Ala Carte menu to get out of poverty

This content isn’t 100% original, I read it somewhere or watched it somewhere, I can’t remember. But I would like to share this with my readers even though it’s not original, why not, the concepts are pretty good.

I have included my own interpretation.

You don’t need all 6 but you will need a combination. But will you become a millionaire by doing all these? No guarantee, but these will definitely send you out of poverty.

Pioneering

Among all 6 routes, this is the most difficult and this journey is filled with hard knocks. Everything in life shares a common trait; it involves a pattern of movement. Until such time, such event unfold to change the pattern, it will continue to move in that certain pattern. Like the stock market, whether it’s a bull or bear market for the big trend, unless a correction occurs, the stock will continue to move accordingly to its trend. The change as defined in Elliott Wave theory is known as the corrective wave which will change its preceding pattern. 

Example: You are in the third generation of the family, and none in that line of family is wealthy or everyone in that lineage is poor. You are in queue No.3 in this line; you are here because no one in this line has done anything different to change the fortune of the family.

There must be a pioneer in this lineage to create wealth and break off this dreadful sequence. To create something out of nothing is the most difficult. As mentioned many times, in my previous posts, I have mentioned: they are the rags to riches you know. The few fortunate ones. To break off is not easy and most don’t.

You need ideas, business acumen, network and a huge risk appetite

If you can’t do that, you can only hope that your offspring will do that someday. But fret not, this is not the only way out, though the ideal way, there 5 more routes below for you. You will need a combination of a few and not dependant on just one way.

Helper

Someone who will lend you a hand when you fell. Do you know anyone who will do that for you? I guarantee no 100% of the people you know will do that for you. Do you have 10 names you can rely on?  The ideal scenario is when you have some really influential friends around. A lot of things in life require money including getting out of a bad situation. Things will be different if you know 10 poor men; they can’t help much only to give you moral support. And don’t get me wrong, you are not going to make friends because they are rich, but what I mean is that it will good if you have a few of such friends.

The ideal helper is not necessary a friend, he can be anyone like an associate or former colleague and former boss.

Here’s a list of ideal helpers for your reference:

1. Bosses/Ex-bosses
2. Colleagues/Ex-colleagues
3. Ex-girlfriends/boyfriends
4. Government officials
5. Good friends (preferably more well off than you are, you are penniless, you get it?)
6. HR manager/personnel
7. Middle management
8. Top management
9. Centre of influence (someone with a big network of associates)
10. Professionals

You are bound to know some of these people, be sincere and make friends with them. You need knowledgeable, influential, street-wise, positive, hardworking and ambitious people around you. You will be motivated to do better for yourself and most importantly they are more likely to have the means to lend you a hand when you need it. You are not insincere because you choose your friends this way; put yourself in the wrong company or environment and your life will be wasted.

Wisdom

Priceless and often neglected, intelligence seems more desirable over wisdom. It’s a misconception that intelligence is essential for making money while wisdom isn’t. When Buffett says “Be greedy when others are fearful and fearful when others are greedy”, it is not intelligence but wisdom.

And you don’t need to grow old to attain wisdom. Here’s a shortcut:

Write down your goals and what you want to do in the future. And for a moment, imagine you are a 70 year old man, forget who you are now. “Look back” at what you have written, will this 70 year old man do the same thing over again if you were given the chance to redo everything.

Wisdom amongst these 6 routes is vague compared to the other options, it is not easy to picture what wisdom can do to get out of poverty. Another way is to seek advice from the seniors, mentors or those have done it. Benefit from their experiences and add those to your list of options.

Don’t aim for the sky, be realistic and take a step-by-step approach. Everything happens in sequence, you can’t skip and cut corners.

Short cut is usually the longest journey.

Do not:

1. Do something out of your competence.
2. Believe in short cuts to make money.
3. Believe in fast money schemes.
4. Believe in free lunch.
5. Think that you have to be unscrupulous to make money.

Wisdom is bliss and not everyone has it; if this is out of your reach, use other combinations.

Ambition 

Don’t let adversities control your destiny. No matter how unfavourable your environment is, ambition will gets you out of it. Set a goal or a mission, pen your mission statement, your ambition will be the driving force behind you, one day you will be out of poverty. The stronger your desire the faster you get moving.

You must be believe that you are better than others and being in your current situation is only temporary, you didn’t ask to be here and you are definitely not here because of your incapability. 

