Wednesday, November 28, 2007

Stock Market Investing or Gambling?

I was posed a question about gambling. Is gambling in a casino a kind of investing? I always believe that there is actually a very very fine line between investing and gambling and if you are “sober” you will definitely be able to see that line.

Of course, clearly enough, if you go to a casino with a lot of cash, you are going there to gamble, hoping to win more money than you are prepared to lose. And this kind of “hope” has a 90% chance of disappointing you.

Many risk-taking choices are referred to as “gambling” but investments are usually not considered gambling, although some investments can involve significant risk. Some examples of investments can be stocks and shares, bonds, real estate and businesses.

Wikipedia explains that “Investments are generally not considered gambling when they meet the following criteria:”

  • Positive expected returns (at least in the long term)
  • Economic utility
  • Underlying value independent of the risk being undertaken

Some risky speculative investment activities are still usually not considered as gambling but I would like to warn that if you are always purchasing stocks with no fundamentals to speculate that would equate very close to gambling. It is high risk as you risk losing a good chunk of your money.

Psychological aspects

Some people participate in gambling as a form of recreation or even as a means to gain an income. Gambling, whether legally or illegally, like any behaviour involves the variations of brain chemistry, therefore can become addictive and create bad behaviour in some individuals. Gambling being additive can cause gamblers to persist in gambling even with repeated loses. This can be damaging to your life and peace of mind.

The right reasons to invest in the stock market

If you speculate all the time, that can go very close to gambling but if you study the company behind every stock that you intend to invest, wait for the right price to go in, then you are an intelligent investor.

Yes, you have to find the right reason to invest in the stock market. If you want to earn quick bucks on a short term basis, then you are treading on the brim of gambling. Beware….

The actual and the only right reason for people to go into stock market is to continuously earning an income.

Look for company that issue quarterly dividends and continue putting in the earned dividends into purchasing more of such shares. Make a long term investing plan and aim to retire with your invested money.

By investing for the right reason and using the right choices you automatically become a long-term, dollar-cost averaging, buying investor.

Be smart, spend your time to start studying good companies and concentrate only on a few. Diversify if you must but do not over-diversify or you will end up using too much time studying too many companies. Diversify by selecting a few different categories but here again not too many. By studying the history of companies and their dividends payment percentages and pattern, you will be able to decide on the type of stocks you want to invest in to take you to your retirement years.

Saturday, November 24, 2007

Success is Predictable

Success is as predictable as the sun will rise in the east and will then set in the west everyday, 365 days a year. Success is not simply being in the right place at the right time. Success is not meeting one rich person who will help you out. Success is also not a matter of just good luck.

Success will only happen to you if you want it to. You have to work for it. You will have to learn all the success principles and guides given by all the “gurus” of the world and by putting into practice all you have learned you will then be moving to the front line of your life. Once you have attained those principles, you will have an incredible advantage over people who do not yet know or is willing to learn and put such techniques and strategies into practice. You will have the winning edge for the rest of your life and career.

A few good personal traits to have:

  • Have a clear sense of direction
  • Commit to excellence
  • Willing to serve others
  • Honesty is the best policy
  • Be dependable
  • Self Discipline
  • Utilise your inborn creativity
  • Be Decisive
  • Be Action Oriented
  • Be Consistent
  • Be Persistent

Things you have to do and work on:

  • Dare to dream
  • Work towards being self employed
  • Do what you love
  • Work hard and long
  • Have life long learning attitude
  • Know the detail of your job and/or business
  • Learn to prioritise
  • Build a reputation for speed and dependability
  • Willingness to advance in life
  • Go out there and meet the right people
  • Keep in good physical health

Last but not least ----- Failure is not an option

If you want to be a big success, all you have to do is consistently do all the things other successful people do. Observe the stuff rich people do and don’t do. Emulate them and learn to think and work like them.

You and you only can determine your fate and your destiny. You are the driver and the only person responsible for your own life. Remember, there is no limitations to what you can be and what you can do unless you put the limitation there yourself by thinking too much. Remove the fear and the disbelief from your mind.

Everyone is born a winner. Nobody in this world can stop you from being successful. You are the owner of your own destiny. You have the potential to hit the target you set for yourself. You have the creativity, the talent and the abilities for much greater things in life than what you are doing now.

Today, now, decide what you want, to the exact minute detail of what you really want to be and want to achieve. Your greatest responsibility now is to continue that dream and make your plans to achieve your goal. Take action towards your goals and never, never even dare think of giving it up. Once you get yourself started laced with all the above traits you need and things you need done, you will be unstoppable and success is confirmed.

Don’t forget




Friday, November 23, 2007

Discover the 90/10 Principle

Most chaotic situation are caused by the reaction of human population. Sometimes a single action causes a chain of reactions which allow situation to get from bad to worst.

