Uncle VS Inflation

Now, let me share with you about the saving(based on true story)

Few days ago, i heard from my colleague that there is a rich but single uncle (don’t know why,didn’t discover the reason), his hobby is saving. He love to  work hard and accumulate his “money bag” become bigger and bigger. Beside, this uncle has a goals in saving, is to purchase a unit of high class condominium and enjoy for his retirement life. He is plan to pay by cash, because he is not so believe with those financing / loan firms  and banks.

After few years, the saving is become more but he still can’t afford to buy the condominium (due to inflation, products / housing price increase). He never find out the problems behind and keeping work harder and save more. The time passed by really fast, the value of the money he save is keep decrease but the inflation is keep on increase year by year, but he still don’t know what is happening. Then he go to looking for my colleague. Finally, the uncle understand that the interest rate  given by the bank can’t against the inflation rate. But he already wasted a lot of time in saving, and now he have to buy the condominium by loan.

In this story, we can see that the uncle using most of his lifetime is saving, but at last he still can’t withstand the inflation. So, for the younger generation like you all, what have learn in this story? Saving is a tool to accumulate your wealth, but beside that you still need to accelerate your wealth in order to against the inflation.

Mr.A & Mr.B

Let me share with you guys another story about my clients.

Mr.A is a busy businessman, he spent most of his free time to do research and monitor about the investment portfolio or online to look for the update of investment market. Slowly, Mr.A has getting some good return from his investment and he also expanded his business. Beside the business & investment, he also have a happy family – a pretty wife & 2 cute kids. But unfortunately, an serious accident is happen to Mr.A in a night. Because of the accident, Mr.A become total permanent disability and nobody is monitor his investment portfolio.

Furthermore, the share of Mr.A is slowly taking over by the other shareholder. His wife and child can do nothing to stop it and let the shareholder do anything at will. After that, his wife and childs have to work in the hawker center for the living cost and the education fee of his children. All of their friends feel sad and pity of them. Do you think that Mr.A is a responsible husband or father to his family??

For Mr.B, he is a totally different with Mr.A. He is a normal working adults with introversive and fainthearted. He work as a manager in a company and his wife is a insurance agent. So, when it come to the end of months, his wife will ask him to take out some money to help her to hit the sales target. For Mr.B, his goals is to save some money every month and invest but his investment plans were delayed because of helping his wife to hit the sales target. So, actually his wife is earning a lot Mr.B money, and most of their money is allocate in the protection part, and it doesn’t help them to gain the higher returns. How they going to achieve their financial freedom??

From this story, we can know that NO PROTECTION or OVER PROTECTION will not help in you financial plan. Only with the SUITABLE PROTECTION, GOOD STRATEGY, & WELL CASH ALLOCATION then you are able to achieve your goals in your financial plan. So, you are Mr.A or Mr.B??

An Old Lady’s Story

There is a case about an old lady, she is around 60 years old, and she have RM 100K, then she went for an Unit Trust Agent for herself. But that agent never analyst her financial status and what is her actual goals in this investment. He never advice which class of investment is suit for her, he just recommended her the current hottest  products in the investment market.

After few years, she lose her money around 50% of it in the investment include management fees, she cried and came to me, and ask me what should she do now?Everybody know what is the problem right. The problem is on the agent, he never analyst what she need and also her current financial status. For a 60 years old lady, the only thing that she need is this RM100k will bring her some passive income for future living cost. But the agent recommended those high risk funds for her. For an old lady, they don’t need high return of investment, but fortunately, now she is slowly earning back some of her money. So, this is the different between Financial Consultant and other agents out there. You might need a agent for insurance, one for unit trust, and one for investment in stocks and shares, but the problem is these 3 agents never meet together and discuss about your financial status. On the other hand, the duty for a financial consultant is to combine all the duties from these 3 agents, analyst your financial status, and provide you the recommendation on which investment tools is more suit for you now. So, where is your money now? Where you invested in?

Five Principle in Financial Planning

Well, after i illustrated the four main elements in Financial Planning earlier, now it’s time four us to take action on it. You’ll not going to success with only knowledge but action will bring you towards your goals. Actually, in financial planning we also need will power and insist on yourself. So, during this period, we need to comply the 5 principle in financial planning, it just like a game, you will OUT if you’re FOUL, it is the same thing in financial planning.

1st Principle: Design your plans or goals (what you wish to have / get? , What is your target?) But your plans must be able to against 3 impact which is – Timeline Shock + Self Funding Shock + Market Shock)

2nd Principle: Know what you have / owned now (eg. Assets, Debts, Income, ETC..)

