or the example of a neighbor who received 40% over the past year, invests money and after a while suffers losses. Then he goes to a professional for advice.

In such cases, I say: “The first thing you need to start with is to determine your level of risk, how much risk you can afford. Only then can you move on to analyzing your situation and understand what to do: perhaps you need to wait, perhaps restructure the portfolio, or simply record losses and start all over again, using a different investment strategy and other tools.”

Unfortunately, such answers are not very popular. Customers want quick solutions. They are not interested in returning to some basic concepts in such situations; it seems to them a waste of time. But investment is not a fire, where delay is like death. Here, such hasty actions can only aggravate the situation.

Journalists often turn to me for comments. When the market goes down, a typical question is: “What should a private investor do now?” And when I answer the same thing I tell my clients: “First of all, you need to sit down and figure out how much risk you can afford. And only after this and depending on this make decisions.” By and large, this should have been done before investing even a ruble in the stock market. Without this, it is better not to approach market instruments with significant amounts for the investor. Sooner or later this may end badly. If you haven’t done this before, then you definitely need to do it when the first signals of the crisis sound. It is imperative to return to this issue and understand where you “are.”

Such responses have never been published. What's interesting about them? But this boring solution is the most reasonable, believe my experience. By the way, no one asks how an investor should behave when the market is rising. This clearly reveals the psychology of the crowd, the psychology of success.

How to measure your risk?

I usually define the level of risk quite simply. The calculation may be crude, but it is clear to investors: the risk is equal to how much you want to earn. If you want to earn 10% in a year, expect your risk to be 10%, maybe a little more, a couple of percent. If you want to earn 20%, then the risk of loss may be 20–25%. If you want to earn 50–60%, your risk may be somewhere around the same level. And the more income you want to receive, the greater the difference between possible losses and your goal. There is no more precise formula, and there is no need for it. It is enough for a person to know that if he wants to get 10–15% per annum, under unfavorable conditions he can lose about the same amount.

The Association of American Investors, in order to somehow open up this issue to its members, uses this classification. They choose three levels of risk: low, medium and high. The main question is: what level of losses can you endure in one year without changing or stopping your investment plan, i.e. What level of risk can you bear in one year without changing your investment decisions? If up to 5%, then you are a low-risk investor. If you can survive losses of 6–15%, then your risk level is medium. And if 16–25% losses are acceptable for you, then you are a high-risk investor.

This primary classification can immediately outline the tools you can use. For example, for a low-risk person who cannot afford losses of more than 5% per year, there is no question of any stocks or investments in developing countries. It has very clear limitations: deposits or very reliable low-risk and low-yield bonds.

But for now we are not talking about choosing a tool, but about the fact that each person should classify himself. This can be done in different ways. The main thing is to accept the risk that there is no free lunch.

It is not necessary to make categorical decisions, choosing “black or white”. Everything in life is more complicated. As a rule, an investor has a multi-risk profile: some part of the money in his portfolio can be invested in instruments with a low level of risk, some - with an average level, and some - with a high level. Even a very cautious person can afford to have 3-5% of high-risk assets in his portfolio. It depends on what goals the investor has.

Risk is a very dynamic concept. It needs to be clearly defined, and not once and for all. Conditions change along with your career, age, and family composition. Therefore, it is better to reconsider from time to time whether your risk level has been correctly determined. If you do this, then when journalists once again start talking about a crisis in the stock market, you will calmly survive it, although it will be unpleasant.

In such cases, it is very important to remember common sense when analyzing your risk profile. George Soros, in his famous “Alchemy of Finance,” called the risk you can afford very lucidly: “the instinct of self-preservation.” In crisis situations, in his opinion, it is important to determine what level of risk each of us has “in reserve.” There are no universal methods here, Soros writes, each situation must be assessed separately, and in the final assessments you must rely solely on your instinct of self-preservation.

We must always remember this.

What does the past say?

To feel the connection between risk and the use of various assets, let us turn to the statistics of the American company Dalbar, which annually publishes special studies on these issues.

The average investor in the US market received a return of 132.5% over the past 20 years, from 1987 to 2006. In the best month, his capital grew by 9.4%; in the worst month, he lost 26.9%.

What happened once can happen again. When investing money, say, in stocks, remember that you can not only earn money, but also survive a month during which you will lose 27% of your capital.

We were talking about the average investor who invested in American stocks. And what risk does investing in fixed income instruments – bonds, government and corporate – carry? They have brought little over the past 20 years: 39.7%. During the best month, the average investor earned 3.6%, and during the worst month, they lost 3.4%. history shows that the possible losses here are much lower, but the potential income is also small.

Another category of investors uses the asset allocation method. Their portfolio contains various assets, including stocks and bonds. On the Russian market, their analogue is mixed funds. Over 20 years, the average investor here earned 104.7%. Moreover, in the best month his income was 7.2%, the worst result was a 10.3% loss. Thus, a mixture of stocks and bonds allows us to reduce the risk of loss and at the same time receive more income than bonds will bring, but less than we can get by investing only in stocks.

