April 12

Boxing Legend Felix “Tito” Trinidad Brought To His Knees By A 68 Million Investment Loss

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Posted By Felix A. Montelara

Author: Potencial Millonario

Boxing  legend Felix “Tito” Trinidad is brought to his knees by a 68 million investment loss.  However, the knockout blow may be the reported debt of approximately nine million dollars.

Felix Trinidad, in an attempt to be responsible with his assets obtained a brokerage firm, “Popular Securities,” to manage his well-earned fortune. Now I’m going to explain how it is possible to lose an estimated 68 million dollars even if it is invested by a third party and you (or in this case Trinidad) are not monitoring the account. According to reports, José ‘Pepe’ Ramos was assigned by Popular Securities to handle Trinidad’s account. Ramos invested most if not all the money in bonds, according to news reports in Puerto Rico.  The truth is that until September 2013, this type of investment was not risky on face value. The problem began in September 2013 when the markets (Moody’s and the S&P 500) downgraded Puerto Rico’s bonds to junk bond status, hence reducing Trinidad’s wealth (fortune). It is said that Trinidad began to see losses in his statement. Really? Red flag, anyone?

The second problem is that if it is true that Ramos invested 100% of Trinidad’s money in bonds only, we can all see an issue with assets allocation. In lay man words, Ramos placed all the eggs in one basket (Puerto Rico bonds). The right thing to do was to diversify into many assets across the market and invest in several different market sectors, as I would say, “A little of this and a little of that.” Truth be said it is unknown at this time if Trinidad asked to be conservative with his investments, or even if Ramos was authorized to invest without Trinidad’s consent.   No one knows why Ramos decided to place everything into bonds. It is true that before September 2013, Puerto Rico bonds had good ratings in the market and benefited from a triple tax exemption and could be enticing- or as I would say it would have been “sexy” to invest in them for any portfolio at that time; however, never at 100% of any portfolio.

One must understand that Trinidad is a former professional athlete and a marvelous boxing World Champion. He is not a finance expert. He took prudent steps to preserve his fortune but that was not enough.  The last blow brings Trinidad to his knees by a man without gloves in a suit. The lack of basic personal finance education hurt Trinidad as much as it hurts everyone else. Trinidad would have most likely have avoided this type of situation if he was well trained in personals finances. Its like training for a championship bout and not knowing the opponent.  It is alleged that Trinidad noticed losses on his statement.  In the boxing world that is like telegraphing a cross punch. With personal finance training Trinidad may have seen the knee dropping blow coming his way.   When Trinidad

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received his earning statement reports with some personal finance training he could have determined that all the eggs were in one basket and we all know in personal finances that is not a good thing.

Also with a good personal financial education a millionaire worth 68 plus may have not carried with an estimated nine million in debts. Why would Trinidad? Anyone trained or educated in the basics of personal finance knows that the debt is the most powerful opponent, who most likely provides the knock out blow when you are already down on your knees. But as they say in my neighborhood: “to late,” the money was invested and lost. The only controversy is whether Ramos was authorized by Trinidad to place the eggs in one basket.  Ramos, along with Popular Securities, will defend themselves as if they were in a championship bout and the truth will be known in court.

If you were in Trinidad’s shoes, would you have the know-how to foresee that ultimately it is your responsibility to watch over your money?

Finally, we are celebrating Financial Literacy month in April.  Wise up!   Get educated in personal finance and do not allow yourself to be victimized due to financial ignorance. Remember, we all have “The Potential Millionaire.”

March 26

The Millionaire Next Door – Audio

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The Millionaire Next Door accumulates 100′s of interviews within wealth ranking neighborhoods and discovers the habit so many of these wealthy individuals share. *A must read for success. I’ve provided the full audiobook of the novel for you to listen to.

You will need about 8:45 hour to listen to this audio. If you do complete the audiobook it will lead you to succeed with money. The authors of  The Millionaire Next Door make it clear that high income does not equal wealth. Want to learn more? Enjoy the audiobook below.

