Your Dedicated Online Wealth AdvisorPractical tips for managing your money, and making money online!

      Love and Protect Your Wealth 0

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Wealth Management, The Simple Rules

No, you do not need a doctorate in wealth management or financial planning to do well financially. Learning all the rules of game but not playing your cards right forfeits all you have.

We do have all the skills we need to play our cards right. And there’s alot to learn from your family and friends. From the people that I interact with, I’ve learnt that some behaviour, though sometimes repulsive can be put to good use when dealing with wealth.

Guard your wealth, the way your kid guards his toys (repulsive behaviour?)
Yes, they say sharing is kind, is what we should practise. I’d say it doesn’t apply to wealth. Well, unless you have too much of it, like Bill Gates, then yes, please share with the less fortunate. If you don’t even have enough for yourself, guard your wealth like how your kid guards his new robot. The bottom line is, have enough for yourself first, then decide on how much to share. Being overly generous makes you look like an idiot in wealth management and hurts your savings significantly over time. So, guard it till the day you have more than enough to share.

Love your wealth, the way you love your wife
Loving your wife means you try your best to keep her by your side (the same goes for your wealth?), by spending time on it, nurturing it day after day. Yes, you need to spend time on your wealth (otherwise, how do you manage it? Got it?) Spend some time, say every 2 weeks, to go through your financials. Always be up to date on your financial status.

Know how much you are earning, spending, including your savings, liabilities, loans etc… Keep a spreadsheet so you can plot a graph for it when you need it. Nonetheless, love your wealth and make sure nobody meddles with it, unless you say so.

      Loans - To Take or Forsake? 0

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Learn when to take up loans and when to forsake them.

Most of us are paying for some kind of loans. The fresh out of school kid is paying for his study loan, the guy next door is paying for his car loan and the married couple is paying for their housing loan. At some point of our life, we find that taking a loan is inevitable.

So, when do we take up one and when do we say no?

A good starting point would be to ask yourself what is the purpose of the loan. It could be for a new business you are thinking of starting, an MBA you would like to pursue, a car you are mad about, a house your kids would love or that Italian sofa your wife keeps yakking about.

For that new business
Make every effort to determine the profitability of your business (you need the profits to pay off your loan, right?). Talk to your lawyer if you are inexperienced in this. Business ventures should be made with care.

For that MBA
For the career minded, if you are thinking of taking a loan to further your studies (eg. MBA), do some planning. Determine what is the salary difference for those with an MBA and those without. You would need a pay raise to pay off that loan! Check with your employer whether they provide study loans (if they do, they usually have interest rates lower than the banks).

For that sleek convertible
For the car you are mad about, think twice I would say. If you are going to take a huge loan just to get that sleek convertible that your friends are going to wow about, forsake it. After a few months, your convertible would have lost its wow factor and you? You would be strapped with a loan that is going to take you years to repay. Not to mention the amount of money you would have saved for your retirement if you hadn’t taken up that loan.

For that house by the beach
For the house that your kids would love, talk to them. Tell them what they would have to forgo if they want that house. Be it toys, dresses or that latest mobile phone. Give them a week to think about it. Most kids would would go for the mobile phone.

For your wife
For your loving wife’s Italian sofa, offer her something else of equal value but not as useless as an overpriced piece of furniture? Say, get a comfortable normal priced sofa, but invest in a better bed (you spend more time on your bed than your sofa, right?). Still, you shouldn’t be taking loans for furniture. They would have worn out in 2 years but you would still be stuck with your loan. Discuss with your wife what you can afford and what you can’t.

The 3 Golden Rules

1. Before taking a loan, always determine the purpose of that loan. Getting a loan is the fastest way to get cash, but is it worth that long term commitment?

2. If you have taken the loan, repay it as soon as possible. Never take up a new loan to pay for a previous loan or your credit card debts. It adds on and on and doesn’t help the least bit. Seek financial advise if you are twirled in this vicious cycle.

3. Once you have repaid your loans, always think twice before taking up huge loans again.

Some loans are inevitable. Like the housing loan that we need so we can afford a shelter over our head. Take that loan but only for a decent house, not that house by the beach. You can have that when you have accumulated enough wealth to afford it.

      Living within your Means 0

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Adopt a lifestyle you can afford

The average amount that a person spends in a month is mostly based on his lifestyle and spending habits. A guy with a simple lifestyle (takes public transport to work, eats at fast food joints and only spends on what he needs) would most probably spend less than one who drives an BMW to work, eats at classy restaurants and lives an extravagant lifestyle.

