I know it has been a long long while... alot has happened... and I didn't know whether to blog about it or not and even if I wanted to, I didn't really know how to start... so thus the slience. My sincere apologies...
Life has been trying during some of the years of my disappearance... and life has taken quite a huge turn over the recent years...
I was asked by close confidante to start writing all over again about the experience I have gained during the times without having to blog every single horrid detail. Cos she found that she learned alot over the recent years while walking through the journey with me... and since the blog was about helping people, I should continue...
So there... after a good 5 years of Grace from God, I have emerged victorious in some of my life battles... and will continue to write with my head held high...
I will start writing... on a new blog because it is about a new beginning, isn't it?
The new site : sevengenwealth.wordpress.com
If you can be most kind and gracious to me and be willing to read my humble sharings... please, join me there.
With gratitude, I thank you...
Monday, May 26, 2014
Tuesday, December 15, 2009
How To Respect Money
Sorry that I have been away. I have been busy with my work. In these few months of busy work, I have met so many people and it has dawned onto me that alot of us are busy making money and yet somehow something is amiss. And I realised one BIG thing, people, including me, do not respect money as much as we should be.
I thank God that I am in my line of work cos seeing people, meeting them and understanding their viewpoints and learning from their lessons, all of that helped me tremendously. All that I have learned helped bridge my knowledge gap and allowed me to learn my life lessons faster.
So that reminds me of this great article I have read by Barbara Stanny : How To Respect Money.
---
There's a big difference between making a good living and enjoying a good life. You demonstrate respect and appreciation for money the same way you would anything else of value in your life, be it an heirloom rug, an expensive hand tool, a close friend, or cash in hand. If you want it to last, you've got to take care of it. Throw it around carelessly or ignore it completely and guess what's going to happen?
Remember, your goal is not just to put a fatter paycheck in your pocket. You want to achieve financial independence, which means making a good living and enjoying a good life, where money enhances your well-being, not exacerbates your stress. Financial independence does not come from what you earn. It comes from what you do with what you have. No matter how sizable your salary, the money will slip through your fingers if you bypass this step.
Yet this step is frequently neglected, even by the best and the brightest. It was the biggest surprise I had when interviewing six-figure women. With earnings that ranged anywhere from $100,000 to $7 million, the whopping majority, as confident as they were professionally, were surprisingly insecure financially. They were so busy making money they didn't bother to take care of it.
Of all the people I've interviewed for my books, or met during my travels, I can safely say, the ones with the highest net worth were not necessarily the ones who made the most money. They were the ones who took the best care of their money.
Rampant, unintentional spending is often the culprit. Like Pavlov's dog salivating when it hears the dinner bell, as soon as people boost their earnings, 'Ka-ching,' they bump up their spending, then wonder where those extra bucks went.
THE CHOICE IS YOURS
Making conscious, deliberate choices about what you do with your money is precisely what this step is all about. And as I see it, there are only four choices you need to make to fully respect and appreciate money. I call these four choices the Four Rules of Money.
1. Spend Less (Only buy what you can easily afford)
2. Save More (Pay yourself first)
3. Invest Wisely (Put money in assets that grow in value over time.)
4. Give Generously (Use your money to make a difference )
Most of us have the giving generously part down pat. But unless you handle the first three, giving can become an act of self-sabotage. Not only do you jeopardize your future security, but you diminish the impact you can have with your money.
The success of this step rests in following the Four Rules in the order they're listed. That means, before anything else, don't spend money you don't have. And then make darn sure there's something left over for savings. Believe me, it's next to impossible to overcome underearning if you're still whipping out credit cards while bills go unpaid. Even if your debts aren't completely paid off, do not—I repeat DO NOT—add to them. Not only does debt drain your energy, but it lulls you into a false sense of sufficiency.
"If you use debt to meet your needs, you'll never be free of underearning," agrees Jerold Mundis, author of Earn What You Deserve. "Debt is the cruelest form of poverty. It gives you the illusion that you have far more than you do."