Felix A. Montelara

Host & Author: Potencial Millonario and Author: Bulletproof Finances (Future Release Summer 2014)

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March 23

19 Things Your Suburban Millionaire Neighbor Won’t Tell You

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Although having a million bucks isn’t as impressive as it once was, it’s still nothing to sneeze at.

In fact, CNBC reports that in 2013 there were 13.2 million millionaires in the United States alone.

That’s a lot of people, people.  And the odds are one or two of them are living near you.

Heck, one of them might even be your neighbor. In fact, the odds are very good that it is your neighbor.

But, Len, you don’t know my neighbor. That guy doesn’t look anything like a millionaire.

Well, guess what?  Your suburban millionaire neighbor called (oh yeah, we go way back) and the two of us had a nice little chat.

Here’s a few things he shared with me — but apparently doesn’t want to tell you. (No offense, I’m sure.)

1. He always spends less than he earns. In fact his mantra is, over the long run, you’re better off if you strive to be anonymously rich rather than deceptively poor.

2. He knows that patience is a virtue. The odds are you won’t become a millionaire overnight.  If you’re like him, your wealth will be accumulated gradually by diligently saving your money over multiple decades.

3.  When you go to his modest three-bed two-bath house, you’re going to be drinking Folgers instead of Starbucks. And if you need a lift, well, you’re going to get a ride in his ten-year-old economy sedan. And if you think that makes him cheap, ask him if he cares. (He doesn’t.)

4. He pays off his credit cards in full every month. He’s smart enough to understand that if he can’t afford to pay cash for something, then he can’t afford it.

5. He realized early on that money does not buy happiness. If you’re looking for nirvana, you need to focus on attaining financial freedom.

6. He never forgets that financial freedom is a state of mind that comes from being debt free. Best of all, it can be attained regardless of your income level.

7. He knows that getting a second job not only increases the size of your bank account quicker but it also keeps you busy — and being busy makes it difficult to spend what you already have.

8. He understands that money is like a toddler; it is incapable of managing itself. After all, you can’t expect your money to grow and mature as it should without some form of credible money management.

9. He’s a big believer in paying yourself first. Paying yourself first is an essential tenet of personal finance and a great way to build your savings and instill financial discipline.100_4248

10. Although it’s possible to get rich if you spend your life making a living doing something you don’t enjoy, he wonders why you do. Life is too short.

11.  He knows that failing to plan is the same as planning to fail. He also knows that the few millionaires that reached that milestone without a plan got there only because of dumb luck. It’s not enough to simply declare that you want to be financially free.

12. When it came time to set his savings goals, he wasn’t afraid to think big. Financial success demands that you have a vision that is significantly larger than you can currently deliver upon.

13. Over time, he found out that hard work can often help make up for a lot of financial mistakes — and you will make financial mistakes.

14. He realizes that stuff happens, that’s why you’re a fool if you don’t insure yourself against risk. Remember that the potential for bankruptcy is always just around the corner and can be triggered from multiple sources: the death of the family’s key bread winner, divorce, or disability that leads to a loss of work.

15. He understands that time is an ally of the young. He was fortunate enough to begin saving in his twenties so he could take maximum advantage of the power of compounding interest on his nest egg.

16. He knows that you can’t spend what you don’t see. You should use automatic paycheck deductions to build up your retirement and other savings accounts.  As your salary increases you can painlessly increase the size of those deductions.

17. Even though he has a job that he loves, he doesn’t have to work anymore because everything he owns is paid for — and has been for years.

18. He’s not impressed that you drive an over-priced luxury car and live in a McMansion that’s two sizes too big for your family of four.

19. After six months of asking, he finally quit waiting for you to return his pruning shears. He broke down and bought himself a new pair last month.  There’s no hard feelings though; he can afford it.

Source: Dollarbits.com

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March 22

U.S. Millionaires Hit New Record

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By: Robert Frank | CNBC Reporter and Editor

According to Spectrum Group, the U.S. added 640,000 millionaire households in 2013.