3rd Principle: Assign your resources properly ( Assign your money / assets properly in Wealth Protect, Wealth Accumulation,Wealth Management)

4th Principle: Set up a plan to protect your money

5th Principle: Set up a clear succession plan

We must comply the 5 principle stated above, then next our target will be FINANCIAL INDEPENDENCE. But to achieve Financial Independence, all we need is >>>

• Fully Home Paid + 6-12 Months Saving for Expenses + Income Generating Assets (IGA) = Financial Independence

In next topic, i will divided our human timeline into 4 parts –> Age 18 – 25, Age 26 – 45, Age 46 – 60, Age 61 – Expire Date.

So from there, you can see you fall in which part and how you going to plan for you current financial status.

CPA Undergraduate Business Conference – “Awaken The Financial Genius Within”

Miri – 1 October, 2009 – Curtin University of Technology, Sarawak Malaysia (Curtin Sarawak) is holding its 6th Undergraduate Business Conference on 3 October 2009.

Themed ‘Awaken the Financial Genius Within’, the conference is jointly organised by the… university’s Accounting Club, Certified Public Accountants (CPA) Australia and Fortress Wealth Advisory.

The conference’s objectives are to nurture Curtin’s graduate attributes, provide a platform for learning and sharing, and widen networking opportunities among students. It is open to anyone of non-accounting background and approximately 200 participants from other educational institutions will be attending.

According to organising chairperson Chew Lun Wu, the conference brings much benefit to Curtin Sarawak students and they truly cherish the experience. “Besides being a good platform for Curtin Sarawak students to share their thoughts and ideas on money matters, we also get to develop our communication skills. It is also an opportunity for us to interact with industry professionals and our peers from different institutions who will be attending the conference,” he related.

“It is a unique learning experience that cannot be accomplished from just attending lectures and reading textbooks. Indeed, Curtin Sarawak encourages its students to learn beyond the classroom and gets us involved in meaningful events such as this conference. It is an event that is always widely anticipated by our students each year,” added Chew.

Among the topics to be discussed at the conference are ‘Beyond the Millionaire Mindset’ and ‘Discover the Entrepreneur Within’, which will be delivered by a representative of Fortress Wealth Advisory, which specialises in practical advice on wealth management.

Below is some of the photo about the event:

4 Main Element in Financial Planning

First of all, we are talking about the PROTECTOR.

The duty for the Protector is to protect us. What to Protect? How to Protect? The most important part which need the protection in our life is TIMELINE. Our human timeline are dynamic and fragile, if anything happen, it could easily destroy our timeline. What we going to protect? We have to protect ourself from human disaster, a.k.a 5-D: Death, Disabilities, Dread Disease, Downsize, Divorce.

Let think about it, if any 1-D happen in you life before your retirement age, you might loop in a very hard situation. You might lose your job, and in the same time, you need to pay for your medical fees, your kids education fees, and all of your saving might gone, unless you are the millionaire then that is the different thing to say. So, you might need to form a portfolio which is Risk Management Portfolio (RMP) for yourself. With this RMP you can withstand against 5-D, and it also make sure that all your earlier investments and plans are still working as usual if anything haapen to you. This is the most basic part in Financial Planning. Before you go for a war (Investment), you must learn how to defend (RMP). With a solid defend, then you only can start you attack. If not, no matter how big is you battalion (investment tools), any counter attack (5-D) could easily bring a huge lose to you. And you get nothing in the end. Somebody might think that insurance is not important for them, but it is important asset when you die. Insurance is the worst investment asset to invest, but it is the best protection asset when you need it.

2nd is the STRATEGIST

The duty of Strategist is simple, but it need willpower & patient. Financial planning is a long-term project, we need to plan carefully, or else it will waste the resources. Nowadays, the bank interest rate is only 0.8% -2,5% annually, but the inflation rate in Malaysia is as high as 6% to 7% (According to latest Web research). For an example, 3 years ago, a package of Nasi Lemak only cost RM2, but now due to inflation it cost around RM4. In the same time, 3 years ago, you save RM2 into the bank, but will the bank pay you RM4 in 3 years later? answer is “NO”. Then you will lose you purchasing power. 3 years ago, you still afford to purchase the Nasi Lemak, but now you might only afford to purchase the Sambal only. Just Kidding.

Saving the money in the bank is not the smart way to accumulate your wealth, but we still need 6-12 months saving for expenses, in case of downsize. So, where should we out our money? We need to put our money in a place which can give us an interest rate of 6% – 7% or higher than inflation rate, so that we can maintain our purchasing power. So, in this part, we need to SAVE. We need TIME + MONEY to go investment, when you have accumulate a certain amount of money, then you can start invest or set up own business. Then now, you are on your way to achieve financial freedom.

