In The 21st Century
We need to invest time and little money to read some well-known financially education books
to enrich our knowledge. Well, Robert Toru Kiyosaki, is best known for
his Rich Dad Poor Dad (RDPD) series of motivational books and other material
published under the Rich Dad brand. Here is my following comment and suggestions :
Basically, when we are looking at some analysis done on human kind, such as Poor and
Rich, on how would people spend their money and where would they put
or invest their money and how they become rich richer, the poor poorer.
a) The Rich has so much free-time to think of how to spend as well as how to invest their money
b) The Poor has little to spend and little time to think more due to workings and busy making earning.
Solution : The Poor need to locate time to be Financially Well-Educated that working smart rather than working hard. First step to do is to know how to do Budget.
For example, let's assume after deduct EPF is RM3000
Expenses + Food : 30% = RM900
Insurance : 10% = RM300
Car Installment : 25% = RM750
Savings : 10% = RM300
Renting / Savings : 25% = RM750
If we do not have the above budget, frankly speaking, there is no direction on how the money in and outs and no one control it unless we are the one which handle and decides it.
Basically, RDPD is a motivational book and not an investment book neither a strategy
book. When RDPD starts to sell something, it is actually RDPD business income. Where would the poor gain? The Poor only enjoy reading it, that's all.
Solution : Now, the
Poor needs to know the differences of being a Worker, Self-Employed, Employer and Investor and make the changes. The Poor must turn themselves into a self-employed or employer once he or she has captured the skill from the market and there is a demand for it.
Read more ideas from the internet and get some ideas on how to do business and serve the customer. I, myself has read some, that educates me well enough to write something about RDPD. RDPD is actually saying turning ourself into self-employed is better than being a worker, being an employer is much better than being a self-employed, being an investor is much much more better than employer.
In a day,
A worker is able to generate the money for one to two person.
Self employed is able to generate the money for one whole family members.
Employer is able to generate the money from one whole family members to hundreds of people.
Investor is able to generate the money out of the invested money without spending much time on it.
It is about the skill of making money, which could pay for how many people in a month. For instance, for employer, he or she could save two (2) employees salary in a monthly basis without employing them, with this money invest it into a simple Fixed Deposit for their retirement in future. 10 years of business would become future 10 years of retirement. Don't turn this money into working capital. This concept is similar to Bank requirement by placing Fixed Deposit monthly in order to loan to us. Why bank does that, because to reduce the risk as well as for protection.
Basically, RDPD always has good news to share, but for the Poor they are always happy to hear other people success and never be able to "copy-cat" the success method. RDPD is actually expertise in the Real Estate which he may learn it from Donald Trump, at the same time being a teacher of himself would need to translate the message to the student to listen to him as a teacher. Making both types of income to secure himself.
Solution : The lesson here is non other than, polish our skill and make money from it. That's the message. Stop subscribe RDPD if we are not into Real Estate or Writing Books. Pay more for our skill that really makes money.
Basically, Does Rich always mean financial freedom? Not necessarily if one got stress out while having the money and having critical illness. One might spend something on the material, but not maintain his/her health status.
Solution : We might pay monthly maintenance for our car, house, travelling, or any luxury items. But no one is careful enough to maintain our own body maintenance from top to toe. It does not take a pill to speed up the healing process, rather to get involved in a healthy and active life without the needs to worry anything.
Basically, how bad are we into "RICH" as well as "FINANCIAL FREEDOM"? You may notice my blog is aiming for that direction.
Solution : If you like to know more how to make it through into self-employed or to become an employer, you may write to me at firstname.lastname@example.org and I would reply it accordingly. No point to read so many books that does not answer your question directly. Once I replied, I could reply it anonymously in this blog.
Helping me helping you.
Thanks for reading.
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February 10, 2016
Would it possible for all of us,
a) Fixed Deposit, making 70% return of investment (ROI) in 20 years or 3.5% annually.
b) Unit Trust, making 70% return of investment in 10 years or 7% annually.
c) Shares, making 70% return of investment in 5 years or 14% annually.
How about Forex? Would it able to generate 70% return of investment in a year?
Forex is a actually totally different thing. This is a risky investment. There are rules to be followed:
a) Starting low at a comfortable USD10 or USD100.
b) By starting low, reward and risk which is equivalent to Target Profit and Stop loss must be used.
c) Potential Risk Reward are 1:1, 3:1 or 1:1, 1:2, 1;3 with the particular formula we have.
d) Out of each trade, investing 10% to 15% per trade.
e) Use Compounding Interest when certain profit is reached.
f) Develop a simple way to win, and a simple way to lose.
g) Using Chart.
h) Similar to gambling Risking & Reward as well as the Possibilities of winning and losing percentage.
Would this become a financial freedom? It is definitely more than that. Those who involved in Forex, would probably know it needs determination and loss at a smallest amount to generate a good personal own formula.
It normally take at least 3 - 10 years to master it due to the emotion as well as too much tool and resources out there to confuse people.
Good luck to those who want challenges in a good way. Have I provide a method? Yeap, you may need to read the item a) to h) again to fine-tune the method.
January 31, 2016
For Fixed Deposit, we are talking about generating 70% return of investment (ROI) in 20 years.
For Unit Trust, we are talking about generating at least 70% return of investment in 10 years, which is similar with KWSP Dividend return 6% - 7% annually.
How about Shares Market or Stocks Market, would it generate 70% return of investment in 5 years time?
