How important financial planning is to you?

Financial education is vital to everyone who has an income. I’ve met people who earn more than $25,000 a month and not all them is financially ‘stable’. Naturally if you earn more money, your expenses will also increase. However, if you have a proper financial planning, you can achieve your financial goals in time to come.

Just recently, I met with an ambitious 20 year old guy who earns $2,000 a month and dream of driving a BMW. When I asked him how he plans to buy the car, he told me that he will work very hard and save more money every month. However, when I asked him when he want to buy his first house and how he wants to retire, he told me that he has not thought about it yet and he is only concern about getting his car and lots of money.

The problem with him and many other people out there is that they do not have proper financial planning. It is proven that people who have proper financial planning will enjoy life in the future. whatever that they desire to buy, the lifestyle that they want, the education that their children will have and holidays that they want will be possible.

Can we be blamed for such bad financial planning?

Well, if you think about it properly, it is our teachers in school that we have to blame. When I was in school, all that my teachers told me is that I have to study extremely hard to get a good and high paying job. Did any of our teachers ever tell us that financial planning is very important? Did they ever tell you that even if you earn $25,000 a month, your financial freedom is guaranteed?

Your journey to riches starts here.

Saving money can be the most difficult task a person can do. I have seen people in their 40’s that do not have savings at all. When I asked them how come they do not have any savings, their reason is that they find that their income is not enough to set aside for any savings.

The art of saving money is actually very easy. It is very important to know how much to save every month and how much savings one must have. Once you have the adequate savings in your bank, you can then accumulate wealth. Why the rich accumulate wealth so quickly is because they invest their money after they have saved enough money in their bank. Most of the times, the rich have their own personal financial planner to track their finances and advice them.

Nevertheless, you do not need a financial planner to tell you save money. If you are clueless on how much to save each month, let show you step by step with the example below.

EG 1

Norman is earning $4,500 and his wife is earning $4,000. On average, the couple would spend $7,000 a month on expenditures which includes their insurance and household expenditures. Norman and his wife are looking into accumulating their wealth and are very interested in investing their money in stocks and shares. The couple also wants to diversify their portfolio and are looking into unit trust and bond funds. Currently, they have $49,000 in their savings account and wants to find out how much is the best amount to come out for their investment.

From the above example, Norman has a savings ration of 7. (Savings divide by monthly expenditure). Savings ratio is a ratio that will tell you how many months can you depend on your savings if you get retrenched or out of job. In this case, Norman has 7 months to find a new job before he drained up his savings. From a professional point of view, Norman should invest $28,000 of his savings and maintain a savings ratio of 3.

EG 2

Kelvin is a fresh graduate who is clueless on how much he should save for any emergency uses. He has been working for 6 months and currently earns $1,600 a month. Even though he has been working for 6 months, he has not been able to save any money because he tends to spend all of them by month end. He usually keeps aside $100 but end up using that money usually at month end.

In this case, it is clear that Kelvin do not have any money management skills. As a guideline, one must save 20% of their income. Saving of money is done on the very day that you receive your pay. Therefore, Kelvin must save $320 a month and live with the rest of his pay. He has to have a budgeting system on his expenditures and be very disciplined.


To sum up, in order for you to be financially stable and accumulate wealth, you need to have good money management skills, excellent saving habits and be extremely discipline. You need to save 20% of your income every month and maintain a savings ratio of 3 to 6. I am very sure that you can achieve your financial goals if you are able to take control of your own finances. It is time for a change.

Do you want to have a debt- free life?

Cost of living now is increasing rapidly forcing people to work harder than ever. It is now common that people are taking up part time jobs to supplement their income. On average, almost half of an individual pay is used to pay liabilities. Banks are coming up with more and more credit products to attract more people to take up bank loans.
Credit companies are also making a lot of money collecting interest payment from their customers.

Financial problems seem to be a part of a person life now. Having debts is life. I reckon anyone who does not want their life to be debt- free and financially stable. More and more people are talking about financial freedom and dream of having a good life. However, people are earning more not to accumulate wealth but to pay debts. The golden rule for financial freedom is; you need to have money to make money.

There are many financial products that are designed for people to accumulate wealth but people are not making use of these products. People are better versed on which bank approves loans without much hassle and which department store offer instalment programs.

Do you want your life to full of debt until you grow old? Do you want to take a big loan even on your child’s education? Do you want to pay for your new car cash? Do you want to buy your first big house cash?

All this are possible with the help of financial advisor or financial planner. A financial planner knows all financial products to suit your needs at the back of their head. They are trained in financial services industry and I am very certain that they will tailor your to your financial needs.

As a financial planner myself, I am proud to say that I have helped my family members to realise their financial dreams. Everyone in my family is well aware of their financial situation and is very clear on their financial goals. My goal for my family is for them to achieve their dreams fast.

Drop me an email if you want your dream to come true!

Financial freedom to those who are not lazy!

I always tell my clients that they need to have strict money management tools to help them monitor their budget, expenditure details and daily expenditure. As we know, human beings are very lazy and they only settle for things that are easy. Managing money is not as simple as you think. It is a tedious process but it is worth the pain.

I have been tracking my daily expenditure and monthly budgeting over the past few months and I managed to save more money than I ever can imagine. Managing money is a habit that you must inculcate. If you think that you are too lazy to track your expenditure, I am sorry to say that you will be wasting a lot of opportunities.

Recently, I put myself to a test. I wanted to know how it feels like if I ever get lazy on my money management routines. I thought that I could still manage my money without having to record all my expenditures. Unfortunately, I literally overspend my budget and could not even save any money. In fact, I almost exhaust my savings accounts.

I am sure that you want some financial securities in you life. I am also very sure that everyone in the world would want to have financial freedom. All this dreams of becoming a millionaire, financial freedom day and financial abundance can be made possible if you know how to manage your money.

Money management problem is a problem that is faced by everyone in the world. However, some managed to tackle the problem resulting them to have extra money to spend on investment and accumulate more wealth.

Wealth can only be made if you have money. There is no get rich fast scheme in the world available for you. You need patience, discipline and endurance if you want to achieve your financial goals.

What are you waiting for?

Insurance planning is vital for financial security.

The concept of insurance or wealth protection is often neglected. People are so interested on making money but often neglect the other side of the coin. However, I do not blame people who think that they do not need insurance because the industry itself does not have a very good image.

Some insurance agents can be very unreasonable and make consumers buy insurance policies that are beyond their financial capabilities. With that, people often complain that they are paying too much insurance premiums.

As a financial planner myself, I like to meet up with people and ask them about their financial situation. I often engage in conversations with strangers. One day, I took a cab with my family and I started a conversation with the taxi driver. I asked him whether he is a part- time taxi driver or he has a day job.

He told me that he has a day job at a bank as a clerk and he has to work part- time because he has to pay for his late wife medical bills. I was shocked when I heard his story and asked him more about what had happened.

He went on and told me that his wife was contracted with breast cancer and he had to pay for his wife medical bills, on top of that, he has 2 daughters who were young and still schooling. When I asked him how come he did not have any insurance coverage for his wife, he told me softly that he had overlooked on that matter.

Even after his wife’s departure, he has to have two jobs because he has to pay for his late wife’s medical bills. He advised me to get some insurance coverage and told me that a misfortune can change a man’s life.

I am sure that everyone needs some kind of insurance in their life. I am also sure that you do not want to take another job to pay off your liabilities. The only thing is to get a financial planner or an insurance agent who is reliable and responsible. Wealth accumulation is as important as wealth protection. We do not know what lies in front of us; however, we must also be responsible and anticipate what may come in the future.

Achieve your financial freedom with a customized financial planning.

Financial freedom is something that a lot of people want to achieve in their lifetime. Having to pay all debts and liabilities, enjoying all luxuries in life and enjoy life without to worry about any financial problems. More and more people are very interested in making their financial dreams come true. There are also motivation classes which main aim is not to discourage people from thinking that getting their first million dollar is possible.

As a financial planner, I am also aware that people usually do not quantify their goals. Having a goal of becoming a millionaire is something that is achievable and not impossible. I do have clients who want me to plan their millionaire journey. Having said that, a million dollar road map is easy to develop but very difficult to follow.

Before you can be a millionaire, you need to have a very good financial planning. You need to hire a financial planner to assist you as financial planners went through series of examinations and training perfecting their financial planning skills. It is impossible to be a millionaire if you do not have a financial plan.

