Investing for Beginners

"Cash is King"

2009-03-23T22:20:00.000-07:00

I was watching an interview of the Australian champion "butterfly" swimmer who won USD1 million in a swimming championship and was asked by the interviewer what she did with the money she won. She said she heard that "Cash is King" so her money is still tucked safe in her saving account!

Is that what you are doing as well? I guess with the madness in the world now and whichever corner of the world you are in, it does seem not safe to put your cash anywhere, even in the bank. What a predicament nowadays for people with plenty of cash!! It does seems like there is no where to go; definitely not safe under your mattress!

Let truth be told, it is definitely better to still have cash than a whole portfolio of investments that is worth a quarter of what you have invested. But, nevertheless, take to heart that you are not the only one in this dismay situation, even the best investors, people like our investment guru Warren Buffet have lost money in their investments, have made a bad judgment to the "what will be in the future" prediction. So hang in there, I believe that time cannot get any much worst if not better.

Meantime, people with hard cash should make some good, safe and sure-win investments to earn some profits while waiting for the good and better times. A lot of people will just take the easy way out by putting cash in FDs, it is, no doubt, a good, safe and sure-win investment but definitely not earning your cash's worth.... so think about it and make a harder effort to source for better "sure-win" ways....

Are you hoarding your Cash?

2008-11-01T04:17:00.000-07:00

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!"

2008-10-31T03:08:00.000-07:00

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

2008-09-15T08:03:00.000-07:00

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

2008-08-17T22:34:00.000-07:00

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?

2008-08-17T22:15:00.000-07:00

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:

2003 - Gold at $382 dropped to $319 (-16%)
2004 - Gold at $425 dropped to $375 (-13%)
2005 - Gold at $536 dropped to $489 (-9%)
2006 - Gold at $725 dropped to $560 (-22%)
2007 - Gold at $841 dropped to $778 (-8%)
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

2008-07-16T04:45:00.000-07:00

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?

2008-07-16T04:17:00.000-07:00

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

2008-07-11T17:30:00.000-07:00

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

2008-04-19T05:39:00.000-07:00

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

2008-03-16T00:53:00.000-07:00

"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

2008-02-28T18:05:00.000-08:00

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

2008-01-20T02:12:00.000-08:00

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?

2008-01-17T19:10:00.000-08:00

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

2008-01-12T20:57:00.000-08:00

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

2008-01-09T20:53:00.000-08:00

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

2008-01-06T19:12:00.001-08:00

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?

2008-01-01T21:44:00.001-08:00

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!!!

New Year – Time for Reflection

2007-12-30T22:35:00.001-08:00

Every new year will bring us closer to the day we dream of. The day we can stop being in the rat race, the 9 to 5 routine or the weekly 3-shift work we are in. Whether we want it or not we will eventually retire one fine day.

The last day of the year; 31^st December, always give me that feeling of underachievement. Of not doing enough or not completing all that I intended to. It gives me the déjà vu feeling, that I have been on this road before. Why?

It is time for reflection….. had we done what we had set ourselves to do at the beginning of the year or had we done enough for ourselves and for others?

Your Successes

Have you been successful in some of your endeavours; if you have, are they good enough for you, is it up to the standard you want? Are all your successes beneficial to you and to others? Are they good enough for you to repeat over the coming year?

Your Mistakes

If you fail in some of the ventures you have got yourself into this year, are you able to learn from these mistakes (I feel strongly about calling mistakes failures as I believe no one will ever fail, you just miss your target). Mistakes are there for us to learn, we learn not to repeat them and learn to correct them so we make them into successes.

There is No Comparison

I would urge everyone who is on their venture to become successful to avoid comparing yourself with others. You should compete with yourself and not others. Do not compare yourself with your friends, neighbours or even siblings. Set your own standard and target and the only person you compete with is yourself. Everyone is different in their making and everyone succeed at their own pace. You will only get frustrated if you start comparing yourself to others and that will definitely be detrimental to your mental health. You do not want or need that.

I find reflecting a very good way to move on with our lives especially if there are obstacles that we have encountered and reflections give us time to heal and repent and it is good for the soul… have a fun time doing that on the 1^st day of the year.

Plan Well to Retire Well

2007-12-28T18:20:00.001-08:00

You have to learn to plan well to retire well. Year-end is usually the budget time for organisation and companies and it could be also the right time for personal planning. As I have said in my previous posts, if you fail to plan, you plan to fail.

Face Your Fear

I asked my young son “Why are you broke before the end of the month?” and he shakes his head with the answer “I don’t know”. Then, after pondering a moment, he said “Maybe because I earn too little, I am going to look for a better paying job.” Well, that may be somewhat true but frankly speaking, no matter how much you earn, it will never be enough unless you put up a good financial plan.

When asked to write down all his monthly expenses, his response was “No way, I am not going to shock myself”.

I felt this is the common fear people faced when its time to financial plan. I would advise all to take the bull by the horns and go for it. Face your fear and find out where you are wasting your money and what is causing you not to be able to save.

Take Time to Save Now

Dream your dream and reach out for the sky. Every success begins with a dream. I find saving as the best way for a novice investor to start creating wealth but it usually start with a dream, a need to save.

a) Obstacles to overcome

There are usually many obstacles on the road to success. Do not fear these obstacles as they are the experiences that you need to achieve success. Find them and overcome them one by one and they will make you stronger by the day.

b) Make time work for you; time makes a difference

If you were to save $100 a month and can earn a 5% interest, how long will it take you to achieve the goal of $10,000. You can find the calculator by typing “how much will be savings be worth” in any search engine to help you do the calculation.

c) Interest adds up

If you want to achieve your saving goals faster, instead of just $100 a month, you can work harder by taking up a part-time job over weekends and put all the earning into this saving plan. Lets say you earn $400 a month and you add this to your original of $100. See how much faster this will grow by using the calculator again.

Learn about compounding interest and how it can work for you.

Convert Your Dream into Reality

List the financial goals you want to achieve for yourself and work towards those goals. Remember, you have to write it down; better still if you let people know of your goals. Be specific; know what your goal is, how much money it takes to achieve that goal and when you want to accomplish it.

Again you will need to write out your plan and how you plan to accomplish your goal.

You need to plan well in order to retire well. Today is a good time to start your planning. Never put off what you can do today till tomorrow.

Giving Back to Society

2007-12-26T22:23:00.001-08:00

John Wesley who founded the Methodist Church in the 18^th century used this simple rule to teach God’s love. Universally, God’s love is doing good works.

Do all the good you can,

By all the means you can,

In all the ways you can,

In all the places you can,

At all the times you can,

To all the people you can,

As long as ever you can.

By John Wesley

We read so much about rich people giving back to society what they got from society. People like Bill Gates, the richest man of the world, left his company to focus his time for society. He gave away his wealth for important issues like education and health. Warren Buffet invested $31 Billion to his foundation to help society.

Does all these good doings stop with the rich people? Or do we wait to be rich to do good?

In this season of festivities while we are all enjoying ourselves and having fun time with our family and friends, let us stop for a moment to think about the lesser fortunate. Lets spread joy and goodwill and start to give to others.

I read somewhere that running after money is like chasing after the wind. My father always said that “money” has four legs and we only have two and it is hard keeping up with money. But, if you willingly give and give, they will come back to you. Give with your heart.

So while you are working hard earning money out there, spare some time to do some good this season and continue to do so the whole year round. There is no better time to start than like right now. Start by giving way to a car at a traffic jam, giving up your seat for the elderly in a public transportation, giving your change and a little more in the charity boxes….. in fact you can do a lot more on a daily basis if you are tuned in to giving.

One act of random kindness a day will add up to 365 kind acts you will have done for a full year.

“Retire Young & Rich” – Next New Year Resolution theme

2007-12-24T19:25:00.000-08:00

December is the time of the year where people make resolutions to be better for the next year. The Christmas and New Year festivities allow us to spend relaxing time with our family and friends, reflect on the past year’s achievements and shortfalls and shout out our resolutions for the new year.

Yes, the usual resolutions are to lose that extra 10 kg you have gained over the year or to stop smoking or even to be a better person by promising yourself to do a few good deeds a day; give up your seat in public transportation to the elderly, disabled and pregnant etc etc. All these are fine and good but let us change the theme for this year’s resolution.

How about setting a goal to retire young and rich? It is a lifetime goal and if you have set this goal then your next 5 years’ resolutions will be set for you. In fact, your new year resolutions are set for life as you now have a life long direction. Here are 5 I can think of on top of my head; maybe you have more to share……

Year 1: Where Your Money Goes?