So what kicks off an unaffordable lifestyle?

Little rewards, Big leakage
Many of us enjoy showering ourselves with “little” rewards, like taking a taxi when you think it’s late or there are too many people on the bus, or splurging on a sumptuous meal after working overtime for a week. We tell ourselves that we don’t do it often anyway, so it’s probably okay. But, silently, all these are creeping into our lifestyle and making it a habit. Soon, we find that we are spending much more than we should and we can hardly pinpoint the leakage of wealth!

Peer Pressure
Yes, your friends are doing really well, they are getting houses and cars and wearing diamonds that you need to pawn your underwear to afford. And no, you do not need to compare your financial status with your friends. If your friends can afford that extravagant lifestyle, so be it. You do not need to follow their footsteps or compete to see who has a bigger house, bigger car and bigger diamonds. These are not going to see you through your retirement. If your friends are spending so much on these, they most probably don’t have much left to save for their retirement? So, never be pressured by friends or salesmen to commit on items that are going to cost you dearly. Live within your means and have the last laugh when you retire at 40 and see them slog till 60 with that big house, rusty car and yellowish diamond!

So how do you live within your means?

First, jot down your gross salary (the amount you bring home each month). Then, list down your expenses below it. List them in detail, like house loan repayment - $500, groceries - $300, electricity bill - $200, not unknown lump sums under a miscellaneous category. If you are unsure where your money is draining to, it’s okay. Draw up a worksheet like those Excel spreadsheets, and fill in tomorrow’s date. For a month, diligently record down your expenses. Yes, every SINGLE day. This is the only way to spot your wealth leakage.

After a month, tally your income and expenses. If you are spending more than 80% of your paycheck, you are definitely spending too much! You should save at least 30% of your income as a guideline. From your expenses worksheet, spot your wealth leakages and eradicate them. They are most probably luxurious items or multiple “little” rewards. Don’t fool yourself by consoling yourself that it’s just this month that you overspent - because it’s your wife’s birthday and you had to get that diamond ring for her, or oh, you had to buy that plasma TV that you’ve been eyeing for so long and it’s on sale. Well, next month it would be your grandma’s birthday and the following would be your wedding anniversary. What next?

Every little pleasure you indulge in and every impulsive costly purchase builds up on your expenditure and kills your budget. Always pay yourself (that 30% you need to save) first, then allocate your remaining budget and live within it!

The 3 Golden Rules
1. Know how much you earn and how much you can afford to spend each month. If you can’t even work this out, how ould you know you overspent? And on what?

2. Do not get influenced into getting big ticket items. If the salesman tells you the item is only on sale today, that you’ll miss the offer tomorrow and you have to make a decision immediately, say NO. If you can’t make up your mind at any oint of time, always say NO.

3. Pay yourself (for savings) first, then allocate the remaining amount for expenses. Balance your lifestyle and live strictly within that budget.

Otherwise, you’ll never have the last laugh. Most probably you’ll be the last to laugh.

      Credit Cards: Sign or Sigh? 0

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How do you manage your growing stack of credit cards?

A number of us own a credit card or two, while many of us own one from each major bank. Each card provides a different set of benefits, we say. Do we really need that many cards?

What makes you and I go through all the hassle of credit card application for so many cards? The convenience of having the extra cash when you need it? The little gifts you get to exchange for with the points you clocked with your purchases? The pack of discounts that accompanies each card? Or the display of social status when you flash a Platinum card?

Whichever your reason for having those plastic cards in your wallet, if they are causing you financial problems, it is time to face reality and bid (some of) your plastic foes farewell.

The Power of Convenience
For the masses who keep credit cards for convenience sake, you are playing with fire. Convenience means you conveniently sign away your savings and conveniently purchase big ticket items that you do not need. Yes, it is very convenient to have a credit card, especially when you are overseas and have run out of cash. But doing that makes you feel wealthier than you really are, and gives you a false sense of financial security. It’s easy to plant your signature above the dotted lines, but paying for that signature is far from easy.

Points for Gifts
Credit card companies do have a way to make us sign, sign and sign. They bribe us with point incentives for making hefty purchases so we don’t feel too guilty about it. But think about it, how many of us actually managed to exchange the points for something decent after a year of card flashing spree? We have so many cards that the points are spread so thin, they either expire after some time (since it’s too little to exchange for anything from the catalogue), or you reluctantly use up all your points to exchange for some dining vouchers that you might not use or eventually forget. If you managed to exchange for some decent products, you are probably spending too much?