Seminars on how to become a millionaire do not give you customized financial plan. You can be earning $ 200,000 per annum but if there is no financial planning, you will be asset rich and liquid poor. Managing your cash flow is the most basic element in financial planning.

One of my client, Mr Doctor (names are kept confidential), a doctor who has his own practice and earns $180,000 to $250,000 a year initially do not have any financial planning. He does have insurance policies and that was all. I had a hard time convincing him to meet me. He was very reluctant and told me that he already have a financial planner.

After much persuasion, I managed to meet him and assist him in his financial planning. I did a financial analysis on him and explained to him that financial planning is not just about insurance planning, financial planning also stresses on cash flow management, investment planning, child education planning, tax planning, estate planning and most importantly retirement planning.

After a year we had that meeting, he came back to me and told me that he now understand how important a financial plan is. He told me that he now can quantify his financial goals and he also told me confidently that he will be a millionaire in 5 years time.

I knew that after my appointment with him, he will identify his strength and weaknesses financially and able to quantify his goals. With my customized financial planning and financial planning tools, I am sure everyone will achieve their financial dreams.

Do you have any investment?

We always hear that it is best if we let our money work for us. The first thing that comes to our mind is investment. People are talking about investment more often now compared to 10 years ago. People are also losing more money in their investments since there are more investors as compared to 10 years ago.

So, what went wrong?

The only reason people are losing more money than what they ‘supposed’ to lose is because of lack of knowledge. I have seen people who invest thousands of dollars and do not know much about the investment. They do not know what kind of risk they are exposed to.

I have a friend who invest in anything that he thinks can give high returns. When I asked him whether he is a risk taker, he told me confidently that he is a risk taker. However, when I asked him whether he is a loss taker, he told me that no one likes to loss. In short, he is a risk taker but not a loss taker.

In reality, a person who is a risk taker must be prepared to lose money in any investment that he made. On top of that, one must be well aware of the risks that are exposed in their investment.

I would suggest that you only invest when you really know what the risks behind the particular investment are. You need to spend some time evaluating the investment that is presented to you. If you do not have the knowledge competency in the investment, I would suggest you to seek for professional help. It does not hurt to spend a bit of money in hiring a professional to assist you in your investment. At the end of the day, it is your hard earned money.

Although the mindset of the people now is better, some things just do not change. There are more and more people who have millionaire mindset but do not have a millionaire attitude. To be a millionaire, you not only have to have a millionaire mindset, you also need to adopt their attitude. One attitude of a millionaire is due diligence.

Enjoy big returns when you invest your money.

We are in the age where there are many kinds of investment instruments that we can invest. Investment is so common that almost everyone has some kind investment in their life. Investment however is also confused with trading. Some people think that they can lose their initial capital and lose all their money in investments.

This is not true because investment generally have a long time horizon. With longer time horizon, more money can be earned from compound interest. Unlike investing in real estate, investing in any financial institutions gives you compounded interest. The rich do not get richer by investing; they get richer because they invest in a very long time horizon.

When you decide to invest your money, you must be aware that you need to commit to your investment in a long term basis. There are no short term gains in unless if you are trading.

I have a personal friend, Joseph, 38 years of age, who invested his money 8 years ago. He invested in a unit trust that gives a potential return of 5% to 20%. His initial aim was to save his money in an account that can give him more interest than what the bank is offering in a fixed deposit scheme. Just recently he drew an amount totalling up to $160,000 and used the money for his home renovation and bought a holiday for his package for him and his family to Europe. He told me he only saved $800 a month and deposited the money into the unit trust.

I am sure that you will also want that kind of money in the future. Let it be for your child’s education, a dream renovation, your dream vacation, your dream car; it all possible to achieve if you start today.

Protect your wealth!

People are now more aware of how to make more money. They know that they will have to invest their money if they want to have more money. However, the what kind of investment instruments one must invest is still one of the more confusing things.

Some people will have a good experience investing their money but some will have very bad experience. Some can earn double of their initial capital while some lose all their money in their investment.

While many love to invest their money, not many want to protect their current income. Protecting wealth is as important as wealth accumulation. You can be earning $100,000 per annum but one accident can change everything that you earn. Wealth protection is all about risk management and insurance planning.

If you already have an insurance policy, it does not mean that you do not need any more coverage. Insurance planning is very much related to an individual life stage. For young adults who just started working, the main protection need is their income. For a young couple who have a newborn baby, their protection need is their income their baby’s protection, and their mortgages if they have any.

Wealth protection must be taken seriously and it is not something that you can skip. Insurance premiums need not be expensive if you know how to plan. The planning process can be very tedious but it is all worth it. The last thing you want is having an insurance policy that is very expensive and do not meet you needs.

How you can create wealth.

Everything seems to be cheap nowadays. Thanks to the wide variety of credit options, people can buy anything they like even though the item is very expensive. Most people are spending almost half of their income to pay their debts. Even if the pay gets an increment, the liabilities also get an ‘increment’.

In Singapore, you can buy a first hand car with just a dollar down payment. With this kind of offer, people are more tempted to buy a car even if the loan amount increases to almost half. In this country, you can even buy a hand phone on instalment basis. Practically, you can own anything that you see and like.

With liabilities almost half of an individual income, there are bound to problems. The concept of taking a debt is widely mistaken. Debts are actually taken only if one can service their loan. With this statement, of course you can expect a lot of people taking on debts because they know that they can pay. However, they will have troubles servicing their loan as time goes by.

Why?

The answer is very simple; people do not have cash flow management. If only we are taught on how to manage our cash flow in school, I am very sure that we will not have any problem handling our money.

There is no single subject in school that teaches us on wealth creation. What our teachers tell us is that we have to study very hard so that we will have a good future. Our teachers explained to us the consequences of not studying hard enough but never tell exactly how we can create wealth when we study hard.

Wealth creation is something that very complex. There are many factors contributing to an individual’s net worth. One of the golden rules is not to have a debt service ratio that is more than 45%. Personally, I would recommend one to minimise to as low as 20%. No matter how much your income can be, if your debt service ratio is high, you cannot create wealth because you will be spending too much money servicing your debts.

Now, you can also be a millionaire.

Setting a goal that is quantified is very important if you want to be become a millionaire. Most of the time, people cannot become millionaire because they do not plan their goals. Your millionaire planning must be quantified so that you will not be swayed away when you have more money.

I have seen many businessmen who earn $40,000 a month and always dream that they will be a millionaire. However, these people find it hard to achieve their goal not because they do not invest their money or whatsoever, they just fail to plan. Example of plan is as follows;

Miss Frugal wants to be a millionaire. She has an income of $480,000 per annum. Despite being well to do, she managed to save $180,000 per annum because she is frugal and is a single woman.

Inflow: $40,000
Outflow: $25,000
Savings: $15,000

Time to take to be a millionaire;

ROI Amount Years

8% $180k pa 4.78
12% $180k pa 4.51
15% $180k pa 4.33
20% $180k pa 4.09

With this plan, she can roughly invest her money that will give a yield of 8%- 20% and she will be a millionaire in less than 5 years time. If she does not have her millionaire plan, she will have problem guessing when she will be a millionaire. She will also religiously save $180,000 yearly as she will be motivated.

Many people fail to be a millionaire despite having a lot of money is because they do not have a plan that they can follow. They usually plan their make their first million by thinking of how to multiply their income streams and working extremely hard. Everyone can be a millionaire. This may sound stupid but everyone can indeed be a millionaire.

Here is how;

ROI Amount Years

8% $500 a month 34.6
8% $1,000 a month 26.5
8% $1,200 a month 24.4
8% $1,500 a month 22.0

Now, ask this question to yourself, is it impossible to be a millionaire. Well, no!

Financial planning

I had 2 very interesting people that I met today and discussed with them about financial planning. The term financial planning itself is often misunderstood and people usually think that financial planning is a simple task and everyone can plan their own finances. Financial planning is the process of meeting your life goals through proper management of your finances. It is not an easy plan to develop if you do not have the competency and skills.

Back to the conversations that I had earlier, one of them told me that he already had his finances planned and he was very confident that he does not need my help. I knew in that instance that this guy will not know anything about his retirement planning and I asked him how much will he require if he were to retire when he reach 65 years of age.

He laughed loudly as if I was joking and told me that calculating his retirement fund is an impossible task and his plan of retirement is to acquire as much money as possible. He was not sure how much money he will require but he was certain that he was on track. He assured me that I need not worry about his retirement planning.