The recovery is official—at least for millionaires.

The number of millionaire households in the U.S. surged by 640,000, or 7 percent, to 9.63 million last year, according to a new study from Spectrem Group. That marks an all-time high for the number of millionaire households in America since Spectrem began tracking the data in 1997.

It’s also the first time the millionaire population has exceeded the pre-crisis peak of 9.2 millionaire households in 2007, showing that last year’s stock surge drove a corresponding growth in wealth for the rich.

The number of households worth $5 million or more also surpassed its pre-crisis peak for the first time, rising by 100,000 to 1.24 million households. The number of households worth $25 million or more surged by 15,000, to 132,000 households.

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“In terms of the affluent investor, it is fair to say they have finally recovered from the economic downturn,” said Spectrem Group President George H. Walper Jr.
However, the number of households worth $500,000 has yet to recover to its pre-crisis population peak. Those so-called “mass affluent” households grew by 1 million to 15.3 million in 2013—just below the 2007 top of 15.7 million.

Spectrem defines millionaire households as those with a net worth of $1 million or more, not including the value of their primary residence.

November 20

Millionaire revises plan for Mars flyby in 2018: Now it’s up to NASA

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Image: Inspiration Mars vehicle

Inspiration Mars
An artist’s conception shows the Inspiration Mars spacecraft making its way around Mars. The stack includes, from left, an Orion-derived re-entry pod, a Cygnus-derived habitat module and a service module for avionics, control and communications. Circular solar arrays provide primary power for vehicle systems.
This is an interesting concept by Tito. Enjoy the article
Felix A. Montelara
Autor & Host Potencial Millonario

 

By Alan Boyle, Science Editor NBC News

Millionaire Dennis Tito has revised his plan to send a husband and wife around Mars in 2018 — and is calling on NASA to contribute several hundred million dollars to the cause as a partner.

“This partnership is a new model for a space mission,” Tito told lawmakers on Wednesday during a Capitol Hill hearing organized by the House Science, Space and Technology Subcommittee on Space. “It is not the model of traditional contracts or subsidies for vehicle developments, although those models are embedded in the NASA programs to be leveraged for this unique mission. It is a philanthropic partnership with government to augment resources and achieve even greater goals than is possible otherwise.”

Inspiration Mars, the nonprofit venture that was founded by Tito earlier this year to spearhead the space effort, released a 26-page mission architecture study that supplemented his testimony. The concept was hashed out over the course of 90 days in cooperation with NASA experts, and draws heavily on technologies being developed for the space agency.

Tito initially envisioned the flyby as an effort primarily backed by private contributions, but the 90-day study determined that the mission had to be done with NASA hardware. “This has to be first and foremost a NASA mission,” supplemented by philanthopy, said Taber MacCallum, Inspiration Mars’ chief technology officer.

In an emailed statement, NASA said it’s willing to share expertise with Inspiration Mars “but is unable to commit to sharing expenses with them.”

“However, we remain open to further collaboration as their proposal and plans for a later mission develop,” David Weaver, the agency’s associate administrator for communications, said in the email.

How to fly past Mars
Inspiration Mars’ concept calls for using NASA’s big but yet-to-be-built rocket, known as the Space Launch System or SLS, to put the Mars transit vehicle into Earth orbit. Then the two-person crew would be sent into orbit atop a commercial rocket — for example, a Falcon 9 or an Atlas 5 — to rendezvous with the transit vehicle. That vehicle would consist of a service module to handle avionics, control and communications; an Orbital Sciences Cygnus cargo capsule, modified to serve as a deep-space habitat module; and a re-entry pod based on the Orion capsule currently being developed for NASA’s use.

A beefed-up SLS upper stage would blast the transit vehicle out of Earth orbit for its long, looping ride around the Red Planet. The flight profile would follow the scenario Tito outlined when he announced the Inspiration Mars effort: Because of a favorable planetary alignment, the spacecraft could go around Mars and make a “free return” to Earth with virtually no expenditure of fuel — as long as it left Earth by January 2018.

