Master your finance

This is a summary of what was discussed in the First episode of Financial Talk Show “Li Cai Zhang Men Ren” on 3 July 2007. This is a one-month program on Capital Radio 95.8 FM, every Tuesday 4.15 pm to 5 pm. This program will end on 31 July 2007. Each week we will discuss a different topic. The program is conceptualized by both myself and Capital Radio 95.8 FM DJ Lee Jeng. Cheers! Dennis Ng How to Master your Finances Who is “Li Cai Zhang Men Ren”? DJ: many listeners might be wondering why is this program entitled Li Cai Zhang Men Ren, so is the Zhang Men Ren Capital Radio DJ Lee Jeng or Certified Financial Planner, Dennis Ng? Dennis: we want to educate the public and the objective of the program is to empower listeners to learn how to “master” your finances, thus, each and every listener would be empowered to be the “Li Cai Zhang Men Ren” of their Households. That’s why we named the program Li Cai Zhang Men Ren. DJ Lee Jeng: Dennis, What is Financial Literacy to you? Dennis: One aspect of Financial Literacy is for you to know how to “look at numbers” from the right perspective. For instance, when members of the public were interviewed about the changes in GST from 5% to 7%, most of them said that the increase is marginal, just a 2% increase, not much of an impact. DJ Lee Jeng: yes, that’s how most people view the GST increase, so is there anything incorrect about this view? Dennis: certainly. Because when we look at “increment”, basically we use the latest GST rate of 7% to be divided by the original rate of 5%, if we do so, the ACTUAL percentage increase in GST is not 2%, but 40% instead! Similarly, when coffee shops increase coffee prices from 80 cents to 90 cents, the increase is not 10% but 12.5% instead. Thus, one key step to Financial Literacy is to learn how to look at numbers correctly. DJ: What good news were announced in Singapore recently? Dennis: one good news is CPF Contribution by employer is increased from 13% to 14.5% from 1 July 2007. If we use an example of a person earning S$2,000 a month, the actual increase in CPF contribution per month is about S$30 per month. DJ: yes, this is good news, but the increment is not exactly a lot. Most people overlook the Power Of Accumulation and Compounding Dennis: another thing most people overlook is the POWER of ACCUMULATION and COMPOUNDING. Yes, the increment of S$30 per month does not seem like a lot, however, in actual fact, over a period of 30 years, this represent additional RETIREMENT funds of S$16,061! More than 50% of Singaporeans do not even have $50,000 in their CPF account when they retire at age 55. Thus, this “small” increase in CPF actually can help them boost their retirement savings by a not insignificant S$16,061! And if this person invest this additional CPF and earns 4% instead of 2.5%, the increment would be S$20,821, or an additional of 30% compared to leaving the money in CPF Ordinary Account. Thus, most people IGNORE the fact that each little bit of savings and money can actually be the seeds of a MONEY TREE if you allow the seeds time to grow into a tree. For instance, when I was born, my family is actually quite poor. However, my mother is a very frugal person and very disciplined in savings. She managed to nurture all 6 of her children and even planned enough for her own retirement, not from earning big bucks, but all through just disciplined savings. I remembered when I was about to enter university, my mum passed me back a savings passbook to me. She said this savings is what she saved for me all these years and she is passing it back to me since I’m grown up and know how to use the money wisely. It was like over S$10,000, (I know some of you might say it is just “peanuts”). However, when I looked through the passbook, I realized the money was accumulated over a long 20 years of time, with deposits as low as S$10, S$20…..so basically, my mum saved on a regular basis, about S$30 per month and the money grew to over S$10,000. The morale of the story is that you don’t need to start saving a lot of money, just a little on a disciplined basis and it can amount to something over a period of time. So for all those people out there who give excuse you don’t have much money to save, well I guess now you have no more excuse. DJ: some people complained that prices of most things in Singapore seem to be rising, coffee, GST, taxi fare etc, etc? Financial Literacy: Learn how to focus and TAP on opportunities to grow Richer Dennis: well, most people only focused on 1 side of the coin. On the other side of the coin, Singapore’s economy is growing by more than 5% in the last 3 years, many foreigners are attracted by the many opportunities in Singapore and are coming to set up business and buy properties. Property market has recovered, in fact prices increased by more than 20% in last year itself. Imagine if your house was worth S$400,000 1 year ago, now it is worth about S$500,000, or in other words, your NETWORTH has increased by S$100,000 without you doing anything at all. Many Singaporeans are “blind” to the opportunities in Singapore. For instance, the Company tax in Singapore is only 8.5% for companies with Net profit of below S$300,000 a year, this is possibly the lowest in Asia, even lower than Hong Kong. Many foreigners are attracted by the opportunities in Singapore. The question Singaporeans need to ask themselves is how can we tap on the opportunities in Singapore, rather than just focus on the price increase of some of the things. DJ: thank you Dennis for sharing with us some useful tips on Personal Finance today, next week we’ll discuss about Singapore Property Market Outlook, stay tuned.