This is so true to life that I felt compel to share with all the visitors of this site. This 90/10 Principle is written by Stephen Covey and is applicable to your business situation as well.

I once heard a simple story of a rich man who display a lot of expensive antiques in his home. One day his seven-year old son accidentally knocked down one of his favourite expensive vase and broke it to a thousand pieces. The normal reaction of a human being is to scold or even beat up the poor frightened boy but the reaction of this wise man was so touching. He not only did not get upset or angry, he was all concerned and fussed over the boy. “Did you hurt yourself” he asked, ” Did the sound of the breaking vase frightened you?” and he knelt down beside the boy hugging him tight, ignoring the broken vase entirely.

When asked by his visitor who happened to witness the incident, his explanation was simple. “I can replace any expensive items in this house but not my son; he is my only priceless possession.”

My outlook of children upbringing changed at that moment onwards.

Discover the 90/10 Principle.

It will change your life (at least the way you react to situations).

What is this principle? 10% of life is made up of what happens to you. 90% of life is decided by how you react.

What does this mean? We really have no control over 10% of what happens to us. We cannot stop the car from breaking down. The plane will be late arriving, which throws our whole schedule off. A driver may cut us off in traffic.

We have no control over this 10%. The other 90% is different. You determine the other 90%.

How? ……….By your reaction.

You cannot control a red light. But you can control your reaction. Don’t let people fool you; YOU can control how you react.

Let’s use an example.

“You are eating breakfast with your family. Your daughter knocks over a cup of coffee onto your business shirt. You have no control over what just happened.”

What happens next will be determined by how you react.

You curse.You harshly scold your daughter for knocking the cup over. She breaks down in tears. After scolding her, you turn to your spouse and criticize her for placing the cup too close to the edge of the table. A short verbal battle follows. You storm upstairs and change your shirt. Back downstairs, you find your daughter has been too busy crying to finish breakfast and get ready for school. She misses the bus.

Your spouse must leave immediately for work. You rush to the car and drive your daughter to school. Because you are late, you drive 40 miles an hour in a30 mph speed limit.

After a 15-minute delay and throwing $60 traffic fine away, you arrive at school. Your daughter runs into the building without saying goodbye. After arriving at the office 20 minutes late, you find you forgot your briefcase. Your day has started terrible. As it continues, it seems to get worse and worse. You look forward to coming home.

When you arrive home, you find a small wedge in your relationship with your spouse and daughter.

Why? …. Because of how you reacted in the morning.

Why did you have a bad day?

A) Did the coffee cause it?

B) Did your daughter cause it?

C) Did the policeman cause it?

D) Did you cause it?

The answer is “D”.

You had no control over what happened with the coffee. How you reacted in those 5
seconds is what caused your bad day.

Here is what could have and should have happened. Coffee splashes over you. Your daughter is about to cry. You gently say, “Its ok honey, you just need to be more careful next time”. Grabbing a towel you rush upstairs. After grabbing a new shirt and your briefcase, you come back down in time to look through the window and see your child getting on the bus. She turns and waves. You arrive 5 minutes early and cheerfully greet the staff. Your boss comments on how good the day you are having.

Notice the difference?

Two different scenarios. Both started the same. Both ended different.


Because of how you REACTED.

You really do not have any control over 10% of what happens. The other 90% was determined by your reaction.

Here are some ways to apply the 90/10 principle. If someone says something negative about you, don’t be a sponge. Let the attack roll off like water on glass. You don’t have to let the negative comment affect you!

React properly and it will not ruin your day. A wrong reaction could result in losing a friend, being fired, getting stressed out etc. Even to the point of ending in jail.

How do you react if someone cuts you off in traffic? Do you lose your temper? Pound on the steering wheel? (A friend of mine had the steering wheel fall off) Do you curse? Does your blood pressure skyrocket? Do you try and bump them?

WHO CARES if you arrive ten seconds later at work? Why let the cars ruin your drive?

Remember the 90/10 principle, and do not worry about it.

You are told you lost your job.

Why lose sleep and get irritated? It will work out. Use your worrying energy and time into finding another job.

The plane is late; it is going to mangle your schedule for the day. Why take outpour frustration on the flight attendant? She has no control over what is going on.

Use your time to study, get to know the other passenger. Why get stressed out? It will just make things worse.

Now you know the 90-10 principle. Apply it and you will be amazed at the results. You will lose nothing if you try it. The 90-10 principle is incredible. Very few know and apply this principle.

The result?

Millions of people are suffering from undeserved stress, trials, problems and heartache. We all must understand and apply the 90/10 principle.

It CAN change your life!!! It can help you change your personal as well as business life situation for the better.

