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.

      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.

      Investment: To Jump or Dump? 0

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“Planes are safer on the ground but they are meant to fly” by Anonymous

With some spare cash in the bank, most of us would contemplate on whether to put it in fixed deposits and earn a meagre 3% interest or to put it to greater use by investing it (but undertake a higher risk). After asking around, you find people investing in all kinds of commodities, from gold to bonds to properties.

So, what do you jump into and what do you dump?

Assuming you have limited resources (I mean cash here, and I suppose everyone has a limit), you would need to decide on what reaps the most profit, as in return on investment.

Before jumping into investments, determine how much risk you are able to undertake. Will losing half of what you invested threaten your retirement plans? Will losing 5% of your investment drive you nuts? In investments, risk and returns are almost always inversely related. Therefore, it is important that you find a balance between the two.

How fast and how much your money grows in a specified period of time depends on WHERE you place your cash. Well, you could place it under your pillow and earn zero interest with no/low risk (well, hopefully your house doesn’t get burnt down). Or you could place them in a savings account and earn 0.25% interest with low risk (hopefully the bank doesn’t go bankrupt). Or you could place them in fixed deposits and earn a relatively higher interest rate of 3% with low risk (hopefully you wouldn’t need to take out the money before the term ends and forfeit all your interest). Or you could invest them in less volatile bonds and funds and earn a non-guranteed 6% profit at low/medium risk. Or you could invest them in volatile stocks and earn a non-guranteed 20% profit at high risk.

Whichever option you decide on is mainly based on your financial goal and risk tolerance level. Placing your money in a savings account may be one of the safest places but it reduces the potential rewards that it could have generated if it had been invested appropriately.

Is this the right investment?
If you are staying up late all night watching over your investments or calling your fund manager every five minutes to check on the status (even in the middle of night), dump the investment and look for something within your comfort zone. You should be comfortable with the amount of risk involved and the returns accompanying it when dealing with investments.

The 3 Golden Rules
1. Remember that risk and returns are almost always inversely related. Look for the balance point.
2. Doing nothing about your wealth most probably means your wealth will end up with nothing more.
3. Find a comfort zone for your investments. Risking your health over financial gains is one risk you should never undertake.

      Cents and Sensibility 0

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Be sensible when dealing with coins

When I was younger, I used to think that coins are worthless, that I wouldn’t be able to buy anything with those few cents. Most of the time, I would waste them on little items like candies or snacks. It never occurred to me that if I had lots of coins, it could be a significant sum too.

The pure existence of the “piggy bank” (those coin boxes that looks like pig) suggests that someone intended for us to save the coins as well? “Piggy banks” have its roots tied to kids saving up their coins for rainy day. So why can’t an adult do the same? Not literally using a “piggy bank” maybe, but its the same idea I guess.

There’s a computer fraud called the salami method where a person (usually a computer programmer in a bank) rounds off a fraction of the cents to his own account. You wouldn’t notice the difference of $128.43 and $128.41, would you? Yes, 2 cents isn’t much, you can’t even get a sweet nowadays. But, what if he was siphoning from hundreds of thousands of accounts? Let’s do some mathemathics. Say he siphons from 500,000 accounts, 2 cents a month. Well, he would be getting $10,000 a month! This shows the importance of cents!

Start Saving your coins
I keep an empty can (Yah, those Campbell soup cans will do) for my coins. I have a coin pouch that I use when I’m out, to keep the coins I get during the day. After each day, I come back and empty the coins into my can. You will be amazed how fast the can fills up!

What next?
Once the can reaches the brim, pour them all out and start counting them! See how much you have saved! Bank in the coins along with your monthly savings. Do not splurge them on unnecessary items thinking those are extra cash. Keep them for your savings!

The 3 Golden Rules

1. Don’t waste your coins on small unnecessary items.

2. Get an empty can/coin box. Save your coins in it. Do not empty it until it’s full!

3. Once full, bank them into your savings account. Do not splurge them on anything!

I wouldn’t encourage you to keep several cans of coins just because you are too busy (or lazy) to bank them into your account. Keeping that extra cash in a can/coin box instead of your bank account means you are forgoing the interest that it would have generated (no matter how little it may be).

      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!