The 314 million-mile (505 million-kilometer) trip would take 501 days, culminating in a high-speed re-entry through Earth’s atmosphere and splashdown on May 21, 2019. Tito favors sending a husband and wife — not only because that would presumably make for compatible crewmates, but also because the history-making trip would thus include both genders of the human species. NASA would play a key role in astronaut selection.

Tito said the timetable could jump-start NASA’s plans to send humans around Mars — a feat that’s currently scheduled for the 2030s. “Why not move this mission to the here and now, and not wait until the ’30s?” he asked.

Follow the money
Tito estimated that the mission would cost less than $1 billion, and that about $300 million could be raised from private contributions. However, he said those contributions would probably come in only after the flyby launches were firmly scheduled on a manifest.

By Tito’s tally, that would leave roughly $700 million in costs to be covered by NASA. He noted that the space agency was already working on some of the components for the mission, including an SLS rocket that’s due to be built for an unmanned, around-the-moon flight test in 2017. He said that rocket could instead be used to launch the hardware for the Inspiration Mars mission. However, in order to meet the mission requirements, work on an advanced version of the SLS’ upper stage would have to be accelerated.

Tito framed the 2018 Mars mission as a challenge to American know-how and national will. “If we need a Plan B, there is a mission 88 days longer that flies by Venus before going by Mars, a unique trajectory that could be flown in 2021. However by then, another country — almost surely China — will have seen our missed opportunity, and taken the lead for themselves,” he said.

He offered the subcommittee what he called “a frank word of caution.”

“The United States will carry out a Mars flyby mission, or we will watch as others do it — leaving us to applaud their skill and theirdaring. If America is ever going to do a flyby of Mars — a manned mission to another world — then 2018 is our last chance to be first,” he said.

Reality check
Before Tito’s testimony, the lawmakers were generally supportive of the Inspiration Mars concept. Rep. Lamar Smith, R-Texas, chairman of the House Science, Space and Technology Committee, said it was “the type of space endeavor we should encourage.” But after Tito’s statement, some questioned whether NASA could afford to spend several hundred million dollars on a philanthropic flyby, particularly in an era of tighter federal budgets.

“Right now, I don’t see evidence that a lot of money would be available,” Tito acknowledged.

The plan would apparently require retooling the multibillion-dollar SLS-Orion project, and entrusting mission success to a heavy-lift rocket on its very first launch. The concept also assumes that commercial space taxis will be ready to carry astronauts by 2018. NASA currently projects that the taxis will enter service by 2017 — but there’s always a chance that the schedule will slip, particularly if development funding doesn’t meet NASA’s projections.

November 16

Assets Protection Planning

Listen to the issue of  assets protection from a real lawyer and his best friend Elvis a dog.

 

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I hope you learn but most important you enjoy it.

Felix A. Montelara

Host & Author: Potencial Millonario

November 1

How Brazil’s Richest Man Lost $34.5 Billion

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Stay tune to this story it will take some time but Eike Batista will rise again.

Felix A. Montelara

Author: Potencial Millonario

—Reuters- OGX, the Brazilian oil company controlled by former billionaire Eike Batista, sought court protection from creditors on Wednesday in Latin America’s largest-ever corporate bankruptcy filing.

The bankruptcy protection request, which was confirmed by the court in Rio de Janeiro, came after OGX failed to reach an agreement with creditors to renegotiate part of its $5.1 billion debt load.

Jonathan Alcorn | Bloomberg | Getty Images
Eike Batista, chief executive officer of EBX Group Co. Ltd.

It also is another chapter in the unraveling of Batista’s once high-flying industrial empire, which he has been dismantling in recent months after disappointing output from offshore OGX wells set off a crisis of investor confidence.