Do a comparison of your Income versus Expenses and readjust to balance your personal finance. Your resolution should be to reduce your expenses after your splurging on this festive season.

Year 2: Pay Yourself First

Start looking at ways and means to save so that you can now apportion part of your income to a special account. Target at 10% and once you have achieved your target, reset your goal higher. Instead of spending your bonus money on a new car, use part of the money to open up a special account where you can continue to put in money monthly.

Year 3: Let Your Money Earn Money for you

Following your Year 2 resolution of paying yourself first, your 12-month savings will be earning money for you by now, even as little as earning fixed deposit income.

Year 4: Learn to Invest

Yes! With your new portfolio you will by now have enough to put your money into some kind of investment to earn bigger money. If you are new to investing you will have to start on the safer type like mutual funds and fundamentally sound stocks. Go easy here and advance as you improved in your financial skill.

Year 5: Invest in Yourself

Take lessons on how to earn money or to build a sound business. Read as much as you can on financial literacy. Teach yourself to be an expert in your field of work. Learn, learn and continue learning.

Preparing Yourself for Retirement

2007-12-23T02:56:00.000-08:00

Every one has to retire at one point or the other. Whether you retire early or late depend very much on your financial situation and your family background. Some who are late starters; meaning those who are almost at retirement age but still having young children might not be able to retire early even if they want to. Others are luckier in the sense that they have their retirement years all planned out.

Remember, when you retire you are expected to draw on your retirement funds and investment portfolios for at least a minimum of 25 years; some may be longer depending on individual life span.

Here are 3 things you need to do before you retire:-

1. Explore Investing Avenue for your retirement funds

If you are only starting to invest after drawing on your retirement funds, you will have restricted investment objectives, in other words, you cannot afford high risk investment and you definitely cannot afford big losses. You probably have to settle for dividends and interest income where your investment has assured earning.

a. Invest in Stocks

Start to look for fundamentally sound stocks with good historical dividends payout to purchase. Check out the stock historical price and set a target price that you are willing to purchase and look out for the stock movement. Once you draw on your retirement fund, you are ever ready to start your stock investing. Research needs time and its better to start now before you actual retirement date.

b. Invest in Mutual Funds

It would be good advice to put at least 50% of your retirement funds into a good mutual fund to grow your money. Do a survey on the funds available in the market and do a study on the returns of the funds you want to invest in. Again, you need to start looking for good investment funds now rather than wait for your fund to be available.

c. Foreign Currency Deposit

You might want to explore foreign currency investment which gives you better interest rates than your home currency. It will be to your advantage to purchase the currency when the exchange rate is low and put them into fixed deposits.

2. Medical Check-up

For working people who has medical benefits with their companies, it is advisable to go for a full medical check-up before your final workings days. Ironically, once you retire you will probably discover some sickness that we weren’t aware of while you are busy working. So, take time off to do your much needed check; all the scans and tumor markers that are so needed. Mostly, we put off such check-up due to fear of finding out the truth but it is better to know while you are fully insured than to find out later when your working insurance has lapsed.

3. Do a Retirement Budget

Depending on your retirement portfolios… you will have to be realistic when coming out with your retirement budget. Obviously, without an active income, you will need to scale down on your expenses. If you put out a monthly expenses budget, you will be able to know how long your retirement fund will be able to last you. If your stretch is 30 years, then you are safe to retire in comfort, if not you will have to re-look at your expenses. If you can stretch longer years, then it looks like you are ready to retire and enjoy life.

Anyone can trade in the stock market

2007-12-06T21:43:00.000-08:00

You don’t have to be a qualified analyst or have a degree to trade in the market. To earn good income from trading can be an option for anyone who has a keen mind and a willingness to learn. Time will help you excel in this skill. Here is a few pointers to help beginners get started.

Read, Read and Read

The man who doesn’t read good books

has no advantage over the man

who can’t read them.

Mark Twain

Every one of us knows this “Knowledge is Power”. We are in school a big part of our life, to do what? Yes, to learn, learn and learn. That doesn’t mean that the minute we are out we stop learning. Learning is a life long process which only ends on the last day of our life. So the best way for us to learn is to read, read and read. In order to learn about trading in the stock market, we have to find good book on stock market trading.

Do a “Phantom” Trading

If you are new to stock market investing, you might want to do a 3-month trial trading. This may help you get ready for the real investing you would like to go into. You will have to do the same thing similar to what you need to do if you are doing real trading. Pick a few stocks and start studying the company background, history, dividend payment and trading price for the past 10 years. Keep a record of these stock and see how you do in 3-month’s time. Once you are confident, you can start your first trade.

Join the membership of a live website

To do both, the “phantom” trading and actual trading, it is better to shop around for a good trading live website to join as a member so that you can use this site to help you track your portfolio. Most site might have a one or two- hour time delay, so, you can either do your trading online (this usually charge very low fee) or with a registered trader.

There are a lot of trading online websites available for you to join as a member so that you can use their site to control your portfolio. Most of these sites has a platform for forum, where investors can communicate and share their views on stocks and market situation.

Study the stock you want to invest

Background check on company, share prices for 10 years, do a search on the history of the companies you intend to invest in. Information are usually available on trading companies websites. Check them out and keep your own journals.

Diversify by concentrating on only a few shares

Diversification is very subjective. You may concentrate on a few stocks but avoid putting all your eggs in one basket by choose different category of products. I personally felt that one should not over diversify when investing.

Keep track – Create your own personal "Watchlist"

Use a reliable and near real time site to create your "Watchlist". This way you can keep track of your portfolio easily and you can also have a quick glance of how the stocks are doing every trading day. You may also want to keep a separate "watchlist" for any potential stocks you plan to purchase. By doing this, it will help you keep track of the price fluctuation in order that you can make the right decision at right time.

Strategise Your Investing

2007-12-05T17:37:00.000-08:00

Sometimes when you read on “Investing” topics and “Investing” books, you get all kinds of advice, all kinds of strategies and all kinds of methods to invest. At times you even get contradictory strategy. Some says to diversify, others advise to stick to one; all with good reasons… So, who do you listen to?

Then, you might be told to listen to the successful ones and do exactly what they do and you won’t go wrong. Here again there are so many successful ones with different methods and ways. If you are new to investing, you get more confused. Some might just give up on their quest to invest.

For me personally, my strategies change with time and in order for us to invest wisely we must keep abreast with the current news and changes in the economic climate. Your have to learn to strategise as the earth is evolving as today maybe good to invest in REIT but tomorrow is Gas & Oil, then it just might change to pharmaceutical or even plantation. Stay resilient.

The following are the “holy grails” of a good investor:-

1. Emotional Control

2. Having Guts

3. Having a Clear Vision

All the above 3 points are actually integrated. If you have a clear vision to invest in some stocks, then you must have the guts to hang in there when the going gets tough and having a perfect control on your emotion. Ride out the rough water and you will then be able to enjoy the calm sea.

Select a few stocks and start monitoring the movement of such stocks, after a while you will feel more comfortable to invest in them as you will be able to gauge the company’s direction. Emulate some of the successful investors but come out with your own strategies where you feel most comfortable.

Happy Investing!!

Financial Literacy – your insurance to living

2007-12-01T18:32:00.000-08:00

Today is Sunday, I woke up ready to have a lazy day but when scanning news online, I had headline like this “1,600 turn to Bank Negara’s AKPK unit every month” screaming at me. This is alarming for a small country like Malaysia.

These 1,600 individuals turn to the Credit Counselling and Debt Management Agency (AKPK) for help to manage their debts. What about those who are also in debts but are not aware yet and also there are those already in debts and trying to clear them on their own to save their pride. I am appalled by just thinking about it.

As reported by Rashvinjeet S Bedi, the number seeking help monthly has tripled since the agency was set up 18 months ago. And I am sure it will continue to rise if nothing is done to educate these people about how to handle their personal finances.

When I started this blog, my main objective is to bring awareness about how to value money to the younger generations; Generation X and Generation Y who should now be in the thirties and twenties and have just started to earn their own money and be out there to swim with the sharks.

I wanted so much to warn these young kids about “money danger” that some of my postings had become so dull, so boring, so not exciting and so annoying as a “nagging mum”. Yes, who wants to live frugally or live a simple life just to ensure there is enough money to keep us going when we are old. How uninteresting can that be? There are so many “happenings” out there that you would want to get your hands into.

