Is your Finance all about money ?

Sorry for the silence, it seems that I may get tight up for a while recently.  You may have already observed that I no longer have time to find cartoon for my articles :)  I started writting for other publication so I get a bit confused and find it hard to balance the content between this blog and the other responsibility during this transition.  But there are so many more drafts to be released in this blog.  Bad Debt topics have a lot of hanky panky so I need to spend more time before proper release for public reading.  So I hope you guys do enjoy reading and do comment more so that I have better clues what articles to put up during the limited time I have now.

I have shared Gabriel's story, a 68 years old who used to be typical middle income group who sort of make it in his finance planning.  His neighbours don't even know him by name, his ex-colleges don't even remember him when they met on the street, his clients don't remember using his services, but yet he makes it better than many others who are holding high positions in careers, running a much more bigger scale business than him.

But his case doesn't come easy as a matter of fact.  It wasn't easy for him to save money in banks actually.  That were wars all around and everyone kept all their stuff under their own pillow - the safest place to be at that time.  There was only one choice when he invested in mutual fund and even newspaper warn people to be careful because the private mutual fund was ran by someone without linkage to bumiputera.  It was considered as the biggest scam at that time.

Gabriel first kid went to local university.  Gabriel taught well to his kids on finance matters.  Well actually no, he just taught his kids on income matters.  His first kid worked part time since high school and earned half of the expenses during his degree years.  

When the 2nd kid started to hint wanting to get foreign education, Gabriel made an interesting move.  He migrated to Australia.  It costed him MYR 3,000 at that time.  ( It costs more than MYR 10,000 now without a consultant ).  He didn't really like it there but it wasn't a decision for him anyway.  Eventually both of his 2nd and 3rd kids graduated with Australia degrees.  Costed him less than his first kid's degree.  

To him, this migration was the biggest sacrifies he made for his legacy, you can observe his business income was negative during that time, the only year his business runs a lost whole his life.  Because he thinks helping his whole family settling down in Australia was more important.  But this move also brought him some surprising result, that he actually retired earlier than he thought would be.

There are quite a few more interesting stories about Gabriel, but most of them are based on the same principal. 

When you need to achieve something in your finance matter and get stuck with the numbers ie. not enough money.  Try to elevate a little bit and ask yourself, what was it you are trying to achieve again ?  Most often one is pursuing the figures or money too hard that they forgot what the real purpose was.  

When you focus on the real purpose and not the money itself, you may suddenly realize money is not the only way to achieve your purpose.  And sometimes, you may find certain ways to achieve your purpose without money at all.

If the whole purpose of your personal finance is all about money, then you do not need personal finance planning actually.  What you need is to dedicate your whole life to making income.  Perhaps bank teller would be a good start.

So, is your finance all about money now ?

( part 1, part 2 ,part 3)

1view 09 04 02

I have been away mostly today and I have to admit although I do expect bullish but I didn't expect it this strong. Today's market performance is the first time shacking my confidence that market will drop to much worse during mid year.

The drop of gold price actually confirm stock up trend so although it will eventually come down but the up trend will last at least some more days.

I may profit take some of my speculative stocks tomorrow or early next week, keep my long stocks and continue to accumulate more bullets for later this year.

I get all these from stock.malpf.com, you may view there in real time too.

1view 2009 04 01

Yesterday market was brought up by China but the global up trend ended when it reached USA. So today KLSE is most likely to open high close low.

However, there is a 30% chance KLSE can have a break from global trend today and trend higher anyhow.

The most long lasting business model

If not mistaken, it was 2,300 BC and 4,500 years ago (no, not a mistake, these are the actual years).   Once upon a time ...

Caby  is a smart man, he understands human nature very well and decide to make a fortune out of it.  Today he is only focusing on the 'greed' part.

He collects $1 from every man he meets and promise to pay half of them $2.  At first, people have doubts and only a handful people join.  But when half of them are paid double the money they put in, words start to spread and everybody rush in like no one business.

Although it was clearly implied that another half will get nothing out of the $1 they paid, but soon the other half start to compalin that this is a scam.  Caby is a smart man, he starts to alternate paying another half of the people double the return.  As far as the people concern, they pay $1 twice and they are guarantee to get back $2 in second round anyway.  So the worst is break even and if 'luck' is on their sides, they can get paid $2 for the $1 they put in.  They can stop playing and immediately earn 100% return !

But who is happy with $2 ?  Illogical but true enough, everyone realize they will keep on playing and all they will ever get is a break even, but everyone still think they can earn 100% return.

You are breaking even at best but

you still think you are winning 100%

at the same time

Finally, the business model works and sustain itself.  Caby is a smart man but he hasn't earn a single cent doing this yet.  He is calm, he waits, for the real phase to kick in.

Finally Greed kicks in.  $2 is not enough anymore.  People start to demand higher pay out.  Caby is a smart man, he starts explaining how the system work.  That if higher payout is made, less people will get paid.  People agree.  People still want higher pay out.  4, 8, 16, 32 ... very soon you start to see games like 3D, 4D, Magnum all over places.  By now, the size is just too big that people cann't keep track of who play and who get paid.  Caby is a smart man, he knows exactly how the money flow and start to get his share out of this whole business model.  As long as there are people, this business model will continue and Caby is a rich smart man.