THE BIG MUST FOR OVERCOMING UNDEREARNING: STOP DEBTING NOW!
Debt SUCKS. It weighs you down. It drains your energy, your resources, your peace of mind, and your quality of life. Until you get rid of your credit cards—tear them up, hide them from sight, or freeze them in ice in a tin can—and start paying down your bills, you'll have a very tough time reaching the next level of your life that you aspire to.
BEWARE OF GOING TO EXTREMES
Careless spending or continuing to debt is like boarding a train traveling the wrong way. You'll never get where you want to go. At the same time, you do not want to head in the reverse direction—DEPRIVATION—where your emotional and/or physical needs are not being met. Important message to all underearners: Spending less does not mean misery and hardship.
Deprivation is endemic to underearning, being both a symptom and a source of the condition itself. Doing this step does not require either scarcity-thinking or severe self-denial. But it does require a certain amount of delayed gratification. There is a difference. Cutting back is not the same as cutting out completely. And financial prudence does not imply forsaking necessities, or even some pleasures. The distinction is critical. Discernment is the key. Cut back by taking little bits out of each category. Otherwise, budgeting becomes like crash dieting. Deprivation creates a hunger that will drive you right back to the stores on a buying binge.
MAKE YOUR MONEY WORK FOR YOU!
But budgeting is only the beginning. You've got to be willing to take some risks in order to make a little extra. In truth, our biggest financial risk is not market volatility. Our biggest risk is to do nothing at all. Sure, the market's ups and downs are scary. But you can significantly cut your losses with due diligence, a long-term approach, and adequate diversification. On the other hand, if all your cash is sitting in the bank—or worse, under your mattress—you don't need a crystal ball to predict your future. Your purchasing power will shrink like a bunch of steamed spinach. Unless a portion of your savings is in assets that grow faster than inflation and taxes eat it away, your greatest danger is that you'll outlive your money.
For instance, say you've just gotten a $1000 bonus. You're smart enough to save it, so you put it in the bank, where the return is guaranteed and it earns about two percent. In about 20 years, your original investment, adjusted for inflation, will be worth a grand total of $500 (assuming inflation doesn't rise above three percent.)
But if instead you put that $1000 in a stock mutual fund earning ten percent and never add one cent to it, in 20 years you'd be looking at over $6,000. Big difference.
What if you don't have $1000 lying around? Here's the truth: You don't need a lot of money to create wealth, not when you consistently set aside small amounts over a period of time. Mere pocket change adds up surprisingly fast with the magic of compounding (where you're earning interest on your earnings as well as on your original investment). For example, if every day you aside 50 cents to put into a mutual fund earning eight percent (a reasonable return today), in 20 years, you'll have $10,000.
THE MONEY APPRECIATION GUIDE
Check the statements which are true for you.
* I am clear on my financial goals.
* I know my net worth* I have no credit card debt.
* I have enough savings to live on for three to six months.
* I have money invested in a retirement account.
* I have investments outside a retirement account.
* I understand the investments I own.
* I will have enough money to live on in retirement.
* I have a will.
* I know where all my financial documents and records are.
This is what respect and appreciation of money looks like. Pay special attention to the statements you did not check—that's the work you need to do next.
Author's Bio
Barbara Stanny, the leading authority on women and money—is on a mission—to revolutionize women's relationship with money. As a bestselling author, sought after speaker, workshop facilitator, and money & wealth coach, Barbara teaches women to earn the money they deserve, build the wealth they desire, and step fully into their power! Visit BarbaraStanny.com.
I thank God that I am in my line of work cos seeing people, meeting them and understanding their viewpoints and learning from their lessons, all of that helped me tremendously. All that I have learned helped bridge my knowledge gap and allowed me to learn my life lessons faster.
So that reminds me of this great article I have read by Barbara Stanny : How To Respect Money.