發現了 90/10 的定律。


90/10 的定律是什麼?生命的 10% 是由你的際遇所組成,餘下的 90% 則由你的反應而決定。

這意味著什麼?我們無法掌握那 10% 的際遇。 我們無法阻止行程因汽車壞掉、航班誤點,甚或車子拋錨而延誤。

我們無法控制那 10% 的際遇,但餘下的 90% 則不然。你可以決定餘下的 90%

如何? 憑你的反應。







你的太太趕著上班,你匆忙開車把女兒送回學校。因為你已經遲到了,你以時速四十英里在一條限速三十英里 上的道路前進。



為什麼? 一切皆由你早上的反應而起。









咖 啡翻倒在你身上,你的女兒幾乎要哭了,但你溫柔地說:「親愛的,這並不算什麼,但你下次得小心一點了。」你拿起毛巾便上樓去。在你更衣完畢並拿起你的公事 包後,你下樓去,望出窗外,你看到你的孩子正在上巴士。她回頭並向你揮手。你早了五分鐘回到公司,並親切地與你的同事打招呼。你的上司亦對你新的一天給予 正面的評價。





你或許真的無法掌控 10% 的際遇,但剩下的 90% 則可以由你的反應而定。

以下有一些實踐 90/10 定律的方法。如有人說起你的是非,千萬別當一塊「海綿」,讓那些攻擊性的說話像水在玻璃上一般的流走。別讓那些負面評價纏繞著你!




記著 90/10 的定律,別在意。


你為何失眠與憤怒 ? 事情總是發生了。不如用你憂心的力量及時間去找尋新工作吧!



現在,你懂得了 90/10 的定律。實踐它,你將會發現它的驚人效果。嘗試實行它,你將不會有任何損失。 90/10 的定律非常神奇,而只有很少數的人懂得運用它。


超過百萬人沈溺在痛苦、嘗試、問題與心傷之中。我們必須理解並實踐 90/10 的定律。



Thursday, November 22, 2007

Assets versus Liabilities

A man builds a fine house;

and now he has a master,and a task for life;

he is to furnish, watch, show it,

and keep it in repair;

the rest of his days.

Ralph Waldo Emerson 1870

Question: Think, is a house an asset or a liability?

Answer: Both. Liability because, as with the above quotation of Emerson, if you buy a house or build one, the house become your master as now you have just gained a “master” for yourself, you have created a task for life. You have to furnish, clean, repair, maintain and keep it in liveable condition for the rest of your life.

It will only become an asset if you purchase this house at a good price to sell it when the price appreciate and meanwhile it is rentable to earn you money, earn you more than what you can get if you put your cash in the bank.

Let us now try to understand the difference between an asset and a liability.


  • Real Estate
  • Stocks
  • Mutual Funds
  • Bonds & Notes
  • Rentable properties
  • Cash


  • Mortgages
  • Credit cards
  • Loans (all kinds)
  • Property for own dwelling
  • Car for own use

A generic rule is all assets can earn you money while liabilities are those that cost you money.

The poor spent their total income on day-to-day expenses, sometimes the income is not even enough to cover living expenses; while the middle class purchase liabilities that were mistaken for assets like a home, one or two cars and luxury items like big screen televisions etc. Only the rich accumulate income-generating assets on an ongoing basis.

The poor will always be struggling to avoid hunger and should the breadwinner fall ill, most will end up depending on charity.

The middle class will continually be on the race spending only on the sole income which is the monthly salary. As salary increase, so do the taxes and inflation which probably increase faster than the salary. Therefore the middle class will constantly in a financial struggle. They usually ended up paying mortgages of their home and car, treating these to be their assets.

Meanwhile, the rich will get richer as they are on the continuous lookout to acquire more money earning assets and investments. Their expenses will remain constant while their income-generating assets increase earnings for them.

Why is our home a liability? It is because you spend your earned wages for the following:-

  • The middle class work all their lives to pay off the mortgage of a home, usually a 25-year loan, assuming you start at 30years old, you will only pay off you loan at 55, just as you were about to retire.
  • You need to put aside a portion of your monthly earnings for maintenance and utilities.
  • Even if your home value appreciate, you are unable to dispose of as this is your only dwelling.
  • Annual yearly taxes like assessment tax, quit rent etc.

Start planning when you are still young. I would encourage all Generation X and Y kids to learn about assets and liabilities and understand the difference. If you are still young and have just started to earn a salary, you would probably still be living with your parents, therefore you do not need to purchase a home yet. You should just do the following:-

1. Understand what is the difference between a liability and an asset

2. Concentrate on purchasing income-generating assets

3. Keep your liabilities and utilities expenses to the minimum

Focus your energy on building your assets to retire young.....

Monday, November 19, 2007

Investing – with your spouse

The age-old saying “Behind Every Successful Man, is a Woman” is true to its being. There is a synergy to balancing in which the Chinese believes in “Ying and Yang”. Some things just need a partner to go with and should not be left alone or separated like “fork & spoon”, “table & chair” (in French table is feminine while chair is masculine), “mortar & pestle”.

