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Where Did All Your Money Go To?

March 10th, 2008 by Wai Loong (5 Comments)

Did you win Singapore Pool’s TOTO over the Chinese New Year? Chances are that you didn’t… and please forgive me for being so straight. Do you really think it’s that easy to take a fraction over that $10 million dollars prize and walk away as a millionaire?

I seriously doubt so.

The good news is, you can slowly make your way there – at least once in your lifetime!

Wait a minute… did I say anyone can become a millionaire?

That’s right! And I mean it. But there are some conditions and sadly most people do not realize.

The first question to ask yourself is:

“Where did all your money go to?”

Stupid question? I doubt so. Don’t believe me? Try to recall all the expenses you incurred over the last 7 days. That’s right, pull out a sheet of paper now and draw out 7 rows and start putting down items like:

  • Travel (Bus, Cab/taxi, MRT/train)
  • Breakfast
  • Lunch
  • Dinner
  • Mobile phone bills
  • Groceries
  • Utilities bills
  • House loans
  • School loans
  • Consumer loans
  • Personal income tax
  • Movies/entertainments
  • etc (keep adding them as you recall!)

Done that? Now, next to each item, fill out the amount for the item. Continue doing this and make sure you leave nothing out of your calculation – it’s vital!

Calculate the sum of all 7 days. This is likely to be the amount you spend to support your so-call lifestyle in a week. Multiple that by 4 to determine an average expense for a month.

Of course, that’s not a very accurate estimate if you incurred some expensive one-time expenses like buying a plasma TV or LCD TV during the last 7 days. But you get the idea.

The point of this exercise is to wake you up to the idea of cashflow. If you haven’t heard of this term and you skipped the exercise, then retrace and do it now for the sake of your financial future! And I mean it!

You see, most folks are big spender (and that’s you!). And the truth is, the more you earn, the more you’ll spend. The truth I’ve shown you is a concept call cashflow. If you’ve read Robert Kiyosaki’s “Rich Dad, Poor Dad“, you’ll understand immediately.

It’s not about how much you earn.

It’s about how much you save and ____.

I’ll get to the ____ later. But answer this: “When is the last time you made an expenditure list like the one I describe above?”

1. Identify and Reduce Your Expenditures!

Personally, I keep track of all my expenditures daily in an Microsoft Excel spreadsheet, recording every single spending at the end of the day. Some people prefer to use a PDA. That’s fine too but only if you’re already carrying one and not run out to buy one for this purpose!

Diligently keeping track of expenses leads you to discover where all your money has flown out. This information is vital because you now have the knowledge to cut down on spending or find alternatives to trim down your living expenditure. I don’t mean you come out stingy on necessities.

Keeping up with basic health and living is okay, as long as you do not exceed your prescribed amount you feel comfortable. Gradually find alternatives to products and services that can serve the same purpose and save them for good reasons.

2. Save and Invest!

What’s the purpose of reducing your expenditure?

To increase your personal savings of course!

Even the legendary billionaire investor Warren Buffett said this in an interview when he surpassed Bill Gates as the wealthiest man in 2008:

“If you want to know why I passed Bill Gates, it’s because I spend less. It’s a tribute to thriftiness.”
– Warren Buffett

One of the problem that’s facing youth these days is the disrespect for an age old wisdom and virtue – saving.

Now, I don’t mean putting all your money and hide it in your bank account. Your money you save are like slaves for you. Put them to good investment and make them work hard and smarter for you.

That sounds easy isn’t it?!

Before you jump off your seat doodling over that $1 million dollars from your investments, I’ve got bad news for you

Investment requires you to get fairly financially educated and also to put trust in honest and capable people to manage for you. I’ve hit many scams in the past and got burnt so watch carefully where you’re investing. Anything that promise you abnormally high return such as 100/200/400++% per annum is probably a scam and you should run fast!

If you’re looking ways to put your money to good use, always make sure that it’s a small fraction off your own savings. Ensure that you have enough savings to sustain your family and lifestyle for the next 6 months without any full time income. If you’re not certain, consult a financial professional/adviser.

Here are a few asset classes that I’ve recently identified and are looking to get started (some of these assets I’m already holding and reaping returns) :

  1. Mutual Funds (also known as units outside US and UK)
  2. Stocks
  3. Property/Real Estates
  4. Fine Wines
  5. Oil/Energy
  6. Precious Metals

ATIC - Asia Trader and Investor Convention 2008 - Show Directory

If you’ve been to the recent ATIC: Asia Trader and Investor Convention 2008 at Suntec Singapore Hall 401 (1-2 March 2008), you’ve probably identified a few of these asset classes.

