What's your money personality?

By Milan Doshi

During my seminars and personal financial consultations, I have come across many people who have different attitudes towards money.

All of us have unique personalities - some characteristics are inborn and some are learnt along life's journey. Likewise, when it comes to money and real estate investments, we too possess various money personalities. They are:

1. Spenders / Shoppers

These personalities derive great emotional satisfaction from spending money. They need instant gratification and can't resist spending money. Spenders often shop to entertain themselves, even if the items they buy go unused. A sale is simply an excuse to spend money on the pretext of getting a good deal on things that they do not need at the moment.

A well-to-do good friend of mine was shocked to discover, during his house moving, that his wife owned more than 100 pairs of shoes and over 30 handbags! Like most guys, he couldn't see the need for his wife to own so many pairs of shoes and handbags. As money was not an issue, he didn't mind his wife buying more new shoes or handbags, provided that she gave her old ones away. He was concerned that his new house was quickly running out of closet space to store the things his wife bought.

Unfortunately, besides being a shopper, his wife was also a hoarder. She didn't have the heart to give away things that are still fairly new and seldom used. This led to frequent quarrels and my friend decided that the only way out was to build more closet space in his current house and to move to a bigger house a few years later to accommodate his wife's impulsive shopping habit. It was a small price that he could afford to pay to keep his wife happy.

Advice for Spenders/ Shoppers: Shop a lot less, save a lot more


If you love to spend, it's very likely that you are going to continue doing it. when shopping, try to seek long term value, not just short -term satisfaction.

Before purchasing, ask yourself how much that purchase is going to mean in a year. If the answer is "not much", then forgo the purchase.

This way, you can limit your spending to things that you'll actually use. If possible, set a monthly budget and stick to it. In case you over-spend in a month, make sure that you have the discipline to cut back the following month.

Another suggestion is to cut up any extra credit cards you may have and lower the credit limit on the ones you use regularly. Give standing instructions to auto-debit your bank account on the due date with the full amount for all your credit cards. This way you will not be tempted to overspend.

2. Debtors


Debtors are similar to Spenders/Shoppers.

The only difference is that they are spending money that they don't have and are living beyond their means. They are deeply in debt and often, are not in a position to do much investing.

Debtors will typically live rich but die poor!

A newly married young couple in their late twenties came to see me for a personal financial consultation. They were keen on investing in properties and stocks.

Their combined gross income was RM15,000 per month but their net worth was less than RM100,000! They had RM20,000 in credit card debts, less than RM5,000 in savings and they both drive brand new Japanese cars worth around RM70,000 each.

Their logic of purchasing new cars was that they didn't want any problems associated with buying cheaper second-hand cars.

In my opinion, both fell into the Debtor personality.

While they were earning well for their age bracket, they were mismanaging their money by accumulating credit card debts and over-spending.

Since both were desk-bound employees, there was no need for them to make a good impression by driving new cars. In fact, they could ill-afford to drive new cars at this stage of their lives, given their current financial situation.

In order to clear up the credit card debts and begin their investment journey, I strongly suggested that they sell off their two cars which were around a year old and downgrade to a three year old Proton or Perodua car which costs around RM35,000 each.

Straight away, they would be able to settle their credit cards debts and have sufficient start-up capital of around RM50,000 to begin investing.

Unfortunately, it was easier said than done.

Towards the end of our consultation, the husband blurted out that they had just placed a deposit for a new car for himself worth RM85,000 to lock-in the low interest rates.

Since both had the Debtor personality, I really had a tough time convincing them to change their spending habits. If one of them had a different money personality, perhaps I would have an easier time to get one spouse to convince and force the other to change his/her ways.

Finally, all I could do was wish them good luck. Personally, there is no way they will go far in life unless they make drastic changes to their behaviour

Advice for Debtors: Start saving, investing & don't spend money that you don't have!


If you are already in debt, you first need to get your debts sorted out before you can begin investing. If you are not able to do it alone, get some professional financial help like what the couple did when they saw me.

Also, analyse what caused you to get into trouble.

If it was easy access to credit cards, then the solution would be to cut up all "temptations" cards and sticks to debit cards. If spending was something that you used to compensate for other areas in your life that you feel were lacking, think about what these might be and work on changing them.

If your house and cars were purchased because of the need to look good, then you may even need to downgrade your lifestyles by moving to a smaller house, drive an older car, etc.

