Market is down. As I said earlier this is the right time to invest and reap the benefits laterHere is the summary of what happened in Wall street on that fateful week of 15th september 2008
Saturday, September 20, 2008
Market Meltdown
Market is down. As I said earlier this is the right time to invest and reap the benefits laterHere is the summary of what happened in Wall street on that fateful week of 15th september 2008
Thursday, September 18, 2008
The brink of capitalism
As Wall street tries to steer its way though this week, one by one of its giants are falling. It all started with Lehman Brothers, one of the oldest institution in wall street crashing on 4 billion dollars worth of debt. Despite talks with Barclay Bank and Korean Development bank, none was able to rescue Lehman which eventually filed for bankruptcy on Monday 16th of September 2008.
The chain of events further weakens AIG the largest insurance company in the world. On the previous week AIG was reported to be seeking 40 billion of loans from the Fed. But suprise suprise it turns out AIG was in the far worst condition than anybody has expected. The Feds eventually rescued AIG for the sum of 85 billion dollars.
Who is next? Morgan stanley shares are plummeting and Goldman Sachs as strong as it is seems shaky. In the UK Lyodds just took over HBOS. Six of the among largest central bank is pumping over 270 billion dollars to the stock market in an effort to prevent market from further crashing
Steping out and looking at a larger picture and one has to wonder, where has all the money gone? We do not see global production of any commodities or manufacturing drop so much in one day as the drop of the market in Wall street.
It is when one understands the core of capatilist that such drops and bankruptcies are possible even when production of everything else is relatively stable
I shall not bore you with the details of how capitalist works. But strip everyting from the regulation and conservertive investments, capitalist works on greed which is the very most intristic nature of humans. The more greed the market the more positive the growth. Prices start of companies and assets becomes inflated , far more that what their initial value is. Unregulated and uncontrolled the positive growth can turn into a bubble. Stock prices become overinflated and like any bubble become to overstessed. Investors are paying a lot of money expecting a good return. However, companies, consumers and production cannot keep up with investor's expectation. Turning sour the investors sell away the holding to minimise lost.
Prices tumbled. In an event when a lot of this happens market declines. Suddenly the very people who works for the company loses their job because when the investors pulled out the company does not have enough money to continue operations.
The customers loose too. Not only that they loose the product that they have been loyal, all the extra money that they have paid for the product ( cost of production ) has been robbed away by the capitalist.
In the end of the day, Its the capitalist who becomes rich. This is even when markets are down. And it seems that this has been a vicious cycle again again.
If you want to be rich and you can't beat them, then join them. Of course there is a different between a smart capitalist and a foolish one. A capitalist looks when the market is in recession and starts investing on good stocks that are cheap. when recession is over, market price will go up along with profits. However, do not be over confident. Take the money out before it drops again.
The ability to spot the right time to buy and sell as well as being able to more or less predict the trend that defines a smart capitalist. An even smarter capitalist would be able to move from one stock to another thereby sustaining profit even when the general outlook of the market is poor.
So there you go. If you do not know a lot about investing start reading the books concerned with it. Do not directly jump start on buying stocks but follow the market first to get a feel on the market. Start small and roll the money. Lastly, don't be a fool and put everything you got on something that you are really not sure about.
The chain of events further weakens AIG the largest insurance company in the world. On the previous week AIG was reported to be seeking 40 billion of loans from the Fed. But suprise suprise it turns out AIG was in the far worst condition than anybody has expected. The Feds eventually rescued AIG for the sum of 85 billion dollars.
Who is next? Morgan stanley shares are plummeting and Goldman Sachs as strong as it is seems shaky. In the UK Lyodds just took over HBOS. Six of the among largest central bank is pumping over 270 billion dollars to the stock market in an effort to prevent market from further crashing
Steping out and looking at a larger picture and one has to wonder, where has all the money gone? We do not see global production of any commodities or manufacturing drop so much in one day as the drop of the market in Wall street.