To emphasise on why you should, here are the 2 real life examples quoted by reporter Rashvinjeet:-

“DR AZAM, 28, had it all: two flashy cars, a beautiful home and a flourishing career. He wore expensive clothes and lived extravagantly on credit.

He renovated his mother’s home and decorated it with expensive Italian furniture. He took a loan for the renovation and bought another house.

Without realising it, Dr Azam owed creditors RM400,000 in housing loans, hire-purchase loans and credit card debts.

Stuck, he approached the AKPK for help. Being single and with his mother being the only dependant, Dr Azam was advised to sell his house. He moved in with his mother and sold one of his cars.

In the end, Dr Azam was able to save 45% of his monthly loan payment.”

This is a typical example of living beyond your means and spending your money before you even earned it. At least Dr Azam can still be rescued and live a comfortable life. Lets look at the next example:-

“BEFORE the economic crisis of 1997, Allen was a sales manager earning a five-figure monthly salary, living a comfortable life. However, the economic downturn forced his employers to shut down operations in Malaysia.

At 43, it was hard for him to find a new job. To complicate matters, his wife has a medical condition.

Allen turned to loans and credit cards to fund his lifestyle. Soon enough, creditors began hunting him and threatening bankruptcy.

Suicidal, Allen turned to odd jobs, making less than RM1,000 a month. He skipped meals to ensure his wife had something to eat.

His wife changed his mind about suicide and suggested that he seek the help of AKPK.

Allen had RM200,000 in his EPF, although he could only withdraw the money at 55.

With a debt of RM130,000, AKPK advised him to consider bankruptcy as an option, so that he would be able to settle all his debts when he turns 55.”

I truly empathised with Allen. Earning a five-figure income in the 90s is a lot of money but obviously he did not foresee the economic crisis. What we can do now is to learn from this very painful lesson.

A good friend of mine thought me to use the “Worst Case Scenario” method of looking at every situation. Do a “worst case scenario” of your financial situation. How much mortgages, loans, debts do you have and if you were to lose your job today, how are you going to survive. Do you have “Plan B”? Really look at it, it is scary but it is necessary.

Change your ways. Do not spend indiscriminately or at your wimp and fancy. Think before you spend.

CHANGE

Time and again, we need to change but change is hard.

Sometimes we change due to living changes

or we will wait for “hurt to change”

but never wait till you have to “despair to change”.

It may be too late or too drastic, like in Allen’s case.

Stock Market Investing or Gambling?

2007-11-28T23:06:00.000-08:00

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.

Success is Predictable

2007-11-24T16:58:00.000-08:00

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

“SUCCESS IS PREDICTABLE

and

FAILURE IS NEVER AN OPTION”.

Discover the 90/10 Principle

2007-11-23T02:35:00.000-08:00

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.

Why?

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。

它將改變你的一生（最低限度，它將改變你對不同情況的反應）。

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。

你不能控制交通燈轉紅，但你能夠控制你的反應。別讓他人愚弄你，你能夠控制你的反應。

讓我們舉個例子。

你與你的家人吃早餐，你的女兒不小心把咖啡潑倒在你的襯衫上，這是你無法控制的情況。

下一步將如何則由你的反應而定。

你開始責罵。

你狠狠地臭罵女兒一頓，令她陷於痛苦之中。然後你又把怨氣發洩在太太身上，責難她把咖啡放在桌邊。接踵而來的是一場短暫的罵戰。你生氣地上樓更換你的襯衫。你下樓，然後發現你的女兒正哭著吃早餐並趕著回校。結果，她錯過了巴士。

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。

你付了六十元道路罰款，終於抵達學校，並已遲到十五分鐘。你的女兒沒有跟你道別便已跑進學校。你回到公司，已是九時二十分了，這時你竟然發現──你忘了帶公事包。這是非常糟糕的一天，而你感到你的運氣每況越下，你開始渴望回家。

當你下班回家，你感到你與太太及女兒的關係上出現微小裂痕。

為什麼？ … 一切皆由你早上的反應而起。

為何你會有如此糟糕的一天？

Ａ）是咖啡所造成的嗎？

Ｂ）是你的女兒所造成的嗎？

Ｃ）是警察所造成的嗎？

Ｄ）是你所造成的嗎？

答案是Ｄ。

你無法控制女兒打翻咖啡一事，但你在緊接那五秒內的反應讓霉運開始發生。

以下是你改寫命運的結局。

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。

看到兩者的分別嗎？

兩個不同的情景，由同一個開首所引起。但結局完全兩樣。

為什麼？

皆因你的反應而起。

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！

適當的回應能夠使你的生活免受破壞。一個錯誤的反應能夠使你失去朋友、生氣、甚或被壓力壓得喘不過氣來。

如果車子拋錨了，你會如何感想？你會生氣嗎？你會否猛擊車上的鐵鍊？我的一個朋友就把鐵鍊弄下來！你會怒罵嗎？你的血壓是否急速上升？你會否嘗試去踫擊他們？

誰會在意你上班遲到了十秒？為何讓車子破壞你的駕駛過程？

記著 90/10 的定律，別在意。

你被通知說你被辭退了。

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！

航班延誤了，而它將影響你一整天的行程。為何將你的怒氣發洩在服務員的身上？她並不能阻止事情發生。

如利用你的時間學習，或認識旁邊的乘客。不要憤怒，它將令你的一天變的更糟。

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。

結果呢？

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。

它將改變你的一生。

願與各位並勉！

Assets versus Liabilities

2007-11-22T18:50:00.000-08:00

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.

Assets

Real Estate
Stocks
Mutual Funds
Bonds & Notes
Rentable properties
Cash

Liabilities

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.....

Investing – with your spouse

2007-11-19T20:46:00.000-08:00

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

2007-11-19T02:34:00.000-08:00

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.

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

2007-11-13T18:03:00.000-08:00

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.

“TAKE THE ‘TOUGHNESS’ OUT OF INVESTING”

“ENJOY WHILE YOU EARN”

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

2007-11-12T18:27:00.000-08:00

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"

2007-11-12T05:56:00.000-08:00

“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

My Motivational Trigger

2007-11-11T20:11:00.001-08:00

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" :-

montrealgarden.pps

(I wish to thank the creator of this slide show for sharing, also a note of thanks to the person who sent it to me)

Yes, simple things like this motivates me.....

It motivates me to set my goal, put my thoughts and feelings into action. It helps me start to plan, put my plan to work and work at my plan.....

It reminds me to look for more opportunities, to work harder for what I want in life, to go out there and get them.....

It pushes me to put up my budget, review it periodically. It urges me to value money, to spend less, to look for more ways to save, to seek new avenues to grow them, to save more, not to waste unnecessarily......

I hope it also somehow motivates you to take action or at the very least go find your very own motivational trigger. LIFE IS SHORT, LIVE AND LETS LIVE!!!!

Business Intelligence

2007-11-08T21:39:00.000-08:00

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 Structure 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.

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 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 [Teamgates.com, 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?

2007-11-08T03:31:00.001-08:00

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!!

Property Investment – What is Loan Amortization?

2007-11-07T03:58:00.000-08:00

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

Year	Interest	Principal	Balance
2007	$1,124.52	$172.68	$99,827.32
2008	$6,705.41	$1,077.77	$98,749.55
2009	$6,630.36	$1,152.81	$97,596.73
2010	$6,550.09	$1,233.08	$96,363.65
2011	$6,464.24	$1,318.94	$95,044.71
2012	$6,372.40	$1,410.77	$93,633.94
2013	$6,274.17	$1,509.00	$92,124.93
2014	$6,169.10	$1,614.07	$90,510.86
2015	$6,056.72	$1,726.46	$88,784.40
2016	$5,936.51	$1,846.67	$86,937.74
2017	$5,807.93	$1,975.25	$84,962.49
2018	$5,670.40	$2,112.78	$82,849.71
2019	$5,523.29	$2,259.89	$80,589.82
2020	$5,365.94	$2,417.24	$78,172.58
2021	$5,197.63	$2,585.55	$75,587.04
2022	$5,017.61	$2,765.57	$72,821.47
2023	$4,825.04	$2,958.13	$69,863.33
2024	$4,619.08	$3,164.10	$66,699.23
2025	$4,398.77	$3,384.41	$63,314.82
2026	$4,163.12	$3,620.06	$59,694.76
2027	$3,911.06	$3,872.12	$55,822.64
2028	$3,641.45	$4,141.73	$51,680.91
2029	$3,353.07	$4,430.11	$47,250.81
2030	$3,044.61	$4,738.57	$42,512.24
2031	$2,714.68	$5,068.50	$37,443.74
2032	$2,361.77	$5,421.41	$32,022.33
2033	$1,984.28	$5,798.89	$26,223.43
2034	$1,580.52	$6,202.66	$20,020.78
2035	$1,148.64	$6,634.54	$13,386.24
2036	$686.69	$7,096.49	$6,289.75
2037	$196.23	$6,289.75	$0.00