This adage is very true in the olden days and I dare say it is still true today except that I believe it works both ways now more than ever. Behind every successful man there is a woman, who can be a wife, a mother, a sister or a girlfriend and behind every successful woman there is a man; a husband, a boyfriend, a father or a brother. God created man to be stronger in physical sense while woman to be stronger emotionally. There is a good balance if we put both sexes together.

No matter how rich you are, no matter how big you have become in the corporate world, no matter how successful your business is, a man requires a balance that a woman can provide and vise versa. There must be the “ying yang” balance otherwise all the treasures you acquired will not have much meaning in your life.

“Two heads are better than one”. A lot of couples keep their money matters away from each other. Some to the point of lying of their expenses; some even lie or keep mum on their investments. I believe couples should share with each other the things they do.

1. Talk to your spouse

If you are suddenly motivated to put up a budget and to start an investing plan I would suggest you start by talking to your spouse. Let her or him know your thoughts. The first step is communication. By talking out loud your thoughts will prepare your spouse of any eventuality. No surprises up the sleeves.

2. Discuss with your spouse

If you are planning to invest so to retire early, put up a plan. Set your goals. List out the things you need change in order to achieve your goals. Before putting your plans into action, take time to discuss your action plans and goals with your spouse. Make it a fun project that you can do together.

3. Argue with your spouse

Yes, if you must, you should start arguing with your spouse before you put your plan into action. Argue and fight your hearts out. It is never easy living with another and it is never smooth sailing because 2 brains usually go different directions. Make adjustments to your plan to suit both your needs. Leave your disagreement behind. Do not take it to bed with you.

4. Agree with your spouse

After all the arguments and fights, come to a common goal where you both agree can work in a win-win situation for all. Be specific with your goals and put them down in writing. This will avoid any fights later on if things get rough.

5. Harmonise with your spouse

Form a strong alliance with your spouse so as to take your investing ideas to greater heights. List out the things each can do better and set out to conquer the investing world together. Make a pledge to work in harmony with each other.

6. Work in tandem with your spouse

Having a common goal with the same motivation will take couples who can work together to achieve their final goals faster and with better results. Working in tandem with each other may not be easy but it is possible. What both of you need is a determination to succeed.

If somehow your chain of momentum slowed or come to a halt, go back to rule # 1 and start all over again, start talking to each other and building your dreams once more. The more you practise at it, the better you will become and ultimately your path to successful investing will be a dream comes true.

If you ever notice the habits of the mandarin ducks, always swimming in pairs and toward the same direction, side by side and in great harmony. Nothing fluster them. Be like them.

Save to Grow Your Money

Don’t give away or waste away your hard earned money so easily. Take time to find ways and means to avoid spending money unnecessarily. I know for sure some of us do not like this task and may even feel that life is too short to deprive oneself of some luxuries after a hard day’s work. Yes, this concept in life is fine. I am not suggesting you to be a miser but merely to be more conscious of where your money goes.

Here is a checklist of my own experience and how we can all save without feeling miserable.

Your Transportation

  • Check your tyre pressure every month. Most car owners and drivers know that fact that it is a “must” task but a lot of us do not do it regularly and punctually. We are always postponing this task simply because we are either in a rush or too lazy. Unbalanced tyre pressure cause more petrol consumption and also additional wear and tear.
  • Park at free car park. This may not be easy in the city but putting in your effort to locate one may save you a big chunk of your daily expenses. You may have to arrive early and may even have to walk a longer distance but if taken positively, you are having multiple savings; save on petrol; walking is a good exercise; waking up early is a healthy habit; helps you avoid the usual jam and in a way reduce your stress level.
  • Car pool. If you have colleagues living in your neighbourhood, you may just work out a schedule to car pool. This will definitely cut down your transport cost by half.
  • Take public transport. It is definitely cheaper to use the public transport than to drive to and from work provided it is convenient to do such.
  • Wash and polish your car on your own. Instead of driving to the car wash and get your car wash and polished. Do it yourself. Dual advantages; you save money as well as get the much needed exercise. Make this chore a fun activity with the family.

Energy-efficient Your Dwelling

Energy-conservation is not only environmental friendly (statistics showed that in UK, housing produces about 30% of carbon emissions), it saves you a lot of money as well. Take the effort to gradually convert your daily chore and electrical uses to be energy-efficient:-

  • Use energy saving products. It may cost you more to buy energy-saving bulbs or lightings but in the long run you will save on electricity consumption and cut down energy cost. Buy energy-saving products like boilers, heaters, fridge, dishwashers and washing machines. Look out for the Energy Saving Recommended Logo.
  • Conduct a home energy audit. Some of your electrical equipment may be old and leaking energy so an energy audit may help you identify what is causing your electricity bill to go up.
  • Generate your own energy. Use solar energy panel for some of your electrical equipment. Initial cost may be high but if it provides energy for 50% of your daily uses, it will eventually save money for you.
  • Join some energy-saving movement. Or attend talks on how to save and control the energy usage in your home. Put what you learn into practise
  • Switch them off when not in use. Turn off the lights, fan, air-condition, heater etc. when you leave the room. Check to ensure all are switched off before leaving your house to work.