These numbers confirm the basic principles of risk that we discussed above.

We talked about risk, but how much can you earn? To have some kind of reference point, let’s again take the American market. Over the past 20 years, the average American investor has received a small return: 4.3%; over the past year the return was much higher: 14.7%; over the past three years - 11.3%. Those who invested in a wide range of securities - the S&P 500 index (calculated based on the stock prices of the 500 largest US companies) over the past 20 years have earned an average of 11.8% per annum, in 2006 - 15.8%, in the last three years – 10.4%.

Inflation in the US over the past 20 years has averaged 3%, so those who have invested in US stocks for 20 years have covered the inflation component. The same cannot be said about those who invested in various fixed income instruments: the average income of such an investor over the past 20 years was 1.7% per annum, over the last year - 2%, over three years - 0.9%. More interesting are the results of those who worked with long-term government bonds. For example, the average return of the Long Term Government Bond Index over 20 years was 8.6% per year, over the last year - 1.2%, over three years - 5.8%.

Now we do not set ourselves the goal of analyzing why it turned out this way and not otherwise; we will consider this issue further. I presented this data to understand what the risk levels are, what we can expect if we are in a particular risk group, both in terms of income and losses.

Time

The next factor that influences an investor's choice is time. This may even be the main factor. Because based on all the investment experience that we can observe, a person will never get a negative result if it is unlimited in time. But we live for a limited time. We need income from our investments by a certain time, so restrictions on the use of our money are very important.

The simplest and most general formula for determining the time for investing is the time from the moment we invest money until the moment when we need or may need this money for other purposes, for example, paying for a child’s education, buying a house or apartment, for use as pension money. Therefore, it is customary to distinguish three categories of investors according to time: short-term, medium-term and long-term investors.

As a rule, a short-term investor is one who invests money for one to two years, a medium-term investor from three to five, and a long-term investor from five or more. Some believe that a long-term investor is one who can invest money for ten years, there is no exact classification. This is only a first approximation, but it allows us to classify the investor as a potential user of certain investment products.

Typically, any family has money that can be invested for a year or two, there is “long-term” money that can be invested for a long time, and there may be medium-term money.

For a short-term investor, it is better to forget about investing in stocks. I think even bonds are quite risky for him. Therefore, bank deposits are best suited for such an investor.

Here's a typical situation. The client says: “I personally, or our company, have available funds, and we won’t need them within a year. How can we use this money so that it does not sit idle and so that we get a good income from it? True, we would not want to take risks because in a year we will need this money.” If it is a company, this could be the purchase of equipment or the start of construction, for a person it could be the purchase of a house. I have to disappoint my clients, I see this disappointment in their eyes, because I say: “So far, no such method has been invented that would allow you to use your money without risk or with little risk within a year with an income significantly exceeding the bank deposit. The best option is to find a good deposit, and if the amount is large, then request conditions from several reputable banks and choose the most profitable option.”

If an investor has an average time horizon, say 3–5 years, you can use not only deposits, but also bonds. A small portion of the money can also be invested in shares of large companies (blue chips) or investment funds that invest in blue chips. But a significant portion of the money should be invested in fixed income instruments.

Why do most classifications consider a five-year period to be the threshold? The answer is very simple. The fact is that on average the economic cycle lasts five years. If you have more than five years, then you have a high probability of compensating for possible losses. If you have ten years, then you will almost certainly have the opportunity to go through this cycle: even if you enter the market at the peak, after a major decline, you will have time to recover. Therefore, investors who have a time horizon of five to ten years can afford the full range of investment instruments, including any shares.

Professional preparedness

As a fourth factor, I would highlight the level of professional preparedness. What does it mean?

When you visit your doctor, you may encounter several typical approaches. Let's say a doctor conducts a diagnosis, identifies your problem, and prescribes a course of treatment. At this point you part ways. The procedure is very fast: the doctor is a professional and knows what he is doing, your task is to follow his instructions.

The second option is that the doctor first tries to explain to you what is happening. Often, a doctor can show this on a diagram: there is inflammation here, so it hurts here. He is trying to clearly explain to you what is hidden from you, but he sees thanks to his experience, analyzes performed, and so on. After explaining, he tells you what treatment is offered, and the patient understands what is happening to him and what the doctor is offering.

How are these two methods different? There are people who don't want to know, they need to get their pill and take it. Others want not only to accept it, but also to understand what is happening to them.

The second method is closer to me. I try not to deal with people who come and say: “Here’s your money, invest it wherever you want, I made inquiries about you, you were recommended to me, I trust you, here are my conditions, we’ll meet in a year and see what the results are.” . A person should not invest money in a black box based on trust or distrust in a financial advisor. The ideology is closer to me: when we set a task together with a client, I explain to him why we do it this way and not otherwise. He has the right to choose, the right of veto, because it is his money.