It is when one understands the core of capatilist that such drops and bankruptcies are possible even when production of everything else is relatively stable
I shall not bore you with the details of how capitalist works. But strip everyting from the regulation and conservertive investments, capitalist works on greed which is the very most intristic nature of humans. The more greed the market the more positive the growth. Prices start of companies and assets becomes inflated , far more that what their initial value is. Unregulated and uncontrolled the positive growth can turn into a bubble. Stock prices become overinflated and like any bubble become to overstessed. Investors are paying a lot of money expecting a good return. However, companies, consumers and production cannot keep up with investor's expectation. Turning sour the investors sell away the holding to minimise lost.
Prices tumbled. In an event when a lot of this happens market declines. Suddenly the very people who works for the company loses their job because when the investors pulled out the company does not have enough money to continue operations.
The customers loose too. Not only that they loose the product that they have been loyal, all the extra money that they have paid for the product ( cost of production ) has been robbed away by the capitalist.
In the end of the day, Its the capitalist who becomes rich. This is even when markets are down. And it seems that this has been a vicious cycle again again.
If you want to be rich and you can't beat them, then join them. Of course there is a different between a smart capitalist and a foolish one. A capitalist looks when the market is in recession and starts investing on good stocks that are cheap. when recession is over, market price will go up along with profits. However, do not be over confident. Take the money out before it drops again.
The ability to spot the right time to buy and sell as well as being able to more or less predict the trend that defines a smart capitalist. An even smarter capitalist would be able to move from one stock to another thereby sustaining profit even when the general outlook of the market is poor.
So there you go. If you do not know a lot about investing start reading the books concerned with it. Do not directly jump start on buying stocks but follow the market first to get a feel on the market. Start small and roll the money. Lastly, don't be a fool and put everything you got on something that you are really not sure about.
Tuesday, September 2, 2008
Engineering an outcome
A lot of thing do not happen by chance and most likely it would never will. Even at times when all hard work has been put in the outcome isn't simply critical. It could either be failure related to soft issue (humans issues which include you yourself ) or simply because of Murphy's law which can be covered as the subset of the first mentioned. At its simplest understanding Murphy's law states that whatever can go wrong will go wrong.
Knowing this does not mean that one has to be scared of achieving an outcome. Contrary to this, knowledge of Murphy's law should be used as an advantage. This can be done by anticipating the failure and prepare a back-up plan for it in order for critical mass to be achieved.
There are many ways to in stopping failure from stopping critical mass. The most common use is by having consistently having a good margin so that if in case anything goes wrong there is still time to fix it up and it won't affect critical mass. Be cautious however, that this way is a double edge sword. It may provide some sort of safety net to achieving critical outcome, however, the technique breeds complacency. proper planning too is essential as having too big of a margin would mean critical mass would never be achieved while have too short of a margin would create failure to which critical mass would collapse as the nature of critical mass is that of an integrated one.
One must remember that concept of critical mass is interlinked. Failure of the subset does not disrupt critical mass. However, if the subset is the only one supporting the link , failure of a minor outcome can be the destruction of critical mass. Therefore, it is important to remember that the link ( i.e work , social life, investment, plan) should only be supported by a single entity.
Approach from many direction to ensure that the outcome can be achieved.
Knowing this does not mean that one has to be scared of achieving an outcome. Contrary to this, knowledge of Murphy's law should be used as an advantage. This can be done by anticipating the failure and prepare a back-up plan for it in order for critical mass to be achieved.
There are many ways to in stopping failure from stopping critical mass. The most common use is by having consistently having a good margin so that if in case anything goes wrong there is still time to fix it up and it won't affect critical mass. Be cautious however, that this way is a double edge sword. It may provide some sort of safety net to achieving critical outcome, however, the technique breeds complacency. proper planning too is essential as having too big of a margin would mean critical mass would never be achieved while have too short of a margin would create failure to which critical mass would collapse as the nature of critical mass is that of an integrated one.
One must remember that concept of critical mass is interlinked. Failure of the subset does not disrupt critical mass. However, if the subset is the only one supporting the link , failure of a minor outcome can be the destruction of critical mass. Therefore, it is important to remember that the link ( i.e work , social life, investment, plan) should only be supported by a single entity.
Approach from many direction to ensure that the outcome can be achieved.
Friday, August 22, 2008
managing your resources
At the risk of sounding too general, I am writing what may seem obvious to many. Some commonsense which many of us are guilty. What am I talking about is none other than .... wasting.
