Saturday, September 27, 2008

now Finance Planning starts ....

You already setup a Standing Instruction transfering a Fix Amount ( Percentage ) of monthly income into another Saving Account.  

Congratulation !  More than 90% of general population never survive till this stage.  Surprising or not, those who can make it to this stage are usually those non high flyers, the old guy next door or the geek who never leave his room etc.  And all of them became the millionaires next door that you never know.  ( Amazon agrees )

Basically what you have accomplished is managing your Cash Flow.  You have decided Future is Important and want to reserve some seeds instead of eating up all of them now.  Here onward is all about maximizing return of this Saving Account.

The key is Passive or Money Earns Money.  A way that the money grows by itself without you watching it, working on it ... if you are eager to talk about earning more money, goes back to the Income stage.  Increase all your want and explore all your wild ideas there ... here is about putting your wealth aside and comes back years later to wow yourself.

( The analytical part after Cash Flow is Asset and Liability but I leave this to later.  Lets stay on something simple and practical stuff first )

Basically you pile up your wealth pyramid like this ...

1. Bank Saving Account
2. Bank Fix Deposit
3. Bond Fund
4. Mutual Fund ( Balance Fund then followed by Equity Fund )
5. Stock Exchange

This is the part where challenges may come.  Different consultants share different approaches based on their own perspectives.  Not everyone pile up the pyramid bottoms up.  Not everyone draw the pyramid like that.

This is also the part there is no right and wrong answers.  Its all about how YOU want YOUR SAVING ACCOUNT to grow IN ANYWAY YOU WANT ...

So what should you do ?

If you are new to this and no other people is confusing you, just take this pyramid now.  Subsequent sharing will lead you to building your own pyramid.

If you already disagree with this pyramid or your existing consultants tell you otherwise, then this is a good time you take out a pen and draw your own pyramid now.  Whenever you have more than two ideas that cannot co-exist fully, then its time you pick the good from both and build your own.  Afterall, this is all about you yourself, not anybody else.