Here we are faced with the issue of professional preparedness. What can you explain to an investor who has never invested money in the stock market in his life? Another thing is an investor who has been doing something for at least a couple of years, who has investments, for example, in mutual funds, he has already felt how the market works. I'm not even talking about those who consider themselves professionals in this field, who have been playing in the market for many years, who have their own philosophy, their own approach, and they want their money to be invested from these positions.

Therefore, I focus not only on the fact that I will serve the client for many years, but also on educating him in the field of investing. I want him and I to begin to speak the same language over time, so that over time we can discuss quite complex tasks. Such clients come with their own proposals and look at reports differently.

If you do not feel that you are sufficiently prepared, but want to do something on your own, start with the simplest tools that you understand, with small amounts. Study, read, don’t think that you’re wasting your time. Everything will come back to you later. Never invest money “at random” or because someone else did the same. Try to understand, at least at the level of the picture that the doctor shows the patient, what is happening and why, what results you can get, what you are striving for.

So, we looked at four main factors that influence an investor's choice. I would also like to say about how our preferences change depending on our life cycle.

Over time, the horizon narrows and the ability to take risks becomes less and less. If at the very beginning we prioritize growth, then by retirement age we prioritize income generation. At the age of 20–25 we are ready to take more risks, but by mid-life, in the second half of life, the risk decreases, it averages out, and by retirement it becomes very small.

Editor Boris Safronov
Project Manager N. Kazakova
Technical editor N. Lisitsyna
Corrector E. Aksenova
Computer layout A. Abramov

© Bekker I.I., 2009
© Alpina Business Books LLC, 2009
© Electronic edition. Liters LLC, 2013

Becker I.
Do not lose! What did “papa” Kiyosaki keep silent about? Common sense philosophy for the private investor / Isaac Becker. – 2nd ed. – M.: Alpina Publishers, 2009.
ISBN 978-5-9614-2825-4

All rights reserved. No part of the electronic copy of this book may be reproduced in any form or by any means, including posting on the Internet or corporate networks, for private or public use without the written permission of the copyright owner.

Preface from the publication's partners

Dear friends!
I am very glad that we are URALSIB | Bank 121, working in the field of Private Banking, provided support in the publication of Isaac Becker’s book “Don’t Lose It! What did “papa” Kiyosaki keep silent about?” Firstly, the author is well known and respected in the professional community. We have been reading his columns in Vedomosti for many years. Secondly, our bank has experience of cooperation with Isaac Becker, and we have seen in practice that we are dealing with a wise man and a highly qualified specialist.
In my opinion, the book you are holding in your hands is relevant and multi-layered. Each reader will be able to find in it what interests him most. So, for young people, the chapters on personal finance management and basic investment tools, their pros and cons, will probably be the most interesting and useful. The attention of older and wealthier people will certainly be attracted by material about global investments and the “English” method of organizing investments. A meticulous reader will read this book from cover to cover, and a busy business person will be able to instantly grasp the essence by reading the advice that the author gives after each chapter. In general, I am sure that this book will not leave anyone who is seriously concerned about preserving and increasing their capital indifferent.
If, after reading it, you understand that it’s time to take your personal and family finances more seriously, and want to become a more effective and modern investor, then know that we at URALSIB | Bank 121 will always be glad to see you and will provide comprehensive assistance in any of your endeavors.
Happy reading!

Sincerely,

Andrey Degtyarev

Chief executive officer

URALSIB | Bank 121

Introduction

Who is this book written for and what does it not teach?

I wrote this book for quite a long time. The idea has been around for a long time, but its plan has been on my desk for about a year. And only when I realized that this is, in principle, what, in my opinion, is needed, I began to prepare it. I carried her as a woman bears a child.
Working as a financial consultant, I often have to meet with people, listen to their problems, tasks, prepare proposals for them, and then collaborate with them for years. Many become close friends to me, I know their families, birthdays and problems. And every time I walk the same road.
As a rule, the person who comes to me for advice has very little knowledge in the field of personal finance: how best to organize their money, where to invest it, how to protect it, how to pass it on to the next generation. Sometimes it even seems surprising: a professional in his field, who has managed to build an excellent business that brings in good income, is lost when it comes to organizing his personal money. These people's success in business does not give them knowledge and experience in working with personal finances. Each time we slowly begin to go through this school, I explain simple things to them, answer their questions.
These questions are usually the same. So I decided to put them together and try to answer them in this book.
This has a certain benefit for me. With a person who reads this book and comes to me for a consultation, I will spend less time on educational programs, leaving more time on solving specific problems.
This, of course, is not the main thing. My goal is to paint a holistic picture of personal finance and investing based on my years of practical experience as a financial advisor.

Where it all started

What does rich dad have to do with it?