I admit I was a bit agitated but I told him that I can calculate his retirement fund needed. As I was explaining to him and given him the numbers, he looked flabbergasted and asked me to plan him his retirement planning immediately. I was so happy that he was willing to listen and take actions.

The other conversation that I had was with a 40 year old man. He has 3 children that he has to support and has high hopes on them. When I asked him does he have enough money to pay for his children’s higher education, his face went blank. He then told me that he should have enough and with all the study loans that are available, he has nothing to worry. This time round, my face went blank.

I asked him whether he is ready to pay his child’s educations loans for the rest of his life and his answer was very brief and simple. All he said to me was, he has no choice and if he has to work hard to pay for his children’s education, he will do it even if it means that he has to work even during his retirement years. I was moved by his paternal love and told him that he does have alternatives.

As you can see, financial planning is very important and having a good financial plan will add leverage to your life. Leverages that can even lead you to your financial freedom.

Ignorance and lack of investment knowledge will drain your pocket.

Investors nowadays are exposed to all kinds of investments. Some offer returns that are extremely lucrative, while others offer little or no returns. However, there are no particular kinds of investment that will give you the best returns. You may have heard from other people that are some investment that you must avoid because of the risk involve and some investment that you must invest your money on because of the returns.

Ultimately, these tips that you get or market insights that you get are just some preferences. Believe or not, all kind of investments can give you lucrative returns if you know exactly what you are investing on. You definitely know world renowned investor guru, Mr Warren Buffet, also the 2nd richest man in the world, gets his fortune from investing and trading his money in stocks and shares but this fact also do not say that you too can rich if you invest and trade your money in stocks and shares.

If you have the skills and in depth knowledge like Mr Warren Buffet, you can get ready to mark you name in one of the richest people in the world. To really make money in the stocks and shares, you need to have a due diligence. You can forget about making tons of money if you do not know anything. I suggest that you continue living your normal life because you will not lose as much money if you invest your money.

I am not discouraging you from building your fortune; I am challenging you to put in effort studying the science of investing. I have seen countless investors that do not know what they are investing on and talks as if they are really maximizing their returns. However, I could not be bothered about correcting them because they are just too ignorant. They would rather believe their broker’s tips than doing their own research and study even deeper into the finance industry. And every time they engage their broker’s service, they are paying quite a lot of money on them.

I really hope that you will not be ignorant and think that you know a lot of investment or trading because the fact is this, people take degrees to do this sort of things.

Thought of the day!

I have never come across any textbook on wealth creation, money management and wealth management. Have you ever asked yourself why your teachers in school did not teach you on how to make more money?

Instead, they tell you to study hard for the exams, go to a good university and find a job. When they say job, what they really meant was jobs like lawyers, doctors, scientist, teachers and engineers. As soon as we go to school, we are basically ’programmed’ to study hard and get a good job. We already have a typical average Joe or Jane’s mindset and not a millionaire’s mindset.

1.)Go to school

2)Study hard

3)Get a diploma or degree

4)Get a ‘good’ job

Now, let’s imagine what will happen if we are taught on how to create wealth, generate more income and multiply our income streams. I’m am very sure that we will be happier now and not complaining about not making money. Now, my question to you is, can we blame our education system? Hmmm…that’s a tough one.

Give it a thought.

Achieving your financial freedom day is not easy but attainable.

If getting rich is easy, I think there will not be any financial problems in the world. The real fact is, to be rich; you must put in more than 100% of your effort. There is nothing in this world that is easy. To achieve is your financial freedom day is not easy but is attainable.

The same goes to students who are pursuing their education, they will need to study extremely hard to excel in their studies. The long study hours and sleepless nights mugging for their exams is the activities or input for them to excel in their exams. To be a millionaire or achieving your financial freedom day, you must put in inputs.

For a student to effectively put in their inputs, they must pay attention to their lectures, complete their tutorials and communicate with their lecturers and friends. Studying extremely hard itself is not enough. In contrast to be a millionaire, your – inputs do not mean that you have to work extra hours, get a part-time job and try to increase your streams of income.

To be a millionaire, you have to start investing your money. Make your money work even harder than you. You need to maximise your income exponentially in order for you to shortcut your millionaire dream. Invest! Invest! Invest!

The above paragraph is so common in any wealth accumulation book that when anyone read this kind of book, they will be motivated and start investing. For an individual who have finance background, they will know what kind of asset to invest, what portfolio to adopt, what are the returns and risk involve, how to invest their money effectively and minimise losses. But what happen to an individual who knows nothing about investment?

Actually, what this books fail to tell you is that you have to learn how the fundamentals of investment. I also know that there are books and guides on how to invest money but these kinds of books will never tell you specifically what kind of asset class to invest.

In order to make your first million effectively, you will need to acquire some financial knowledge. Without due diligence, you can never invest your money effectively and reap big returns.

Your million dollar road map!

In the pursuit of achieving your financial dreams, there are some changes that you will have to adapt. These changes are actually yor road map to your first million dollar. Firstly, your will power must be extremely strong. Millionaires have will power that is so strong that they can adapt to any unanticipated changes. This is true when one’s business is making a loss, having a weak will power will only make one to give up their dreams.

Becoming a millionaire is not an overnight process. It takes years of perseverance and endurance. It is not impossible to be a millionaire these days because there are so many sources or streams of income that one can have. However, this does not mean that if you have multiple streams of income, you can be a millionaire.

While everybody is concern about making money and expanding their businesses, they often forget the single most important change that they will have to adapt to be a millionaire; effective cash flow management. Having an effective cash flow management can double up your dream to be a millionaire.

Of course there are many out there that are selling cash flow management products that can help you but all these products are useless if you do not follow them. The problem with having an effective cash flow management is that it is too time consuming and tedious.

When you know how to handle your cash flow, naturally you will want to increase your knowledge on finance. You will learn more in depth about investing your money and how to protect your money. Risk management and investment planning will be your concern now as your goal is to grow your money through the most effective investment vehicle and how to protect your income if anything happen to you.

As you can see, just dreaming to be a millionaire is not enough. There are many other factors contributing to your success. If you do not have the desire to learn, you may as well forget your dream to be a millionaire and continue living your normal live just like the many other average Joes and Janes everywhere in the world.

Rising standard of living and you.

Our standard of living has gone up so high that life has been very competitive. More and more people are talking about high paying jobs, bigger cars, long vacations, 5- star hotels, diamond rings, exquisite dining and many other luxuries. However, what people had failed to talk is how much their income has rose. Does it tally with the high inflation rate and high standard of living? Are they having too many debts?

With debt easily bought by people, there are bound to be many problems. People will start paying debt and not saving money. I have seen people whose debts are more than 50% of their income. . I also met people that do not have savings and have two kids that are growing. Still, they still want buy more debts. In Singapore, one of the many reasons why people cannot get rich is because most people are stuck with debts that are more than 50% of their income. . All this financial problems are very common, and these are the setbacks that you have that will hinder you from achieving your financial goals

The common luxury that many people in Singapore buy is car loans. Almost all Singaporean wants to own a car. Well, the car dealers are not helping either; they come up with attractive ways for consumer to buy debts. With as low as $1, you can drive a car home in Singapore.

I am not saying that you cannot buy a car, dream of luxuries and increase your asset. What I want to tell you is that you must not forget the reason why you are working and why must you avoid having too much debts

Personally, I save 40% of my income without fail. It is not an easy task but I just have to do it. What I did was that I have a budgeting plan that is realistic and I track whatever that I buy. It took my 8 months to perfect my budgeting skills and spending pattern but it was all worth it.

I am not suggesting that you must have the same saving habits as mine. However, financial experts suggest that 10% of your income should be saved. Anything less than that, you are gone. It is better to start small than just planning for the day that you will start saving. If you have dreams of having your financial freedom day, you must start with saving your money. Saving money is your key to your financial freedom.

Quantifying your retirement goals.

If you are not working to be a millionaire, you should at least work to have a comfortable retirement years. With the advancement of medical technologies, human beings are expected to live longer. When you live longer, it also means that you will need more money for your retirement.

Retirement funding is a no joke process. One must quantify their retirement goals and must be aware of their retirement fund. It is too late to plan for your retirement if you have reached 50 and above. Hence, retirement planning should start as soon as one starts too have an income.

As a financial planner, I met with a lot of people that do not think that retirement is important. Most of them think that they should settle their current financial problem first, and then they will look at their retirement needs. The more you procrastinate on your retirement goals, the more difficult for you to reach your retirement goals.