There has been a lot of talk about precious resources on the world scale. On how humans have used more than they are required. I am not going to bore you with that mumbo jumbo ( no matter how related it is to this topic). The discussion goes on saying that resources are truely limited, and if we are not careful with our usage of natural resources sooner or later we would on the loosing end
If you understand that.. than it would be easier to understand resource management on a more personal level. When we talk about personal resource management, we talk about trying to optimize and increase efficency of results (whatever that is you want ) with the finite amount of financial resources . Below are some of the recommended guidelines:
1) SET YOUR TARGET AND GOALS
This is probably the most significant part of your resource strategy. Know what you want and be sure to follow through. Of course sometimes your end point changes from time to time, However, make sure that your core goals are intact.
2) EXPERIMENTS AND CHASING OPEN ENDED GOALS.
You do need to concentrate your goals and aspirations. however, as the saying goes... ' don't put all your eggs in one basket' still holds. invest your resources a small amount of your resources on other subsets of your well being. However, bear in mind that do not get overboard with too many small skirmishes until you lost track and resources of your main goal. If these experiments are successful they maybe a bonus but make sure if it it fails your would be on your knees crying.
3) EMOTIONS, EMOTIONS.
Making decision based on emotional pleasure once a while is a guilty pleasure that can be relaxing and refreshing. However, be wary to not be to addicted to it or else your indulgence would be more of a burden to your resources that helping you relax.
4) PASSION
while managing resources tries to minimize emotional pleasure in deciding what is good for the overall picture, emotions itself plays a larger role in managing resources. Passion for example plays an important part in deciding the targets and goals. Passion itself increases productivity and efficency of the result that you intended. Hence, do not discout emotions but use them as the main tool to maximize your results with minimal resource
There has been a lot of talk about precious resources on the world scale. On how humans have used more than they are required. I am not going to bore you with that mumbo jumbo ( no matter how related it is to this topic). The discussion goes on saying that resources are truely limited, and if we are not careful with our usage of natural resources sooner or later we would on the loosing end
If you understand that.. than it would be easier to understand resource management on a more personal level. When we talk about personal resource management, we talk about trying to optimize and increase efficency of results (whatever that is you want ) with the finite amount of financial resources . Below are some of the recommended guidelines:
1) SET YOUR TARGET AND GOALS
This is probably the most significant part of your resource strategy. Know what you want and be sure to follow through. Of course sometimes your end point changes from time to time, However, make sure that your core goals are intact.
2) EXPERIMENTS AND CHASING OPEN ENDED GOALS.
You do need to concentrate your goals and aspirations. however, as the saying goes... ' don't put all your eggs in one basket' still holds. invest your resources a small amount of your resources on other subsets of your well being. However, bear in mind that do not get overboard with too many small skirmishes until you lost track and resources of your main goal. If these experiments are successful they maybe a bonus but make sure if it it fails your would be on your knees crying.
3) EMOTIONS, EMOTIONS.
Making decision based on emotional pleasure once a while is a guilty pleasure that can be relaxing and refreshing. However, be wary to not be to addicted to it or else your indulgence would be more of a burden to your resources that helping you relax.
4) PASSION
while managing resources tries to minimize emotional pleasure in deciding what is good for the overall picture, emotions itself plays a larger role in managing resources. Passion for example plays an important part in deciding the targets and goals. Passion itself increases productivity and efficency of the result that you intended. Hence, do not discout emotions but use them as the main tool to maximize your results with minimal resource
Thursday, April 17, 2008
Make This Your Financial Habits!
1. Automate payments
Rather than expending energy chasing your bills and figuring out how you are going to save a few extra dollars each month, let automation help you out. Your paycheck should be directly deposited to your account to avoid wasteful bank trips or the urge to cash your check and walk out with a big wad of spendable greenbacks. For savings, set up an automatic recurring direct stock purchase plan where funds are automatically deducted from your checking account each month. If you prefer savings accounts to stocks, have a portion of your paycheck directly deposited into a high-yield savings account each payroll period; most employers will let you split your paycheck among different accounts of your choosing.
