Are you hoarding your Cash?

Another point to ponder! Is keeping cash a good move? Cash is liquidable and a lot of things else. But is it wise to hoard them? Not so .... according to Mr Warren Buffet; this is what he said ... maybe we should listen to him:-

Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts too alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: "I skate to where the puck is going to be, not to where it has been."

By the sound of this report which was extracted from "The New York Times", looks like it is wise to look at Equities especially now....

Yes, I know.... decision, decision and decision... That's what life is all about!

"The Worst is Yet to Come!"

With today's economic situation, we are all in quandary and I am sure even the most experienced and expert investors are finding it hard to make the right decision or any decisions at all. We kept on reading and hearing that "The worst is yet to come!" Nobody knows when this perplexity is going to bottom out. We can all just give it our good guess and your guess is as good as mine!!

But after reading what was written by the financial guru, Mr Warren Buffet, on "Buy America, I am" in The New York Times on 16 October 2008, I guess we have to be brave to ride out the turbulence!! I kind of like his simple rule ~~ mind you simple and yet very powerful ~~ "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

Mr Warren Buffet further mentioned as follows:

"Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

Mr Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company. Do read about him and his success and then his advice will be more valuable to you.

So like everyone said "The Worst is Yet to Come!" Are you waiting for the rock bottom before deciding to buy? The decision rest on you and you alone!!

Dual Currency Structured Investment

This type of investment is pretty new in Malaysia and is offered by banks; not all banks. It is a short-term investment linked to the currency market.

This investment pays investors a fixed interest with the possibility that at maturity, investors will receive back the original sum invested plus interest in a different currency. At the time of Investment, the Investor will know the amount that will be received at maturity in the Base Currency and in the Linked Currency. What is not known is in which of these two currencies the Investor will be repaid.

The Tenor of this investment can be for a period of 1 week, 2 weeks, 1 month, 2 months or 3 months. It may vary from bank to bank, country to country.

You have to select 2 currencies; Base Currency and Linked Currency. The "live" system in the bank will show a range of 10 different sets of conversion rates against the investment return (% of interest to be paid). The price is only valid for 35 seconds; meaning that you will have to click the category you choose before the 35-second is up otherwise the rates will change upon the next refresh.

A Current Spot Rate will be fixed usually higher than the list of 10 set of rates given you to select. You will have a choice of selecting the rate you want to convert and your investment return will depends on the set of conversion rate and interest percentage you chose.

Warning: If at maturity the Redemption is paid by the Bank in the Linked Currency and the Investor intends to convert this sum back into the Base Currency, this conversion will have to be made at the then-prevailing exchange rate, which may be less favourable than the Conversion Rate which the Bank converted the Redemption into the Linked Currency.

After conversion back into the Base Currency, the overall return may also be less than the Investment Return. In some circumstances, the Investor could even receive less than the original Investment Amount. This simply means that the Investment is ultimately not principal protected!

Gold Value versus The GreenBack

If you are considering investing in gold you may wonder "how am I supposed to invest in gold?". Some people will rush to buy gold jewelleries because they serve dual purposes; as an ornament and a great gift, it will appreciate in value – good investment.

However, today gold are traded everywhere, in the share market, in unit trust and also traded by banks. Some are traded on paper value while others actually provide you with gold bullion. Do your own research and find out what would suit you better and also look into the charges incurred upon buying and selling. Each trading house has their own percentage level of charges…. Get your investment money’s worth by trading with the lowest in charges….but be wary of the security level as well.

Take a look at this chart --- Gold & The Dollar --- (this chart is borrowed) and you will notice the movement of gold and USD is in the opposite directions. This is another guide for you to consider if you so decide to trade in gold.

Invest in Gold?

Have you heard of this term “Old is Gold”? When human grows old, their functions slowed, their values are compromised, their memories waned and their usefulness may be reduced tremendously. Then the term “old is gold” had been coined to add value to aging people. Gold then became the measuring tool. Why GOLD? As everyone knows, gold is an unfading metal of great and undiminishing value.