---
There's a big difference between making a good living and enjoying a good life. You demonstrate respect and appreciation for money the same way you would anything else of value in your life, be it an heirloom rug, an expensive hand tool, a close friend, or cash in hand. If you want it to last, you've got to take care of it. Throw it around carelessly or ignore it completely and guess what's going to happen?
Remember, your goal is not just to put a fatter paycheck in your pocket. You want to achieve financial independence, which means making a good living and enjoying a good life, where money enhances your well-being, not exacerbates your stress. Financial independence does not come from what you earn. It comes from what you do with what you have. No matter how sizable your salary, the money will slip through your fingers if you bypass this step.
Yet this step is frequently neglected, even by the best and the brightest. It was the biggest surprise I had when interviewing six-figure women. With earnings that ranged anywhere from $100,000 to $7 million, the whopping majority, as confident as they were professionally, were surprisingly insecure financially. They were so busy making money they didn't bother to take care of it.
Of all the people I've interviewed for my books, or met during my travels, I can safely say, the ones with the highest net worth were not necessarily the ones who made the most money. They were the ones who took the best care of their money.
Rampant, unintentional spending is often the culprit. Like Pavlov's dog salivating when it hears the dinner bell, as soon as people boost their earnings, 'Ka-ching,' they bump up their spending, then wonder where those extra bucks went.
THE CHOICE IS YOURS
Making conscious, deliberate choices about what you do with your money is precisely what this step is all about. And as I see it, there are only four choices you need to make to fully respect and appreciate money. I call these four choices the Four Rules of Money.
1. Spend Less (Only buy what you can easily afford)
2. Save More (Pay yourself first)
3. Invest Wisely (Put money in assets that grow in value over time.)
4. Give Generously (Use your money to make a difference )
Most of us have the giving generously part down pat. But unless you handle the first three, giving can become an act of self-sabotage. Not only do you jeopardize your future security, but you diminish the impact you can have with your money.
The success of this step rests in following the Four Rules in the order they're listed. That means, before anything else, don't spend money you don't have. And then make darn sure there's something left over for savings. Believe me, it's next to impossible to overcome underearning if you're still whipping out credit cards while bills go unpaid. Even if your debts aren't completely paid off, do not—I repeat DO NOT—add to them. Not only does debt drain your energy, but it lulls you into a false sense of sufficiency.
"If you use debt to meet your needs, you'll never be free of underearning," agrees Jerold Mundis, author of Earn What You Deserve. "Debt is the cruelest form of poverty. It gives you the illusion that you have far more than you do."
THE BIG MUST FOR OVERCOMING UNDEREARNING: STOP DEBTING NOW!
Debt SUCKS. It weighs you down. It drains your energy, your resources, your peace of mind, and your quality of life. Until you get rid of your credit cards—tear them up, hide them from sight, or freeze them in ice in a tin can—and start paying down your bills, you'll have a very tough time reaching the next level of your life that you aspire to.
BEWARE OF GOING TO EXTREMES
Careless spending or continuing to debt is like boarding a train traveling the wrong way. You'll never get where you want to go. At the same time, you do not want to head in the reverse direction—DEPRIVATION—where your emotional and/or physical needs are not being met. Important message to all underearners: Spending less does not mean misery and hardship.
Deprivation is endemic to underearning, being both a symptom and a source of the condition itself. Doing this step does not require either scarcity-thinking or severe self-denial. But it does require a certain amount of delayed gratification. There is a difference. Cutting back is not the same as cutting out completely. And financial prudence does not imply forsaking necessities, or even some pleasures. The distinction is critical. Discernment is the key. Cut back by taking little bits out of each category. Otherwise, budgeting becomes like crash dieting. Deprivation creates a hunger that will drive you right back to the stores on a buying binge.
MAKE YOUR MONEY WORK FOR YOU!