I believe that this is unlike the rags to riches I have mentioned only a few lucky ones make it but ambition will definitely turn your life around and it’s not about luck. Even if you can’t achieve 100% of what you want you may end up with only 80% which is still better than where you were. That 80% may provide for your life with what you have never dreamt of.

Spend most of your time developing your competitiveness.

Decide early what you want, how much you want to earn per month and which skills you will need to achieve it. Aim to be a professional and nothing else.

Mentality

This in my opinion is the most important. A positive attitude to everything. Positive about your own capabilities. If you think you can’t find a way out of poverty, be positive.  There will always be a way out but if you are not positive enough you wouldn’t notice its existence.

You have to believe that you deserve more and you can have more.

And during the way out of poverty, difficulties and obstructions are inevitable, without a positive attitude there’s no way you can cope with them.

The positive attitude thing has been written by umpteen times by many authors, I don’t want to repeat the same thing again so I shall stop here.

Righteousness 

The worst thing that could happen to a poor man is the lack of righteousness. I am not suggesting that you should become someone’s hero. Does that make you rich? No. That will not help you make a penny more. But, crime arises because of poverty – the lack of money.  What’s worrying is that poverty may force a poor man into desperation and commit crimes to make his livelihood. This will throw him into a bottomless pit and most of the time he will not get out of it.

Stay righteous and keep your integrity, keep yourself safe from the long arms of law. This will determine whether the above 5 routes will fall in place or out of reach. I must conclude that this is the basis.

Deep pocket – Singapore Budget 2009

22 January 2009, Obama’s inauguration, big day for the Americans, big day for the world. Watched the ceremony via CNBC.

All eyes on the new President and his policies to change America.

Another big event for Singaporeans. Our Budget 2009 is out today – 22 January 2009.

Summary:  http://sg.news.yahoo.com/rtrs/20090122/tap-singapore-budget-c3bb44c.html

Full news http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20090122-116472.html

My thoughts on Budget 2009

I have some mixed feelings about the Budget, Singapore is not likely to manage the free falling economy.

Spending more money is also not going to help us either (the same old thing-spend more when economy is down) , Singapore, a small country (population is barely 4 million)with very little resources, our consumer goods are mostly imported, by spending more, we are going to stimulate import while export is down. Until our major trading partners – USA and China recovers, we are not going to make a comeback.

Back to the topic….

Government is going to double *GST credits for Singaporeans.

Goods and Services Tax (GST) – Similar to VAT. In case you do not know why GST credits, here’s a short explanation:

1 July 2007, Government increased GST from 5% to 7%, a 2% increase. To help households cope with the increment, the Government gives rebates in cash to Singaporeans. Around $300 per individual, a rough figure (amount depends on household income etc..), it’s hardly of any help since the increment is permanent while the offset will only last for a couple of years.

Back to the topic….

This year the Government will double the payout. The impact will be minimal for Singaporeans, I just hope that there will be no other increment in the cost of living until we recover.

*CPF housing grant will be increased to help new home owners.

CPF – Similar to 40I(K)

Also a tiny amount, but according to the Government’s policy – every Singaporean gets to own a house, so I guess they want it the same way even in a bad time like this. I am not going to comment further, read the full news if you are interested.

Lastly I really hope that we do not need to dig into our reserves but unfortunately we were given no choice. $20.5 billion package is a small amount compared to what other Governments are giving in their respective countries but I guess this is the deepest we have gone.

Fortunately, our Government manages money well thus now we have the resources to tide over the bad situation. I am glad that we have a good Government that response efficiently to crisis.

In the last financial crisis, the Government did not dig into the reserves and got criticised for not doing so but they were proven right, it’s time for rainy day.

We recovered very well from the last crisis.

I am contemplating the idea of a career switch recently, good luck to me, and hopefully the worst will be over very soon.

Stocks or Property

The two most popular investments and also the most common methods for investments. Property is often portrait as the more lucrative investment among the two, and more than often a tool for the rich man’s portfolio.

Though property investment looks more lucrative but buying a property for investment doesn’t make good sense to me.

If I were to look at the growth of the two – stocks and property, it’s clear to me which is better for my portfolio. One is virtual and the other Real (tangible).

Pace

Property reacts more slowly than stocks in any market and there is no exception for this rule. Should a construction stock grows 10% in the last quarter of the year- September to December, real property prices will most probably gain in June to December the following year, it’s approximately 6 to 12 months behind stocks gain. For relevance comparison, I will stick to construction/property stocks only.