2.Know your banking center locations
Rather than just hitting up any old ATM when you need cash, adopt healthy financial habits by making one or two scheduled stops a week at a conveniently located bank branch. If you stick to your plan, you should be able to avoid those rogue cash withdrawals you might experience at the bar on a Saturday night. This will help you stick to a budget and if you go to your bank, you will save on those costly ATM fees.
3.Carry one credit card
With the swarm of credit card solicitations you have, it is no wonder you likely have and use more than one credit card. Besides, they are all useful in some form or another as each gives you reward points from Starbucks to Dillard’s, as long as you use their credit card. Cutting up all but one card to carry with you reduces the temptation of overspending and is a healthy financial habit. Furthermore, in the event you are trying to get your finances together, it is far easier to manage one account rather than several, and you can commit more of your cash to paying off one balance rather than spreading it around. Find one credit card that has practical rewards, such as gas rebates, cash back or travel points (rather than free coffee). When you get your credit card statement, immediately pay off the balance in full, but schedule an automatic payment a couple of days before the due date to maximize cash flow and maybe even earn some interest while the payment is waiting to hit your account.
4.Reconcile your accounts
A lot of people do not reconcile their checking and credit card accounts. Reconciling makes for a healthy financial habit, and by doing so, you will be forced to watch your finances more closely. Often, getting your act together financially simply means paying attention to it; reconciling your account is a rudimentary exercise that makes you look at what you spend to make sure it matches up. Additionally, reconciling can help you identify bank fees and other charges you are not expecting that seem to contribute to your dwindling account balance. Even if you do not find any gaping holes in your spending patterns, the commitment of simply reconciling your accounts each month when the statements come in will put things in perspective.
Rather than expending energy chasing your bills and figuring out how you are going to save a few extra dollars each month, let automation help you out. Your paycheck should be directly deposited to your account to avoid wasteful bank trips or the urge to cash your check and walk out with a big wad of spendable greenbacks. For savings, set up an automatic recurring direct stock purchase plan where funds are automatically deducted from your checking account each month. If you prefer savings accounts to stocks, have a portion of your paycheck directly deposited into a high-yield savings account each payroll period; most employers will let you split your paycheck among different accounts of your choosing.
2.Know your banking center locations
Rather than just hitting up any old ATM when you need cash, adopt healthy financial habits by making one or two scheduled stops a week at a conveniently located bank branch. If you stick to your plan, you should be able to avoid those rogue cash withdrawals you might experience at the bar on a Saturday night. This will help you stick to a budget and if you go to your bank, you will save on those costly ATM fees.
3.Carry one credit card
With the swarm of credit card solicitations you have, it is no wonder you likely have and use more than one credit card. Besides, they are all useful in some form or another as each gives you reward points from Starbucks to Dillard’s, as long as you use their credit card. Cutting up all but one card to carry with you reduces the temptation of overspending and is a healthy financial habit. Furthermore, in the event you are trying to get your finances together, it is far easier to manage one account rather than several, and you can commit more of your cash to paying off one balance rather than spreading it around. Find one credit card that has practical rewards, such as gas rebates, cash back or travel points (rather than free coffee). When you get your credit card statement, immediately pay off the balance in full, but schedule an automatic payment a couple of days before the due date to maximize cash flow and maybe even earn some interest while the payment is waiting to hit your account.
4.Reconcile your accounts
A lot of people do not reconcile their checking and credit card accounts. Reconciling makes for a healthy financial habit, and by doing so, you will be forced to watch your finances more closely. Often, getting your act together financially simply means paying attention to it; reconciling your account is a rudimentary exercise that makes you look at what you spend to make sure it matches up. Additionally, reconciling can help you identify bank fees and other charges you are not expecting that seem to contribute to your dwindling account balance. Even if you do not find any gaping holes in your spending patterns, the commitment of simply reconciling your accounts each month when the statements come in will put things in perspective.