But budgeting is only the beginning. You've got to be willing to take some risks in order to make a little extra. In truth, our biggest financial risk is not market volatility. Our biggest risk is to do nothing at all. Sure, the market's ups and downs are scary. But you can significantly cut your losses with due diligence, a long-term approach, and adequate diversification. On the other hand, if all your cash is sitting in the bank—or worse, under your mattress—you don't need a crystal ball to predict your future. Your purchasing power will shrink like a bunch of steamed spinach. Unless a portion of your savings is in assets that grow faster than inflation and taxes eat it away, your greatest danger is that you'll outlive your money.
For instance, say you've just gotten a $1000 bonus. You're smart enough to save it, so you put it in the bank, where the return is guaranteed and it earns about two percent. In about 20 years, your original investment, adjusted for inflation, will be worth a grand total of $500 (assuming inflation doesn't rise above three percent.)
But if instead you put that $1000 in a stock mutual fund earning ten percent and never add one cent to it, in 20 years you'd be looking at over $6,000. Big difference.
What if you don't have $1000 lying around? Here's the truth: You don't need a lot of money to create wealth, not when you consistently set aside small amounts over a period of time. Mere pocket change adds up surprisingly fast with the magic of compounding (where you're earning interest on your earnings as well as on your original investment). For example, if every day you aside 50 cents to put into a mutual fund earning eight percent (a reasonable return today), in 20 years, you'll have $10,000.
THE MONEY APPRECIATION GUIDE
Check the statements which are true for you.
* I am clear on my financial goals.
* I know my net worth* I have no credit card debt.
* I have enough savings to live on for three to six months.
* I have money invested in a retirement account.
* I have investments outside a retirement account.
* I understand the investments I own.
* I will have enough money to live on in retirement.
* I have a will.
* I know where all my financial documents and records are.
This is what respect and appreciation of money looks like. Pay special attention to the statements you did not check—that's the work you need to do next.
Author's Bio
Barbara Stanny, the leading authority on women and money—is on a mission—to revolutionize women's relationship with money. As a bestselling author, sought after speaker, workshop facilitator, and money & wealth coach, Barbara teaches women to earn the money they deserve, build the wealth they desire, and step fully into their power! Visit BarbaraStanny.com.
Thursday, March 26, 2009
Who is bigger? You or Your problem?
(Kind Note : For those who are not religious, please kindly skip to the next paragraph) I believe God answers my prayers and He also hears my thoughts, moans, groans and worries. Well, to say the least, it has been a little rough for me this week and I was feeling a little down this morning.
A dear friend sent me a lovely email this morning titled "Who is bigger? You or Your problem?". How apt! He showed me this site and after watching the video, I am encouraged and my spirits are lifted. Things are not as bad as I first saw it.
Now, I am really excited to share with all of you.
Learn the 3 Keys of How to Live Abundantly in Your Finances, Health and Relationships
http://www.lawtosuccess.net/blog/?name=andy&cbid=avatar47&tid=harrison
I have taken the liberty to put the video on this posting BUT please you must go to the site if you want the free coaching session. They will have an audio and a transcript to download to cater to people with different learning techniques.
This would be part of Money Management Technique Part 5 : Motivation and also part of your goal : EDUCATION!
God bless and may your monies greatly multiply!!!!!
A dear friend sent me a lovely email this morning titled "Who is bigger? You or Your problem?". How apt! He showed me this site and after watching the video, I am encouraged and my spirits are lifted. Things are not as bad as I first saw it.
Now, I am really excited to share with all of you.
Learn the 3 Keys of How to Live Abundantly in Your Finances, Health and Relationships
http://www.lawtosuccess.net/blog/?name=andy&cbid=avatar47&tid=harrison
I have taken the liberty to put the video on this posting BUT please you must go to the site if you want the free coaching session. They will have an audio and a transcript to download to cater to people with different learning techniques.
This would be part of Money Management Technique Part 5 : Motivation and also part of your goal : EDUCATION!
God bless and may your monies greatly multiply!!!!!
Tuesday, March 24, 2009
How to be rich and successful?