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

Year	Interest	Principal	Balance
2007	$1,123.19	$646.63	$99,353.37
2008	$6,583.01	$4,035.90	$95,317.46
2009	$6,302.00	$4,316.92	$91,000.55
2010	$6,001.42	$4,617.49	$86,383.05
2011	$5,679.91	$4,939.00	$81,444.05
2012	$5,336.02	$5,282.89	$76,161.16
2013	$4,968.18	$5,650.73	$70,510.43
2014	$4,574.73	$6,044.18	$64,466.25
2015	$4,153.89	$6,465.02	$58,001.23
2016	$3,703.74	$6,915.17	$51,086.06
2017	$3,222.26	$7,396.66	$43,689.40
2018	$2,707.24	$7,911.67	$35,777.73
2019	$2,156.37	$8,462.55	$27,315.18
2020	$1,567.14	$9,051.77	$18,263.41
2021	$936.88	$9,682.03	$8,581.37
2022	$267.72	$8,581.37	$0.00

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.

Investment Advice for Generation Y

2007-11-05T19:25:00.000-08:00

What kind of investment advice does the Generation Y needs?

Does the Generation Y faces similar financial problems as their parents? What kind of frustrations are they facing with their financial and investment experience.

Lets us take a look at what the younger generation can do to be financially free:-

1. How to get started

If you hear them, you will realise that they are not sure how to get started, even to the point of going out there to find a job. The older generation would say as long as I find a job that gives me good pay I will be fine but Generation Y would like to have a job that not only gives them good pay but also something that they like and can enjoy.

Then again if they have a job, they will wonder "where do I get started?". Pay off my student loan first? Buy stocks? - What stocks to buy? Shall I put my money into mutual funds or start a small business? Shall I commit to real estate investment? Things get complicated these days as there are so many investment opportunities out there in the market place. When given with too many choices, the less likely are we to make a decision and we normally ended up not doing anything at all.

I would encourage young people to start with enhancing their knowledge by reading. Remember that you do not have to know everything about investing to get started. Investing gets easier once you start. There are lots of easy ways to start, like putting your savings into a low risk mutual fund account. From then on you should try to understand your personal barriers and your risk level. Are you game to take risk? Are you comfortable to long term commitment?

2. Change the mindset

Know what you spend and how you spend your monthly income. Do not do a guessing game with your hard earned money. Most of the young generation do not know specifically where their earnings go. You will be surprised that if you make a notation of what you spend daily, you will definitely find a chunk of your money being spent away on "rubbish". This is definitely a waste of hard-earned money.

Two important things; one, get to know where your money is going; two, make it go where you want.

Change that mindset, you have to be bothered with where your money goes otherwise you will end up having no money.

3. Put up a personal budget and plan

Once you realised that you have been wasting your money, you would want to re-look at what you have been doing and put up a plan. Write a list of the constant (fixed) monthly expenses. Tally that with your net income and see how much you have left. Then, re-adjust your variable expenses to fit into your earnings. Ensure you apportion 20% of your income to your savings first. Read about "Pay Yourself First" to learn more.

From this exercise you will definitely find out where all your money has been going and you will be able to change the tune to put a greater portion of your earnings into investing. Money investment will give you greater satisfaction in the long term.

4. How to invest

There is a difference of being rich and wanting to be rich. A lot of us are caught into the frenzy of hot stock tips, day trading and other fancy alternative investments. Those investment tips are well written, very tempting and motivating and they put you in your dream world. The world of wanting to be rich. They are designed to sell magazines and are not really good investment advice.

Usually the buy-and-hold, long term strategy investment, as advised by Warren Buffet is the best bet. Patience is the virtue of life. Do not get caught up in the "hot tips" lifestyle, you cannot afford to get burn, not even once in your lifetime.

Buy stocks with fundamentals, the ones you can hang on to for long term with good dividend yield. Avoid penny stocks that can give you high percentage of earnings but with no solid hold. Use your head not your heart whenever investing is concerned.

5. Live a debt-free life

The best principle of life is still to "live a debt-free life". A very simple rule - live within your means. Do not overspend. Ensure that your budget is well planned out and live within your budget. Forget about living up to the Jones. Ironically, the grass is always greener at your neighbours. The envy of seeing your friends living in huge bungalows, driving exotic cars and living in sheer luxury is something but you may not be aware, people living in this lifestyle might be living on edge.

So there, young people, if you can start to put the above 5 rules into your life, you may just have created a good start. I know time is on your side but please remember that "time waits for no one" too. Do not procrastinate any further, put your life in order and the faster you do it the younger you will retire - retire young and rich.

Baby Boomer Generation versus Generation Y

2007-11-02T23:46:00.000-07:00

Baby Boomer Generation versus Generation Y
(1946 to 1964 versus 1981 to present)

After listening to a friend lamenting about his grown up kid and how disappointed he was with his attitude towards life, I came to the conclusion that there are definitely a lot of difference between these 2 generations. When the parents (the silent generation) of baby boomers did not understand their children, they called it "the generation gap". Similarly, there is definitely a big gap between the b-boomer parents and the Gen-Y kids. The sociological trends definitely differ. The thought and spending pattern and style are also different.

The b-boomers are a hardworking lot, more frugal and realised that life is not being served on a golden platter. They came from the poor to middle class families and they realised at an early age that they had to work hard for their money. They took charge of their lives and swore to build a better tomorrow for their families. This is how the Gen-Y kids are being brought up... to have a comfortable life.

Socialogically, each generation thought they are better than the other. Parents and children (grown up) fight over money matters all the time. That is an accepted fact.

In order to have a harmonious relationship between the father and son, mother and daughter, father and daughter or mother and son, we will all need to put ourselves in each other's shoes.

There are no secrets to personal finance. Know where your money comes from and where they are going, save more, invest and grow your money, let your money earn money for you. These rules have been repeated over and over again through years. Despite all the lecturing the b-boomers parents gave to their Gen-Y kids, personal finance can be very engaging to young people.

Hello parents, Gen-Y kids are real smart (here goes, Gen-Y kids; challenge me if you must as I would like to hear from you all), they are not useless with their personal finances. They are just different because they are brought them up differently.

B-boomers parents give their Gen-Y kids the very best, a good life, a comfortable home, being chauffeur-driven to and from schools and activities either by parents themselves or by hired help; warm, good food always ready; branded personal effects, computers, the latest model mobile phone at a very tender age; piano lessons; car when they are of driving age and whatever not...... the list is endless.

Why? To give them the very best. Both parents are busy earning money and the Gen-Y kids turned out to be very independent. They know what they want but they really do not know how to go out there to get them. Sad to say, they have been provided too well. Most Gen-Y kids ended up lacking in personal responsibility.

Hold it, Gen-Y kids, I know you have a lot to say to defend yourselves. Bear with me....I have a lot to say about Gen-Y kids too, don't forget I have two myself.

Whatever you want to say about this generation, all they need is a gentle nudge to step up and take control of the personal finances. Gen-Y kids are smart, they can make a success of themselves faster but they can also blow away what they made even faster. You cannot blame them because they have more debts to pay off. Many of them are in debt before they start. The have study loans to take care off. There are avenues of spending their money through online and on luxury and branded goods that were never in existence in baby boomers days.

So, having said that, how can we help them make it in their own ways. How can parents assist by not being intrusive or demeaning the kids. That way, we can create a win-win situation and will achieve a harmonious family environment.

To be continued......."What Generation Y wants?"

8 Wonderful Ways of Using Credit Cards (Part II)

2007-11-01T21:47:00.000-07:00

Have you read the previous post of the 1st 4 Wonderful ways of using credit cards? If you agree with the first 4, then read on and learn how to play the banks instead of letting the bank play you….

5. Use only 10% of yr credit limit

Avoid using more than 10% of the credit limit on your cards. So, it is to your advantage to have a few cards on hand with maximum credit limit to that you will have ample fund to use monthly. If it is hard to stay at 10%, you might want to apply for higher limit from your current bank. Here again, I wish to caution all on your self-control. Having higher credit limit and more credit cards may be a temptation to spend more. So budgeting is essential to make this point a plus for you.