With that in mind, shall we say that “Gold” is a valuable metal sort after by all. In other words we can summarise that “Gold” has value. Lets take a look at how much the value of gold has been moving from year 2003 till current:

1. 2003 - Gold at $382 dropped to $319 (-16%)
2. 2004 - Gold at $425 dropped to $375 (-13%)
3. 2005 - Gold at $536 dropped to $489 (-9%)
4. 2006 - Gold at $725 dropped to $560 (-22%)
5. 2007 - Gold at $841 dropped to $778 (-8%)
6. 2008 – Gold hit $1002 on Mar 17 then dropped to $786 on Aug 15 (-21.5%)

If you look at the above trend, you will see the fluctuated percentage is highest at 22% in a year and this year, gold has hit top value at $1002 per oz and has dropped back to $786 on 15 August, a reduction of 21.5%. Question is …. Is it at its lowest? Also, is it time to invest in gold yet?

Lets take a look at gold price compared to oil price…. Is there a trend for us to follow?

	Gold in USD	Oil in USD
31 January 2008	928.20	92.00
29 February 2008	975.00	101.00
31 March 2008	915.70	106.04
30 April 2008	876.60	114.06
31 May 2008	886.10	126.00
30 June 2008	924.90	143.00
31 July 2008	913.30	124.08
15 August 2008	786.00	113.77

Alright now, I have done a simple research and a true to life comparison, now you are the one to decide whether its gold you want to invest in and if yes, is it now that you want to go into gold….. the decision is yours to make and the money is yours to earn.

Happy Gold Hunting!!

Investing is personal

At times like now, most investors especially those who are new and inexperience; or even those who have already taken some gains earlier are in a predicament not easy to rid off. If you are serious investors with little experience, your brain might now be functioning like a washing machine, round and round with all the unanswered questions:-

• Dare I invest further?
• If I dare, what shall I invest in?
• Do I invest in gold, stock, share, bond, trust fund or commodities?
• If recession is settling in, how long will it last?
• Can inflation kill the economy?
• What is affected, who will be affected?
• What is the domino effect?
• Fuel hike .... affects daily commodities .... affects interest rate

Don't even bother to think that anyone can give you a perfect answer; not even God.

For the right answers, search within, you should know yourself well and you just need to re-ask yourself some of these questions:-

• What is my risk factor?
• Is it worth all the stress you are getting?
• Do you want to go on taking the risk?
• Can you afford to invest long term?
• How is your "gut" feeling right now?
• How much profit shall I settle for?
• How much loss (percentage and money wise) am I willing to take?
  

Frankly, investing is very personal. You and only you will be able to give you good advice. Use your logic.

"Wild Goose Chase" Investing Style?

I read with trepidation many investment advice being written these past few months of global uncertainties. Many of us investors are overwhelmed with all the well intended advice; however, what would be the right move? Do we invest in gold now or should we have switched to bond like a few months ago already? Do we go into commodities now that food prices are going up? Or do we go into oil and gas sector?

Whatever decisions you made or whatever action you had already taken; I am sure by now you would have been wiser but will not have ended up much richer or happier. Not now, not yet.

Time is still the essence. Whatever actions or non-actions by you, you will still have to bide by time to see substantial gains. It is still important to go on fundamentals and stick by your decision, your very own judgment, experience and research on facts and figures.

Avoid making hasty decisions and going on a panic selling, buying or switching. Any "Wild Goose Chase" on your part will only hurt your pocket and give you unnecessary stress. This is the time to use your head not your heart.

Deja Vu

Have you ever had this feeling that you have been there before when you visited a new place? Do you call that "deja vu"?

Likewise in investing, many of us have had our very own "deja vu's" especially in these past few months. Many of our portfolios are on the dip, mostly around 30% to 40% below value, maybe even worst than that. However, even the most experienced investors and the pro's are not spared. So take heart; "you are not alone in this" if its any consolation.

Being affected whether minimum or aplenty; it is easy for us to say "Do not panic" when all you wanted to do is to give up but that is the trick........ I truly believe this "What goes up must come down but whatever has gone down will eventually comes back up". This is the time to test your resilience. Hang in there folks!!!

Rules of Life by Bill Gates

This has been circulating on the net for a while now but I just read it. Whether its true or not I find some of the points worth repeating to those who wish to read and learn. If you do not read it too seriously, it might just lighten your day! Have fun listening to the world's richest man.......

Bill Gates recently gave a speech at a High School about 11 things they did not and will not learn in school. He talks about how feel-good, politically correct teachings created a generation of kids with no concept of reality and how this concept set them up for failure in the real world.

Rule #1 :
Life is not fair - get used to it!

Rule #2:
The world won't care about your self-esteem. The world will expect you to accomplish something BEFORE you feel good about yourself.