Over my years of financial advisory, I can say that I have met quite alot of people. And this year has been a pretty eye-opening experience for me. In just this quarter, I have met up, advised and consulted quite a handful of people. All of them are good people but what I realized from most of them is saddening.
Maybe we were not trained in school and not taught at home and topic of money is not brought up with friends... but I can see that all of us are paying the price. I am blessed that I am in this field and am exposed to my Mentors' teachings thus I have learnt how to manage my money properly. But it saddens me to see that there are still alot of people out there who are still unaware of that thin ice they are putting themselves on.
Of course, I have extremely savvy investors and very diligent savers but that's just a mere minority of them. I used to expect that the people who are educated would be able to understand money management techniques or principles. And in my starting years as a Financial Advisor, to my surprise, they can be the hardest nut to crack. I guess there are so many "teachings" out there that may have clouded their perception. But nevertheless, in such economy climate, I think it's best to go back to basics.
I deeply and strongly believe that the simplest way of investing is SAVING. Yes I know, I can hear all of you moaning out there about interest rates and etc. But frankly, in this climate, how many more ways are there? Let's talk about safer instruments for now. Alot of people are afraid and I don't blame you and many out there are at a total lost of what to pick and which to pick and when to go into or come out of the market! so with so much uncertainty and yet we need to meet our basic necessity of investing, what else more than a safe instrument for this time? SAVE.
You can choose the highest interest-paying bank which will pay you at best 2% or you can choose a safe instrument that can help you ride out the economy crisis like an endowment which could pay 5 to 8%.
I can hear all the murmurs about American International Group (AIG). Well, there are many more insurance companies out there : Prudential, Great Eastern are the 2 other bigger boys left.
Still you would need to follow the 6 systems in Money Management Techniques Part 3 -
System 1 : Financial Freedom Fund (Triple Fs)
System 2 : Long Term Saving
System 3 : Short Term Savings
System 4 : Tithing
System 5 : Reward
System 6 : Expenditure
Do what the rich and successful people will carry one doing.
I have talked to multi-millionaires in Singapore and Malaysia and I figured this...
Successful people are willing to do that which unsuccessful people are not willing to do.
All the rich and successful people are willing to do that extra mile, study about their investments, pay for their brokers, save, invest be it good times or bad.
All of which the unsuccessful people are not willing to do! I hear them complaining about the economy, how the government should help them, how they should not spend and also not invest for fear of the economy, how they should not invest in their own future just because they want to save for the rainy day.
But isn't this THE RAINY DAY?
Successful people are not willing to do that which unsuccessful people are willing to do.
Successful people are not willing to put off their plans for their success, they are not willing to just procrastinate and mop around, lamenting about the economy crisis or lament about the paper loss of their investments.
However, unsuccessful people are willing to shelf their saving plans, chop off their endowment, liquidate their investments all because they are afraid to ride it out and they want to grab and hold every single penny.
I am sure that there are some who needs to do all this to make ends meet. But the majority I'm referring here still have jobs, still have earnings yet they make the most unwise decisions at the most crucial time.
I am a little saddened by their actions. However, I am not willing to give up and am going to press on, just because I am blessed to be in the position to advise about financial matters, I will continue to do so because of my beliefs and my principles.
I very much still want to help all of these people understand and realize that they can and am able to manage money just as well as the rich and successful people.
Many times I have seen and I have done so myself that I would want to HAVE all the money in order to DO what the rich and successful do, then I can BE rich and successful. (HAVE -> DO -> BE)
Or many fall into the illusion to DO what the rich and successful people do in order to HAVE what they have so that we can BE rich and successful. (DO -> HAVE -> BE)
In face, the right way and the only way for us is that we need to do is to BE rich and successful, BE like them, DO what they do, mimic all you can, because once you BE, then you'll DO and you'll HAVE. (BE -> DO -> HAVE)
So stop procrastinating and start BEING rich and successful!
God Bless!