6. Treat your credit card like a debit card

Because of the fear of overspending, some prefer debit cards, where the money comes straight out of their checking account. The problem here is, debit-card rewards usually aren't as generous as credit-card rewards, and there's less chance to earn interest because you are paying for your purchases right away. Two disadvantages of debit cards; Debit-card activity usually is not reported to the credit bureaus, so your prudence won't earn you a good credit score. You have to pay before your purchases and you lose the 21-day interest free grace period of credit card. Therefore it would be to your advantage to have a change of mindset and to use credit cards like debit cards.

7. Take advantage of interest-free instalment plan.

Take full advantage of the 9, 12, 18 or sometimes even 20-month interest-free instalment for large purchases. Some banks charge a fee for such plans, that is why you have to choose the best credit card company to avoid these charges. Buy all your electrical items or large need-to purchases in shops that has interest-free instalment plan tied in with your credit cards rather than paying cash for such purchases. Put your cash into a saving plan to earn you money.

8. Play the banks - don't let the bank play you.

When your credit total comes to a certain big amount, and you have been a good paymaster, chances are you will receive a call from your credit card bank to offer you a non-collateral personal loan. They usually play with numbers offering interest rate as low as 0.58% per month as compared to credit card interest rate of 1.5%. It may sound very tempting but don't be fooled, the interest is calculated on the lump sum and does not offer you the reducing factor like as if you are paying back your credit card debt where the next month interest is normally calculated after deducting what you have paid. At the end of the day... you may end up paying more interest including charges like administrative fee of 1% etc. etc. So look before your leap.

In order to take full advantage of using credit cards, you will have to have a very good self-control and manage your spending carefully. My advice: have your monthly budget carefully planned out and ensure that you keep to your budget.

BE BOTHERED

Some people are not bothered at all when dealing with their daily expenses. They felt that the reward point systems are a big hassle but mind you, if you change your mind set and take the bother to get all your necessary expenses to be auto-debit into your credit cards, you will actually save yourself a lot of time and stress and you will enjoy the rewards (earn back money) as well. So "BE BOTHERED" - IT IS WORTH IT!!!

8 Wonderful Ways of Using Credit Cards (Part I)

2007-11-01T18:27:00.000-07:00

There are 8 wonderful ways of using credit cards to your advantage. People say that “Money is the root of all evil” and if you have incurred debts due to the use of credit cards you will probably think that “credit card is the cause of your debts”. Like the term “money is the root of all evil” would probably be mouthed by people with bad experiences with money but it should actually be termed as “the greed for money is the root of all evil” that is causing the bad experience, it is actually the doing of mankind. Likewise, it should be “the misuse of credit card is the cause of your debts”, therefore if you exercise self-control on credit card usage, you will definitely benefit from their use.

Let us now take a look at the first 4 Wonderful ways:

1. No Cost Credit Cards

Get the right credit card, no-fee, low interest rate to complement your low-minimum checking account and high-yield savings account. Find a no-fee card that will give you 1% cash back, some even pay 3% or 5% on certain purchases. But be leery of rewards cards with annual fees. Those fees probably aren’t worth paying unless you’re a big spender. And here again if you are a big spender you should not be paying annual fees for using credit cards. If you topped off your big spending with good paymaster you will have a very strong bargaining power.

2. Waiver for Annual Fees

If you are currently having any credit cards that come with annual fees, do not cancel them if you have already been using them for a while. Whenever the annual fee is charged, take the trouble to call the bank to waiver the annual charges. Most banks will normally do that for you. Only cancel the card if you request is being refused. There are lots of other banks willing to give you lifetime free cards nowadays.

3. Getting rewarded.

Indeed, if used deftly, your cards will help you collect rewards, build a great credit score and earn even more interest. The strategy is to pile expenses onto credit cards that pay cash back or other rewards. Place all utilities like electricity bills, mobile phone bills, paid television, broadband bills etc on the auto-billing method by charging into your credit card. This not only helps you earn rewards monthly but also save you time and stress of bill paying. The only inconvenience is doing all this instruction once. You will then have to just settled your bills at the end of each month.

You can even get double reward; one from your credit card and another from other reward cards. All this comes with a few caveats so pick your reward cards carefully.

Remember that all these rewards points are money where you can claim “cash vouchers” to use for other necessary purchases. This is another way of getting discounts on your spending.

4. Save interest rate

Until these bills come due, keep your money in your online account where interest is being paid on the daily rest. Pay all your credit card in full monthly which will help you build up a good credit score. Take full advantage of the 21-day interest free period to maximise your return. Do not overspend or you may be hit with financial charges which will turn this to a disadvantage. Keep a ongoing record of your monthly card charges to avoid any unpleasant surprises at the end of each month. Knowing the maximum of monthly spending amount allowed on credit card will help you keep tab. Ensure to stick to the limit.

Look out for 4 more Wonderful ways……..

Enhancing Your Credit Score

2007-10-28T20:09:00.000-07:00

Now you know where your credit score comes from, it will be easier for you to maintain a good score by following the rules to enhance your scoring:-

1. Check your credit score annually

Check out your credit score even if you are not looking at getting a loan. Not understanding and not knowing your credit score may be detrimental to your financial health. If you have not checked out your credit report, you many be surprised to find errors in them.

2. Avoid maxing out on all credit cards

Avoid having a string of credit card accounts and maxing out on every one of them. This may be construed as poor money management.

3. Avoid applying for new credit cards at one time

Do not apply for a lot of credit cards in a short span of time. This might give you a bad report of having financial problems.

4. Do not resolve to be a "cash" person

Cash expenses do not contribute to your credit score as they do not have any historical data. Credit cards may be bad for compulsive spenders but maintaining at least one card might help with your credit score. Make sure you maintain the card carefully. Instead of only using cash, you can still use this particular card for necessary expenses like petrol, groceries shopping etc.

5. Settle all credit accounts regularly

If you have a few credit accounts, ensure that you settled all accounts regularly. Do not just pay off one account at a time.

6. Do not cancel all your credit cards

People with bad experience with credit cards might want to pay off all their debts and cancel all the cards, however, this is a bad idea because you will be destroying your credit history by doing that. Exercise self-control on your spending and maintain some of the longer used cards to keep your credit history intact.

Good credit rule is to put your personal expense budget in order and ensure that you pay your bills and your credit accounts (credit cards, loans, mortgages) on time. Self-control is the golden rule to maintaining a good credit history.

What is Credit Scoring?

2007-10-28T02:01:00.000-07:00

“Credit Scoring” is your personal financial background computed by each country’s credit score organisations: some government link, some private to identify the level of your credit risk based on the following categories:

1. Payment History (35%)

The lender will usually look at whether you have paid your credit accounts on time, based on….

Payment information on all types of accounts (personal loans, mortgages, credit cards etc.)
Public records and collections items (events of bankruptcy, suits, repossession etc)
Details of late or missed payments based on recency and frequency
Number of accounts that showed late payment

2. Amount Owed (30%)

Owing money in a few credit accounts does not give you a negative score, however owing too much money to too many credit accounts may label you as overextended causing late or missed payment. Consideration will be taken on

Amount owed on different accounts
Balance in certain accounts (credit cards showing a low balance is a plus)
Number of accounts with balances (too many may be viewed as over extension)
Total credit line given by all “revolving” credits and the maxing out of such accounts
The amount owed in loan account compared to the original amount borrowed

3. Length of Credit History (15%)

Longer credit history is a plus point but if you have a short history with good payment record is good as well. Factors taken into consideration are:

The length of all your credit accounts (age factor is considered)
The length of specific credit accounts
How long you have been using these credit accounts

4. New Credit (10%)

Opening up several credit accounts in a short span of time is considered greater risk especially if you do not have a long term credit history. Factors considered are:

How long since you opened a new account
How many new accounts you have
How many recent requests you put in for credit cards

5. Type of Credit (10%)

Your credit mix will be taken into consideration if there is little information on your credit report:

Mix of credit types i.e credit cards, loans, mortgage loans etc
Total number of accounts you have
Total number of accounts you have but not in use

If you have made a few mistakes or have been making late payment, it is not going to give you a totally bad rating. Other positive factors listed above may neutralise the effect

This is How They Score You Up

2007-10-25T18:50:00.001-07:00

The health of your credit becomes a very important factor in your personal finances. Bad debts, late payment, non payment of monthly instalment etc. comes into play as far as your credit score is concerned.