Rule #3:
You will NOT make $60,000 a year right out of high school. You won't be a vice-president with a car phone until you earn both.

Rule #4:
If you think your teacher is tough, wait till you get a boss.

Rule #5:
Flipping burgers is not beneath your dignity. Your Grandparents had a different word for burger flipping: they called it opportunity.

Rule #6:
If you mess up, it's not your parents' fault, so don't whine about your mistakes, learn from them.

Rule #7 :
Before you were born, your parents weren't as boring as they are now. They got that way from paying your bills, cleaning your clothes and listening to you talk about how cool you thought you were. So before you save the rain forest from the parasites of your parent's generation, try delousing the closet in your own room.

Rule #8:
Your school may have done away with winners and losers, but life HAS NOT. In some schools, they have abolished failing grades and they'll give you as MANY TIMES as you want to get the right answer. This doesn't bear the slightest resemblance to ANYTHING in real life.

Rule #9:
Life is not divided into semesters. You don't get summers off and very few employers are interested in helping you FIND YOURSELF. Do that on your own time.

Rule #10:
Television is NOT real life. In real life people actually have to leave the coffee shop and go to jobs.

Rule #11:
Be nice to nerds. Chances are you'll end up working for one.

Retirement Timeline

"Majority neglect retirement plan"; an article in The Star reads on 14 March 2008. Most of Malaysian have not prepared for retirement while those who have only started after age 40.

If you want to retire comfortably, it is definitely too late to start planning at age 40 not to mention wanting to retire rich and young. I asked myself "Why do we do that?" Merely because we are too busy with our daily life and kept putting off planning for our retirement because the word "retirement" sounds too far away?

Retirement is in fact the most important phase in one's life and I felt strongly that the timeline for retirement should begin the minute we finished college. Right, young people out there must think I am being ridiculous. You have not even started to earn money or gotten your first job, why should there be thoughts of retiring......

You are absolutely right, and that how the statistics ended ...."leaving it too late to plan for your retirement".

I was just suggesting that you start to plan towards your retirement. I am a strong believer of the phrase "If you fail to plan, you plan to fail" and it is necessary to include a retirement timeline to your aspirations and your life's goals.

Everyone should plan for their future and if your future plans include how and when you want to retire, it will help you have a clear view of how rich or how young you will retire. Planning this step of your future will definitely encourages and pushes you to achieve your life's goals faster and more effectively.

"You start to live once you do not need to earn to live!!"

Words of Advice for Stock Market Investors

With the "yoyo" market trends out there, everyone of us needs a dose of motivation to keep us going, to maintain our poise and confidence. Especially for new investors and the beginners, it is indeed a trying time as the market trend is so reactive, a lot of us are unsure what move to make.

Here is something I found in my newspaper clipping collections and I wish to share this piece of booster with you, a winning essay by Gan Hong Leong of Bentong, organised by SIDC published in the Focus column of The Star:

Words of Advice

For all stock market investors and speculators out there, here is Gan's advice:

Value for money you must insist

Buying in a downtrend you must resist

The trend is your friend

Follow it to the very end

Holding on to falling stock is unwise

Cut your losses quickly is advised

Never kill the golden goose when you have one

Never sell prematurely, let it run for once

Undervalued unpopular stock is never a fancy

Glamour stock is the choice normally

Join the crowd; enjoy the ride, if you wish

Be careful though, lest you fall out and vanish

The market is most tempting at the top

Lock in your profit before volume has a good drop

Sell your stocks when you love them most

Take your money and let the deal be closed

Buy when volume traded is at its lowest

The market will then be at its dullest

Investors should buy low and sell high

Traders should buy high and sell higher

Someday you will know what I mean

By then, you are a stock market dean.

Stock Trading – Watch the Chart

Isn’t it shocking after months of accumulating your stock and fund portfolios carefully and thinking that you are going to sit and watch your money grow, you woke up one morning to see headlines like this “Stocks Extend Plunge…Dow falls 227 points…. Dow falls 306 points etc etc” staring at you in your face. Whether you are investing in America or elsewhere in the world, you are and will definitely be affected. Your heart sink!!

And for those who are still waiting for the right time to enter the stock market, you will probably be thinking that this is logically the right time to start your stock accumulations and by watching the happenings in the world, the movement of world markets it will be able to guide you to some money making trend.

Also, some will be thinking, “Will the price drop further?” “Shall I wait a little longer?”