If the court approves the request, OGX will have 60 days to come up with a corporate restructuring plan. The company’s creditors, which include the California-based bond fund Pacific Investment Management Co (Pimco), and U.S.-based investment fund BlackRock, will then have 30 days to endorse or reject the plan.

Officials at OGX and EBX, Batista’s holding company, did not immediately respond to telephone calls and emails seeking comment.

An OGX bankruptcy is unlikely to have a significant effect on Brazil‘s economy. The company is barely out of its start-up phase and produces almost no crude oil, and most if its debt is held by foreign bondholders. But the fate of sister company OSX Brasil depends almost entirely on OGX, whose market value has plummeted by nearly $45 billion since its stock peaked in October 2010.

Eike Batista under investigation by Brazilian regulators
Brazilian oil tycoon Eike Batista set a record for wealth loss, reports CNBC’s Robert Frank. Between 2012 and 2013, Batista lost over $33 billion in paper wealth.

Batista created OSX, which had to scale back efforts to construct the largest shipyard in the Southern Hemisphere, to build and lease oil production and service vessels to OGX.

A renowned dealmaker who once boasted he was on track to become the world’s richest man, 56-year-old Batista has seen his personal fortune reduced by over $30 billion in the last 18 months as investors punished the share price of his listed companies.

The downward spiral forced Batista to start breaking up his Grupo EBX conglomerate, which also included a port operator, mining and energy interests, and an entertainment company.

Batista’s rapid decline has become a symbol of Brazil’s own economic troubles. After a decade-long boom in which investors poured cash into Brazil and Batista’s enterprises, Latin America’s largest economy has been in a rut for nearly three years, frustrating predictions that the country was poised to join the ranks of developed nations.

OGX’s decision to seek protection from creditors came as no surprise. After missing a $44.5 million interest payment owed to bondholders on Oct. 1, OGX scrambled to restructure its debt before the end of a 30-day grace period or be declared in default on $3.6 billion in bonds.

The process was rocky from the outset, and OGX called off the talks with creditors on Tuesday, leaving a bankruptcy filing as the only viable option to buy more time in its quest to save the company.

 

October 29

Puerto Rico Invites Millionaires to Relocate

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Coat of Arms of Puertor Rico

Coat of Arms of Puertor Rico (Photo credit: Wikipedia)

By Felix A. Montelara
Author: Potential Millionaire
Once thought of as a vacation paradise, the little island of Puerto Rico is now attempting to bring the rich and wealthy to live there- permanently.  Earlier this year, the Secretary of Economic Development and Commerce, Alberto Baco Bague, travelled to New York City to explain to rich stock brokers the benefits that Puerto Rico has to offer.
An article on npr.org written by Dan Bobkoff explains the efforts of the Puerto Rican government to entice millionaires: “Under laws enacted in 2012, when someone moves to the island, all of that person’s investment income, like capital gains, dividends and the like — is completely tax-free. Plus, service income — say, a hedge fund’s management fees, is taxed at just 4 percent. And, as it is for all Puerto Rico residents, there’s no federal income tax.”  Mr. Bobkoff continues that in order “to take advantage of the tax breaks, the rules say you must live in Puerto Rico at least 183 days a year and prove that you’re really part of the community. Your spouse must live with you, and your kids must go to local schools.”
The government of Puerto Rico is launching this effort in hopes of stimulating the difficult economic situation in this U.S. territory.  According to the article, feelings about the breaks given to these new elite are mixed, ranging from ignorance of the new laws to resentment.  While bringing the rich to the island is thought to bring more industry, jobs, and opportunities to locals, there is some political danger in treating this new class differently than the local citizenry.
You can view the whole article at http://www.npr.org/2013/06/28/195152925/puerto-rico-rolling-out-the-welcome-mat-for-millionaires (in english).
I would love to have your thoughts about this issue.  Do you think this type of tactic is beneficial to Puerto Rico, or any other country or city?  How would you feel if you had to pay local taxes and the newly invited rich didn’t?  Would it be worth it to economy?  Call me or email me your thoughts!