Food Shopping

These are some money saving tips on food shopping which I felt personally that allow me to save. Next time you go groceries shopping put these tips in your “Groceries shopping list”:-

  • Purchase generic brands. Most generic brands usually contain about the same ingredients and nutrients as your favourite brands. Products like coffee, oil, rice are nearly as good but sold at a lower price.
  • Buy fruits in season. Fruits that are out of season can be much more expensive and may not be as fresh as fruits in season. However, seasonal fruits may be higher in price at the beginning of the season and it is better to wait awhile before buying. My experience is that I bought 2 persimmons for $8 at the beginning of the season and after 2 weeks I could get 4 persimmons for only $6.
  • Avoid buying imported brands. You are not only paying for the food you want to consume but paying for the freight and handling charges as well as tax imposed by your local government. Support your local economy by going local and save.
  • Buy from your local markets. Do your shopping at the local markets instead of going to the supermarkets where the prices are inflated. In some areas, the markets are now open longer hours. It may not be as comfortable as the supermarkets but the foodstuff are usually fresher and much cheaper as you eliminate the middleman cost.
  • Do not overstock. Eat up all that you have bought. Statistics showed that one-third of the world foods are being thrown away. This is definitely wasteful. Foods usually do not last forever, so only buy the amount you need and avoid overstocking.
  • Shop Around. If you have to shop for non-perishables in supermarkets, go shop around for the best buys. Here you can stock up your one month’s need to avoid going too many trips. This will save you petrol, parking, time and even to prevent buying extras (what you really do not need).
  • Make your meals at home. Cooking your own simple meals at home is a much cheaper alternative to eating take-away or eating out. Pack lunch boxes (sandwiches and fruits, fried rice etc) for the kids as well as yourself to your office. Eat in restaurants only on celebrations, this will make the occasion much more special then eating out all the time.
  • Use leftovers. Use your imagination to cook up new dishes from leftovers. I use left-over meat to cooked up “Shepherds” pie and fry the left-over rice. Its delicious and cost saving and food are not thrown out adding to the landfill and go wasted.

There are more ideas to share but I think I am stretching a little. What I am trying to stress here is that you can really save a whole load of your money if you ever stop to think of the wastage you have done thus far.

I like this simple phrase “BE BOTHERED”. Take charge of your life, take charge of your money, don’t waste it away. Practise the above suggestions and put any savings into a used tissue or shoe box (no need to waste money buying a money saving box). Commit to a monthly contribution into a trust fund to earn you money. Believe me if you start now, you will retire richer than you planned to be.

Readers can share any money-saving ideas by putting in your comment. I am pretty sure there are a lot more ideas not mentioned yet. Share your successful experiences with the world.

Tuesday, November 13, 2007

Investing in Stock Market – Beat the Odds (Part II)

The first 4 rules were basically telling us to keep a cool head and to ensure we make good decisions as far as stock investing is concerned. Another aspect of being a successful investor is continual learning and having a good control of your portfolio. Stay cool by using your head, not your heart when dealing with your nest egg. Let’s take a look at the remaining 4 rules……

Don’t be snobbish

Be humble…. If you are not sure of what to do, take time to learn. Ask for advice. If you don’t ask, no one would know that you need help. Do not be afraid to be laughed at. Remember that “those who laughed last always laughed best” and “pride goes before a fall”. It’s better to look stupid than to be stupid. Looking stupid is not stupidity and stupidity cost you money eventually.

Don’t worry

“Worry is interest paid before it is due”. People tend to worry when they see their investment not doing as they have expected. If investing is so predictable, then every body will just be doing investing and nothing else. So why pay your interest before it is due? Stop worrying and put your energy into more productive avenues.

Don’t get out of perspective

When the market drops, it is naturally that the human mood will follow suit. And when market surges, people tends to think that a bubble is in the making. If this is how you think, there is never a right time. Investing then becomes a chore. Timing the market is near impossible. So, keep your perspective, stay away from all the “Don’t”.

Be specific

Know what you want and know how to go about getting it. Eleanor Roosevelt once said “It takes as much energy to wish as it does to plan”. Wishing isn’t getting you anywhere but planning will move you on.

Investing and planning your finances may be an unnatural act. Our brain is trained to undervalue long-term goals and have a tendency to exaggerate the cost of short-term sacrifices. People who do some kind of planning and specify their needs have twice as much savings than those who don’t.

Set specific and realistic goals. "I'll put $200 a month into a mutual fund to build my retirement fund" is more likely to succeed than "I'll start my saving plan."Be specific in your investment and financial planning!!