Let me give an example:

Eugene is 42 years old who earns $40,000 annually. His current investments are worth $50,000. He plans to retire in 20 years time and expected to live until the age of 85. He also indicated that he will need 60% of his last drawn income for retirement.

Assumptions:

• Investment rate of return before retirement: 8% pa
• Investment rate of return after retirement : 5% pa
• Inflation rate : 2%
• Wage growth rate: 3%

Therefore;
• First year retirement income : $43, 346
• Resources needed to fund retirement income : $738, 318
• Projected value of current resources at retirement : $238,048
• Retirement fund shortfall : $505,207
• Annual funding required at the end of each year: $11,041

As you can see, Eugene needs additional $505,207 for his retirement and he is required to have $11, 041 yearly to accommodate his retirement shortfall. This yearly funding cannot be achieved just by savings alone, it also needs some investments.

If you plan later, your yearly funding will get more and sometimes, it will be impossible to get that amount. When you cannot meet your yearly retirement funding, your retirement years will not be an enjoyable one and it will be too late for you to regret. I am sure that you do not want to work all your life.


Note: Calculations were made on a financial calculator.

Cash flow problems?

Have you heard of this phrase, ‘Good things will come only to those who wait’? In your journey to become a millionaire, you have to delay your gratification. You have to live by your needs and delay almost all your wants. We all know we must let our money work for us. The more money we have, the better.

Being frugal is not an easy task. In fact, it can affect your lifestyle. Nevertheless, being frugal gives you big rewards in the future. One of the first steps to be a millionaire is to be frugal. If you cannot live like that, your journey to be a millionaire can take much longer.

The idea of being frugal is simply how you manage your cash flow. Managing cash flow is one of the most difficult and tedious tasks to do. It requires you to be discipline, honest and patient. You have to monitor your balance sheet, cash flow statement, monthly budgeting, annual budgeting and daily expenditures. Basically, you have to know exactly how much money go in and go out. Every single cents count.

The idea is to create awareness on how you spend your money. If you know exactly how much you spend and how much you are left with, you can end up saving up more money. You can reach your financial goals within a shorter period of time only when you have a prefect cash flow management system.

The daily updating is the one that make your financial goals faster. When you are actually recording and tracking whatever you buy, you will realise that you are spending too much money on something or not. With all the technology now, tracking on what you buy can be tricky.

I personally have a good cash flow management and been saving 20% more of what I have been saving. I did not do this overnight; I took 4 months to perfect my cash flow management skills even though I have all the tools. As you can see, managing cash flow is not easy but it is worth the pain.

You will become frugal automatically when you monitor and track your expenditures. If you need any help or advice on how to manage your cash flow, do drop me an email.

All financial goals must be quantified!

With the ever competitive market, one must be aware of their industry players. Upgrading one’s skills and education is far more demanding then many years ago. To stay competitive in the market, one must be well- equipped. As a financial planner, I too want to always edge out my competitors.

As financial planning is growing it’s popularity, I have no problem looking for my competitors. Financial planners around Singapore always have road shows in shopping malls to attract clients. Well, what I did was very simple, I went to one of the road show; get a financial planner to advice me on my financial goals.

At the beginning of the meeting, the financial planner was very accommodating with all the available products. He then asked me my financial goals and quantified my goals. To my surprise, he did not quantify my goals accurately and made a lot of assumptions. He did not even have a financial consultant calculator with him.

I thought to myself that I should give him another chance and set up another appointment. On the second appointment, I gave him all my financial details and goals. Again, to my astonishment, he did not bring a finanicial consultant calculator and made assumptions. I then asked him how much it will be enough for me to retire.

Immediately he told me that my retirement is around $1million. He said that will be a save amount to consider. To prove that his assumption is wrong, I asked him to calculate for me why he said that it’s around $1 million not other value. All he can tell me was that retirement fund is difficult to calculate.

I am sure as hell that retirement fund can be calculated. There is a way to do it. Firstly, you have to know what is your annual income expected when you retire. This amount is calculated by your current annual income. Then you need to calculate how much is the total retirement fund needed, the available resources and funds, and then get the retirement fund needed. All this values are calculated in future values and can only be calculated with a financial consultant calculator.

If your current or future financial planner do not use this method to calculate your retirement account and do not have a financial consultant calculator, I think you should not listen to his advice as it is based on assumptions, not real facts.

Investment is more than just risks and returns!

In the world of knowledge based economy, information can be passed faster than a speeding train. Information can be attained from mediums like internet, calls, sms and newspaper etc. With all these information available at the tip of your fingertips, buying and selling of your investment is done faster.

However, some of this news can be fact and some are just speculations. Speculations can be the market’s greatest enemy. Half of the time, people buy and sell their investment because of market speculations. ‘Hot’ tips are very common among investors. These ‘hot’ tips sometime kill investors as they do not actually analyse the tips that they got.

Brokers and bankers are famous people for investors with little or no knowledge about investment to get tips from. Whatever that brokers and bankers share to investors will be regarded as a hot and valuable. investors react to these ‘tips’ almost instantaneously hoping that they will not lose money or hoping that they will gain a large amount of returns. At the end of the day, investing on an asset is based on who gets the best ‘tips’ and which brokers or bankers are the most credible.

Investing on an asset is actually more than science. You will need to do a lot of research and acquire some skills on technical and fundamental analysis. There are a lot of things that you must do before you invest your money. It is your hard earned money at the end of the day. Investing your money on an asset is not about ‘parking’ your money in an asset and pray that it will grow!

Does this mean that you can never be rich and can never invest your money because you do not know how to? The answer is no!

There are courses, seminars and people who actually can help you to invest your money. This help you get will also incur some costs but it is an investment if you think about it. In order to be success in your investments, you need to know the science of it. The more in- depth you know about the investing, the less money you can avoid to lose. Investment is more than just risks and returns!

Already planned for your retirement?

When asked if you know how to manage your money, I am pretty sure that you will say yes. When your answer is a ‘YES’, why in the name of god do you not have enough savings and find it very difficult to meet your ends need towards the end of the month. As you know, managing your finance is not a simple task. Managing your cash flow is more than the art of science.

I have seen many people who think that their method of managing their cash flow is good. I have also seen people who are not bothered about their cash flow and are just ignorant. These kinds of attitudes are very dangerous especially for those who have wishes to be rich.

Only after you know how to manage your cash flow, then you will know can plan for your insurance planning, investment planning, retirement planning, tax planning and estate planning.

As a financial planner, I have to quantify goals for my clients. Sometimes, these goals are overly impossible to achieve and sometimes, they are just vague numbers. Retirement planning is the most complex amongst all as it is the furthest goal at least for most of the people.

E.g. Ming is a 40 year old man that wishes to have $1,000,000 as his retirement account. Currently, his savings in his bank account is $100,000 and he is drawing a $2,500 worth of pay. He also has an endowment plan set to mature at the age of 65 and the maturity value is $50,000. Assuming that he has no dependants and wish to retire at 65; this will be his shortfall

Retirement account= $1,000,000
Net surplus= $850,000
Years to retire= 25 years
Monthly savings= $2,666 (impossible)

Savings itself is not possible for Ming to achieve his retirement account. He will have to have some kind of investment that will pay him good interest. in order for him to enjoy the interest, he will need to know some kind of investment knowledge or at least get someone that can help him.

Factors like inflation rate, return rates on investments, future dollar value and power of compounding must be considered in planning one’s financial goals. Even if you have the best plan, sometimes things can go wrong too. Financial plans have to be monitored and must be analysed on an annual basis.

Assuming that he made some changes to his cash flow management, engage a financial planner and try to come up with some recommendations, this is how it would look like

Investment of his $100,000 @ 10% interest after inflation=$1,083,470

As you can see, Ming seem to have hit the $1,000,000 mark that he wanted for hid retirement fund but let me tell you something, that $1,000,000 that he plan is not even a number that is accurate. Having an accurate retirement fund is not a number game; there are ways to calculate it. If you already have a financial planner that you think does not plan your retirement fund appropriately, you will be at a losing end when you reach your retirement years. It will be a good move if you have the right financial planner.

Inflation; how serious can it hit you?

What do you understand by the term inflation? Does it matters if the rate of inflation is high? What impact does it have to you and your financial goals? Does your financial planner consider about inflation when planning your financial plan? Does it pay to understand about inflation?

As a financial planner, I am always trying to plan my client’s financial goals and one of the factors that I think is important is inflation. Inflation is the rise of the future dollar compared to the present value. In short, your dollar today will be lesser compared to your dollar tomorrow. Just look at the price of one consumer product like rice, a packet of rice today cost more than 5 years ago.