Next is MONITOR.

Every battalion need a monitor. We have a good defend and attack, and now what we need is monitor. Even though we have the best strategy / defend / attack, we still need someone to monitor the progress or situation. Through monitor, we can find out the problem, and make improvement on it. It just same like financial planning, we have to always monitor the progress and statistics, keep improving, then we will only achieve financial freedom. There is a differences between financial freedom & financial independence. Financial freedom is, due to you already have a passive income, so in this situation, you can choose whether you still want to work or not. But financial independence is we still have to work for income, but in this time we do not have to depend on other people and don’t have any debt’s burden at all. So, a good monitor will lead their army to victory (financial freedom)

Lastly, is Successor

This is part is simple. You only have to find a person to succeed you kingdom, but black & white is important in this part, otherwise there is gonna be troublesome when dispute is occur. In real life, you must state everything properly in your testament, otherwise everything will goes to government.

So, above is all the main element in financial planning. I will find new topic in the next post. Ir you have any question, you can leave a message or email to me. i will reply to you soon. Thx.

Important Element in Financial Planning

I believed everyone know the importance of having an stable / well financial planning. But the problem is how many people is planning for their own financial status, and going for their financial freedom?

Sometime we are confuse in our life, we don’t know how or where to allocate our money? What to invest? Is the insurance premium enough to cover? aren’t we save the money in the right place? These are the basic elements of financial planning. It always look simple, but you will find difficulties when you going to work it out. So, we need to form our “battalion”, and these “battalion” will use their strength to help us to go for our financial independence. But what is the element we need in this “battalion”?

Protector >> Help to protect our wealth

Strategist >>Recruit army, Accumulate wealth, and ready for attack

Monitor >> Analyst and oversee the statistic, giving the best recommendation / strategies to help to win the battle

Successor >> Distribute duty, and pass it to the next emperor

We have to from our own “battalion” in order to win the battle. ~~VICTORY~~

How we going to start our journey to achieve financial independence? There is only a line between the poor and the rich, which categories you fall into? To be continue…Thanks.

Why We Can’t Be Rich??

There are 2 categories of people in our sociey: The Rich & The Poor. Did you notice that everyone in this society have the potential to be the rich?? But most of the people does not achieve it due to their different thinking / working styles / life style.

For an example, nowadays most of the people are staying in apartment or condominium. But you notice that, some of the apartment are so dirty / messy but some not??? It is simple to explain this. For most of the poor, they not willing to pay for the maintenance fees / management fees, but they are not aware of due to lack of the fund, they can’t hire the professional to manage the apartment well. furthermore, This will also low down the future value of the property. From here you can see that, because of saving a little of money, then they lose a future.

Below is other differences between The Poor & The Rich:

For the poor, most of them just want their life to be ease & peace ; but for the rich, they like the challenges. Let’s thake career for the example, for the poor, they hope that they could work in the big company especially MNC, because they only want a stable earning and good working environment. On the other hand, most of the rich hope their child to work and surge in a small company. Furthermore, some of them, they even hope that their child to be an entreprenuer to set up their own business.

Beside, in the investment, the poor usually will choose  those low risk investment which can only protect their wealth. For them, 3% – 5% of return from their investment is more than enough. But for the rich, they love the challenges the most. So, they usually more prefer to invest in those high risk investment. It is because they believe that “Low Risk, Low Return”.

The Rich Believe in Team Work

In the real life, the poor are very hardworking. They even more hardworking than the rich. But why they are putting a lot of effort, and they don’t get the same return?? This is because the definition of “hardworking” for both parties are different.

For the poor, their definition of “harworking” is work alone non-stop from early morning until late night. But for the rich, the term of “hardworking” can devide into 3 categories”

1.Team-Work

For most of the rich, they do have a good leadership skill, motivation skill. Especially for their sales team, the rich never go to sell their product / services by their own, they only lead & motivate their sales team, so that everyone will work toward the goals & enjoy the result.

2. Make The Money Work Together

Most of the poor, because of their fear to take risk, most of them will let their money to “sleep” in th bacnk and earning  low interest rate. So, their money will become “lazy” and “low / no production” for them. For the rich, they will take their money go for investment. Most of them, they are looking for at least 10% of return from their investment. Even though when the rich is sleeping in the night, their money will work hard to help them to produce the profit. Example, they earn money through loan money to their friends to set up business to earn the interest or involve in purchasing of real estate and earning sales profit & rental profit. This is a clear comportment between 2 parties.

Lastly, in my point of view, the effort from the rich might not be compete with the poor. But the rich know how to utilize the resources such as people & money to help them to generate the profit / extra earning.

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