That is not the end, that is not even the main part of the story yet ... the story starts when there are some smart people among the players.  They start calling this business model gambling and saying all the bad effects it can bring.  Despite that it is a bad thing they say, they didn't say we should stop totally.  They just say we should regulate it.  Normally people would say, "Bad ! Don't do it !", what kind of people would ever say, "Bad, do it under my control, then its ok" ? - - -  Yeap, Politician.

After regulation or in another word, under the umbrella of the protection of a country, this business model grows even bigger and sometimes its an international investment event around the globe.

Ok, now back to the good guys who say don't do it.  Which is also the juice in this story.  Caby is a smart man.  He said to these anti-gambling guys, "what if I pay out according to who need it most?"  Good guys ponder a little bit but after a long haul of exactly what need is and how to determine who need it first etc.  They settle in.  Now the business model has changed and become ...

You pay $1 a day, 365 days a year and should you has the 'need' one day, you will get $100,000 !  Different group of good guys have different needs so many different kind of variation of games are put in place.  Some said the need is 'when I lost my income', others may say 'when I die, pay my family please'.

It turns out Caby is smarter than he think he is.  Now he has one business model for all the greedy illogical guys and another model for the good guys.  Both type of people think they are well taken care off.  As long as there are people, no matter if all of them turns saints or evil, Caby is a rich baster !

Its the most long lasting business models ever built ...

~ Caby is a made up word from 2 big nations, one still exist today, another is a legend.

World Major Stock Markets Open Time

There are a few stock markets in the world consider as MAJOR because their market value is more than USD 1,000 billions.  Its could be useful to understand which of these major markets open first and see how they affect each other.

Earth turns from west to east so we see sky moving from east to west.  By world definition, earth day starts from GMT +/- 12 which is somewhere near Hawaii.  Moving west the first continent see the first day light of a particular day would be Australia ...

So the first markets that open on earth are Australia and Japan, followed by China, Hong Kong, Italy, England, Spain, Germany and finally Nasdaq and NewYork.

These are some of the key data ...

( blue highlight the smallest figures and

red highlights the highest figures

click on the picture to see larger view )

Notice the market start time is reference with GMT where GMT 0 is at London, England.  So at exactly midnight in London, Australia market opens, vice versa for all the other markets.  In short, all these world markets cover GMT 0 to 21.  Active Internation speculators / traders may rest for 3 hours a day :)

Applying these world MAJOR markets and its opening time, I finally fine tune my 1view world market into the following.

The toughest market to work with are Italy, Span and Germany because they are not English based and I don't speak their languages yet.

I think so far not many people find it useful yet but if you do, do leave some comments, thanks !

Book Review : Top Money Tips - by KC Lau

One of the biggest achievements of this blog is to receive an invitation from KC Lau to review his book released late last year. The sense of being noticed is quite ... rewarding indeed.

I highlighted before the most interesting point in the book is How To Get Your First Car For FREE ! Most people like it a lot but soon there are also a few other not so positive comments about this particular tip. Which is rather important actually because it brings out TWO very important fundamental in personal finance planning - "its all about what you think" and "Personal Finance is boring".

If you think a tip is interesting, then most probably it will be useful to you.

If you think its a lousy tip, then most probably it will bring you nothing.

You can buy the book in most national book stores like Borders, MPH, Popular etc. I had documented my first hand experience with MPH. Very soon, the books were sold out and went into subsequent prints.

Most reviewers have already listed down the content outline of the book so I wouldn't repeat that.

What I would discuss is Why do you want to buy physical book ? Especially when there are alternatives like eBook and Blog on Internet for FREE ? Other than reasons of branding and that you are a fan of KC Lau then ofcourse you would buy his products to know him and his ideas better. There is still a very important factor that we buy books because of the information in it. Which may raise doubts in value for money comparing to other FREE sources.

1. Physical books are tax deductable up to MYR 1,000. Sometimes after I read a book, I resell it out getting back half the price. So I am claiming $2X from my income tax while actually paying out $X only. ( Sometimes I resell at higher price and earn a profit there too )
2. I like the convinience that I can pick up any book when I go to toilet, waiting for lover to finish shopping, queueing in hospital etc. By the time my smallest NetBook boot up and connect to Internet, I already finished reading half chapter in the book. When my turn is up, I can just flip the book and go immediately. Even if I put my notebook to standby mode for that extra split seconds only, the nurse, lover usually will change their mood from normal to complaint mode - "we thought you are waiting for us, not us waiting for you !"
3. Be it with Google or Yahoo, sometimes I find the info I want, sometimes I don't. Sometimes the info I found was there but quickly disappear the next time I look for it. Sometimes I remembered putting a bookmark but just couldn't seem to find it. Very often I am directed to pay for something anyway. With a book, I always know where to find the info once I get in touch with it, and I can start stop at any part of the book the way I like it. Its always there when I want to refer it ...