When making an investment, rate of inflation is very important. Inflation is classified into 2 categories, anticipated and unanticipated. Economist can predict the inflation rate with a high degree of accuracy, this inflation is called anticipated inflation rate. What happens when there is an increase in the price level that comes in as a surprise? For instance, if the market participants anticipated a 3% inflation rate but the actual inflation rate turn out to be 10%; this will then be an unanticipated inflation rate. It will be impossible to make a prediction on the future values if the inflation rate is high and variable.

High and variable inflation rate will generate uncertainty and weaken the link between income and productive activity. Some of the effects are will definitely hit money lenders, distortion of prices resulting in wrong choices , when inflation takes hold, market begin to adapt and an allowance for inflation is generally built into the market interest rate and, for retirement planning, it will have an impact on the future values.

To hedge this problem, you will have to be kept aligned with the changes of the economic activities at least once a year. Having an annual review can help you avoid losses.

Will your dreams be just another dreams?

To be focussed is a trait if you want to be a successful. No one in this world is born with any problems and you can only be successful if you are focussed and very motivated in whatever you are doing. Relationship problems and family problems can change your life forever. A change in your life can be a good, it can also be disastrous.

In the pursuit of your financial freedom, the problems that were mentioned above are the last thing that you want. You will have to be strong in facing these kinds of problems as it can make you financially drained.

I too faced these kinds of problems in my life but I managed to overcome these kinds of problems. In fact, these problems made me more determined than ever to make more money as I realised that the root of this problem is money itself.

Rich people also face this kind of problems but being rich by itself is not enough. There is a significant difference between a person who is born rich and a self- made millionaire. A self- made millionaire has traits that make them who they are. Why? It’s because when these self- made millionaire is starting their journey, they are faced with lots of problem. The problems that were faced by these millionaires actually made them what they are now.

Just remember this, problem make you a stronger person. Before you can become a millionaire, you have to change who you are now. Having a millionaire’s mindset is very important. In fact, it is the single most important attitude/ trait that you have to adopt.

In my experience of helping people realise their financial dreams, most of the times I noticed that some people are so affected by their problems that they can side track what they want to achieve. Brooding over a problem and not thinking of solutions is one of the most common behaviour.

When you dream of something, naturally problems will come. These problems keep getting bigger and bigger and if you cannot handle them, your learning curve will decelerate and your dream will be gone!

Do you know about compound interest?

Over the weekend, I had a great lunch meeting with one of my partners and we sort of talk about what we can achieve in 5 years time. My partner is a very successful businessman with a liquid asset of more than $2 million, impressive for a 33 year old man with not a high education.

His said to me that he would increase his net worth by $500,000 in 5 years time and told me that it was a realistic target. Well, this is where I am good at; I opposed to his target and told him that I could help him increase his liquid asset by $1 million at the end of 5 years.

At first he thought that I was talking about his business but I convinced him that I will increase his net worth with what he has. To my surprise, my partner does not believe in investment. He believes only on ‘parking’ his money on the bank because he is sure that his money will not be gone.

I laughed so loud upon hearing what he said and told him that he forget everything about inflation. In Singapore, the inflation rate is going at 2.6% as at 30th September 2007 and it will increase. On the other hand, banks are offering only 5% interest. in short, he will only earn a 2.4% interest yearly. In 5 years time, the $2 million that he has will only be at $2.27 million.

After hearing what I said, he ask me to propose to him an investment that do not have much risk and still give reasonable returns. I then told him that he should invest his money in unit trust as this kind of investment is safe as the funds are diversified, managed by a team of professionals and perfect for beginners.

I told him that with the right investment skill which I will train him, he will be able to have at least an interest rate of 13% after subtracting inflation rate. With this rate, his $2 million will be at $3.68 million after 5 years. The moment I said this, he eyes almost pop out and asks me to tell him how I arrived at this figure. Well, the answer is simple, power of compounding.

Solve problems and make money out of it!

Do you always complain about your problems to your family and friends?

Be it about your career, money or even your relationship problems. People nowadays love complaining so much that they forgot to solve their problem. They would rather sit down, talk about their problems and go back with the problems.

As a financial planner myself, I do have problems on my personal finance but I hate to complain about my problems. Whenever I have a financial problem, I would sit down, brainstorm ideas on what are the possible solutions and I solve my problem. I like to tell my friend that they should never complain about problems, what they should do is to turn the problem into an opportunity and anticipate solutions.

To be successful, you have to have turn problems into an opportunity. If you stay longer with trying to solve the problem, I am sure you will come up with the solution. Every bad experience or problems adds to your learning curve. Always believe in blessings in disguise. Instead of talking and complaining, do something about it.

If you have a good problem solving techniques, you can even earn money from your skills. Impossible is no longer applicable now. In he world of opportunity, money can be earned easily. Look around you, there are more and more millionaires around. The number of people becoming a millionaire has increased tremendously over 20 years.

Thanks to internet, earning a 6 figure income a month is no longer impossible. Internet marketing is growing its popularity and I am sure that the number of millionaires will increase exponentially. If you look at internet marketing, basically everyone is trying to solve someone else’s problems. Like I said, every problem serves plenty of opportunities.


to be cont'd

Do you spend money like a millionaire?

People who have an income of more than $10,000 may seem to have lots of money. However, believe it or not, these people also are suffering the same dilemma of a people who earn less than $3,000 a month. Everybody will have a financial problem as soon as they earn an income.

This problem is a common problem and there are many products or tools that are designed to help solve this problem. Personal cash flow management is very important and having a good cash flow management technique will definitely help you create your means.

Some people have good personal cash flow management but what they are lacking at is they do not know how to spend their money effectively. Spending effectively or smart spending is something that will help you in your monthly expenses. You can even save money when you are shopping!

I used to have a very bad habit of spending money and not have a savings. I would not plan for my budget and would buy anything that I want. After 2 years of having an income, I was stuck with just one bank account, no savings account and no contingency plan for any emergency.

When I was introduced into the finance industry, I learned a great deal of information on wealth accumulation techniques. Without financial education, I think I would still be living the same live that I used to live, that is to spend and not to save. Saving money is a trait of a millionaire. Millionaires do not spend their hard earned money just like that; they are more frugal and save a lot of money.

If you want to be a millionaire, you have to think like a millionaire and be frugal like a millionaire!

Retire Rich!

Retirement is something that is often overlooked yet the most important time of your life. People are expected to live longer; meaning that people will spend more money on medical expenses. With the advancement in medicine, almost all sickness can be cured. With this, you must have a very good retirement fund that you can rely on.

In Singapore, the government had initiated a compulsory savings for retirement purposes. I have seen many people who do not have enough money for their retirement; the reason for this is that most of them do not start their retirement planning until they reach their late 30’s.

Retirement planning actually should start the moment you start getting a pay. Although it may seem that your retirement day is still very far away, having an early start will guarantee that you have a comfortable retirement days.

There are many ways whereby you can prepare yourself for your retirement. Insurance companies are coming up with a variety of products that can prepare you for your retirement. Products like life insurance, endowment and annuities are very popular for individuals who are planning for their retirement.

You may wonder why life insurance can be a tool for your retirement, it is because it has cash value and some life insurance covers you until the age of 65. After that, the insurance company will give you back the money your money plus interest. On the other hand, endowment has little protection but more on savings goals.

The best product for retirement is annuity. There are many types of annuity that is in the market. Basically, what annuity means is that you give a lump sum to insurance company, and then you will get your money on a monthly, quarterly, half- yearly or yearly basis. The balance of your money is then invested. Some of the annuity product can pay you up until you die and some pay you on a term.

Whatever the methods and ways to secure your retirement years, you must have a good plan for your retirement. You cannot afford to make mistakes in your retirement years as time is money.

Increase your wealth today!

I used to get jealous whenever I see people driving off their luxury cars. I would give negative comments about the wealthy people and I used to hate them. I used to think that they are just simply lucky to be born rich and have a capital to start with. I labeled these people as people who are born with a silver spoon. I used to think the the rich are getting richer while the poor are getting poorer.

I never thought that I can be rich and wealthy because I am not born with a silver spoon. Although I have negative attitude towards the rich people, I myself was working quite hard to earn a living. I did all kinds of jobs in all kind of industry. Some of my friends once called me ‘Jack of all trades.’