ATIC - Asia Trader and Investor Convention 2008 - Fine Wine 01

ATIC - Asia Trader and Investor Convention 2008 - Fine Wine 02

I noted a particular fine wine investment to crates of Australian wine that matures in about 3 years. Initial investment is SGD$10k and return is about 10-12%pa. There are no upfront sales charges and the only catch is a 5% charge upon selling value. Judging from this information, one is not advised to sell the purchase anytime within a year.

ATIC - Asia Trader and Investor Convention 2008 - Fine Wine Printed Brochure

ATIC - Asia Trader and Investor Convention 2008 - Fine Wine 03

ATIC - Asia Trader and Investor Convention 2008 - Fine Wine 05

The purpose of this type of investment is capital gain and not that of income.

If you’re in a hurry to make big bucks, watch your back! I’ve carefully taken down these wise points from someone who taught me a lesson on making your own judgments in any form of investment:

  1. Returns (ROI)
  2. Risks
  3. Liquidity
  4. Affordability
  5. Proof of Security/Ownership
  6. Timeframe/Tenure of investment

ATIC - Asia Trader and Investor Convention 2008 - Investing in Commercial Real Estates

If you cannot convince yourself or produce proof on any of the above, then stay away from the investment. It’s better to preserve your capital for better deals or opportunities in the future.

Still, I somewhat feel like a sucker whenever I put down money on my investments these days. This probably comes from a single bad experience in the past where I was being cheated by one unit fund investment from a local bank back in 2003. That “investment” claimed 100% principle guarantee, but the fees and charges eroded a few hundred bucks.

So watch out too if you’re paying too much for sales charges, administration fees. Professional managed portfolio does not comes free.

3. Protect You Most Valuable Asset – You Inc!

Many people are aware of the investment (offensive) part.

What about the protection (defensive) part of wealth management?

Interestingly, folks are rarely concerned about this until something major or catastrophic happens to them.

As Adam Khoo pointed out in his books and courses, any serious wealth builder pays attention to protecting themselves and assets should something happen to them.

You should at least get start yourself with health insurance. One accident with operation and hospitalization is destined to wipe out all your savings, no matter how much you save. Leave that payment to your insurance institute! Why put your financial future at risk? Rich people are known to insure themselves heavily to a point where they are prevented to be over-insured by insurance companies.

I’m not trying to promote insurance here but you get the concept of protection and how important it is for your financial being. The people who need insurance protection most are the same group of people who completely misunderstand and disregard it.

You can’t save them though.

Hopefully education can enlighten!

4. Build Your Own Businesses and Asset Profiles!

Perhaps, building your own business is the fastest way to accumulate capital for strategic investments other than digging into your own savings.

You may think that it’s hard, but rest assure that many people have succeeded. The good news is, a trend of younger and successful group is fast catching up on forbes youngest billionaires list. I’m not suggesting that you go out and build a multi-million or billion dollars business from scratch, here and now. What I mean is, the accessibility of better business environment and market demands have propelled more and more folks to create businesses and thereby creating millionaires at a faster rate than ever before.

Don’t believe me? Then hurry and check out this recent article on PC World, “Meet the Whiz Kids: 10 Overachievers Under 21“.

Most of these billionaire kids are either self-made or inherited. In fact, these kids put many of us adults to shame, and especially to highly educated folks like you and me. What did we not know that they knew which propel them to insane wealth?

Indeed, I discovered clues about wealth creation recently while reading a book, “The Kama Sutra of Business: Management Principles from Indian Classics” by Nury Vittachi.

“At the dawn of civilization, a group of people discover that concentrated economic activity generates riches.”
– The Source of Wealth, Nury Vittachi

Self-made wealth are usually built from seizing opportunities from demands, by creating unique solutions or delivering unique services to massive groups of people. Through the exchange of services and money by concentrated groups of people (offline/online), massive wealth is created.

Okay, all these sound very nice, but what has that got to do with you?

Good question! I don’t try to claim I’m an expert, but I can point you to ideas that you can further research to see if you are hooked. But first, you’ve got to learn to accept and internalize the concept of:

“Who are you working for?”

This is one of the first questions thrown at me when I was doing my coaching exercise about 2.5 years ago. Honestly, I got it all wrong when I answered this one.

Go on! DO NOT read further, but try answering this yourself without trying to peep below.

ZZZ

zzz

Ready with your answer?

Good!

If you cheat, it’s your choice anyway. I can’t stop you.

Drums in and roaring…

And the answer is…

“You are working for YOURSELF!”

Congratulations! Did you get that correct?

Don’t worry if you’ve got it wrong.

My original answer was: “I work for XYZ company”.

So what’s wrong with that answer?

Basically, folks have been conditioned to think of studying hard and get a job. Work hard, get a pay check and don’t get into trouble. If you’re ambitious, try climbing the cooperate ladder. Probably your parents have advise you that too? No? That’s exactly how rich and powerful people want you to stay locked in that frame of thinking and continue to keep this best kept secret from you. The longer the better.