Property prices will pick up only after the rises in stocks and fall after the stocks declined. Regardless of rises and declines, stocks always lead and followed suit by property prices. And in terms of speed, virtual growth is always faster than Real growth.

Property will be good for the slow and steady investor.

Virtual vs Real

It doesn’t take a genius to tell you that stocks are virtual assets while property is Real – at least tangible. No matter how you classify a stock, it’s nothing more than virtual. Both investments report paper gain/loss as long as the investor does not realise his investments and in my opinion I would prefer to buy something Real than virtual. Tangible assets give me a better sense of ownership.

Virtual gains vs Real returns

While it is very possible to witness a stock grows tenfold it is not possible for property. A construction/property stock could grow ten times – 1,000% and in contrast property prices will not grow 1,000% in any market, in any economy. Virtual gains (stock) will always be greater than any Real returns (property).

Given the same amount of capital for both investment options, I am likely to have a bigger margin for my returns from stocks than property investment. And risk is relative; my exposure to losing money will be greater in stocks than property.

Stocks only

I will buy a property for my family, some place comfortable for them to live in, nice and cosy and that will be the only objective for me to buy an estate. Doesn’t matter if the market is going up or down as long as my objective remains, there is no profit or loss for me in any market conditions.

Unless cash rich and I have a couple of millions on hand to buy an estate, and let my money sits around for a few years before realising my profits, acquiring a property through mortgages, loans and monthly instalments for investment don’t make sense to me.

Stocks will remain my No. 1 vehicle for investment despite what I have mentioned above, though I stand to lose more from stocks investments but the upside is apparently more attractive. Faster gains and bigger margins. 

It’s tough at the top – The last of the tycoons

Img source: Problogger

You may have already read the news about the suicides of several tycoons. The saying goes “The bigger you are, the harder you fall”.  Or the other saying “Birds will die for food and men will die for money”.

It’s pretty unfortunate for these men and their families: Steven Good, Adolf Merckle, Thierry Magon and Karthik Rajaram (at least a millionaire).

They have the wealth that everyone thirsts for, if not for the unprecedented financial crisis, most people will still envy what these men have achieved. The envy ends when these tycoons ended their lives. They have the wealth but lost it when the stock market stumbled.

Being at the top has a huge price to paid for, not only the price of getting there but also the price of falling from the top. It can be tough at the top.

The face of failure is too big for them to handle. I supposed in these cases the main culprits are the egos, face values and primarily the mental states. It requires a tough mind to accept failures and apparently the stress took over.

I have always thought that tycoons, businessmen, CEO, CFO etc…the top people have the ultimate brain prowess to handle humongous stress and criticisms. But the news has just proven me wrong. Mental toughness is not a privilege.

What happens if at that juncture of suicide, the mental states of these tycoons are positive? Instead of “losing fortune means losing everything” to “losing fortune is not a total loss”. I mean family is priceless, life is priceless and the will to withstand the setbacks is priceless.

I am not them so I don’t know what it really means when a billionaire loses his fortune. I may not be able to take it should that happened to me and it’s easier to comment on what have happened than to go through the same crisis.

I cannot point my finger and say they are foolish. When money is larger than life, mishaps always happened. 

The market is where fortunes are made and lost, it’s part of the game and game is part and parcel of life. You buy big when you can afford it, your stakes are high and you will fall harder than anyone else. To look at the positives when you are down is not easy.

I will stand by what I have said “Mental toughness is not a privilege”. Anyone who thinks, including myself, it’s tough getting to the top, think again, it’s even tougher to stay at the top and not come down. 

Do you actually make money from blogging?

It’s an ageless question. I have read this everywhere…..from Yahoo Answers to Blogcatalog and forums.

It makes me wonder if those so-call experts are really making what they have claimed. Most bloggers don’t make money I believed. It’s not a matter of wrong strategies deployed but rather most of us started blogging without the thought of making money from blogging.

I have read many articles on Make Money Online but they all said the same thing. I would like to have my blog monetize but then to do it just for the money is not motivating enough. I failed at marketing.

SEO is like the doctrine for any aspiring Make Money bloggers but then despite the boast that SEO is the key to traffic, I remain skeptic about how a blogger could make money from Adsense or other blog marketing tools just by driving traffics to their blogs without interesting topics to convert them into regular readers. Most of the posts I have read are not original, simply put, the authors somehow copied from each other to churn enough posts to attract traffic or at least to make their blogs look content rich. You will find repetitive contents which discourage you to read another post of the same thing.