One day, I was sitting in a coffee shop and overheard a group of uncles talking about money just next to where i am sitting. I was listening to the whole of their conversation and I got really excited. Their conversation got me excited and got me motivated to make more money. They were talking about investments and multiple income streams.

That very day, I came home with intentions to source out information on wealth creation in the internet. Honestly, I was quite amazed by information that I gathered and I got very determined to make million. The first move I made was to enroll in financial courses. The financial course that I took includes financial planning, insurance planning and stocks and shares.

Day after day, I can see my wealth clearer. I used to think that people who want to be a millionaire were dreamers and this dream to be a millionaire is dreams that you make during your school days. But now, I found out that there is a system that works. Of course not the get rich quick scheme kind of thing but with my financial knowledge expanding, I realized that getting a million dollar in my account is a realistic goal.

I also found out that to get multiple income streams is not that difficult. One of the best income streams that you can have is from internet marketing. If you read about internet marketing, there are people who earn a whopping 6- figure income monthly. However, internet marketing is not an easy task and you really have to do a thorough research on internet marketing. It may seem like its easy, but if you really do it, it can get extremely tough.

I hope that all of you will enjoy your financial freedom day soon and increase your income tremendously. There is nothing that is easy, however if you are strong enough to face all the challenges, you succeed in what you do.

A dollar a day, keeps the debtors away!

If you are earning a mere $1,000 to $2,500, do you think you can be a wealthy person and reach your financial freedom day? In my experience of being a financial advisor, I met up with a lot of families that have an income of less than $3,000 and bearing 3 children of age 9 to 17. Usually these people that I meet have dreams of having enough cash so that they can afford many things.

However, these are just dreams. These people that I met have a common problem. They do not know how to manage their cash flow effectively. They usually have no savings and complain that they cannot save because they have to meet the ends need. They know that savings is very good but do not make an effort to save their money. no matter how small the amount maybe, it will accumulate and when it accumulate, you will encounter a lot of money making opportunities.

When it comes to managing your money, you will need to be discipline. Nothing in the world is easy. Wealth can be attained by anyone at any income if they have discipline and patience. When you do not manage your cash flow, you cannot make any investment planning, risk planning, retirement planning, tax planning and estate planning.

It’s never too late to start managing your cash flow and start saving money. a tip will be to list all expenditures from the most important to least important order. Track these entire expenditures even if it less than a dollar. Once you know what your spending style is, then you can develop your very own unique budgeting.

The most important and most valuable tip from anybody that are very serious about savings or anyone in the finance services industry is to save 20% of your income. This 20% is deducted from your income first, deposit into the bank, then the rest is for you to plan how you going to spend. Personally, I think this tip is a very difficult to practice but you will get the hang of it. If you are truly serious about your wealth, start saving today!

Insurance; a must have for anyone!

After a person finish their education, usually one will get a job. Upon getting a job, one will be termed as facing the ‘real’ world. What is meant by ‘real’? Is it the challenges or the fact that one has to be responsible of their financial goals? Whatever the reason may be, one has to consider about risk.

What happens when unfortunate things happen?

Who will bear the family if you get into an accident?

Who pays the liabilities if something happen?

These are just some of the questions that one must ask when they start getting an income. Risk management is something that is often overlooked and usually people will end up paying a higher premium because of age and health condition. Risk management is something that cannot be done alone; you need help and advice from a professional. I reckon that anyone can do their risk management without professional help.

As a financial planner myself, all my insurance are handled by a third person because I do not want to be bias of my decision and waste money unnecessarily. Insurance can be asset if you know how. These assets has very liquidity rate too.

In choosing an insurance policy, you need to know how you can benefit from the policy. You do not want a policy that is too expensive or too little protection. An insurance policy must not be viewed as a burden; in fact it should be viewed as something that is a necessity.

There’s no time for you to regret when something bad happen to you. Risk can be transferred to insurance companies. With time changing so fast, you will never know what lies in front of you. I suggest that you have at least a life insurance in your portfolio. Be smart and responsible of your life. Risk management is something which is very basic and a need for anyone who has an income.

Believe it or not; you will be a millionaire!

If you really desire to be a millionaire, the only person that can make that change is you. You do not pass on your failure to your next generation for them to conquer it. Let face this fact, your children will see you as their model and they will do the same thing when they have their own children; to pass their failure to the next generation and hope.

I am very confident to say that financial freedom can be attained by anyone in this world. Unless of course if you are mentally disabled, in a coma or facing a life sentence in the jail. Now, you must be wondering how you are going to attain that financial freedom day that you have been eyeing for.

Financial freedom can be attained only if you plan. Planning your financial goals is a lifelong process but a rewarding one. When you plan your financial goals, you will have a better picture of your financial status. When you dedicate your life to financial freedom, you automatically expose yourself to many opportunities. It is then up to you to strategize your goals.

In the planning process, you will learn a lot of valuable knowledge on finance. Take this from me. Even though I am not yet a millionaire but I can calculate when I can attain my financial freedom day. At the tender age of 22, I have two businesses that I manage and I am also taking up my degree. I am learning new things and exposed to lots of opportunities day by day. I am so determined to attain my financial freedom day that I am very busy to even spend time my family and friends.

After you finish planning your wealth, you will have a bigger and broader picture of your goals. No one likes to be living in poverty; everyone loves some luxury in their life. Once you have your mindset ready and plan your wealth, you will reach your goals

Be a Smart Investor!

The word investment is greatly mistaken for only to stocks and shares. When someone says he invests his money, automatically other people will think that it’s the stocks market. But do you that you can invest your money in a less risky or even no risk type of investment?

There are investments that will guarantee you same kind of income. However, as risks and returns are conversely related, you will not get as much returns in a no-risk or less risk kind of investment. In short, the higher the risk, the higher the expected returns and expected returns will low if the risks are low.

Does this mean that you have to be a risk taker to get more returns? The funny thing about investment is that you can enjoy growth in your investments in a risky kind of investment. Over the years, many people had come up with formulas, ratios, theories and ways to minimize risk.

Risks itself are divided into 2 kinds of risk; systematic and unsystematic. Systematic risks are risk that cannot be diversified where else unsystematic risks are risk that can be diversified. To understand these risks is not a simple task. One must be well- equipped and very knowledgeable.

If you are not a finance kind of person, you can approach brokers, financial planners and financial analyst for their service. Of course, there will be a price to pay for their services. But if you calculate the servicing cost and the loss from your investment, it will be wise to get their service.

After you get their service, you still have to learn some basic knowledge on investments. You have to ask your agents some basic knowledge so that you do not solely depend on them. These agents have many other clients who are investing money using the agent’s service; you have to be proactive in order to be a smart investor. By being proactive, you can be rest assured that you will not lose as much money.

For readers from Singapore, you can engage my services as your financial planner. I will provide you with all the necessary tools not only for your investment, but also your tax planning, retirement planning and estate planning. I will educate you and train you on how to maximize your wealth, get away from debts and achieve your financial freedom day. Email me your contact details and I will get back you the next working day.

Success Secrets revealed!

I am going to reveal a secret that can change your life. This secret is so powerful that upon reading this post, I will need you to send out only to five of your friends and tell them about what you read. I am not selling any product; hence this is not a network or multi level marketing scheme. My intention is to tell as many people as possible.

Have you ever thought why some people that you know are so successful?

Have you ever asked them how they become successful?

Do you think that you can be as successful as them or even better then them?

Do you ever blame yourself for being what you are right now?

Well, I too have been asking these questions to myself for many years. Naturally, I am a competitive person, but I tend to give up when it comes to studies. I was not the brightest among during my school years but I can safely say that I am one of the best in terms of sports and fitness.

During my school years also, one of my teacher taught me something that is very wrong. He told me to concentrate in my physical abilities since I am not academically inclined. For a while, I prove to the best sport person and injury catch with much faster than I expected. Well, something very good happen to me after the injury. Blessing in disguise? NOT!

As I started getting an income for myself, I was not happy with what I am getting. I started to take many part- time jobs and got acquainted with a lot of people. All of them are of different mindset and attitude. As for myself, I just want to make money and lots of them.

In the process of wanting more money, I was determined that I will network myself and source for excellent contacts. As days passed by, I got myself acquainted with business owners and entrepreneurs. I was motivated by their motivation to reach their goals, that is financial freedom. I was not just motivated; I was modeling their theories and concepts.

To my surprise, I realized a significant difference between them and all my other contacts. It was their mindset, attitude and strong desire for success that separates them from my other contacts. When I have these kind of contacts, I grew stronger and more motivated. I’ll be honest with you, I have never thought that I will be a business man and be in the finance industry.