Maybe we were not trained in school and not taught at home and topic of money is not brought up with friends... but I can see that all of us are paying the price. I am blessed that I am in this field and am exposed to my Mentors' teachings thus I have learnt how to manage my money properly. But it saddens me to see that there are still alot of people out there who are still unaware of that thin ice they are putting themselves on.
Of course, I have extremely savvy investors and very diligent savers but that's just a mere minority of them. I used to expect that the people who are educated would be able to understand money management techniques or principles. And in my starting years as a Financial Advisor, to my surprise, they can be the hardest nut to crack. I guess there are so many "teachings" out there that may have clouded their perception. But nevertheless, in such economy climate, I think it's best to go back to basics.
I deeply and strongly believe that the simplest way of investing is SAVING. Yes I know, I can hear all of you moaning out there about interest rates and etc. But frankly, in this climate, how many more ways are there? Let's talk about safer instruments for now. Alot of people are afraid and I don't blame you and many out there are at a total lost of what to pick and which to pick and when to go into or come out of the market! so with so much uncertainty and yet we need to meet our basic necessity of investing, what else more than a safe instrument for this time? SAVE.
You can choose the highest interest-paying bank which will pay you at best 2% or you can choose a safe instrument that can help you ride out the economy crisis like an endowment which could pay 5 to 8%.
I can hear all the murmurs about American International Group (AIG). Well, there are many more insurance companies out there : Prudential, Great Eastern are the 2 other bigger boys left.
Still you would need to follow the 6 systems in Money Management Techniques Part 3 -
System 1 : Financial Freedom Fund (Triple Fs)
System 2 : Long Term Saving
System 3 : Short Term Savings
System 4 : Tithing
System 5 : Reward
System 6 : Expenditure
Do what the rich and successful people will carry one doing.
I have talked to multi-millionaires in Singapore and Malaysia and I figured this...
Successful people are willing to do that which unsuccessful people are not willing to do.
All the rich and successful people are willing to do that extra mile, study about their investments, pay for their brokers, save, invest be it good times or bad.
All of which the unsuccessful people are not willing to do! I hear them complaining about the economy, how the government should help them, how they should not spend and also not invest for fear of the economy, how they should not invest in their own future just because they want to save for the rainy day.
But isn't this THE RAINY DAY?
Successful people are not willing to do that which unsuccessful people are willing to do.
Successful people are not willing to put off their plans for their success, they are not willing to just procrastinate and mop around, lamenting about the economy crisis or lament about the paper loss of their investments.
However, unsuccessful people are willing to shelf their saving plans, chop off their endowment, liquidate their investments all because they are afraid to ride it out and they want to grab and hold every single penny.
I am sure that there are some who needs to do all this to make ends meet. But the majority I'm referring here still have jobs, still have earnings yet they make the most unwise decisions at the most crucial time.
I am a little saddened by their actions. However, I am not willing to give up and am going to press on, just because I am blessed to be in the position to advise about financial matters, I will continue to do so because of my beliefs and my principles.
I very much still want to help all of these people understand and realize that they can and am able to manage money just as well as the rich and successful people.
Many times I have seen and I have done so myself that I would want to HAVE all the money in order to DO what the rich and successful do, then I can BE rich and successful. (HAVE -> DO -> BE)
Or many fall into the illusion to DO what the rich and successful people do in order to HAVE what they have so that we can BE rich and successful. (DO -> HAVE -> BE)
In face, the right way and the only way for us is that we need to do is to BE rich and successful, BE like them, DO what they do, mimic all you can, because once you BE, then you'll DO and you'll HAVE. (BE -> DO -> HAVE)
So stop procrastinating and start BEING rich and successful!
God Bless!
Sunday, March 22, 2009
Your ticket to investing wisely
There was an article I read from the Straits Times dated 22 February 2009 and I've always wanted to share it. This was written by Ben Fok, who is the chief executive of a financial advisory firm and i thought that he wrote the article about investments in a very apt analogy which can be understood by all.