Well, for small players and common people like us who just want to invest our spare money to earn some good money, we are always at the tail end of the game. When we go in to buy the good stock that just came out in today’s news, we are actually buying from the big players who already have their pie and eat it.

With the impending news of a threatening recession, are we sane to go into stocks investing, but you thought, the prices has gone so low, its almost tempting.

Yes, by all means, go ahead to accumulate your portfolios but be forewarned ---- “You must watch the chart”. Monitor the downtrend on where and when it will end. Look out for stocks with a promising growth in the future and has a growth record of at least 10 years. Watch the price range and determine the price worth you putting your hard-earned money into.

Be patient and try not to be rash… its worth all the work you are going to put in doing your stock survey.

Happy Watching the Chart!!!

How to be a Millionaire?

Does it take money to make money? People always say that the rich will get richer and the poor gets poorer and the gap gets wider. Every country the Government are trying their best to bring the gap closer by giving subsidies to the poor, providing opportunities and assistance so that they can live better. But we still see poor people everywhere; from dirt poor (homeless) to the just-barely-make-it poor.

Have you ever pondered how the rich gets richer? Or how the poor gets poorer?

My personal opinion is that both questions have the same answer. Let’s not waste time in “poor getting poorer” but if you do have the time to survey the poor, you might get to learn from their mistakes and how not to make them. I feel it is better to learn first hand from the rich and find out how the rich gets richer.

As you can see from today’s stock market volatile situation and it is admittable that it is now not so easy to make money just from investing in stocks or the mutual fund as it is very closely related to the market trend.

Let’s learn from the already self-made millionaires of the world. What are they characteristics and their attitudes towards life:-

80% of the world’s millionaires are

Physically:

• ordinary people (like you and me) who make it on their own and in his/her generation.
• Their wealth is accumulated slowly and steadily.
• Only 20% inherited their wealth and the rest never inherited a single cent.
• Most wear inexpensive cloths, drive home-country made cars
• About 50% of them still live in their first purchased house
• 20% of them are retired, 55% self-employed, remainders are working professionals
• All of these millionaires invested approximately 20% of their household income yearly.

Emotionally:

• They have winning attitude
• They always think positively
• They are always questioning to better themselves
• They are always on the look out for better and sure investment opportunities
• They do not take risk; only calculated risk
• They are the doer
• They have the “never-say-die” way of life

After studying the physical and emotional aspect of self-made millionaires, the question we should pose to ourselves is “How can we be like them?” Majority of us spend more than we earn. We are always lamenting about not having enough and we are probably spending our next pay check before it even arrive, thus creating a debt situation.

We live beyond our means, we spend more than we earn while self-made millionaires do the opposite, they spend less than they earn.

They live beneath their means.

Very simply put: They simply spend less!!

And continuously looking for ways to make money out of the money they did not spend.

If you need to learn more, you may want to read some of the related posts in this blog under the category of “Wealth Creation”. Be warned – it is not easy to do what the millionaires do but it is simple. Have fun changing the way of life.

Be a Master Builder of Your Life

Watch this — Building Life

I watch this slide-show by an anonymous writer and I find it to be true to life. Whatever we choose to do in our life, we need to do it with our heart, otherwise, we will end up like this excellent carpenter with immaculate carpenter skill but who built his own house shoddily.

Remember, your life is yours to live. You don’t live it for your parents, your spouse or even for your children. Evidently how you live and die rest fully upon yourself in your own two hands.

Be a master builder of your own life and allow the next generation to emulate your good example by living a healthy, wealthy and happy life. Take care of your own health, work hard to build your financial wealth and while doing both stay happy.

Spenders versus Savers

It is a universal fact that it is easier to spend than to save. Human has high level of needs and that is the main reason why we spend more than we save. Statistics showed 1 in 20 of us are unable to control the urge to spend, men and women alike.

It is also true that we spend as much as we earn if not more. There is never enough. If you have been working for 10 years and more, you can make your own comparison.

Assuming that you were earning just $24k annually 10 years ago, you get along fine with your income and expenses and now 10 years later if your earning has increased let say to $60k annually, I am sure you are not just spending $24k but that you probably are spending $60k or even more. If you are spending more then this will equate to the fact that you are in debt.

Conclusion here is, if you are one of those who said to yourself that you will start saving when you are earning more, stop it, because it will never come to that. If you do not have a financial plan in place, each time your earning increase you will have this other thing that you need or something that you are committed to. And “poof” there goes that additional amount of money you have.