These 8 simples rules will help you overcome the volatility of the present market place if you put them to use. Have a fun-filled investing journey your life-time through.



Monday, November 12, 2007

Investing in Stock Market - Beat the Odds (Part I)

Lets take a look at the first 4 “Don’ts” and see how they can help you keep a cool head when investing…..

Don’t panic

Past weeks, you may have read a lot of negative headlines about the economy of the world, how there may be a impending recession coming up, when and how nobody seems to be able to predict but everyone is talking about it. Do not panic. Panic clouds your brain. If you have stocks and funds in your hands, do not just sell and run. Do an inventory; some stocks are worth holding on to while others are not so strong in their fundamentals. Take stock and sell only those you do not intend to keep but sell it with a profit or only if you need to rid of this stock, at a minimum loss. This will take me to the next topic of not to be greedy.

Don’t be greedy

If you have invested in funds and stocks, you would have already set a target. If you have not, take stock again. Target your investment with time and percentage. Time will be how long you can afford to hold on to these funds. Percentage is how much do you want to earn for the time period you are holding on to. Set a realistic target. If you want a 80% - 100% return, you have to set your timing to 8 to 10 years or willing to hold even longer. If not, take a 10% to 30% profit depending on the market and stock situation. Do not be greedy.

Don’t be impatient

Do not just throw in the towel. Take time to ponder on your investment portfolio. Patience always pay. If you go through each and every one of your investment slowly and patiently, you will definitely see more clearly what you can do with each one of them. Take time to make your decision.

Don’t take risk

Take only calculated risk. The returns you get are proportionate to the risk you take. This is a fundamental law of the markets. To earn a high return in order to build true wealth, you will have to take risk, however, ensure you take calculated risk. Put some of your money in some risky assets like stocks, this is the only investment that can beat inflation, however, ensure that you go for fundamentally sound stocks.

Next — 3 more “Don’t” and 1 “Do”……………

Investment Advice - "Do and Don't"

“If you know that you do not know”; this is knowledge in itself!!

Time and again, we think that we have already learned and that we have great knowledge but then, when you start to really listen to others you may realize that there are still a lot more to learn.

My grandmother used to lament this all too famous Chinese phrase (literally translated) “Eat till old, learn till old” meaning that there is no ending to learning. And there is another Chinese idiom (also literally translated) “The next mountain is even higher than this one” which means to say that “you may be smart but there are smarter people out there”.

These sayings are true and can be applied to investing and how to invest. Investing is a life’s journey and the destination is never in sight. You learn and get better as you travel along this road. You learn to differentiate the pebbles from the sands and the stones from the pebbles.

The next 2 postings will give you the 8 simple rules to follow that will help you along the fine journey of life. Let them guide you to a fun filled and pleasurable path…….

1. Don’t panic

2. Don’t be greedy

3. Don’t be impatient

4. Don’t take risk

5. Don’t be snobbish

6. Don’t worry

7. Don’t be out of perspective

8. Be specific

Sunday, November 11, 2007

My Motivational Trigger

Do you sometimes ever wonder "how on earth can people do what they do" even when there was failure upon failure. What motivates them? How do they go on and on? How? And you want to know. I think, basically, all you have to do is find your very own motivational trigger....

Watch this slide which a friend sent me in one of those all famous "Forward mail" :-

Thursday, November 8, 2007

Business Intelligence

Today’s businesses have changed so much in recent years you are just not being able to catch your breath if you were not following them closely. At this time if you are still not computer savvy you definitely will be left out on a lot of new happenings. As things changed and the earth evolves, we need to change to fit in.

Paradigm shift is the term first used by Thomas Kuhn in his influential book "The ParadigmStructure of Scientific Revolutions" to describe a change in basic assumptions within the ruling theory of science. It is in contrast to his idea of normal science.

Kuhn used the duck-rabbit optical illusion to demonstrate the way in which a paradigm shift could cause one to see the same information in an entirely different way.

You must be wondering why are we talking about science. What has science got to do with today’s business.

Of course, the term "paradigm shift" has found uses in other contexts, representing the notion of a major change in a certain thought-pattern — a radical change in personal beliefs, complex systems or organizations, replacing the former way of thinking or organizing with a radically different way of thinking or organizing.

That’s our discussion today…………A change of mindset.

1. Take a Step Back

Stop what you are doing now. Take a step back and look at yourself, assess your situation especially your financial situation, your asset management, your investment, your business plans. Are you doing the right business? Is it giving you the right yield? Are you into the right investment? Stop doing what is not working and reassess your situation.

2. Look for New Ideas

Think out of the box and look for new options. Do not be too attached to old ideas because they were your ideas. Get advice from the best Investment Adviser or have a brainstorm session. Change if you need to.