Seductive Discounts
Since points can only be materialised into products (regardless of quality) after purchases, credit companies came up with discounts that you get to enjoy while using the card - 10% off your dining bill, 5% off your petrol, 1% rebate and the list goes on. Personally, I do find discounts more attractive than point incentives, especially if the restaurants that I frequent are in the list. I’m sold. But many times, we find that we tend to visit more of these restaurants every month now that wow, we have a discount card! And we end up spending more than we should!

Platinum Status
So, does flashing a platinum card make you look more prosperous or poor? Yes, it would have shown that you are earning a significant sum to be able to own that card. And yes, well, you are also telling the world that you now need more credit from the banks. Credit cards are literally instantly approved loans from the bank, yet you are feeling proud of yourself for having borrowed a greater amount than your companion. An irony?

Unlock the Secret
Then, are we supposed to cut up all our credit cards and fall back to cold hard cash? The answer is a simple No. Though misuse of credit cards may land you in financial troubles or even bankruptcy, they do come with benefits too. For example, you could actually save a few dollars with the discount schemes provided or pay for your meals when you are cash strapped in a foreign land. The secret is for you to amplify the advantages of the card and mute the disadvantages.

So how do you do that?

The 3 Golden Rules
1. Never swipe out of convenience. Always ask yourself if you really need the item. Or are you simply buying on impulse? Personally, I wouldn’t buy the item on my first visit, especially big ticket items. I would wait for a week or so and see if I still want that item. Most of the time, I simply forgot about it or simply too lazy to travel back to that same shop to make the purchase. It works for me all the time. Try it out.

2. Make full use of the discounts, but never buy something just because you have a discount. Only use the discount when you need to buy something, not the other way round.

3. Try to keep to one or two credit cards at most. It is simpler to track your spending, plus you consolidate all your points into just two cards (so you get to exchange for that decent looking vacuum cleaner) and you would not forget to pay your credit card bills and end up with hefty fines and interests.

Credit cards are only plastic cards with a magnetic strip at the back. They do not have the power to drive you to debts. You are the one who approved of all your debts by frivolously leaving your signature on clusters of paper. Think about your financial status before you sign anything from now on!

When your next credit card bill arrives, make sure it doesn’t make you sigh.. If it does, make sure you are heaving a sigh of relief, not remorse.

      Accumulating Wealth 0

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For your family, your retirement, your dream house, whatever.

Most of us hope to earn more so we can provide more and provide better for our family and kids. Some of us hope to save more from our monthly paycheck. A number of us hope that one day we can afford that dream house. Yet, only a few of us actually bothered to go the extra mile to realise these hopes and dreams.

Money do not grow on trees. We all know that, yet somehow, we are always sitting there waiting for something to happen, for a windfall to come. We silently wish that the lottery ticket tucked in our wallet will help realise our dreams. It never does, yet we never fail to try again. Why bet your future and your dreams on luck? Didn’t schools always teach that your future is in your own hands? From now on, you are going to determine your own future and you will work hard for it. Crush that lottery ticket! Accumulate wealth, don’t waste it on lottery tickets.

So, how do we accumulate wealth?

First, work out your monthly expenses. Cut the unnecessary expenditures like fine dining, holidays, car accessories… You know what I mean. If you can’t find anything that you can cut down on, then, your only option is to increase your income.

Increase your income
Start by writing down the skills you possess, like playing the piano (or any other instruments), singing, painting, writing, driving, repairing computers, cooking and so on. Then, determine which of it you excel in and can earn you some extra cash. For instance, you could provide the kids in your neighbourhood with piano lessons for some cash in return, or bake some cookies and cakes and talk to the local bakery if they could sell them for you (they get a cut, you get some too). The extra cash would do just fine for you.

If you wish to earn some cash while staying indoors, be tech savvy. There are lots of avenues for you to make some earnings online. There are simple ones like filling up survey forms where you get paid for each survey completed, and writing articles for websites where they provide you with a topic and you start writing. You get about 5 bucks for each article that is approved.

Other complex ones include setting up an e-commerce site where you can market your merchandise. If you do not have any, you can always market somebody else’s products (eg. Amazon, Barnes and Nobles etc) and earn some commission from it. Or auction away the items that have been stored away in your attic for far too long. If they are in your attic, you probably don’t use them anyway. Why not get some cash back? Sort out the items that you think you can sell off. Post them on the online auction sites (eg. Yahoo! Auctions) and start accumulating cash.

Nobody said accumulating wealth was an easy job. You need to constantly look for new ways to generate wealth. So, if you are still keen on accumulating wealth for your family and kids, for your retirement or for your dream house, start working on it!