I am one of those people for whom the name plays a decisive role. I am inclined to think that it is important to name a child correctly, because by giving a name, we often determine the fate of a person. When I write my workshops, it is very important for me to give the right title, pose the right problem and then solve it. Same with a book. This is not just a name, this is what is now called message - “message”, this is the concept that I tried to present in this book.
The headline “What did Kiyosaki’s “papa” keep silent about?” taken from one of the workshops that is in the book. By including it in the title of the book, I, of course, wanted to add some kind of intrigue, to distinguish the book from many similar ones. But the main idea of ​​this book is in the title. "Common Sense Philosophy for the Private Investor."
It’s hard to imagine how many books have been written about personal finance, investment methods, how many strategies and mind-blowing ideas have been invented on how to make big money in the stock market. Every year there are more and more of these books, new ideas are born. How can an ordinary investor, a person who has achieved success and earned his money, understand all this variety of approaches, methods, and tools?
I consider investing to be a fusion of art and science, where there is no formula for success. Therefore, it is best to be guided by a common sense philosophy, and this is the philosophy I try to carry throughout the book, giving the investor - future or present - a semblance of a guiding thread that can help him in any situation related to the issues of preserving and increasing his money.
This common sense philosophy determined the structure of the book. It is very simple and, I hope, understandable for anyone who has ever thought about their money: how to save it, how to protect it from inflation, how to save up certain funds for a child or for education, how to ensure a good pension and a decent old age.
First, we will talk about what needs this or that person has, what financial goals he has and how to set them correctly. Next, I will tell you what tools you can use to achieve these goals. This will be the subject of the second and third chapters.
Many people, especially those who are just starting to invest their money in the stock market, are afraid of it, and they are rightly afraid. They do not want to risk their money; it is important for them that there is no risk of loss. Therefore, a special chapter is devoted to products that allow you to invest in just this way.
The fifth chapter is about portfolio investments. It is more interesting to those people who have large investments, who invest not in one or two mutual funds, but have the opportunity to organize their own investment portfolio. How best to do this, what types of portfolios there are, whether the ideal to which we strive is achievable - these are the main questions that are discussed in this chapter, and it seems to me that this is quite enough for a person to get an idea of ​​​​what portfolio investment is and how best to approach them.
The sixth chapter is devoted to organizing investments. It is not enough to know and use good tools; it is also very important to properly organize your investments. Sometimes skillful organization of investments solves almost all the investor’s problems - even without investing money. In this chapter I will talk about one of these methods, which I prefer myself. This is the “English Method”, which has been very popular in the UK for decades.
All this is just a popular description of the problems of investing. It is better to solve your financial problems with the help of a professional - just like you go to the doctor with health problems. But a good doctor is “passed from hand to hand,” and it’s the same with a “financial doctor.” Therefore, in the seventh chapter I will try to tell you how to find a good financial advisor, how to work with him, and what you should pay attention to.
The last chapter is about common mistakes when investing and how to avoid them.

Who is this book written for?

It is not intended for those who are looking for get-rich-quick recipes, nor is it intended for those who want to learn a super-efficient method for trading the stock market. I don’t believe in such methods at all, because the method described in the book, even if it was successful, as a rule, after publication it stops working and is interesting only from the point of view of a certain experience. This book is not for such people. Therefore, if you hold it in your hands in a store and look at the introduction, put it down - it is not for you.
This book is for long-term investors, for those who make money in areas not related to finance. It is for those who want to gain insight into personal finance management and who want to speak responsibly and knowledgeably with their financial advisors. This book is for such people. I hope it will be useful for them.

How to read this book

A modern business person has little time. I want to read a lot of books - professional, fiction, and historical, but I put it off every time. This is especially true not for entertaining books, but for those that require intelligence. Therefore, it is difficult to imagine a person who, no matter how much he needs advice, will take a thick tome and read it from cover to cover.
Therefore, I have compiled this book so that the reader can use it no matter how much time he has. Everyone can choose those parts that are more interesting to them.
You can read a book from beginning to end or skim through it in half an hour. It's enough. If you read the introduction and then the consultant's advice at the end of each chapter, then in about half an hour you will have some idea of ​​the entire book and may even be able to use the advice given.
Those who have more time can go a different route. Each chapter is divided into two parts: a description of the problem (without complex conclusions, an abundance of numbers and graphs) and a workshop for the investor, which examines specific cases. Therefore, if you want to quickly read the entire book, you can simply skim the contents of the chapters without reading the workshops.
For the prepared reader, perhaps the greatest interest is in the workshops - specific cases from my practice as a financial consultant.
I specifically kept them in the form in which they were written for Vedomosti - not published, but written, because there is always not enough space on the pages of the newspaper, and many columns were shortened. The philosophy of common sense for a private investor does not exist “in general,” but only in relation to a specific event. What is important is the knowledge that we had at that time, and what we were guided by at that moment when making a decision.
In conclusion, I want to express my gratitude to the people without whom this book would not have been possible, without whom I would not have succeeded as a professional financial advisor.
This is first of all my first teacher Ross Pace, who recently celebrated 40 years in financial advice. He taught me my first lessons in international financial consulting. I am very grateful Kevin Mood, who headed the financial advisor network OFS WorldNet, where I started working. He was very kind to me when I started my career and still supports me today.
I'm also very grateful Donald Graham, one of the smartest and most talented people I have met while working in the financial services industry. This is an encyclopedia man: when I have a difficult question or doubt, I can consult with him and know that I will always get the correct answer that I need.
I am very grateful to one of my first teachers Chris Holley, former representative of the insurance company Generali International in Europe and the Middle East. I have never seen such sellers! This man cannot be refused, with his drive and charm he can sell anything, he can present the material in such a way that it looks tempting and interesting, but at the same time he is an extremely honest and responsible person.
I would like to express special gratitude to those with whom I work at Vedomosti, who help me prepare my columns. Boris Safronov for me is a kind of tuning fork for my successes or failures. Lyudmila Koval, who has been editing “Personal Account” for recent years, is a person of great tact; her comments are always to the point and specific.
Special thanks to all my clients. Communication with them was a movement in both directions. I helped them in financial matters, they shared their experience with me, I learned worldly wisdom from them. As I interact with each of them, I add something new to the common sense philosophy I use for those I work with.
The book has been written. She begins her independent life. I will be grateful to everyone who sends me their comments and suggestions on [email protected]. The best of them will be used in the preparation of the next edition, and their authors will receive free invitations to my seminars and master classes.
In conclusion, I would like to wish the readers of this book a good time, new ideas and prosperity.
Good health to you and your finances!