Moral of the story; success and opportunities are everywhere. It begins with you. Only you can make a difference in your life. When you decide to make a difference, good things will be inclined towards to you. Of course it will not be fast, this is not a fairy take wish- come- true event. It is a learning process.

Are you buying debts?

As soon as we graduate from school, we start working. This the time where you are still young and just trying out to in the ‘real’ world. In this early stage, we do not think much about savings, investments and making money. We are more tempted to spend the money that we get. It’s a good feeling when you do not have to ask money from your parents and use that money for your shopping needs.

The temptation to buy anything that you see, the instant gratification in the early stage of life can create a big impact on your life. Marketers nowadays are getting smarter and smarter; they target almost anyone that has an income. Why do I say this? Well, it is very simple. We are now more driven than ever to buy DEBTS!

We can buy almost anything now. From electrical products to automobiles to housing.. We can even afford holidays that we never thought that we can have. Sellers are now offering loans to anyone that has an income. They make the monthly payment look so attractive you would not consider buying the product.

What you did not consider is your total loan payments and your long term financial goals. Small loans can add up to make a huge loan. At the end of the day, we belong to the category where we are asset rich but cash poor. In the case of loans accumulating rapidly, your assets can turn into your long- term liabilities. It will be impossible for you to get a positive net worth.

When you know your net worth, you will automatically be interested in your yearly cash flow. There are people that are monitoring their monthly cash flow. When you are interested and concern about your inflow and outflow, you can manage your cash flow better. Remember this golden rule; if you cannot manage $2,000 now, you can never manage $20,000 or more in the future.

Investment planning, insurance planning, retirement planning will only be effective and feasible when you have excellent money management. Because you know how to manage your cash flow, you will save more money. This extra savings that you have will accumulate and you can start building your wealth. You need money to make more money.

Financial ratios from your balance sheet.

Financial ratios as discussed earlier are very useful in finding the financial strength and weaknesses of an individual. I must say that these ratios are your guidelines. After calculating your financial ratio, I hope you will get a better idea of what your financial strength and weaknesses are.

Basic Liquidity ratio is to compute the extent your liquid assets can meet your monthly expenses. A ratio of 3- 6 means that you have enough liquid assets to cover for three months of expense. How you get this ratio is just simply by dividing your cash/ cash equivalent and monthly expense.

Liquid- Asset- to- Net- Worth ratio indicates the proportion of an individual net worth that is backed by liquid asset. This ratio works as a useful supplement to the basic liquidity ratio. Just by dividing cash/cash equivalent and net worth. This ratio shows the extent of price risk that you are taking. It is prudent to have at least 15% of individual’s net worth in cash/cash equivalent.

Saving ratio is useful to determine the proportion of your income that is available after all expenses are met. By dividing savings with gross income, you can get your savings ratio. Recommended comfort zone is 10%.

In order to find out how much assets are financed through debt, we shall use the debt-to- asset ratio. This ratio is important because using too much debt to finance assets increases the risk of solvency, especially when there is insufficient cash to make interest payments and principal repayments. Ratio of more than 50% is considered too risky. Divide total debt and total asset.

Non- mortgage debt service ratio is similar to the debt- to asset ratio except it excludes all mortgage repayments from the numerator. A ratio of less than 0.15 is recommended.

To calculate your net worth that is represented by invested asset, we shall use the total investment- to net worth ratio. Just divide total invested asset by net worth. In cases where market conditions are not favorable, you may keep more of the invested asset in cash. This ratio is also to provide feedback on success of your financial plan over the years. A ratio of 50% or more is desirable when you approach your retirement.

Personal Balance Sheet

With information at the tips of our fingertips, we can shop for goods even at the comfort of our home. We can also check out the latest product launch on the internet. Shopping has never been so easy and more people are spending more money as the economy is set to be moving up at a stable rate.

As the economy is growing at a healthy rate, we must also update our balance sheet. Personal balance sheet is a must for everyone who has an income. With personal balance sheet, one can be aware of their net worth. Net worth is derived from the total asset minus total liabilities. The perfect time to improve our financial status is during healthy economy.

As a financial planner, calculating a balance sheet is a simple task as it is a daily routine for me. If you do not have a balance sheet, I strongly encourage you have one done. Alternatively, you can contact any financial planners in your country and they can help you with computing your balance sheet.

Balance sheet comes in a standard form. Assets are usually on the right side, liabilities on the left and from there, you can calculate your net worth. You can find out a lot of useful information after doing up your balance sheet.

Here are some of the information that you can find out;

1. Liquidity Ratio


2. Liquid-Asset-to-Net-Worth Ratio


3. Savings Ratio


4. Debt-to-Asset Ratio


5. Total Investment Asset to Net Worth Ratio


6. Solvency Ratio

I will briefly explain more on the different types of ratios in my next few post. Do give comments if you have any queries. I will be more than happy to help.

Making the right choice!

There are many people out there who advertise their investment strategies. They say that you can also make millions just by applying their investment strategies. If you are a beginner, you may get excited with all the returns that they are projecting to you. Now, ask this question to yourself, if making money is so easy, will there be poor people around?

When I first started learning about investment planning and financial planning, I was overwhelmed by the terminologies and formulas. I did not know that there are many ratios and formulas that you have to calculate. There are both quantitative and qualitative. I know for a fact that making capital gains from investment is not an easy task.

I then made a special attention on advertisements that claim that they can help you make money just by following their steps in making your investment choices. I realized that these people are giving you just the basic knowledge on investment. Most of the time, you will be taught on investing in stocks and shares and forex.

I then ask myself this question, why are they teaching the most complex kind of investment? Well, the answer is very simple; it is to entice you to join their classes. All these people are teaching you are dreams. They teach you what you should do when making an investment, but they forget to tell you the fundamentals of investment.

Which one of these sentences arouses your attention? Make $1,000,000 from forex and shares with these proven steps or learn the risk and fundamentals of forex and shares. As human being, you will definitely be more aroused when you see the first sentence. After reading this article, I am sure that you will think twice before signing up for any investment classes.

But wait! I have a piece of good news to tell you. I have developed a wealth management program for beginners up to expert level. It is not launced in the market yet and I hope to launch it by the end of this year. For Singaporeans, you will have the benefit of attending my classes in a classroom manner and there will also be online programs for people living outside of Singapore. Topic is will cover includes risk management, investment planning, tax planning, estate planning and the most important of all, personal budgeting and cash flow management.

Millionaires and Average Joes'

Motivation is something that is very important in your quest to make money. You will need to stay motivated so that you can attract opportunities. Human being are born greedy and lazy, hence how much money is enough? There are a distinct difference between millionaires and average Joes'.

Millionaires are always motivated to make more money. They are always thinking of ways to increase their streams of income, business opportunities and how to further increase their wealth. Millionaires are actively involved in activities that are conducive to their wealth and are much focused.

Average Joes’, as the name suggest, are average people. We know for a fact that the middle income class is made up of average income people. Naturally, average Joes’ fall in the average income class. When everything is done on an average, you cannot expect exponential results.

You have no one to blame if you are still stuck in the same financial status. The problem lies with you. There is no problem in the industry that you are working in, the education level that you have and the people around you.

You can be attending wealth building seminars, reading books on how to build your wealth and come up with plans to increase your income streams, but you are still not making money. So what is the problem now? Well, the seminars, books and plans are correct, the only problem is you.

Becoming a millionaire is not a simple task, but there is a system and golden rules that you need to adhere. Never think that you can be a millionaire in a short time! Get rich fast schemes are scams and there is no shortcut to build your wealth! Only you can change your financial status!

Risk

As I am a risk adverse person, I will not cover on returns just yet. Risk is something that comes hand in hand with returns, unless it is a risk free asset. There are several ways of looking at risks. The various sources of risks will be examined, leading to an understanding that different types of investments are exposed to different types of risks.

Risk can be further classified into systematic risks and unsystematic risks depending on the source of the risk. Systematic risk represents risk that is common to all assets. It cannot be diversified away. On the other hand, unsystematic risk represents risk that is unique to an asset and can be diversified away.

Examples of systematic risk are interest rate risk, inflation risk, market risk, reinvestment risk and exchange rate risk. I will discuss more on reinvestment risk as the rest of them are more or less self explanatory. An investor face reinvestment risk when he may not able to reinvest the dividends, coupon receipts or other cash flows from his existing investment in order to achieve his targeted rate of return.