The general guidelines about how your credit score is compiled are broken down into five main categories, with the following percentage weight for each:

35% payment history (only for payments later than 30 days)
30% debt-to-credit ratio
15% length of credit history
10% new credit
10% type of credit in use

A credit rating will then be assigned on the data collated:

Rating A - applicant automatic qualify for loan applied
Rating B - loan can be considered
Rating C - application will be rejected but borrower can appeal to bank
Rating D - loan will be rejected and is final

If applicants don’t qualify instantly, chances are a higher interest rate would be imposed on them, or less credit will be offered with a shorter repayment period.

Your Credit Score

2007-10-24T20:40:00.000-07:00

In America, the use of credit scores is not only concentrating on financing, it is now expanding to other industries like insurance etc. In Malaysia and other developing countries, credit scores are still a mystery among lay people. Do you know how your application for housing or car loan is being processed? Did you ever wonder why some banks or finance institution refuse you or offer you a lesser deal than the next customer? It all has to do with your credit score.

Credit Agencies collate information on individual credit history and compile them according to their own way of calculation to determine your credit score. This information is then made available to all finance institution to check when a customer request for a loan. Most bankers have online facilities with these credit agencies. The interest rate to impose and the overall limit you will be entitled will very much depend on your personal credit history.

The first thing you need to understand is how your credit score is determined. In America, general information is available from Fair Isaac, although the exact algorithm used to determine your credit score is a secret closely guarded by each credit agency. In fact you can go online to check your own credit score to assess the accuracy of the information about your personal credit history.

In Malaysia, every applications for loan would now be subjected to a financial rating system based on Bank Negara’s Central Credit Reference Information System (CCRIS) and two other private credit reference agencies – Credit Tip Off Service Sdn Bhd (CTOS) and Financial Information System (FIS) Sdn Bhd.

CTOS and FIS provide details of the individual’s credit standing with other banks, while CCRIS tracks the person’s spending patterns and habits, repayment patterns, credit card and other electronic transaction records in the last 10 to 20 years.

It sounds spooky isn’t it?? If you are first time reading about this, it is, but if you think about it, there is a need for such control otherwise as a business person you will not know if you are doing business with a con business or a genuine one.

Stay Out of Debt!!! -- Assert Your Self-Discipline!

2007-10-24T01:35:00.000-07:00

While you are getting out of debt, you should stay out of further debt. It is very important that you must exercise your self-discipline. If you were in debt before and if you are still in debt, it does show that you have very weak discipline……discipline in managing your money.

Staying out of debt does not mean that you severed yourself from all credits; that includes stop using credit cards totally. You have to cut up your credit cards if you are a compulsive credit card user but you will have to eventually learn to control its use. You see, if you don’t they will control you. You do not want to let that happen and ruin your life.

The usage of your credit card contributes to your credit score whether positively or negatively. Positively, is the usage while negatively, is how you pay back the money you spent. If you regularly service the interest and pay on time with at least the minimum pay back amount, then this is a plus point for your credit score.

On the other hand, not being able to settle your card fully every month will not be good for your personal finance management as “interest charged” on the unpaid portion is “money spent”. Above that, the interest charged by credit card companies are very high (18% per annum = 1.5% per month). These charges will eat into your personal wealth.

Parkinson’s Law

2007-10-23T22:52:00.000-07:00

Yes, I know. This post sounds familiar but human being has the tendency to use their "short term" memory all the time so this will serve as a reminder for those who loves to buy. Every penny saved is every penny earned and even more.....

It is never too late to save no matter how old you are now. If you are in your 20’s you have time on your side but if you are in your 40’s, by now you would have a bigger earning power than someone who has just started. If you heed Warren Buffet’s advice to not purchase brand you will probably have more to put aside than those who are younger.

Developing the lifelong habit of saving and investing your money is not easy. It requires tremendous determination, willpower and self-discipline.

Practice frugality, frugality, frugality in all things. Be very careful with every cent

Question every expenditure. Delay or defer every important buying decision for at least a week, if not a month. The longer you put off making a buying decision, the better your decision will be and the better price you will get at that time.

I like this statement about questioning every expenditure, thank you Brian Tracy! It works for me. If it works for me, it can work for you too. You will be surprise how many things you don’t really need to buy. Majority of people, includes you and I, BUY ON IMPULSE.

A major reason that people retire poor is because of impulse buying. They see something they like and they buy it with very little thought. They become victims of what is called “Parkinson’s Law”, which says that “expenses rise to meet income”. This means that no matter how much you earn, you tend to spend that much and a little bit more besides. You never get ahead and you never get out of debt.

There you are……….resolve NOT to be a victim of “Parkinson’s Law”…….resolve to retire rich….

Get Out of Debt!

2007-10-22T22:07:00.000-07:00

Are your still struggling with that – getting out of debt?

If you are in your 20s and if you have been following this blog and reading about how to invest, put your money into earning more money and you will probably get very fired up. Yes, I can relate to that because I was just like you but unfortunately for me, when I was in my 20s, there is nowhere I could turn to, to learn about investing and getting rich. I have got to put a lot of trials and errors into play. However, I can tell you this – living a debt-free life is bliss, its richness in itself. Yes again, you don’t have to be filthily rich to retire rich. All you need to have is enough, depending on individual needs, to live a carefree lifestyle. That is richness in itself!!

So before you can really start to invest you have to “Get out of Debt” first. I can bet that everyone working on this earth, whether young or old, has some kind of debts in their hands. Most debts are mortgages and personal loans. Majority will be credit card debts.

Lets aim for “zero” debt level. “Zero Debt” should be your ultimate goal. It is not easy but it is achievable. Time is the essence; however, the faster you get out, the lesser you spend (unnecessary) and the quicker you start to earn.

You are probably frustrated with your financial situation, why is there never enough. The big mistake is that you are spending more than you earn. That is where your debt originated. Let’s get real. It’s time to take stock of your expenses. Re-look into what is necessity, what is dire need, what is want, what is want but not real need and above all what is extravagance.

If you have spent more than you should and you have credit card debts, remember that this is eating into more debts. Until and unless you clear that you will never be debt-free or can I say F R E E…….

Decide to stop using your numerous credit cards NOW…. THIS MINUTE. Cut them up….list all the outstanding amount of each card and make a plan to clear the owing by dividing the amount you can afford monthly/fortnightly to repay your debts. Here you will now know the duration it will take you to finalise your card debts. Once you are done with the debts, the amount you put aside to repay your debts should now go into some kind of investment, whatever you are comfortable with.

Life is not a bed of roses........

Value Averaging

2007-10-15T06:36:00.000-07:00

Similar to “Dollar Cost Averaging”, “Value Averaging” is also investing on a regular basis; weekly or monthly. The only difference is you do not invest the same amount monthly. “Value Averaging” means you are value investing. You invest more money when the market is down; the fund price is down, and you invest less money when the price goes up.

Of course, all investors hope the fund you have invested in will continue to rise, but there will almost always be highs and lows (peaks and valleys). You have just to hang on for long term. Meanwhile, you are taking advantage of the “lows”, using these pockets of dip as a great opportunity to pick up more shares according to your affordability level.

This different from “timing the market” as you are not speculating on how the market is going to move. You are just watching the ongoing pattern whereby you will make a buy when the fund price dips.

Psychologically, this can be a difficult investment plan to follow as when the fund price drops, it is not easy to continue putting in money, to say the least, putting in more money. It is easier to go the way of “Dollar Cost Average” style of investing. However, with highly paid smart fund managers managing your fund, and over the long term, hopefully the “lows” will be to your advantage to achieve your ultimate overall goal.

Dollar Cost Average

2007-09-21T07:39:00.002-07:00

Dollar Cost Average is the purchasing of a fixed dollar amount of a particular investment or fund on a regular basis, regardless of the fund price.

You have to buy an initial amount of around $1,000; varies in different countries and depending on the fund house you are investing in. After the initial investment, you can then decide to put a certain amount into the fund, minimum usually is around $100 per month or more depending on your budget.

You are allowed to do this monthly payment by way of bank transfer which keep the task of monthly investing very convenience.

Dollar Cost Average means that your money is going into a fund at a set date monthly or weekly and you are investing at both the high points and the low points. Therefore, the share price or NAV (net asset value) you invest at averages out. Theoretically, you are investing equally when stock or fund is up as when it is down.

Naturally, you hope the stock or fund will keep going up, but either way you continue to put in the same amount of money with the theory that despite the ups and downs, you are headed for a long-term positive gain.