1. What do you want? Draw a self-portrait and set a task

1.1. Personal finance management. We all want the same thing

Professional look

There is such a thing as a “professional look”. For example, a tailor, seeing a man, willy-nilly determines whether the suit fits him well, paying attention to all the flaws or, conversely, noting that the suit looks great, made by a good craftsman from very beautiful expensive fabric. Likewise, a dentist, looking at a person, pays attention to his teeth. But this can only be seen by a specialist.
A fashionista will always, whether she wants it or not, scan a woman who comes to any reception. She will note how she is dressed, whether she matches today's fashion, what is new on her, and what is from the previous collection and which fashion house, she will appreciate her handbag and especially jewelry. People who value wealth and understand it will try to determine your well-being and financial capabilities by looking at your car.
This is people's professional view of the world. The financial advisor also has it.
When I talk to my clients, answer their questions, I see some kind of floating craft in the ocean. It shows the person who came to me, his family, close people, his house, car, bank accounts, business, children from other marriages, perhaps a mistress. Everyone who is connected financially with this person, whose well-being depends on his financial condition.

What are you sailing on?

As a rule, people start their swimming journey with something simple. Over time, the young man's "raft" can turn into a ship or an ocean liner. In any case, it’s hard for me to imagine the “ship” of Bill Gates, Warren Buffett, Roman Abramovich or other super-rich people. But we are not talking about them, but about the principle, about the professional view.
I often ask myself the question: why did I develop this view? The answer is simple: a person constantly needs money, no matter what he wants to buy - food, medicine, goods, services. That's how life works. Figuratively speaking, money keeps a person and his family afloat. Family personal finance is the float that helps people navigate the ocean of life.
Of course, money cannot buy health or happiness, but we will leave questions about the meaning of life to philosophers.
Everyone has their own personal finance system, whether they have thought about it or not, whether they make efforts to improve it, or whether there is no such phrase as “personal finance management” in their vocabulary. A poor student who is just starting his life's journey already has his own financial system: his parents give him part of the money, he receives part of it in the form of a scholarship, and he may also work part-time. Intuitively, without resorting to complex calculations, he knows his needs: his parents will buy him one thing, and he will have to save for another. The scholarship is not much more than the cost of going to a club with a girl, which means you need to earn extra money. Even at such a primitive level, when a person is still connected by a financial umbilical cord to his family, but has already begun to take serious steps towards an independent life, there is already a financial system that he has to plan.
The personal finance system is our “ship on the sea of ​​life.” It must be sustainable and effective. No adversity, no storm should interrupt the journey. The system must be designed so that, even if the ship is damaged, family members do not “drown”, but continue to go about their business, eat, dress, study, work, etc.

Why don't I like the "financial plan"?

In order for this mechanism to work, there is something called Personal Financial Planning, “personal financial planning”. This is an established name, a set of financial instruments and procedures that ideally enable a person to financially ensure the achievement of the life goals that he sets for himself.
I never liked this name, because it does not reflect the essence of the process, especially for a person who was born and raised in the Soviet Union, in Russia. For us, the word “planning” will be quite dubious for many years to come. First, it has discredited itself thanks to many years of planning practice in the Soviet Union. Secondly, making a plan is only part of any business. What is more important is managing personal finances, following this plan, being reasonable about it, constantly monitoring it and, possibly, changing it.
It is from this point of view, it seems to me, that it is better to consider all these issues.

Main goals

As a rule, the following tasks of personal finance management are distinguished:
increasing personal wealth and improving living standards;
accumulation for certain needs;
protection of family members and real estate;
loan settlements;
tax minimization;
inheritance;
investment.