WARREN BUFFET

here was a one hour interview on CNBC with Warren Buffet, the second
richest man who has donated $31 billion to charity. Here are some very
interesting aspects of his life:

1. He bought his first share at age 11 and he now regrets that he started too late!

2. He bought a small farm at age 14 with savings from delivering newspapers.

3. He still lives in the same small 3-bedroom house in mid-town Omaha ,
that he bought after he got married 50 years ago. He says that he has
everything he needs in that house. His house does not have a wall or a fence.

4. He drives his own car everywhere and does not have a driver or security people around him.

5. He never travels by private jet, although he owns the world's largest private jet company.

6. His company, Berkshire Hathaway, owns 63 companies.
He writes only one letter each year to the CEOs of these companies, giving them goals
for the year. He never holds meetings or calls them on a regular basis.
He has given his CEO's only two rules. Rule number 1: do not lose any
of your share holder's money. Rule number 2: Do not forget rule number 1.

7. He does not socialize with the high society crowd. His past time
after he gets home is to make himself some pop corn and watch Television.

8. Bill Gates, the world's richest man met him for the first time only
5 years ago. Bill Gates did not think he had anything in common with
Warren Buffet. So he had scheduled his meeting only for half hour. But
when Gates met him, the meeting lasted for ten hours and Bill Gates
became a devotee of Warren Buffet.

9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.

His advice to young people: "Stay away from credit cards and invest in yourself and

Remember:
A. Money doesn't create man; it is the man who created money.

B. Live your life as simple as you are.

C. Don't do what others say, just listen to them, but do what you feel good.

D. Don't go for brand name; just wear those things in which u feel comfortable.

E. Don't waste your money on unnecessary things; just spend on those who really are in need.

F. After all it's your life so why give chance to others to rule your life.
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copy and paste from ilovesg, i onli change the header to "advice from warrent buffet" to make it more prominent in case others miss it

the story of pipeline and buck

Why saving money is just like bodybuilding

Why saving money is just like bodybuilding

It takes lots of discipline, says former varsity champion who saves a third of his income, of which 20% is invested

By Lorna Tan
Jul 01, 2007
The Straits Times
BODYBUILDING and money management seem worlds apart but Sean Toh reckons the discipline and focus needed to build impressive muscles are equally useful when it comes to building financial freedom.

Mr Toh, 35, a former varsity champion bodybuilder, distils his views into his book, 4 Steps To Financial Freedom. 'The difference between the rich and the poor is that the rich have more financial muscles. Money management is a skill that needs discipline to practice those saving habits.'

His own approach to investing is to buy when nobody dares to invest and sell when the herd is buying. He prefers to do his own research and execute his trades personally via online platforms.


Mr Toh's determination to get to grips with the investment learning curve involved reading more than 200 financial books and magazines.