3. Take Action

Have an open mind. Look out for people who have done what you want to do. Talk to these people, give them a treat and ask for tips. If you want to be successful you not only have to copy ideas but you have to copy them from the best. Copy ideas and improve on them.

4. Continuous Learning

Read. Read a lot. Read on business news, investment articles and what’s new in the market place. Learn from people who has make a success of themselves. If need to, learn by attending classes, listen to success tapes etc.

5. Make Business Offers

Finding a good business is like finding a life partner. You have go out there to talk to people, to make offers and counteroffers, to negotiate, to accept or reject in the market place. By sitting in your office and wait for the phone to ring or for the offer to come by is no more the trend of today. You have to be out there, you have to be in or you will definitely be left out of the good deals.

6. Bargain Hunting

Take a walk through your neighbourhood every now and then and watch out for bargain real estate deals. There are lots of good deals out there waiting to be taken. Some of the best deals are on auction and you just have to find them to get a good return in real estate investment.

7. Think Big

Most people think small by buying only what they can afford. Think big. Buy a big cake and divide them up. This concept goes for real estates investments like land, multi-storey shop lots and other business investments as well.

8. Learn from the best

Learn from history. See how successful people with little higher education can be. So if you have a degree or two, you should do better.Colonel Sanders

Kentucky Fried Chicken. Colonel Sanders dropped out of school in seventh grade. At the age of 40, Sanders cooked chicken dishes for people who stopped at his service station in Corbin, Kentucky. Since he did not have a restaurant, he served customers in his living quarters in the service station. He worked as a chef and perfected the method of pressured fried herbs chicken. He gained his “Kentucky Colonel” title at the age of 45.

Michael DellMichael Saul Dell was born on the 23rd of February, 1965 in Houston. He attended the University of Texas with hopes of becoming a doctor but abandoned studies to start his own business at just 19 years of age.

With just one thousand dollars in his pocket Dell started "PC's Limited" in 1984. From his university dorm room Dell started building and selling personal computers from stock computer parts. The idea that set the young entrepreneur apart from others was to sell directly to the customer, rather than going through a third party to sell his products.

Bill Gates and Paul Allen were high school students with great computer skills. They were determined to find a way to apply their computer skills in the real world. In the fall of 1973, Allen began to push Bill harder with the idea that they should open a software company. Gates was still not sure enough to drop out of school. The following year, however, that would all change.

In December of 1974, Allen was on his way to visit Gates when along the way he stopped to browse the current magazines. What he saw changed his and Bill Gates's lives forever. On the cover of Popular Electronics was a picture of the Altair 8800 and the headline "World's First Microcomputer Kit to Rival Commercial Models." They both recognized this as their big opportunity. The two knew that the home computer market was about to explode and that someone would need to make software for the new machines.

Within a few days, Gates had called MITS (Micro Instrumentation and Telemetry Systems), the makers of the Altair. He told the company that he and Allen had developed a BASIC that could be used on the Altair [, 9/29/96]. This was a lie. They had not even written a line of code. This is how the great success of Microsoft started.

These are 3 motivating stories to learn from.

Moral of the story

“You have to make things happen by going out there to look for your opportunities”.

Are You a Procrastinator?

Are you one who will put off what you can do today till tomorrow. Are you in a habit of promising to do something today and went on with your daily routine and forget about what you have agreed to do?

Take note that sometimes putting off things you can do today till tomorrow might be detrimental to your financial health.

Here is a simple 3-questions checklist for you. Do not procrastinate any further. Use them to get your personal finance and life in order before any regrets:-

  • Have you put up a financial budget yet?
  • Have you put away an emergency fund yet?
  • Have you taken care of your financial succession plan yet?

A Lifetime Checklist

1. Have you put up a financial budget yet?

It is important to plan your life and financially, a budget is important for anyone who is above 18 years of age. If you are 18, you are qualified to have your own personal budget. You may not have a permanent job yet but while you are studying you will still have to survive on a budget; be it an allowance given you by your parents or funds you have borrowed to take you on your pursuing journey and/or additionally you may do some part time job to supplement your monthly fund.

Plan out your expenses now and ensure that you go by planned budget and stick to your plan. You may be surprised that you might have left over after some careful budgeting. Put that immediately into an investment plan.

If you are already working, you would probably have done a budget for yourself. Are you on target with your budget? Have you revised your budget thus far? Remember, after a while, you budget plan may be outdated. Your needs may outgrow your budget so work on updating your budget every now and again to keep up with your lifestyle.

The essence of budgeting is to know where your money is going. Do not fear that you may see what you do not want to see by putting up a budget. You can only put in order what you can see. By putting up a budget will help you put your finances in order.

2. Have you put away an emergency fund yet?

Emergency happens to everyone at one time of our life or another. You have to be prepared and ready for such an occurrence; like temporary losing your job or a sickness in the family etc.