Among the main tasks that have to be solved to successfully manage personal finances, I would highlight the task increasing personal wealth and improving living standards. Sometimes these two tasks are separated, but I believe that they should be considered together. A person always strives to improve his standard of living: to eat well, improve living conditions, receive good medical services, etc. The desire to have more capital, to expand opportunities in business and creativity is understandable. Perhaps for many people these tasks are not recorded anywhere, but when a person has a family and children, a natural intuitive desire to live better arises.
Among the tasks of personal finance management, a special place is occupied by tasks savings for specific needs. Savings programs may differ in goals, but essentially they are all the same. For example, a child was born in a family. We know that he will graduate from school at the age of 18, and we want to give him a good education and save money for education. Some parents start doing this immediately after the child is born, some - when he goes to school. The task can be formulated in different ways, but in essence it is one of the tasks of financial management.
People also save money for a car or a house.
Can be considered as a separate task saving money for old age. This is one of the most important tasks in planning and managing personal finances. It is solved with the help of so-called pension programs. Each person determines when they want to retire and how much income they want to receive. Based on this, he selects a pension program and begins to implement it. In many countries, pension planning has certain benefits: the state encourages people to prepare for retirement. In Russia, pension programs are not yet very developed, but there comes a time in every person’s life when he can only rely on his pension money.
The complex of tasks associated with family and property protection. We can't foresee everything. You can plan for retirement, buying a house in a few years, saving a certain amount for your child’s adulthood, and much more. But personal finances must be protected from unexpected events. A person may become ill, lose his ability to work or lose his business. This can happen to anyone, and we must be protected, we must have enough money to get through these adversities.
Various types of insurance help solve such issues: medical, accident, life, and disability. In the same row there are issues related to home insurance: against fires, floods, accidents. We are talking about a whole range of issues of protecting yourself and your family from unforeseen events.
The next challenge for protecting personal finances is pay off loans. In Russia, this problem is not yet very relevant; now the pressing issue is the size of the interest rate. In Western countries, where consumer lending has existed for decades, many families face the problem of getting rid of existing loans. Many, having fallen into this bondage, then work their entire lives solely to pay off their debts. There is a Money Show program on American radio. Its host, Dave Ramsey, tells you every time how to avoid getting into loans and pay off your loans faster. The program is broadcast live, people call in, tell their stories, and the host answers questions. The climax is when those who have paid off all their debts shout into the microphone, and this cry is heard throughout America: “I am free!” - "I am free". These people don't owe anything anymore.

Do not lose! What did “dad” keep silent about? Kiyosaki? Common Sense Philosophy for the Private Investor Isaac Becker

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Title: Don't Lose It! What did “papa” Kiyosaki keep silent about? Common Sense Philosophy for the Private Investor

About the book “Don't Lose It! What did “papa” Kiyosaki keep silent about? Common Sense Philosophy for the Private Investor Isaac Becker

At all times – both during a crisis and in “peaceful” times – every normal person is concerned with the question of how not to lose and increase what he has earned. Well-known financial consultant Isaac Becker approaches this problem from a position of common sense, drawing on his many years of experience working with foreign and Russian clients. Revealing the secrets of organizing personal finances, he talks about the most effective modern methods of protecting capital and investing money, and gives many practical examples of solving difficult everyday problems. The author wrote the book at a time when the financial crisis of 2008 was unfolding, and this was reflected in the presentation of the material and recommendations.

The book is intended for a wide range of readers, but it will be especially interesting to those who have already earned their first million, and to those who are just trying to earn it.

2nd edition.

On our website about books lifeinbooks.net you can download for free without registration or read online the book “Don’t Lose It! What did “papa” Kiyosaki keep silent about? Common sense philosophy for the private investor" by Isaac Becker in epub, fb2, txt, rtf, pdf formats for iPad, iPhone, Android and Kindle. The book will give you a lot of pleasant moments and real pleasure from reading. You can buy the full version from our partner. Also, here you will find the latest news from the literary world, learn the biography of your favorite authors. For beginning writers, there is a separate section with useful tips and tricks, interesting articles, thanks to which you yourself can try your hand at literary crafts.

FCP (Financial Management) Ltd. *speech via audio conferenceInternational financial consultant

Professional experience

Dr. Isaac Becker is a renowned international financial consultant.
He is a member of the US Association of Financial Advisers and the UK Society of Financial Advisers (The Personal Finance Society).
Certified by The Chartered Insurance Institute (London) as an International Certificate for Financial Advisors.
Dr. Isaac Becker has been working in the field of financial consulting since 1991 (International Business Agency). Became a member of the FCP (Financial Management) Ltd team in 1999. Specializes in working with VIP clients. He also actively advises banks and financial companies on the effective organization of Private Banking and Wealth Management.
Dr. Isaac Becker has more than fifty publications on personal finance and investing.
He is the author of the “golden” book - the bestseller “Don’t Lose It! What did “papa” Kiyosaki keep silent about? Common Sense Philosophy and Practice for the Private Investor."
His articles and comments can be read in such well-known publications as Forbes, Vedomosti, RBC Daily, Smart Money, Arguments and Facts, Money, Company Secret, Profile, Company, Popular Finance, International Millionaire, Nezavisimaya Gazeta, Family Business, Personal Budget, etc. .
Dr. Isaac often speaks at specialized conferences, seminars, and participates in television programs.