5.Visit your bank
With online banking available, it is no wonder you never visit your bank branch. Once a month, rather than hitting the ATM, go to the teller to make a withdrawal. This will benefit you because getting some face time in at the branch will ensure that the staff and branch managers will start to recognize you. Nothing is guaranteed, but when you visit the branch and speak with a teller, you may be introduced to a better checking account option with lower or no fees or a savings account that pays a higher interest rate. Furthermore, with a personal relationship established, you are likelier to have success in disputing bank charges and getting preferential treatment, such as no-fee money orders.6.Watch your credit report
The credit score used to be an invisible number that you couldn’t look at. Things have changed thanks to online services offered by companies like Equifax. These services charge a fee, but you can view your credit report and credit score. In some cases, you can access that information for free when you sign up for a credit-monitoring service and some credit cards. It is nearly impossible to have a perfect credit score, but understanding your score is instrumental in understanding why you did not qualify for the lowest interest rate or why you were declined for financing a new car. Seeing your credit score and recognizing how making payments on time can impact your score aids in putting your financial situation in perspective7. Use software
The above tasks can be simplified and yield better results when you use a wide variety of software to help you budget, track expenses, reconcile, and plan. Readily available software programs, like Quicken, provide a complete financial management and tracking tool. Most banks and credit cards also let you download transactions to eliminate tedious data-entry and math mistakes. Web-based programs, like Mint.com, do the above as well as introduce you to better deals on savings accounts and credit cards, and tell you exactly how much more you will make or save by taking a new route.Wednesday, April 16, 2008
investing and time
Now that you have known about the relationship between investment and savings, let us look at the timeline necessary to make this work:
To make the most of your portfolio, you’ll need to put money in stocks and bonds. If you’re young and you can afford it, your investment portfolio should be an aggressive mix of risky and safe bets because you can always build back your losses should things go south. If you’re older and you started late, however, concentrate on growth with as little risk as possible;
1. Pay off high-interest debt
The longer you carry debt, the more money you’ll end up paying. Therefore, the first step in a successful financial timeline is paying off the money you owe. But not all debt is created equal, so it pays to pick and choose. The first thing that has to go is high-interest credit card debt. If you’ve been carrying a balance for a while, you could be paying 20% or more. Since you’ll probably never find an investment that provides you with more than that amount in interest, there’s no sense saving money until you’ve completely paid off this debt.2. Pay off additional debts
Additional debts that should be paid off, but on a different timeline, include student loans and mortgages on first homes. Typically, these loans have a thing in common. The interest, especially on student loans, tends to be lower than on credit cards. That means you have a choice to make. If you’re able to safely make more interest on a given investment than the amount of interest you’re being charged for your student loan, it could be wise to invest rather than pay off the debt. This way, the interest you generate will pay off the interest on the loan and eat away at the principal. And once you’ve paid off the entire loan, you’ll still have the principal from the investment to work with.3. Set up savings
There’s no hard-and-fast rule for how much you should save. try to put aside 10% of your income. If you’re already saving 10%, try to squeeze a few more dollars in. But remember: The number isn’t as important as the circumstances. If you’re a single guy without a lot of responsibilities, you’ll probably want to save enough for three months of unemployment in case the worst should happen. On the other hand, if you’re a family man, you’ll need to put away a larger chunk because children and a spouse could mean many more unforeseen expenses.4. Plan for retirement
This is the big one, and most guys don’t do it early enough. The fact is that you’re never too young to start thinking about your retirement. If your employer matches your contribution, put in the maximum and take advantange of the free money. If your employer doesn’t offer this, ask your tax adviser how much you should contribute5. Build an investment portfolio
This is where you’ll want to put the rest of your money. In all likelihood, it’ll be your biggest sector for growth, because savings and retirement funds alone probably won’t cut it. Think of it this way: Your retirement money should give you enough to survive when you stop working, while your investment money is the extra that will allow you to really enjoy that time. And the bigger the pie, the faster you can stop working and start enjoying life.To make the most of your portfolio, you’ll need to put money in stocks and bonds. If you’re young and you can afford it, your investment portfolio should be an aggressive mix of risky and safe bets because you can always build back your losses should things go south. If you’re older and you started late, however, concentrate on growth with as little risk as possible;
plan for the future