Rule of 72 - The Power of Compounding

2007-09-21T04:55:00.000-07:00

The Rule of 72 is to divide the number of 72 by the interest rate or the average earning rate and the answer will be how long it will take for your money to double. For example, a $10,000 investment paying at 9% (without reinvesting the interest) would double in 8 years (72 divide by 9 = 8, this is the number of years for your $10,000 to double to $20,000.

Principle to double from $10,000 to $20,000 @9% takes 8 years
Principle to double from $10,000 to $20,000 @12% takes 6 years

This Rule of 72 applies to long term investing which is where it will be leading us to discuss..... Mutual Fund Investing. Why Mutual Fund investment?? Because "Mutual Funds Offer Greater Affordability Than Individual Stocks". It is often easier to select an amount of money you are willing to invest and find a fund with that minimum investment amount than it is to find stocks that fit your budget. Many of the best-performing stocks and the biggest companies will have high per share prices. A stock price at $5.00 per share means your $5,000 investment will buy you 1,000 units . The same $5,000 in a $0.50 NAV (net asset value) will buy you 10,000 units and the stock you wanted that was priced so high may be one of the stocks in the fund. Additionally, you will own hundreds of stocks for the same investment. So not only greater affordability but also diversification.

What a Wonderful World

2007-09-21T04:05:00.000-07:00

Wouldn't it be nice.........

if we have a job we enjoy doing,

if we earn enough to have a comfortable living

if we have enough to put aside for a nice comfortable retirement

if we have enough for our children to go to the best college

and

if we are healthy, happy with no stress

I wish to share with you this video on "Shadow Puppetry" by Raymond Crowe accompanied by Louis Armstrong "What a Wonderful World"

It would be a wonderful world

I see trees of green........ red roses too
I see em bloom..... for me and for you
And I think to myself.... what a wonderful world.

I see skies of blue..... clouds of white
Bright blessed days....dark sacred nights
And I think to myself .....what a wonderful world.

The colors of a rainbow.....so pretty ..in the sky
Are also on the faces.....of people ..going by
I see friends shaking hands.....sayin.. how do you do
Theyre really sayin......i love you.

I hear babies cry...... I watch them grow
Theyll learn much more.....than Ill never know
And I think to myself .....what a wonderful world

8 Secrets of WEALTH CREATION

2007-09-21T03:08:00.000-07:00

1 ADD VALUE

If you have invested in a business and in order for you to make your products or services more valuable, you have to work harder, work smarter, work longer. This is to ensure that your business will start creating wealth for you faster.

2 CONTRARIAN THINKING

A contrarian trading strategy is based on the assumption of negative serial correlation of prices: a predictable pattern such that if prices have gone up, they must come down eventually, and vice versa. This view of contrarians focuses on the important role of fads: rather than acting independently, investors exhibit herd-like behavior, following waves of mass optimism and pessimism, whereas a contrarian thinker /investor goes against the masses.

3 LET YOUR MONEY WORK FOR YOU

Buy things that CAN make money like mutual funds, stocks, bonds, properties and businesses. Buy them at the right time. You would want to buy into investments after the masses have sold, then sell when the bubble develops and before the bubble burst. You can buy the shares of excellent companies with good fundamentals during a recession or a meltdown. Or if you think that recent change of top management will turn around a troubled company.

4 LIFE LONG LEARNING

Take advantage of the traffic jam, put your travelling time into good use, listen to all the motivating audio programmes like the “Rich Dad Poor Dad” series. Fill your mind with “can do” daily. Read books that will put you in a positive mood. Just think, a simple idea from all these positive “vehicles” might just make you a millionaire.

5 LOVE YOUR JOB

If you have to work to earn a living, find a job that you love and enjoy. “When you start doing what you really love to do, you’ll never work another day in your life”

said BRIAN TRACY, author of the book called “The 21 Success Secrets of Self-Made Millionaire”. Here while you are doing what you love and earning your salary, put a portion of which into your investment portfolio to create wealth.

6. IDENTIFY WITH SUCCESSFUL PEOPLE

“Birds of a feather flock together”, this is a saying to determine what type of person you are in relations to the type of people you mix around with. About 90% of your success will be determined by the people with whom you habitually identify and pass the time. Your success and happiness in life is going to be determined by the quality of the relationships that you develop in your personal and your business activities. Find a few people who can mentor you, who can keep you focused and motivated.

7 ACTIVATE THE LAW OF ATTRACTION

Thinking positive is the key… Feed your mind with what you want, not what you do not want. Magnetise you mind to attract on what you want to do. Positive mind enhances the effect of belief and once you believe, you will be successful in all your endeavours.

8 SET YOUR LONG TERM GOAL

Write down your goal, what do you want to achieve says in 10, 20 or 30 years then work towards achieving it. Long term goals should be permanent and specific. It has to be realistic to avoid changes, remember it is harder to hit a moving target. Then work towards you goal every day with persistency. Daily, weekly, monthly, set your short term goals to help you achieve what you want in life.

How to know to invest in the right business?

2007-09-20T20:28:00.000-07:00

If you know yourself that you are ready to invest, you should start right away because time wait for no one. Also, there is never a right time to start to do something. For me personally, anytime is the right time ..... most important is not the time, is yourself..... are you ready?

We have talked about "Investing In Yourself first" and if you have done that, learn all you can and continue to learn, you are on the right track. Of course, nobody can be perfect in investing, sometimes the experienced and the experts make mistakes too. Just make sure that you learn from

According to the book "The New Buffettology", the 4 areas in which Warren Buffet discovers companies with hidden wealth are 1) businesses that have a repetitive consumer need with products that wear out fast or are used up quickly and have brand appeal 2) the advertising business 3) businesses that provide repetitive services that people and businesses are consistently in need of 4) products that most people have to buy at some time in their life.

These 4 areas are very closely related to consumer demand and expenditure. In summary, they are a business simple to understood, with good managment, attractive prices and has long term prospects.

The above guidelines will show you these mistakes and grow with them. Always stay positive."How to invest in the right business"? There are many avenues for investing but what categories are for you.... you have to decide that base on your disposables and your risk levels. Lets analyze the options we have .......

invest in one business by oneself, be an entrepreneur
joint venture with some friends or business associates
join a reputable direct selling company; multi-level marketing
invest in the stock market
invest in property
invest in mutual fund
invest in Fixed Deposit

invest in one business by oneself, be an entrepreneur
joint venture with some friends or business associates
There are lots of successful businesses out there for you to emulate but for a business to be worth your money and effort, you must be able to leverage your time, money and location. Also, the ROI must be quick and the income you are going to derive from this business must be able to beat inflation. Not to mention the facts that you have to know the business you are going into and for option2, you need to be in business with trustworthy people.

I always believe that "there is never a free lunch" so do not expect to throw in your money and your partners will work their butts out to earn a steady income for you.

join a reputable direct selling company; multi-level marketing
Lets look at option3, direct selling. This option is good if you really have very little capital to start with because in this case, you leverage human power by multi-level. Ensure that you join a reputable company with proven track records. Another point to note is that the products you are selling are repetitive consumable products. If you are successful in this line of business, the compounding factor works.

invest in the stock market
Buying stock are like buying businesses, you have to know how to buy into the right business for the long term returns. If you are a working person and are buying into stock on a part time basis, go for the good fundamental stocks, one that give you good dividend returns. The value of the company is dependent on the present value of its future cashflow, a business that you buy must be simple and have predictable future cashflow. A company with a turnover of RM500mil a year is considered one of the key players in the market.

Sometimes companies with new technologies look like a good opportunity to earn quick and big bucks but I would rather advise that it is safer to rule out this great opportunities if you do not understand how these businesses generate their cashflow. Avoid going with emotion when investing in stock. Used the head not the heart.

invest in property
Buying houses and shoplots are a good investment but this require some capital. If its a new property sometimes you can get good deals with the property developers who has tie-in with the banks for a zero-cost deal, meaning they (bank and developer) will absorb the legal fees and other related costs. Buying a property is a permanent deal, your cash are tied in for long term. It will take time to liquidate, therefore it is important that you do your homework before venturing into this type of investment. Ensure that your property is in demand for rental or sales with a good return. It is not easy, but if you are intending to rent out your property, to be worthwhile you need to get around 8 to 10 percent return per annum.

invest in mutual fund
Investing in trust or mutual funds is similar to buying stocks....the only difference is it removes the emotional strain from you because you are employing some investing expert to study the stocks and make the decision on what company is best to invest in. Other advantages are you get to diversify, you can start invest as little as RM1000 and your money are being compounded.

invest in Fixed Deposit
Fixed deposits is good for "parking" your fund for temporary measures, for the "just in case" scenario. Meanwhile, your money is earning money for you.