Nevertheless, I would like to have a profitable blog in the near future but it will not be possible if I have nothing to sell. Affiliate programs are not really appealing to me since they are as good as spams.

And I will most probably stand a better chance if I am using my blog to showcase my CV or I have a brick and mortar business and the blog serves as an advertising platform.

Since blogs have less credibility than “traditional” websites, it’s going to be very difficult to sell anything through this platform.

Forget about the big figures you saw, creating income via blogs is not going to work for everyone. I guess like any industries or sectors only a small percentage of the bloggers actually make it. It’s like trying to become a rich man it takes more than just hardwork, what we have seen are the minority who have make it and most of them failed.

I have not gone into into MMO blogs so I am not sure how much money a blogger  spend per month to keep the blog profitable. There must be hidden costs involved which are not presented to fellow bloggers.

Don’t assume it costs nothing, there’s no free lunch because the economic system doesn’t allow that to happen. Everything comes with a price so does MMO blogging.

The superstitious market

Img source: Corbis

Dear readers,

I have been plagued by the flu bug for days and I could hardly open my eyes while writing my previous post due to the flu medicine I took which is not very effective. I am still sick.

Pardon me if this post is badly written.

Here we go again. The sentiment on the worst is over 2009 will better just made it to the surface. Like what I have mentioned in my previous post “I just recalled the Capricorn effect“, as usual, people are expecting 2009 to be a fresh start.

The market is always superstitious.

Just recently, global markets took a rally on hopes the US economy will rebound from its diminishing state. There’s no rational reason behind this. It seems like the markets are betting on a sharp recovery in the US economy. I have never seen the market reacts in a logical way before.

The speculators created a very superstitious market which attracts the like-minded to further create a butterfly effect. You can Google for the butterfly effect, I will skip the explanation part.

The major economies are still suffering from the burnout in 2008 and it’s almost impossible for any economy to recover this early in 2009.

Nothing is concrete yet, it’s like hoping for rain when the clouds turned dark, it happens most of the time but looking at the damages done in 2008, the norm is unlikely to happen anytime.

I can’t blame the speculators to react dramatically to trivial news or news that have not been confirmed, or I should say rumors. Without the speculators, trading is almost unprofitable. But it seems like nobody is questioning if he is overreacting to a piece of news.

I too, trade when time is permissible but I am careful not to be dragged into the herd mindset.

Follow the crowd with your eyes open.

What I have just written may not be the best representation of my topic but hope you enjoy it. 

The neglected lesson in investment – the missing material

 

I have never come across any financial book that suggests its readers to read this “material”. It’s hardly mentioned or totally absent from most personal finance websites. My blog is barely a personal finance blog, it’s a bit of everything about my experience and observation.

I like to share some of my thoughts on money & investment. With some observations, I think I should highlight this to my readers. In most, in fact all personal finance books mention money management – which is a common topic for financial education. But nothing about this “material” is mentioned.

To learn how to pick stocks like Warren Buffett is not really that important.

Foresights, techniques and analysis methods are secondary. Not that important compared to knowing your rights as a shareholder. What an investor knows about his rights is very limited. Statutes should be part of financial training.

This in my opinion should be the first lesson an investor must learn before anything.

The first step to protect your investment is to know your rights as shareholder. The rights to question the Board, the rights to scrutinize the Board for its decisions and the rights to scrutinize financial statements etc….

Most investors don’t bother to find out about their rights until fraud arises. When fraud happened, the investor gets cold feet and start to look for regulators/watchdogs to enforce their rights in frenzy. It’s essential but the investors leave it to someone else.

Fraud detection is a separate issue.

The decision to leave rights issue to the regulators and leaving oneself out of the picture is costly. 

Before picking up a prospectus or a financial report know your rights as a shareholder first.

I just recalled the Capricorn effect

 

 

Image: redding.com

I read about it in the news every year usually towards the end of December. Nothing to do with the stars in the sky that tell your fortune, if you do not know what Capricorn effect means, try google for the full definition.

In short, at the beginning of each year the stock market will rally based on the illogical concept that the beginning is a good start and how that “logic” really convinced speculators to throw in their money at the beginning is a total alien to me.

I have no idea.

Just when the market looks gloomy because of some catastrophic events that unfolded, I thought no one will mention the Capricorn effect again this year end. But like year-end sales – no matter how bad the economy seems, the routine must be repeated each year.