As you can see, with the exception of paying off your debts, your financial timeline will be an ongoing commitment. The more room you have to operate in your monthly budget -- that is, the more money you can channel into savings and investments -- the more money you’ll have later. If you plan wisely, a bump in the road will be just that -- a bump. But if you fail to put money away, your plans could derail. Remember: The more money you’re able to put away today, the sooner you’ll be able to claim your financial freedom and start enjoying all your hard work.long term savings you must
Short of investing.... Long term savings is the next big thing if you want to be rich. If you just invest without savings you won't be rich. Here are some tips on saving long term ( that is where the big money in savings are):
When to start: 5 years before
Owning your own home is one of the most important financial decisions you can make for yourself and your family. Real estate can certainly be an investment, but you should not view it as a quick-flip opportunity. Over a course of several decades, real estate prices tend to appreciate, but they are not immune to short-term price fluctuations. Buying a home can be a very emotional decision, but you should not let feelings interfere with the business aspect of your decision. First, estimate what an affordable monthly payment would be based on your income, then find a house within that price range -- not above, no matter how much you adore the house itself. Then, aim to save at least 20% of the purchase price for a down payment. It is a lofty savings goal, but it will help your personal finances enormously as it will help you avoid the PMI, obtain a more favorable interest rate from the bank, and it may even help you negotiate the price of the house. Sellers are more interested to work with prospective buyers who are serious and have the real means to make a purchase -- which means a 20% down payment. Talk with your employer about depositing a portion of your pay check directly to a high-yield savings account ( or ASB) to get your must-have long-term savings in order for a house down payment.
When to start: Now
Regardless of your income, this must-have long-term savings goal is not an optional expense, and should come before many things, such as saving for your kid's education. You can make your annual contribution as early as the first of the year and as late as April 15 of the following year. You can take advantage of these factors in one of two ways, the first of which is to fund as early as possible. It may put a short-term damper on your cash flow, but you can have that $5,000 working for you a whole year earlier than if you had waited until the last minute.
When to start: Now (if you have kids or are expecting)
If you have kids or will have kids one day, you can be certain that paying for college will be a serious issue -- and realistically should not be an option considering that, on average, someone with a college degree makes about $800,000 more during their career than someone without a degree would. If you just had a baby, expect college to cost, at present, $15,000 per year, and up to over $59,000/yr in 17 years. Just like retirement, the sooner you can start this must-have long-term savings account, the better, as you will likely have less time to amass cash for college expenses. A relatively aggressive mix of stocks should be used as historically, stocks have outperformed bonds and savings accounts. Specifically, considering the average 7% per year increase in college costs -- the 3% savings account or the 4% CD is not going to cut it. If it comes down to a choice, you should fund your retirement account before you stash away cash for your kids' college expenses. While it is not ideal to have your loved ones saddled with debt after college life, student loans are always an option -- retirement loans do not exist.
When to start: 0-3 months
We're all smart enough to understand why it's important to have a cushion of cash in the bank. Unfortunately, it's easier said than done, especially when the experts are saying you need to have cash on hand to cover three to six months of living expenses, should the worst happen. That might as well be $1,000,000 in today’s world. Start simple and just commit to always having $500-$1,000 on hand in a savings account linked to your checking account. This will be a savior when it comes to things like bouncing checks or dealing with more common emergencies like speeding tickets or insurance deductibles. Even in the event that the emergency exceeds $500, that must-have long-term savings stash will help you tremendously. Don’t wait on this -- just do it -- and make it your first priority. The feeling of being in control of your finances will do wonders for your financial confidence in the long run.
House down payment
How much: $20 % of your intended houseWhen to start: 5 years before
Owning your own home is one of the most important financial decisions you can make for yourself and your family. Real estate can certainly be an investment, but you should not view it as a quick-flip opportunity. Over a course of several decades, real estate prices tend to appreciate, but they are not immune to short-term price fluctuations. Buying a home can be a very emotional decision, but you should not let feelings interfere with the business aspect of your decision. First, estimate what an affordable monthly payment would be based on your income, then find a house within that price range -- not above, no matter how much you adore the house itself. Then, aim to save at least 20% of the purchase price for a down payment. It is a lofty savings goal, but it will help your personal finances enormously as it will help you avoid the PMI, obtain a more favorable interest rate from the bank, and it may even help you negotiate the price of the house. Sellers are more interested to work with prospective buyers who are serious and have the real means to make a purchase -- which means a 20% down payment. Talk with your employer about depositing a portion of your pay check directly to a high-yield savings account ( or ASB) to get your must-have long-term savings in order for a house down payment.