If that doesn’t make sense, try reading this eye opening article, “10 Reasons You Should Never Get a Job” by Steve Pavlina. Steve himself pointed out critical ideas why a job is a jail, a rat race that limits your capacity to pursue the things you are so passionate about and living much room for remorse when you reach your ripe old age. Should you be doing what you really enjoy doing, and getting paid whether you decide to work or not? Work is supposed to be value creation/addition/perception for others, so it’s not just limited to be there only when you’re present. You should be paid based on the value you created for others, and not by your physical presence. Does that make sense?

I must say this is a paradigm shift. People are getting smarter each generation (not necessary wiser), where education improved significantly, and information are more accessible. Accessibility of information comes to a point where what was only known to highly intelligent and powerful people like kings 4 or 5 centuries ago, are now accessible to common folks like you and me.

“So what has information got to do with me?”

In case you do not realize it, intellectual property is now fast becoming an asset that most people do not even consider them as valuable until shown to be true. You now have the tools and information to convert any information and knowledge that is freely available, into where demands and markets are.

It’s really simple. For example, you can create a product and teach people how to win in video games. That’s cool isn’t it? Imagine enjoying doing what you enjoy doing (playing video games) and still making royalty from the sales of your books/ebooks/videos/courses. You should be paid over and over again for that one single creation.

Even as I write on this blog, I’m building up valuable assets for myself. The key is to think of everything that you do as business, always figuring out new ways to extend the value you’ve created, and then turn them into income generating assets.

Seriously, you don’t really care if I make any money writing this article for you, do you?

Nor do you really care if you decide to steal my writings and paste them all onto your own blogs, or circulate them to all your friends and relatives? But do watch your back if you decide to do that. I may not mind that much, but unethical rip offs from the work of others will sooner get you into a lot of serious troubles. So learn to respect the values created by others as you build your businesses and give credits to rightful owners when it’s due.

I’ve keep this article decently short enough to open yours eyes to the wonderful world of wealth creation. Hopefully you did not find me bored and doze off to sleep!

Until then… good investing with your time and money!

Keep your comments rolling in and live a life with passion!

Posted in Investment, Life

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5 Responses:

1
Leroy on March 21st, 2008 at 5:31 am

Bro,

A good book, and its also the first book that enlightened me about the need to improve my personal finance, great for starters – Automatic Millionaires.

For sharing. Cheers! 🙂

2
Wai Loong on March 21st, 2008 at 10:52 am

Hi Bro!

Really kind that you share it with everyone else here!

On the cover, it says “Do it once – The rest is automatic!” sounds like some cash generation machine that one can build to rely on, to milk again and again; and possibly pass it on as a legacy! 🙂

A quick scan of it on Amazon.com reveals that the author, David Bach has written a book that revealed mixed feeling about the content.

The chapter on “Pay Yourself First” seems like a copy from the book “The Richest Man in Babylon“. Nevertheless, it looks great for anyone who like to get started but don’t know how. 🙂

Interestingly, it’s available in the national library. I can check it out when it’s available at my favorite library near my home.

Thanks a lot for the resource!

Do keep your comments rolling in and good investing! 🙂

3
The ‘CAN DO’ Attitude! A Sneak Preview to AKLT’s Leadership Foundation Course Module 3 (Part #1) | Insights, Inspirations, Tranquility, Peace and Harmony on April 14th, 2008 at 11:56 pm

[…] 21 2008]] What Matters To You and I Most: Inspirational And Tranquil Messages ~ (2) Comments[[Mar 10 2008]] Where Did All Your Money Go To? ~ (2) Comments[[Feb 24 2008]] Here’s My Digital Photography Research for IT Show 2008! ~ (19) Comments[[Feb 17 […]

4
Alex Tseng on April 19th, 2008 at 6:06 pm

yo dude , so you are a Kiyosaki ; Robbins or Khoo’s disciple ? cheers ! AT

5
Wai Loong on April 19th, 2008 at 6:36 pm

Hi Alex!

Thanks a lot for dropping by!

I dare not say I’m a disciple, but rather a humble student of many great teachers who taught me many valuable lessons in wealth management and creation.

I trust that you have heard of some of these teachers and even learn something from them and apply them to your life?

Good sharing & do keep your comments rolling in! 🙂

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About Insights, Inspirations, Tranquility, Peace and Harmony

Ng Wai Loong

Wai Loong is an electronics engineer by profession. He currently resides in Singapore, a thriving hub at the heart of South-East Asia. When he is not so stress out on the computers or laboratory, he enjoys value reading, jogging at his own pace and blogging in his spare time. Other times, he likes to catch up with some close friends over a cup of latte or teh tarik. As a gift from this friend, you are invited to interact freely with him on his personal blog.

PS: May the person reading this blog transforms his/her businesses, finances, relationships and life for ALL to WIN!