So fundamentally

1. The information on physical book is usually different than those available FREEly on Internet. Quite frequently information printed on book is more reliable too, proof read by proffesionals.
2. Even if the information is the same, book better organizes the info in a pre-determine way. The format could be better or worse but its consistency on where info is, ease us looking for it now and later.

Now back to the book "Top Money Tips for Malaysians".

What first attracted me is the reflection of this book on the author. Honestly till today I do not know who KC Lau is and has no personal relationship whatsover. But I can sense that the intention of the author of this book is PURELY wanting to share all he knows. Suddenly what he knows and what the book says become less important. It is very hard to find a person who are willingly share all he knows in personal finance world today, not to mention for the good for the community. ( rather than like what most of us do - keeps complaining only ).

I waited long enough to write this review just to make sure what I wanted to share was not already shared by other reviewers. And I hope some of you who has read other reviews can comment on this.

Frequestly after I read a book, I do not remember what the book says. But I can firmly share what I get out of it.

1. I pay more attention to car insurance, saving there could be significant enough as time goes
2. I make more money from Internet, perhaps thru some of the links the book suggested ...
3. I came up with the idea to resell the books I have read and no longer need to keep
4. I reminded myself not to be too self center in finance matters as many other approaches are possible too
5. ...

Would I buy this book ? Well yes and for the first reason I mentioned as my appreciation to someone who is so dedicated to share in personal finance matters.

Should you buy this book ? Well, if you agree with my reasoning why buying physical book is still a good thing then yes you should.

Would I recommend this book ? Now that is a question required scale answer. From 0 to 10 where 0 is Strongly NO and 10 is Strongly recommended, I would give this book a 7 - also a heavenly number :)

Where does the other 3 go ? Hmm ...

1. The writting skill can be more balance. Some chapters are exceptionally shorter ...
2. A small part of the book has too many numbers even though that was meant to be a quick mental exercise.
3. I personally could not fully agree with certain part of insurance concepts ...

It is also from the 1) and 2) that I got the impression on Author's sincerity. As for number 3), most of my insurance concepts may not be suitable for today's general public yet. Especially if you are not that well verse in insurance industry yet, then this book's explaination on insurance is much more suitable for you. You will have to understand the basics rule of thumbs first and then only come to me for some potential myth or paradox and fun discussion. Else that may lead to more damage and destruction.

Lastly, for people who read this review until here. You must be a very patient person. If you haven't bought this book yet and feel like getting one now, then I will add another reason to it both to thanks for your patient and see if my review is effective or not. For the next 5 books people buy through this article, they can get this book at MYR 21 only !! Instead of the normal price at MYR 29.90

Click here to buy "Top Money Tips For Malaysian" for RM 21 ONLY !!

Thank you to those who have taken above offers, surprisingly quite a few buyers actually didn't even realize the existence of malpf blog at all.  Seems like the 'cheap' price is more an attractive point than the review writen here.

I hope this does not violate any regulation ...

Risk revisit

The toughest concept for this blog to get across is the preception of Risk.

This blog preaches that "High Return High Risk" is NOT the entire truth but comes with a twisted myth.  Basically that statement only apply to those who don't know much.  The more you know, the less risk it is.  The correct way of intrepreting Risk will affect another general miss-conception - diversitifaction - "Don't Put your egg in ONE basket".  Putting your eggs all you want but you will have to start with ONE and that better be the best one.

These intrepretations offer explaination to today's situation why so many investors couldn't make it even if they Diversify and believe High Return comes with High Risk.

This is not a new concept actually,

"Risk comes from not knowing what you're doing."  ~ Warren Buffett

"Volatility is NOT Risk." ~ David Dreman

This is not a debate on what the real meaning of Risk is.  Its a matter of how we should look at it so that we can do something about it.

If you believe in High Return High Risk, then when you enter into a potentially high return investment vehicle, you naturally accept that comes with high risk.  This psychological preparation puts you into a 'its ok to lose' state.  More than often people in this state will sit, wait and pray the worse wouldn't happen.  ( which you have just violated the 2 most fundamental flaw in NLP )

On the contrary if you believe Risk is something you don't know, then naturally you will try to find out more about this investment vehicle.  You may eventually pick the right vehicle or you find out how to deal with some of its limitation.  Either way, it puts you in a better position than the earlier scenario.

One of the greatest example of all time is that someone didn't think gambling is all that risky, as a result the whole school of technical analysis was introduced and is one of the hottest study one can get nowadays.

Gambling is risky, yes.  Avoiding it is temporary safe, yes.  By not knowing more about it, you risk getting into it without knowing it.  By thinking risk is when you don't know, you can learn why gambling is risky.  As a result you may come up with some new principals in life about gambling.  If you found out how to deal with this risk, then you would also have a set of solution dealing with 'this kind of risk'.  You may still NOT WANT TO get involve and this time, you can be very sure and understand why you do or do not do something.

"If you risk nothing, then you risk everything." ~ Geena Davis