The formula
- Monthly payments (interest, principle, taxes, insurance): 28% of gross income.
- Total house purchase price: 2-2.5 x total gross income.
Retirement account
How much: $5,000/yrWhen to start: Now
Regardless of your income, this must-have long-term savings goal is not an optional expense, and should come before many things, such as saving for your kid's education. You can make your annual contribution as early as the first of the year and as late as April 15 of the following year. You can take advantage of these factors in one of two ways, the first of which is to fund as early as possible. It may put a short-term damper on your cash flow, but you can have that $5,000 working for you a whole year earlier than if you had waited until the last minute.
Education savings
How much: $200,000When to start: Now (if you have kids or are expecting)
If you have kids or will have kids one day, you can be certain that paying for college will be a serious issue -- and realistically should not be an option considering that, on average, someone with a college degree makes about $800,000 more during their career than someone without a degree would. If you just had a baby, expect college to cost, at present, $15,000 per year, and up to over $59,000/yr in 17 years. Just like retirement, the sooner you can start this must-have long-term savings account, the better, as you will likely have less time to amass cash for college expenses. A relatively aggressive mix of stocks should be used as historically, stocks have outperformed bonds and savings accounts. Specifically, considering the average 7% per year increase in college costs -- the 3% savings account or the 4% CD is not going to cut it. If it comes down to a choice, you should fund your retirement account before you stash away cash for your kids' college expenses. While it is not ideal to have your loved ones saddled with debt after college life, student loans are always an option -- retirement loans do not exist.
Formula
College costs increase about double the inflation rate, 5%-8% per yearEmergency fund
How much: $500-$1,000When to start: 0-3 months
We're all smart enough to understand why it's important to have a cushion of cash in the bank. Unfortunately, it's easier said than done, especially when the experts are saying you need to have cash on hand to cover three to six months of living expenses, should the worst happen. That might as well be $1,000,000 in today’s world. Start simple and just commit to always having $500-$1,000 on hand in a savings account linked to your checking account. This will be a savior when it comes to things like bouncing checks or dealing with more common emergencies like speeding tickets or insurance deductibles. Even in the event that the emergency exceeds $500, that must-have long-term savings stash will help you tremendously. Don’t wait on this -- just do it -- and make it your first priority. The feeling of being in control of your finances will do wonders for your financial confidence in the long run.
Formula
- Put $500 aside now and work from there.
Sunday, March 2, 2008
have the right attitude
Of course wanting to be rich itself is not enough. There are certain behaviors that has to be imprinted within you so that you have the right attitude for the path of richness . Among my suggestions are:
1. Think about the pennies.
Every penny counts. Sometimes you may think its just a couple its just nothing and you should forget about it. Wrong! it all starts with the ignorance of a penny and then progresses on to larger denominations. Before you know it you will be spending more than you are making.
Nevertheless, this does not mean that that you have to be stingy with your family and friends. A penny extra goes a long way in building lasting relationship to which it may turn to a more money making ventures. And don't even start on the gratitude part
2. Optimize and save
Once you have establish the importance of pennies and pounds its time for you to save them appropriately. make sure that each of those extra pennies count to savings. Big amounts can go to the bank. but its the little ones that you may need to save. Its not the matter of how much you save but its a habit for you to eliminate wastage. Wastage is a rich man's no. 1 enemy.
Of course you don't save when it comes to things that are more important. Things that would make you actually lose more than you save. for example you waste time looking for your 1 ringgit note where at the same time you are missing a multi million dollar meeting. That's just penny wise pound foolish.
3. Invest, Invest, Invest
Saving alone won't make you a rich man... yes, you can live a comfortable life, but you won't get rich. Time and time again the world has proven only the people who invest are the one who gets it all. Be it on you own business or property or some else's business
Besides business, investing is your second best chance of getting rich minus the hard work of growing a business.