So, are you a spender or a saver?

Savers

If you are a saver, fine and good but just saving your money is not enough to guarantee you a good retirement plan that will give you the lifestyle you are so used to now.

Read about “Put your money to work for you” and some of the posts here under “Invest” category. Find out how you can put your savings into earning money for you over the next 20 or 30 years before you opt to retire.

Spenders.

Spenders beware! Are you in the high-income, low net-worth category? It’s time to make drastic changes if you are reading this and you are aware that you are spending too much. Similar to people with tendency to violence, they are born with an extra “y” chromosome. You are probably born with a defective chromosome maybe a “s” chromosome :). You are born to shop, shop and shop. Or you may be suffering from a sickness called “shopaholic”. Following are 2 ways to help you fight your “sickness”, they can work but it takes some will power:-

1. Pay yourself first – before you can get your hands on your money end of each month, commit by auto-transfer the amount you want to put away to a special account where you have taken out with no “ATM” card. (Read about some posts here in “Wealth Creation” category).

2. Lock away all your credit cards. Credit cards are meant for convenience and building your credit score but if you are unable to control your spending, the best way is to get rid of the spending avenues. Keep only enough cash for you to get by daily and by all means avoid window shopping. The temptation may be too much for you to resist the inconvenience of running to the bank. After a while you will hopefully (depend on individual and the strength of your will power) get use to your forced new lifestyle of minimum buying and live with this new found lifestyle comfortably.

Rich Dad’s Words of Wisdom

Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.
Robert Frost, from ‘The Road Not Taken’

At times, when we come to the crossroads of our lives, where we turn is what we will make out of our lives therefore it is important that we make the right choice. Most people will not take the road less traveled due to the fear of the unknown.

Fear of the Unknown

Among all the fears, this is the most potent to human advancement. If you do not know whether you are suffering from this fear then you won’t able to “cure” it. Ask yourself truthfully whether you are afraid to venture into the unknown; whether you would take up a task you totally do not know anything about or you will accept a job that you have no idea how to do? Beware this fear as it may stagnate you. Stagnate your mind and soul and keeping you stuck on a spot. Get out of it, try a little adventure and feel the exhilaration.

I read the book, Rich Dad Poor Dad by Robert Kiyosaki and here are some of Rich Dad’s words of wisdom:

• You are what you Think.
• A job is a short-term solution to a long-term problem.
• A highly paid slave is still a slave.
• Why climb the corporate ladder when you can own the ladder?

Wise men speak because they have something to say; fools, because they have to say something - Plato

All these wisdom words are good and fine. I suppose we need to understand them and learn to use them to our advantage, to guide us along and to help us make an effort to change our way of thinking. That is what wise words are all about – a guide and a constant reminder to make the right turn.

How much do you need to retire?

I think the most common question asked is “How much longer to your retirement?” or “At what age do you plan to retire?” But, with the advance in technology and the financial climate changing, the more apt question would be “How much do you need to retire?”

Famous and smart celebrities have the privilege of saying “The question here is not at what age I wish to retire but its at what income I want to retire”. If this ring true for you, you’re blessed.

In fact, it is no fun to retire at your retirement age; be it 55, 60, 65 or even 70. Think about it, how much fun you are going to miss by the time you wait for your retirement age to retire, let say at 60 on the average. If you are young now you probably would not be able to imagine what its like to be 60. Go look around and take a person at that age now and find out how his/her physical, mental and health abilities are.

Majority of us would take our retirement age for granted. We accept that we will retire when it comes the time that we need to retire. Or that we will retire when we are not employable. But, the question here is “Is this how you want to live your life?” Are we allowing an “accepted fact” to rule our lives?

Let’s change our thought patterns, let’s think out of the box a bit for now. Let’s say you live a simple life and that you will survive comfortably on a constant income of $5,000 per month without having to work. How can you plan towards that kind of residual income?

Of course with that kind of income you can only take care of your daily expenses and maybe can afford to save up for an annual holiday. You will have to have your medical insurance intact, just in case you get sick and the better bet is to keep yourself healthy by eating right and exercising regularly.

You will need a $1.2 million to put in a bank earning you a 5% interest to have a monthly $5,000 earning. You got your answer. But it’s not that simple. You will need a lot of planning financially in order to achieve that goal.

Seek a financial planner’s assistance or if you are savvy with money management and have your own financial education, read some of the posts here and seek out what can work best for you.

Happy working towards your retirement!!!