Now that I've scheduled some time to blog, let's get right down to it.
In difficult times like these, a plan-ride analogy may help you achieve your goals
Fasten your seat belt - To me the current financial crisis is the turbulence in our investment horizon. Investors can expect the market to be volatile. The markets will eventually recover, but we need to sit tight and rise out the market turbulence.
Over the last few months, I have counseled many investors who have lost money in their investments.
Over time, I realized that all they really wanted to know was : "What should I do now to get out of this mess? If the best time to invest is now, then tell me what should I invest in? do I have to follow every piece of advice given? How do I identify advice that is good for me?"
With this crisis hanging over out heads and no one knowing how long it will last, the best approach is to get back to basics.
I would like to use the analogy of taking a plane.
One of the things that air crews are trained to do is to adhere to a standard operating procedure.
Like air crews, an investor needs to have a proper investment procedure.
The first step is to know where you are going and how to get there. In other words, you need to know your destination and how much time you need to reach there.
To most investors, the objective of investing is to make as much money as possible. That is fine, but how much, and when do you need it? Without knowing your investment objectives, it is difficult to know what you should be investing in.
Most investors understand that investments span a range of risks. If you require a high return, you must be prepared to take a higher risk.
Using the plan-ride analogy again, once the plane is airborne, you as a passenger have already exposed yourself to greater risk.
Of course, the risk is mitigated by the fact that the pilot is well trained to fly the plane and to react to unexpected events.
Likewise when investing, you should consult a financial adviser who takes time to understand the risk level you can tolerate. Just as the pilot is trained to fly a plane, a financial adviser is trained to do the job of managing risk.
Your choice of investments must flow from your risk appetite. If you can take a 50 per cent drop in your investments, then high-risk investments like technology stocks/funds or aggressively managed funds like small-cal funds could suit you.
If you cannot tolerate too much volatility, opt for lower-risk investment like balanced funds where there is an allocation of 60 per cent in equities and the rest in bonds, for instance.
The idea is to make your risk appetite – not the investment opportunity – the reference point.
Most investment disasters happen when investors make the investment a reference point and then try to adjust their risk appetites accordingly.
Back to the analogy of the plane ride. When airborne, the plane may hit turbulence. For your safety, you are advised to return to your seat and put on your safety belt.
You will also notice that turbulence usually doesn’t last very long. Once the plane is out of the air pocket, it will be flying smoothly again.
Even pilots cannot tell the exact locations and severity of turbulence along their flight paths. All they can do is to build a good forecast by analyzing charts, flight monitors and weather conditions.
This is the reason they ask you to fasten your seat belt whenever you are seated, just in case the plan suddenly hits an air pocket.
To me, the current financial crisis is the turbulence in out investment horizon. Investors can expect the market to be volatile. The markets will eventually recover, but we just need to sit tight and ride out the market turbulence.
Finally, the place reaches your destination and you will be glad that the risks you have taken are over.
However, before landing, the crew will be busy checking landing procedures. This is akin to meeting your investment objectives.
The final phase of your investment horizon is extremely important. As you approach retirement, you should adjust your risk level and think about preserving your capital. Otherwise, you can have a hard landing like what many are experiencing today.
Once you step out of the airplane, you know that you have arrived safely.
Similarly, in investing, you will arrive at some point in the future and hopefully fulfill your financial objectives.
The entire process is the result of knowing your investment objectives, taking some risks and enjoying the fruits of your labour.
Now that I've scheduled some time to blog, let's get right down to it.
In difficult times like these, a plan-ride analogy may help you achieve your goals
Fasten your seat belt - To me the current financial crisis is the turbulence in our investment horizon. Investors can expect the market to be volatile. The markets will eventually recover, but we need to sit tight and rise out the market turbulence.
Over the last few months, I have counseled many investors who have lost money in their investments.