When talking about investment there are of course a certain attitude mold to follow in order to be a rich investor. It is a characteristic of a successful investor to be a risk taker. For obvious reasons, the higher the risk the higher the returns. But be reminded a rich investor despite taking risk, the risk taken is a calculated risk. Taking risk without any basis is just plain foolish and definitely an attitude that could make you poor
4. Live with no regret
Many skillful people trying to be rich gets trapped in this limbo. They all begin with an optimistic view of being successfully rich. After failure of the first attempt many gave up for a not so rich and but comfortable live. In the end of the day their life do not involve any risk because they are scared. Hence their wealth is stagnant and do not grow as much over time.They become the classic of being conservative.
A person that aspires to be rich must not fall into this trap. Positive attitude despite failure is important in order for the perseverance attitude to thrive. Failure in the beginning at most times are imminent. One must not give up but instead use it as a lesson for the next get rich project.
Things happen. It's your choice to be in the right get rich attitude of seeing the half glass full or live as a cynic by seeing the glass as half empty.
1. Think about the pennies.
Every penny counts. Sometimes you may think its just a couple its just nothing and you should forget about it. Wrong! it all starts with the ignorance of a penny and then progresses on to larger denominations. Before you know it you will be spending more than you are making.
Nevertheless, this does not mean that that you have to be stingy with your family and friends. A penny extra goes a long way in building lasting relationship to which it may turn to a more money making ventures. And don't even start on the gratitude part
2. Optimize and save
Once you have establish the importance of pennies and pounds its time for you to save them appropriately. make sure that each of those extra pennies count to savings. Big amounts can go to the bank. but its the little ones that you may need to save. Its not the matter of how much you save but its a habit for you to eliminate wastage. Wastage is a rich man's no. 1 enemy.
Of course you don't save when it comes to things that are more important. Things that would make you actually lose more than you save. for example you waste time looking for your 1 ringgit note where at the same time you are missing a multi million dollar meeting. That's just penny wise pound foolish.
3. Invest, Invest, Invest
Saving alone won't make you a rich man... yes, you can live a comfortable life, but you won't get rich. Time and time again the world has proven only the people who invest are the one who gets it all. Be it on you own business or property or some else's business
Besides business, investing is your second best chance of getting rich minus the hard work of growing a business.
When talking about investment there are of course a certain attitude mold to follow in order to be a rich investor. It is a characteristic of a successful investor to be a risk taker. For obvious reasons, the higher the risk the higher the returns. But be reminded a rich investor despite taking risk, the risk taken is a calculated risk. Taking risk without any basis is just plain foolish and definitely an attitude that could make you poor
4. Live with no regret
Many skillful people trying to be rich gets trapped in this limbo. They all begin with an optimistic view of being successfully rich. After failure of the first attempt many gave up for a not so rich and but comfortable live. In the end of the day their life do not involve any risk because they are scared. Hence their wealth is stagnant and do not grow as much over time.They become the classic of being conservative.
A person that aspires to be rich must not fall into this trap. Positive attitude despite failure is important in order for the perseverance attitude to thrive. Failure in the beginning at most times are imminent. One must not give up but instead use it as a lesson for the next get rich project.
Things happen. It's your choice to be in the right get rich attitude of seeing the half glass full or live as a cynic by seeing the glass as half empty.
Sunday, February 24, 2008
It Starts today
The interest is there. However, the creation of this blog marks the turning point of idea of being rich to just the confines of coffee shop talk. This blog would not only act as a central repository of business ideas but also acts as a discussion forum to strengthen the ideas of being rich
As being rich is about diversifying, My post would be categorized to the following sections:
As this blog is alive, contents may evolve through time. As such do check often as when times go on, contents may be obsolete. However, it is my intention to keep all contents publish and archived so as to be able to trace to be able to trace the developments of be it a model, idea or even to track progress on projects.
Constructive comments are welcomed!
As being rich is about diversifying, My post would be categorized to the following sections:
- Investments
- Starting your own business
- Ideas and discussions
- Projection
As this blog is alive, contents may evolve through time. As such do check often as when times go on, contents may be obsolete. However, it is my intention to keep all contents publish and archived so as to be able to trace to be able to trace the developments of be it a model, idea or even to track progress on projects.
Constructive comments are welcomed!
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