He has been teaching design and technology at Henderson Secondary School for seven years, and also facilitates innovation and enterprise programmes for students.

An air steward before pursuing his studies at the Nanyang Technological University (NTU), Mr Toh managed to save $100,000 during his 31/2 years with Singapore Airlines. That was enough to settle some family debts and pay the tuition fees of his engineering course.

He is married to Australian Heather Parry, 39, and has two daughters.


Q Why did you decide to go into bodybuilding?

A I fractured my knee in Secondary 1. As part of the therapy, I underwent weight training. Since I had always wanted to have a muscular body, I began to fulfil my dream of being a bodybuilder.

I spent every available moment in the gym training. In 1998, I participated in Muscle War, an inter-varsity annual bodybuilding competition, and came in third.


Q What lessons can you draw from bodybuilding that are relevant to money management?

A Managing your money is like a bodybuilder dieting for a contest and having to restrict his fat and salt intake. We are always tempted to break away from the strict diet, like saving money, to have a pinch of savoury foods - overspending.

Saving money is hard for some people because they lack the discipline to save for future investments but tend to overspend on things they don't need. Saving money is like building your biceps.

Being rich is about having more discipline to learn, save and use those financial muscles to leverage on investing to build more wealth, like a competitive bodybuilder preparing for half a year just to win on competition day.


Q What are your money habits?

A I save about 30 per cent of my income, of which 20 per cent goes into investments.


Q What financial planning have you done for yourself and your family?

A Cashwise, I have about $50,000 in stocks and $70,000 in fixed deposits. I also invest my CPF in stocks and unit trusts.

I've made more money from unit trusts than stocks. I own shares in Singapore Petroleum Co, Singapore Exchange, Hyflux, Aussino and Creative Technology. As for funds, I have NTUC Income Prime fund, Aberdeen Japan and Indonesia funds.

I typically buy a unit trust when the value has dropped 6 per cent and practise dollar-cost averaging each time it drops further by doubling my next investment. When I make 20 to 30 per cent, I exit the fund.


Q What about insurance planning?

A I have bought personal life insurance, term life insurance and disability insurance for my family and myself. My annual premiums amount to $5,000.


Q How do you reward yourself?

A By spending 10 to 30 per cent of my investment return on books, food and holidays with my family so that I will be motivated to create even more wealth. The rest of the capital is re-invested.


Q Moneywise, what were your growing-up years like?

A I am the eldest child with two brothers. My father was a butcher. Money did not come easy and I worked to earn extra money when I was schooling.


Q How did you get interested in investing?

A I was having problems managing my personal finances after getting married in 1998, my final year at NTU. I was the sole breadwinner. I challenged myself to explore the option of one person earning two or more incomes without taking on more jobs.


Q What has been a bad investment?

A Investing in units trust without understanding the operating mechanism. I invested in an Indonesian equity fund in the 1990s which was touted as the best-performing fund then. Luckily, I invested only $1,000 so I was able to manage the risk. I advise investors to record their investment lessons in a logbook so that they will not repeat the same mistakes.

Never forget the No. 1 rule of master investors: Don't lose your investment capital.


Q Your best investment to date?

A It is my book. Although I enjoy better returns from units trusts and stocks, my book offers me returns that are tangible as well as intangible.

I broke even and got back my $10,000 capital five weeks after the book's launch. This book offers tangible returns such as royalties and intangible returns like my self-actualisation of being a best-selling writer at Popular bookstores and the ability to empower others with the knowledge to control their financial destiny.


Q What is your investment philosophy?

A These four steps to financial freedom: get healthy and strive for great health; adopt an open mindset to learn; invest your time in your financial and health education; and enjoy the wealth that you have created.


Q And your home now is...?

A It's a fully paid-up four-room HDB flat in Woodlands.


Q And your car is ...?

A I don't own a car and I don't have a driving licence.