Look at it carefully, Fixed Deposit is 3.5% annually, Unit Trust is 7% annually, while Shares is 14% annually.
We may experience the risky investment that come with more return of investment, or otherwise, why do we invest something risky but the return does not hit the Fixed Deposits target?
For shares market, the skill needed here is much more about the followings:-
a) To generate 14% ROI in a year = 14% in a year (possible? )
b) To generate 14% ROI in 6 months = 28% in a year (possible? )
c) To generate 14% ROI in 3 months = 56% in a year (possible? )
d) To generate 14% ROI in 1 month = 168% in a year (possible? )
Once we have reached the targeted 14%, it is advisable to sell or exit the shares. It does not make sense when we all put back ROI into this risky investment again and using the no-risky Fixed Deposit method. It is totally different method at all. Certain investment requires certain tools and methodology. One may find it hard to digest when we say, the profit earned from Shares should not put back into the shares market but rather invest into safer investment tool such as Fixed Deposit.
For example to reach our destination, do we use our bicycle to cycle in the middle of the highway road? or do we drive to the destination? We know bicycle is cheap, and automobile is expensive, but how do get into the destination with a cheapest and fastest way to reach the destination? When reading this, we must have direction to make it happen. Won't we?
Step 1. Calculate yearly Gain / Loss based on changes of Share Price. Let's look at the following:
Based on yearly data, or 52 week data, for example, if we invest Nestle, it only gives us the maximum of 6% annually, which is lower than EPF Dividend. However, when we look at Air Asia, it would give us a negative ROI of -52% in a year. In shares, there is always a bigger risk as compare to Fixed Deposit. There is actually no need to top up our shares value, but to sell it at a comfortable at least 15% profit within a short time. The shorter period we sell, the more time we would catch up with the next 15% in a year.
Step 2. Selection of Industries and companies itself has its own ROI % range.
Kindly use i3 Investor for android for faster info collection.
For example in Banking Industry, we could not expect ROI of 30% in a year.
Hong Leong Bank Bhd 52 weeks range
(12.30 min to 14.82 max) = 2.52 which is 20.48% maximum ROI
Malayan Banking Bhd 52 weeks range
(8.18 min to 9.60 max) = 1.42 which is 17.36% maximum ROI
Public Bank Bhd 52 weeks range
(17.04 min to 19.90 max) = 2.86 which is 16.78% maximum ROI
For example in Property Development & Construction Industry, ROI > 20% in a year
SP Setia Bhd 52 weeks range
(2.83 min to 3.61 max) = 0.78 which is 27.56% maximum ROI
Mah Sing Group Bhd 52 weeks range
(1.26 min to 2.19 max) = 0.93 which is 73.80% maximum ROI
IJM Corporation Bhd 52 weeks range
(2.87 min to 7.50 max) = 4.63 which is 161.32% maximum ROI
For example in Healthcare Industry, ROI < 35% in a year
IHH Healthcare Bhd 52 weeks range
(5.14 minimum to 6.68 max) = 1.54 which is 29.96% maximum ROI
KPJ Healthcare Bhd 52 weeks range
(3.80 min to 4.42 max) = 0.62 which is 16.32% maximum ROI
Step 3. Buy at the Low Price.
We all do have the lowest price data based on the 52 weeks price range.
One may step in to buy the shares when
a) the price level reaches 10% above the minimum price
b) 0% same level of minimum price
c) below 25% of minimum price.
When some industry is being hit by the economy, let's say Oil and Gas Industry, we all would expect a below of 25% from the 52 weeks data would be a great price.
i) buy the 25% price lower from the 52 weeks min. price for company A.
ii) however, if the price drop further, select company B which is 40% lower from the 52week min. price
By examining this method, we would be assure of buying the lowest price at our comfortable zone. Furthermore, we could able to check on the big investor such as EPF whether they are heading the same direction as ours.
Step 4. Knowing the Exit timing.
When we are buying at the wrong price, we wait. However, when our shares is getting the profit, we also wait. How do we time ourselves basically. Step 1 above has already provided us some clue. Our expectation would be two options available, whether it would be 50% of the maximum ROI or 25% of the maximum ROI.
Let's say IHH maximum ROI is 29.96%, our expectation is 14.98% (50% from 29.96%), as well as 7.49% (25% from 29.96%) to exit the trade. This is where we mentioned that 14% gain from shares annually is a basic formula to handle.
Step 5. The price never hit that low for us to buy?
When someone make profit from shares, it does need time to earn that profit as well as to wait for the best price level to enter. During all the free time, kindly do some research on the industries and potential company background. Once they are hitting our price level, that's it.
Step 6. Does shares provide financial freedom at the end?
On average people spending per month is RM3000, would RM36000 equivalent to 14% yearly gain from Shares exist? That would be RM257,142.85 invested in shares. Disappointing?
Either Unit Trust, Fixed Deposit or Shares Market would bring us to that level of financial freedom comfort. Due to this, some would prefer to invest properties. Another question pops up.... would RM350,000 properties possible turn into RM700,000 in 5 years time which is ROI 15%~20% annually after deduct BLR+% interest? Therefore, not everyone is capable to invest properties due to money spent for investing and service the loan and loan interest at the same time. But in shares, would probably perform a much better job if one studied and managed it carefully.
Without all these basic knowledge, if we have a lot of money and we do not know what to do with it, it will be gone.