How to create wealth?

2007-09-16T07:32:00.001-07:00

Wealth Creation...........its the most talked about topic in the financial arena. Is it only for the Warren Buffets or the Bill Gates of the world? Or is it for ordinary working people like us? Are we ready to invest, to create wealth?

The questions that comes to mind are:

"What shall I invest in?"
"When shall I start to invest and create wealth?"
"Where shall I invest?
"Who do I invest with?
"How do I know to invest in the right business?"

It all depends!.............first....... are you ready to invest???

Ask yourself the following questions:

"Are you out of debts?"
"Have you checked your risk level?"
"Have you put aside available cash for the "rainy days"?"
"Have you started to learn the basics?"
"Are you willing to take advice?"

If your answer is "yes" to these 5 questions, you are more than ready...............in fact it is never too young nor too old to start but you just have to be ready to avoid any unnecessary disruption.
Remember, Warren Buffet said in his interview with CNBC news that

"He bought his first share at the age of 11 and he now regrets that he started too late!!"

With this statement in mind you should be more than comfortable to start your journey to creating wealth................

Invest in yourself first

2007-09-15T07:59:00.000-07:00

If you have been following this blog since the start and if you are new to investing or if you are working for others, you will probably think I am crazy......"why do I have to invest in myself first"?, you would ask. At the start I talked about "Pay Yourself First", now I want to talk about "Invest in Yourself First". Yes, before plunging yourself into the share market or dumping your hard earned money into some deal which some good sayers told you its a money churning wheel, you have to master the trick of the trade first.

If you are an employee, which majority of us are and if you are still trading time for money, you are on the single line earning power - linear power. Do not be mistaken, I am not against working for others, in fact for the "baby boomers", most of us only know how to earn a living by trading our time for money. We were brought up to "Go to school, get good grades to get a good paying job" and that is the way we are being conditioned. And that is the way the Y Generation are being brought up too. Thats why I am saying "Invest in Yourself First".

Be patient, do not be in a hurry to put your money to work for you. Learn all you can before deciding on what you want to do.

I have kept my postings simple and easy to follow with keywords relating to investing and if you seriously read, take action on the simple to-do steps you will eventually be resetting your mind to be an "investing mind".

Exponential Growth ..... the Wonder of Compounding

2007-09-12T16:58:00.000-07:00

The Power of Exponential Growth

1 + 1 is 2

2 + 2 is 4

4 + 4 is 8

8 + 8 is 16

This is how the dictionary explain the phrase "Exponential growth"

(microbiology) The period of bacterial growth during which cells divide at a constant rate
extremely fast growth. On a chart, the line curves up rather than being straight
growth of a system in which the amount being added is proportional to already present; the bigger the system, the greater the increase
in everyday speech, exponential growth means runaway expansion

The surprising characteristics of exponential growth have fascinated people through the ages. Lets see what the story of the chessboard, borrowed from a dictionary, can teach us.............

Rice on a chessboard

A courtier presented the Persian king with a beautiful, hand-made chessboard. The king asked what he would like in return for his gift and the courtier surprised the king by asking for one grain of rice on the first square, two grains on the second, four grains on the third etc. The king readily agreed and asked for the rice to be brought. All went well at first, but the requirement for $2 n - 1$ grains on the $n$ th square demanded over a million grains on the 21st square, more than a million million on the 41st and there simply was not enough rice in the whole world for the final squares. (From Meadows et al. 1972, p.29 via Porritt 2005)

Second Half of the Chessboard is a phrase, coined by Ray Kurzweil, in reference to the point where an exponentially growing factor begins to have a significant economic impact on an organization's overall business strategy.

The total number of grains of rice on the first half of the chessboard is 1 + 2 + 4 + 8 + 16 + 32 + 64 + 128 + 256 + 512 + 1024 ... + 2,147,483,648, for a total of exactly 2³² − 1 = 4,294,967,295 grains of rice, or about 100,000 kg of rice, with the mass of one grain of rice being roughly 25 mg.

The total number of grains of rice on the second half of the chessboard is 2³² + 2³³ + 2³⁴ ... + 2⁶³, for a total of 2⁶⁴ − 2³² grains of rice. This is about 460 billion tonnes, or 6 times the entire weight of the Earth biomass.

On the 64th square of the chessboard there would be exactly 2⁶³ = 9,223,372,036,854,775,808 grains of rice. In total, on the entire chessboard there would be exactly 2⁶⁴ − 1 = 18,446,744,073,709,551,615 grains of rice.

The Chessboard story, which is mind boggling, is to simply illustrate the power of compounding...... no wonder it is dubbed as "The 8th Wonder of the World". Now that we understand how powerful compounding is, lets us look for ways to make use of this principle to multiply whatever money we have..............if you are saying you don't have, relook at your expenses, read again Point No. 2 of my initial post...... get out of debts and start saving now, no matter how small, to start with. Put your plan into ACTION.

Linear Growth

2007-09-11T19:03:00.000-07:00

lĭn'ē-ər
adj.
of, or relating to, or resembling a straight line
having only one dimension

Linear Growth was what I was talking about when I posted on "Income Creation" where you work for money; either in your own business or as a professional or working at a job for others. In linear income growth you get out what you put in, nothing more, nothing less. If you work for others, you wait for the year long increment and bonus which sometimes can be a disappointment. If you provide services for others, you wait for the project to come and worked hard for the fees paid to you. In these 2 scenarios, your life would probably be....

you get one day a week to spend with your family
you might not get more than $40,000 a year (more for professional) no matter how hard you work
you get your hard earned annual leave of 14 or 21 days but you are too broke to take the family for a rewarding holiday and for professional if you take off, your income stopped
you seldom get time off and when you do you are either exhausted or broke to enjoy it
you get your paycheck end of every month, and you have to be back on the time-for-money treadmill again the next month

Of course there is a way out. We can break this time-for-money trap with leveraging. In my last post, I used the Coca-cola story to illustrate the power of leveraging. Now there are lots of way to leverage..... big corporation leverage by using their employees. By copying the right kind of leverage in the right situation you can literally grow bigger and faster........ which takes me to the next subject..........EXPONENTIAL GROWTH

The Power of Leveraging

2007-09-08T23:47:00.000-07:00

The concept of exchanging "Time for Money" is really limiting. There is that much we can do with our 24-hour, so we will have to look for other ways and means to add to our income, to achieve the goal we have set for ourselves to create wealth.

If we can find a way to leverage our time and effort our goals will be achieved faster and easier.

The dictionary explains the word "Leverage" as the mechanical advantage of a lever. Lever, an old French word means "to make lighter" and................Leverage in financial dictionary means - "Use of borrowed funds to increase purchasing power and, ideally, to increase the profitability of an investment."

Scenario:

If Investor A wishes to invest in real estate. The property costs $100,000 and produces
Net Operating Income of $10,000 per year. If purchased with all cash, Investor A's annual Rate of Return is 10% ($10,000 ˜ $100,000). If she leverages the investment by borrowing $75,000, her return on equity may be higher. If the debt cost is 8% ($6,000) annually, the leverage results in a return of 16% ($4,000 ˜ $25,000). However, if the debt cost is 12% ($9,000), the leverage is negative because it reduces the return on equity to 4% ($1,000 ˜ $25,000).

Leveraged Growth
Working Smart Not Working Hard

The

story

In 1885, Dr John Pemberton developed the now all famous Coca-cola, a carbonated drink. Both small town and big city dwellers enjoyed carbonated beverages at local soda fountain or ice cream salon. Often housed in drug stores, the soda fountain counter served as a meeting place for people of all ages. But.......this is limiting time, effort and location.

In August 1888, Asa Candler paid $2,300 in cash to buy over the rights of Coca-cola. Two young attorneys from Chattanooga believed they could build a business around bottling Coca-cola. In a meeting with Candler, they obtained the exclusive rights to bottle Coca-cola across most of the United States....... for the sum of $1. By 1909, nearly 400 Coca-cola bottling plants were operating.

By 1920, the ideas and zeal of the 2 young attorneys fueled steady growth. Six-bottle cartons were a huge hit in 1923 and by end of 1920s, bottle sales exceeded fountain sales. Before bottling people had to go to a local soda fountain to order a coke - or there is no coke. Bottling changed all that, consumer need not go to a soda fountain to enjoy a coke because they could buy a six-pack and bring the fountain home with them. It has created a world of convenience...this is leveraging of time, effort and location.