Decide on the amount you may require in case of such situation. You may want to put aside 3 to 6 months of your salary as an emergency fund. This fund should be set aside and should not be part of your expense budget. Take care to put it somewhere where it is earning you money yet can be liquidated easily during your need.

Having set aside an Emergency Fund will help put your mind at ease to get on with your daily life.

3. Have you taken care of your financial succession plan yet?

a. Retirement Fund

For Malaysians, we have our EPF, while the Americans, their 401K and Singaporeans, CPF. These are funds we contribute to in preparation for our retirement on a monthly basis while we are still working. Our employers are required (some countries by law) to pay an equivalent amount usually 10 to 12% of the basic salary.

Be aware of such benefits as soon as you start to work. If you are not receiving this, check it out with your employer. There may be some loop holes to avoid paying employee their due by employing them on a daily rate. Check this out in your own country and ensure that you bargain for this before signing any employment contract. This is a huge part of your retirement plan.

Keep track of your funds by requesting for a yearly statement and know how your funds are doing. Are you been fairly rewarded by leaving them with these organizations? If you are not satisfied with the fund earnings, check out where you can put your funds to achieve better rewards.

Have you assigned your beneficiaries yet? You may have done it years ago before you have a family of your own. Do take time to check this out and do your re-assignment as soon as possible.

b. Written A Will?

Accidents may happen. Sickness may happen to anyone who may be healthy today, so it is important for everyone to have a will done. Do not wait till you are 45 to do this. Your will can be changed as you advanced in age and as and when you want it to change.

Majority of people procrastinate to writing a will as they usually avoid talking about the subject of death. If you are borne, you will eventually die, the problem here is you do not know when you will die. This is the reason why you have to write up a will now.

Go to a lawyer to write up a simple will, it will not cost you more than a few hundred dollars. At least you know where your money will go when you are dead.

c. Bought a Life Insurance?

Have you insured your life against any eventuality? Getting yourself insured is more cost effective when done at a younger age. You don’t have to go for the fanciful packages. Get a simple life plan with critical illnesses. If you can afford it, an additional hospitalisation plan would be good but most organisation insure you for this. You have to assign your beneficiary for this as well.

These may just be 3 simple questions. If your answers are “YES” to all, very good, your financial health is in order but if your answers are “NO” for all or any one of them, my advice is to get to it right away. AIM TO LIVE A CAREFREE LIFE!!

Wednesday, November 7, 2007

Property Investment – What is Loan Amortization?

For those who are interested in going into property investment for the first time, please take time to understand how you are being charged for the loan by the bank.

What is Loan Amortization?

Wikipedia explains amortization as the process of decreasing or accounting for an amount over a period of time.

And if we are talking about real estate investment or property investment, amortization is a method for repaying a loan in equal instalments of which part will be interest due and the remainder will go to reduce the principal amount; the balance of the loan. As the loan amount is gradually reduced, a progressively larger amount will go towards reducing the principal.

For example, if you are taking a loan of $100,000 for 30 years at an rate of 6.75 (BLR (base lending rate of 5.75%) + 1%, the following is how your “Loan Summary” will look like. You will notice that you pay more interest than principal at the beginning of a loan period but at the end your payment goes more towards the principal. If you opt for 30 years to pay back your $100,000 loan, you only pay a monthly instalment amount of $648.60 but you ended up paying back $233,495.31 for a $100,000 loan of 30 years.

Loan Summary

Monthly Principal & Interest $648.60 Total of 360 Payments $233,495.31

Total Interest Paid $133,495.31 Pay-off Date Oct,2037

































































































































Lets take the same loan amount and calculate it on a 15-year period to see whether it is affordable and how much you can save. The “Loan Summary” below shows that you will have to pay a monthly loan repayment of $884.91, an additional of $236.31 but you ended saving a whopping amount of $72,211.61 on interest.

Loan Summary

Monthly Principal & Interest $884.91 Total of 360 Payments $159,283.70

Total Interest Paid $59,283.70 Pay-off Date Oct, 2022





































































Reducing the number of years you take to complete paying the loan amount will help you save a lot on interest.

Another way of saving is to increase the amount of your loan payment. For this example, if you increase your monthly payment to $902.62, (an additional amount of only $17.71) the period to complete your loan will be reduced to 14.5 years with a saving of $2,228.24.

As I have said over and over again, property investment is long term investment and has liquidity constraint. However, if it’s a good piece of property that will appreciate in value over time and is rentable, it is worth investing in.

If you will to put in your cash of $150,000 to purchase a property of $250,000; with a loan of $100,000, a $1,400 monthly rental income will cover your instalment payment as well as an assumed fixed interest rate of 4% on your $150,000 cash investment.

Keep your credit score clean, get a good interest rate from your bank, use the services of the bank to leverage on real estate investment. Property investment is a worthwhile investing avenue to look into.