Photo — Alexey Zotov

I have conducted many interviews with financial advisors, but perhaps this is the first meeting with an advisor who entered the profession back in the roaring 90s. I spoke with the head of the consulting firm FCP Financial Management Ltd about the prospects of cryptocurrencies, investments in ICOs, as well as the tax auto-exchange, which will come into force in Russia in 2018. Isaac Becker. The interview took place at the Saxon + Parole restaurant.

The main trend in the investment market in 2017 is cryptocurrencies, Bitcoin. How do you feel about all this?

The emergence of an alternative currency is a very positive development. I think this is a breakthrough. Over time, cryptocurrency will occupy, if not the entire market, then a significant part of it. This is the future.

I fully believe that some country will completely switch to cryptocurrency. This removes the issue of cash, gray money and may well solve the issue of corruption. We have already seen the trend, especially in the Scandinavian countries, for all payments to be non-cash, because everything is transparent.

Another question is what kind of cryptocurrency is the future? Bitcoin or Ethereum? Not sure. This is the first experience. Practice shows that there are certain holes and weaknesses. It was not possible to create a completely flawless currency the first time. Perhaps Bitcoin will leave the scene and be replaced by other cryptocurrencies that will take into account all the mistakes. Perhaps they will be launched at the state level. I fully admit that the dollar or ruble can act as a cryptocurrency.

If a client comes to you and says: “There will be an ICO soon, I want to participate.” What do you think?

I will say - “No”. I don't have clients looking for speculative investments. Perhaps some of them were previously looking for options with an income of 50% or 100% per annum. But now they have become normal investors who are happy to receive their 8-12% per annum every year. They don’t need big risks; they have enough risks at work or in business.

If one of the clients wants to increase the level of risk, then I can offer normal IPOs. It is an IPO, not an ICO. Because relatively large, well-established companies, for example, in the IT industry or pharmaceuticals, are constantly going public. They already have a real business, they are capable of turning the world around, say, in a certain area of ​​medicine.

The problem with ICOs is that there is practically no verified information. You can make a lot of money on an ICO, or you can lose everything. Therefore, I believe that it is safer and better to invest not in ICO, but in IPO. Of course, there are people who make good money from this, and I wish them good luck. But my clients and I are not one of them.

How are you doing in general, how is your business?

If you can evaluate it on a 10-point system, then, in principle, somewhere around 9.0-9.5. Things are going well. Those who entered the financial consulting business 10-15 years ago, or like me, back in the 90s, now feel very good. It’s worse for those who are entering the market at the moment. It's not easy for young people and beginners. I’m talking specifically about financial consulting for wealthy people, and not about those who recommend which bank to open a deposit in and where to buy an insurance policy.

It turns out, who are your colleagues in the shop?

These are, for example, private banking branches of European banks and family offices.

Natalia Smirnova, Vladimir Savenok are not in this category?

I would not like to judge who and where to be. They are very talented people, real professionals who have achieved a lot. But we have a slightly different background, different schools and different people with whom we work. Let me give you a simple example: if a person comes to me and says that he has a million dollars and he wants to become my client, then I will ask if he is the last? If yes, in principle I will not work with him. Although for other financial advisors, I think this will be a godsend. I just have a different business model.

In financial consulting, you can feel good, having, for example, 2 or 3 thousand clients who invest 100-200 dollars a month, be happy and consider yourself the coolest guy. But there is a completely different business, where we are talking about piecework and not every client, as they say, is yours. Where you choose someone with whom you will work for 5-10 years. Where you know the client's family, birthdays and even problems with the client's business because people consult you.

How much money does it take to become your client?

On the website of our company vip-money.com we write 500 thousand euros. In practice, we start working with 2-3 million euros.

But what about a smaller amount?

Hardly ever. Except that there was one case about 10 years ago. A guy came to me and said: “I know that you start working with 500 thousand euros. I only have a hundred, but I'm sure there will be many more over time." I rarely bend my rules, but this time I made a concession. The man worked in the IT industry and ended up making it big, turning out to be a great guy and earning a lot of money.

How much money do you have under management?

I will not say. I can only indicate that the number of clients I work with is not thousands, not hundreds, but only a few dozen people. Moreover, how to count money? If you count the funds that I invest, this is one amount. If you count the money on which I give advice, it’s completely different.

How often do you review investor portfolios?