So we are expecting the Capricorn effect anytime soon. It’s more likely a routine than a phenomenon.

I don’t expect that effect coming in 2009 since the consumers, speculators; investors and business owners are more conservative this time. No big deal if the market really rally, it’s more likely to premature.

No big deal again even if all indices gain two digits growth afterall the big trend is going down. I almost forgot that about the effect, I don’t make a point to remember this “special” day. The knee jerk rally is very common throughout the year and not only at the beginning of the year. The term Capricorn effect should be removed since it does no good but motivates irrational responses from the speculators.

Like the star Capricorn in Zodiac, it’s too vague to mean anything.

I am not going to follow the heard and say “It’s a new start for everyone in the market, time to invest” What sense does that make? “The bad news have been absorbed last year and thereafter the new year means a new beginning” What sense does that make? As if we start from zero and as if the market has no hangovers.

It makes the market look absolutely superstitious.

I no longer believe in Capricorn effect unlike in the past when I first started trading. Back then it was like one major event I have to look out for. But now it has no meaning to me.

Branded fund houses not so important

Source: nefinc.org

The big names in funds management don’t appeal to me since I trust no one with my money except for myself. I have no doubt in the expertise of the fund managers but I think they are just not as keen as me with my investments after all it’s not their money but mine.

“Branded” fund houses mean nothing, they must have done right to emerge into big fund houses, but they really don’t mean anything.

Investors should be more interested in knowing who sits behind the computer managing their funds, the fund managers, portfolio managers, administrator so on and so forth.

However, that is not possible since the fund houses are not likely to disclose that kind of information and most importantly these employees do not stay in their jobs for long. The better they are the more likely they will be headhunt especially the ones who beat the benchmarks.

And that’s the whole point. They don’t stay. So it doesn’t matter if the fund is rated 5 stars or 3 stars, these ratings carry no weight (at least to me). It’s more like a part of a marketing plan or a selling point in pushing sales.

The guy who manages the fund so well that the fund achieves some awards may have already left the fund house for a bigger paycheck from its rival. Can the next person perform just as good?

The fund remains the same fund but manages by a different manager.

Forget the awards, most importantly – Is the fund manager who grew this fund still around? Buying funds because of its awards make no sense, it’s more useful to the salesperson than the investor.

Not surprisingly, a lot of sales “advisors” like to sell awarding winning funds to the less savvy investors.

The next time when you see funds ratings or big names in funds management, ignore those noises and ask yourself if you really understand what you are buying and the industries the funds invested in. Since there’s nothing much you can do about the regular hopping of the fund managers but you should at least know that you may not be getting what you see.

Madoff sets the benchmark

Record holder

Just when we are getting ready for 2009 and leave the disasters from the miserable 2008 behind, we have pie thrown at our face.

It’s as good as running a 42km marathon and just before the finishing line your right foot tripped your left foot, what could be more embarrassing than that?

Is Madoff’s scam a wakeup call for the regulators of Wall Streets? Andwhen I thought Enron is the world’s most successful con, Madoff proved that he can do better. He ran the largest Ponzi in the world and most probably his name should be in the Guinness Book of World Records for breaking Enron’s scam records.

The regulators must have been sleeping since Enron collapsed in 2001. Thanks to them, Madoff is the new pace setter. De-regulation was a huge mistake, this big mistake caused the greatest downfall of big names on Wall Streets as well as putting the reputation of financial institutions at risk.

It will be an uphill task to regain investors’ confidence.

Why am I skeptical financial reports?

Any numbers in the financial statement can be manipulated to conceal actual figures and deceive investors. Even the most seasoned investor will have some difficulties in detecting fraud in financial statements.

Being an outsider of the company, the investor can only rely on the financial reports for analysis and he should remain skeptical no matter how attractive the reports seemed to be.

In Madoff’s case and like other fraud, the public trusted them totally, which wasn’t very wise. They trusted the financial reports, I mean who don’t, who actually has all the time in the world to scrutinize every report he reads.

If you can’t do it for all your investments at least scrutinize your largest investment.

If profits are reported, take only 90% of your confidence in that report and leave the remaining 10% for doubts. Question and scrutinize. Do it as if the company owes you an answer without the hostility.

If losses are reported, take only 90% of your confidence in that report and leave the remaining 10% for doubts. Actual losses could have been bigger than what you read.

Though questioning is not good enough against a good conman, it’s better than not asking. Anyway, always leave 10% for doubts, always keep vigilance where you put your money.