Over time, I realized that all they really wanted to know was : "What should I do now to get out of this mess? If the best time to invest is now, then tell me what should I invest in? do I have to follow every piece of advice given? How do I identify advice that is good for me?"
With this crisis hanging over out heads and no one knowing how long it will last, the best approach is to get back to basics.
I would like to use the analogy of taking a plane.
One of the things that air crews are trained to do is to adhere to a standard operating procedure.
Like air crews, an investor needs to have a proper investment procedure.
The first step is to know where you are going and how to get there. In other words, you need to know your destination and how much time you need to reach there.
To most investors, the objective of investing is to make as much money as possible. That is fine, but how much, and when do you need it? Without knowing your investment objectives, it is difficult to know what you should be investing in.
Most investors understand that investments span a range of risks. If you require a high return, you must be prepared to take a higher risk.
Using the plan-ride analogy again, once the plane is airborne, you as a passenger have already exposed yourself to greater risk.
Of course, the risk is mitigated by the fact that the pilot is well trained to fly the plane and to react to unexpected events.
Likewise when investing, you should consult a financial adviser who takes time to understand the risk level you can tolerate. Just as the pilot is trained to fly a plane, a financial adviser is trained to do the job of managing risk.
Your choice of investments must flow from your risk appetite. If you can take a 50 per cent drop in your investments, then high-risk investments like technology stocks/funds or aggressively managed funds like small-cal funds could suit you.
If you cannot tolerate too much volatility, opt for lower-risk investment like balanced funds where there is an allocation of 60 per cent in equities and the rest in bonds, for instance.
The idea is to make your risk appetite – not the investment opportunity – the reference point.
Most investment disasters happen when investors make the investment a reference point and then try to adjust their risk appetites accordingly.
Back to the analogy of the plane ride. When airborne, the plane may hit turbulence. For your safety, you are advised to return to your seat and put on your safety belt.
You will also notice that turbulence usually doesn’t last very long. Once the plane is out of the air pocket, it will be flying smoothly again.
Even pilots cannot tell the exact locations and severity of turbulence along their flight paths. All they can do is to build a good forecast by analyzing charts, flight monitors and weather conditions.
This is the reason they ask you to fasten your seat belt whenever you are seated, just in case the plan suddenly hits an air pocket.
To me, the current financial crisis is the turbulence in out investment horizon. Investors can expect the market to be volatile. The markets will eventually recover, but we just need to sit tight and ride out the market turbulence.
Finally, the place reaches your destination and you will be glad that the risks you have taken are over.
However, before landing, the crew will be busy checking landing procedures. This is akin to meeting your investment objectives.
The final phase of your investment horizon is extremely important. As you approach retirement, you should adjust your risk level and think about preserving your capital. Otherwise, you can have a hard landing like what many are experiencing today.
Once you step out of the airplane, you know that you have arrived safely.
Similarly, in investing, you will arrive at some point in the future and hopefully fulfill your financial objectives.
The entire process is the result of knowing your investment objectives, taking some risks and enjoying the fruits of your labour.
Friday, March 20, 2009
Motivation
I suddenly thought of a video to share with all of you. A video that has been around since 2005 but has never fail to inspire me. I am deeply motivated by this speech and it powers me through my lows.
So for all of you out there who may have felt the economy. This is for you...
So for all of you out there who may have felt the economy. This is for you...
Secrets of a Millionaire Mind
I have been busy with my business, my reading as well as my self development courses.
One of the books I've recently read : Secrets Of A Millionaire Mind
I personally think it's good book and very interesting to read.
This is T Harv Eker on the psychology of Millionaires.
If you're interested, you can go attend the Millionaire Mind Intensive at end of this year.
Drop me a note if you want tickets.
One of the books I've recently read : Secrets Of A Millionaire Mind
I personally think it's good book and very interesting to read.This is T Harv Eker on the psychology of Millionaires.
If you're interested, you can go attend the Millionaire Mind Intensive at end of this year.
Drop me a note if you want tickets.
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