An example will be if an investor may wish a return of 8% over a period of 5 years. He buys a 5 year bond with a yield of 8%. However, he may not achieve a realized yield of 8% after 5 years because he may not be able to reinvest the coupon payments at 8%.

Unsystematic risk will be country risks, liquidity risk (ability to convert into cash as quickly as possible), business risk, credit risk (external indebtedness of the company to debt holders other than equity holders), industry risk and financial risk.( arises when a company incurs debt)

Be sure to asses the risk of any investment. Investment opportunity will always be there waiting for you. Conversely, losses also will be there for you if you do not asses risk and make due diligence

Guide to investment. Part 2

Before you even dive into any investment, you have to understand some of the financial jargons. You need to understand the language and you need to fully understand the concepts and thesis. At the end of the day, it’s your money we are talking about. You can avoid making losses in investments. It’s the same with a student who is sitting for an exam; the student will only pass the exam if he/she studied hard.

Let me first explain about insurance funds, unit trust, mutual funds, bond funds and cash funds first. I will cover more on stocks, shares and property in the later part. I will need you to understand the ‘simpler’ kind of investments before you go into other types of investments which require you to have more in depth knowledge. As you can see, choosing an investment is not an easy job. You will need to have a lot of patience.

In investments, you can reduce the risk and increase the returns if you make due diligence. There are a few things that you must do before you even start putting your money into any investments. You need to know, what kind of fund you are investing; what are the characteristics, what are the projected returns, who are the fund managers, what kind of industry and most importantly, at what stage the investment is at; infancy?

1) What kind of investment?
Insurance fund, unit trust, mutual funds, bond funds or cash fund.

2) What are the characteristics?
Equities? Balanced? Conservative? Geographical? Sector? Portfolio? Fixed?

3) What are the projected returns?
Guaranteed? Compounded interest?

4) Who are the fund managers?
Reputable? Credible? Net asset?

5) What kind of industry?
Technology? Life sciences? Marine time? Transport? Food? Beverage?

6) What stage?
Infancy? Booming? Adult?


These are just some of the facts that you need to know. There are other factors that you must also consider in your investment process. The guidelines here are just simple basic steps and they are meant for illustration purposes only. There are no recommendations made in this article.

Guide to investment. Part 1

I’m sure many people know that investments can grow their money. The only way to make your money work for you is by investment. I’m sure everybody knows what are shares, unit trust and mutual funds are. All these financial jargons are commonly used by financial practitioners but not for a normal person.

Some people have bad experience with investments and some have very good experience.

People with good experience will find more about investments and will invest more money so that they can meet their financial goals. Some are committed to save more money to make even more money. I will be very happy for u if you have all these kind of attitude towards investments.

People with bad experience on investment will have a negative view on investments and they usually do not believe in any kind of investments anymore. I do not blame them for their pessimism as I too will be angry if I lose my money on investment. However, I realized a pattern as to why these people lose money.

Most of the time, people who have lost a lot of money on investment will have little or no knowledge on investments.

They usually follow what their family, friends and colleagues are investing. There is no research done on what kind of investment they are into. For starters, they should know what are returns, risk and profit. One more reason is also that they have the park and pray attitude, where they park their money and hope that it will grow.

It does not hurt to ask from other people what investments are. In love, what you do not know will not hurt you but in investment and business what you do not know will hurt you a lot. Remember this; investment is made to make money, not to lose money. There are myths about investments. My advice is, in investment, it’s all calculated quantitatively, hence there are no myths to investment. And, there are no such things about luck in investment. It is pure fact finding and calculations of the indices and ratios.

System for wealth building!

As long you are still alive, you can make money. The way of making money has been changing rapidly with time. Many years ago, the word millionaire can be intimidating. People never thought that they can make millions of dollars. The reason for this is that people around the world are busy finding jobs that pay them well.

Even if you have a job that pays you $10,000, you will not become a millionaire. Becoming a millionaire is something that is so complex but if you can adopt the system for building your wealth, you can be a millionaire in no time.

The theory is the same with building a house. You know for sure that you cannot build a house without architect, engineers and labor. Same goes for building wealth. You need investments, insurance and your income. The sad thing is that people always think that building a wealth is impossible and they forget the fact that wealth can build a system.

If you are really serious about making money, you will need to make a very thorough research. You must find out what kind of investments you want, what kind of insurance and creating a multiple income streams. With all this in place, you can definitely make money.

What do you do when you do not anything about making money and you are just not the financial kind of person?

Not to worry, they are plenty of Certified Financial Analyst Certified Financial Planner, Financial advisor, brokers and many more. Get leverage with all these professionals so that you do not make a mistake of investing in the wrong investments.

These professionals are trained to create wealth. They went through gruesome years of training and studies to help people get their wealth.

OPC (OWE PEOPLE"S CONTACT)

The acronym OPM (Owe People’s Money) is commonly used nowadays. Everyone knows that OPM is a powerful tool to use when especially when you want to start your own business. Any wealth management books that you’ll ever read will have a topic on OPM or at least they mentioned OPM.

Now, let me take you one step behind. The reason for this is because it is always a good practice if you can find the source. Work backwards! Try to find the source of a problem, word, suggestion and anything. Begin with level one!

Hence, what comes before OPM? LEVERAGE!

When you can create leverage, you can minimize mistakes and increase productivity. In creating your wealth, business, career or whatever it is, you must create leverage! You can only get leverage if you do your research thoroughly and network! Loral Langemeier insist on due diligence. I on the other hand, insist on NETWORKING!

You will never know who you will meet when you network. Networking also has advertising benefit. You can also build credibility when you network. I do not get ideas on wealth management just by reading books; I do a lot of networking! This post is inspired by a new friend of mine! ( thank you by the way)

Success can be possible for anybody! When you network, you get leverage from the people that you meet. Say you are an IT guy who wants to set up your own business; you can get leverage from a guy who knows everything about marketing. This marketing guy gets leverage from his networks that are mainly from the same field or industry as him. It forms a long chain of networking. Just by leveraging your networking and contacts!

Maybe I can start a new acronym;

OPC

(OWE PEOPLE’S CONTACT) !!!!

Life Insurance

Life insurance policies have become very attractive nowadays and you can certainly take the advantages. Some people think thatlife insurance is a waste of money and they do not wish to add extra expenditure in their account. There are also people who have too many life insurance plans and have little or no liquid savings in their bank account.

Life insurances are mainly broken down into two main categories; Traditional and Investment Linked Policies (ILP). The difference between these two is, traditional insurance will guarantee you the bonuses and interest rates. On the other hand, ILP do not guarantee the bonuses and interest rates, in short, risks are bore by ILP owners.

I will not say which one is better and which one will give you higher interest rates. You will have to identify what kind of person you are. Are you a risk taker or a risk adverse person? What I can say is that both do give out handsome bonuses and interest rates. Insurance companies created two types of insurance policy to serve the market demand, not to mislead people.

Having a life insurance policy is like getting medical coverage, accident coverage and death coverage. When you have a life insurance policy, you will also accumulate cash value usually after three years the policy is incepted. You can take advantage of the cash value for emergency purposes. You are able to take up a loan from the cash value that you accumulated and have it cashed in within 3 to 5 working days.

Henceforth, a life insurance policy is not an expense. It is a kind of saving tool plus other coverage. However, you must be committed in your life insurance because you do not want your policy to lapse. In the event if anything happen when your policy had lapse, you will not be insured. My advice is to get a life insurance plan when you are still young and get something that do not have premiums that are high.

Thank you for the support!

I would like to say thank you for those clients who have believed in the products that I sold to them. I appreciate the fact that you believed in me and you invested your hard earned money into the investments products that I recommended. Up to date, I have closed up to $300,000 worth of investments. You may think this is a small amount but consider this factors, I have only started selling investment products for the last 6 months as I have been actively studying and researching the finance industry, I am also running my own business, I am doing internet business and also taking up courses. In short, I only spend less than 4 hours a day thinking about closing clients.

I will try my level best to gather as much information as possible and think even harder to provide you with ideas on how to make money and stay wealthy. My daily queat to learn more about the finance industry is committed to all my existing clients and potential clients.

You may be young, old, fat, slim, or whatever, I will still help you and give my professional views on your current financial problem. in the event when the case I am attending to is very complex, I will get help form my fellow friends who are also actively in the finance industry. I will continue to give my best financial advice to my existing clients and also my potential clients and provide some leverage to your quest to have your financial freedom day. Thank You.