I look at clients' portfolios every day. The morning begins, I turn on the computer and literally look through brokerage accounts for half an hour or an hour. I review and change the portfolio structure 1-2 times a year. There are portfolios that I haven’t touched for years. This is if there are no cataclysms in the market and normal work continues.

I must say that even during periods of crisis, I am not always a supporter of noticeable changes in the portfolio. For example, the 2008 crisis. Then, in about a week, the portfolios fell by 40%. Everything collapsed. The phone didn’t stop ringing, everyone was calling me, everyone was asking me what to do? I said, “You don’t need to do anything. Your money is invested in good assets. This is a crisis, they happen. Calm down, don’t do anything, everything will be fine.” About 70% of people agreed with my recommendation. 30% said: “No, it will get worse,” and asked to transfer money to more conservative assets.

As a result, those who did not twitch completely restored their capital in a few years. And those who switched to conservative products remained in the red for a long time.

Do you invest only in foreign assets? Are you sending anything to the Russian stock market?

No. I believe that if a person has a business in Russia, then this can already be considered an investment. The risk is enough for him that this is his business, home, himself. Besides, if there was a Russian Facebook or Google, that’s one thing. But I don't see this.

Starting from 2018, Russia will begin to receive information about the foreign assets of citizens from 100 countries, including some offshore companies. Surely, there were requests from clients in this regard. What was their advice?

The time has come when we must live honestly. This is advice to everyone. In fact, they began to talk about Russia’s transition to the exchange of tax information somewhere in 2010, when at the G20 meeting, against the backdrop of the crisis, the topic of combating money laundering and offshore companies was raised. Even then, I began to advise my clients that they need to prepare for this.

I said this: “There is a line. On one side there is white money, on the other there is gray money. There is a border between them. Now there are holes in it, various holes and tricks when you can turn gray or black money into white. But every year there will be fewer of them. At some point the line will close and you will remain on one side. If you remain in black money, it is very bad. You won’t be able to use them, you won’t be able to give them to your children, you won’t be able to pay for their universities. It will be impossible to buy houses and apartments with this money. You will fall into a trap and you need to work now to prevent this from happening.”

Continuing your thought, will the line close in 2018?

Probably yes. Of course, the last holes will remain, but it is a matter of time when they will disappear and all countries will begin to exchange data. And then it is likely that they will get you later. Those. an undeclared account somewhere in Thailand, for example, will be found not in 2018, but in 2020. But it will be clear that the money has been there, say, since 2010.

One client tells me: “Why should I worry? I have money in a Swiss bank since 2005. I threw about a dozen.”

Dozens of what?

10 million euros. So, I answer him: “Dear, the time will come, they will knock on your door and ask where you got this money from?” Because for every ruble you need an explanation of where you got it from. The nuts are already being tightened, and the last screw will be tightened in the next few years.

The media wrote that in recent years, about a third of the 500 richest businessmen in Russia left the country, among other things, so as not to declare accounts here. Are you also seeing this trend?

Yes, and this is a very big problem for the country. People sell their businesses, start investing abroad, move there and take capital with them. If you take the hundred richest people in Russia and look at the change in the geography of capital over the past 10 years, you will see a bad trend. This is a problem and needs to be solved.

If you come down “from heaven to earth”, where “ten” is not 10 million euros, but, say, 10 thousand rubles, what to do if a person has only 1 million rubles? Where to invest?

The main thing is that you don’t have to run away and try to invest your money. Do you have a million rubles? Put it in Sberbank! Be sure to convert it into foreign currency. Since 2014, the ruble has not been a savings currency. As soon as you converted a million into foreign currency, which is about 17 thousand dollars, don’t run to invest it anywhere. And don’t run to consultants, because, by and large, no one will help you. Let the money lie. And you work! Another million? They transferred it again and let it lie on deposit.

Over time, start reading books and articles on personal finance on RBC, Vedomosti, Forbes. Look at how you eat? If you are 30, 35 years old, rather than investing anywhere, it is better to spend money on eating fresh fruits, eating less meat, more fish. Go to the gym. Get a check-up at a good clinic. This is what needs to be done first.

When you see that everything is fine with you, you have a house or apartment without a mortgage, you have a normal lifestyle, you have money for your son for university, for your daughter for a wedding, only when you have a surplus can you start investing money. And then, not immediately, but gradually.

But time flies, you want profit “tomorrow”, and not for retirement.

I understand, but miracles do not happen, incl. in investments. The truth is that the most attractive and “profitable” investment products, of which there are a lot on the market now, most often hide big risks. Maybe they are postponed for a year, 2, 3, but at one point they will be realized. Nothing happens without risk. It is most often hidden behind colorful, attractive packaging. Your task is to find this risk so that you don’t have to look for your money later.

Other interviews:

• — the head of the Personal Advisor company on how he distributes his personal money and the role of intuition in investments
• - founder of the company “Personal Capital” about investing in hedge funds, exchange-traded funds, mutual funds and much more
• — Vice President of the “Golden Coin House” on investments in gold bullion coins and precious metals in general

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