Thanks for visiting. This blog is intended for individuals with Net Annual Income of $105,000 or more. Get Rich Slow + Get Rich Quick = Get Rich Slick. If you're new here, you may want to subscribe to my RSS feed.

I’ve been wrestling with how to be help people understand how to really build wealth and I have come up with an analogy related to farming that I hope will allow everyone to relate.

It’s simple enough. A farmer buys seed, plants the seed (in fertile soil), nurtures it (water & sun), and reaps the harvest at the appropriate time. The farmer isn’t always in total control of his crop. Drought, flooding, insects, and a variety of other potential disasters must be weathered successfully.

moneyfarm.png

The MOST important thing to remember about the farmer and his farm however is that he is planting RENEWABLE crops. As long as the farmer manages to keep some of his crop, it will produce seeds for the next season.

My money farm operates in a similar way. I have investments that must weather all sorts of potential disasters and set backs but they are based on the premise that they are RENEWABLE crops.

The easiest money crop is Credit Card Arbitrage. It’s only a matter of time before banks close this fabulous feed store but here is how it works.

I borrow some “seed” money say about $50,000 at 0% APR and plant the “seed” money into a high yield savings account earning 5% or more. I nurture the money by ensuring it is safe and by periodically adding more seeds when I find them. On occasion, it makes sense to pull out the seeds and move them to a more fertile ground (i.e. higher yield savings account).

At the end of the season (end of 0% APR Period), I harvest the crop, return the original seeds back to the bank and keep the remaining harvest. The extra harvest can be replanted as a crop or invested to create a money tree (see tomorrow’s post).

The most beautiful thing about farming is seeing the RENEWABLE harvest come in season after season.

Last year, I borrowed 50k in 0% APR money and planted that in fertile soil earning 5%.  I made $2500 in interest for the year.  I’ll pay back the initial “seed” money and keep the harvest ($2500).  If I can repeat this process every year, I’ll earn $25,000 over the next 10 years.   How’s that for a renewable resource!

Large corporate “farmers” do this on a massive scale but there system is a little different. These big farmers borrow “seed” (Yen) from foreign countries like Japan and “plant” that “seed” in US soil (US Treasuries). The fancy name for this activity is the YEN-Dollar Carry trade. Usually, the seed is borrowed for free (0% APR) or at a very low interest rate and invested at the US Treasury rate (currently around 4.5%).

I try to mimic what the “big boys” do on a smaller scale so that I can profit from the process just like they do.

Tomorrow, I’m going to show you how to create a money tree and then I’ll show you how several money trees form a money forest. After this week, you’ll understand how to create a money farm and a money forest to achieve the wealth you want.