Next, focus your efforts on saving money diligently.

Pay yourself first by setting aside a certain portion of your take-home income that automatically goes into a special bank account that is used for investments. The money in this account can never be spend - it is your golden goose.

Later, when you retire, you can only spend the eggs that your golden goose laid i.e whatever interest, dividend or rental incomethat your investments generated.

3. Savers


Savers are the exact opposite of Spenders/Shoppers and Debtors.

They only shop when absolutely necessary and never accumulate credit cards debts. They generally have no debts and are often viewed as cheapskates.

Savers are not concerned about keeping up with the Joneses or following the latest trends. They are happy with their 20-year-old cars and derive great satisfaction from seeing the interest earned on their bank statements.

Due to their conservative nature, they don't take big risks with their investments. They prefer fixed deposits instead of other riskier investments where there is a possibility of a loss.

Extreme Savers unfortunately will live poor but die rich!

Most of our parents who had lived through the Second World War and experienced hard times, where they didn't have the luxury of three meals a day, will fall into this money personality type.

I met many people who live in old houses that were last renovated 20 years ago and drive well-maintained cars that are more than 15 years old. These people are the ones who have more than RM5 million in fixed deposits!

At the current fixed deposit rate of 2.5% p.a., their interest income alone is over RM10,000 per month which is more than sufficient to fund their no-frills lifestyle.

Advice for Savers: Practice moderation & take a little more investment risk

If you are a Saver, you should not let all the fun parts of life pass by just to save a few cents.

To achieve some sort of balance, it's advisable that you allocate a small sum of "Play Money" where you can nourish your inner child by living like a King/Queen for a few hours every month.

Spending a bit of money on having fun isn't going to make you bankrupt. Once you have tasted the good life, would you want more?

The answer is a definite 'Yes'. In fact, you would be motivated to challenge yourself to make more money so that you can have more of the good life.

Instead of taking little or no investment risk by leaving all your money in fixed deposits, you need to learn to take a little more risk by investing a portion of your capital into higher return investments such as REITs, properties, bond funds, etc.

After all, the key to investing success is to minimise risks while maximising returns. Avoiding investments risks completely will not get you far in the long run.

4. The Avoiders / Money Monks

These people are not comfortable with the subject of money due to their lack of interest or they feel that that are other more important issues.

Often, they will try their level best to avoid the subject completely. Money Monks are happy-go-lucky types who strongly belief that God will take care of them. At the extreme end, they may not even know whether they are rich or broke.

If you are married to an Avoider or a Money Monk, you will have to shoulder the responsibility of managing money and investing for your family. The big advantage is that you will have little or no arguments on any money matters with them.

Advice for Avoiders/Money Monks: Make sure that you do not marry your own kind. Alternatively, find a trusted professional financial planner.

It's a sad fact that people typically will not change even when they know they need to.

Hence, it is extremely tough to suggest to Avoiders and Money Monk that they should have an interest in knowing how money works.

If you are an Avoider or Money Monk, an easier alternative is to make sure you don't marry their own kinds or you should seek professional help when it comes to managing your money.

5. Investors


Investors are consciously aware of how money works.

They know where they are financially today and try to put as much of their money to work.

All investors tend to seek a day when their passive income from their investments will provide sufficient income to cover all their expenses.

Their actions are driven by careful decision making, and they are comfortable with the need to take a certain amount of risk in pursuit of their goals

Advice for Investors: Keep it up!

Congratulations! Financially speaking, you are on the right path and doing great! Keep doing what you are doing, and continue to educate yourself.

It's extremely important to know which money personality you fall into as each has its own strengths and weaknesses.

Understanding your unique money personality will help you shape your approach to spending, saving and investing.

If you are married, it will also help you understand your spouse better as most marriages get into trouble because of money issues.

Open up your mind

Recently, I have shared my plan of achieving financial freedom with some people around me. However most of them don't seem to be very interested. I believe that most of the people are "too educated". They can do certain task very well for other but are not willing to try out new things to improve their own financial status. Perhaps, this story will explain why many people are not able to achieve financial freedom.


Once upon a time, there was a wise Zen master. Many people would come and ask him for enlightenment in the ways of Zen. One day, a general came to visit this Zen master. He said arrogantly and proudly to the master, “After fighting so many battles successfully, I really tired of it. So how can you enlighten my mind?” He began to laugh loudly while waiting for the master to reply.

The master slowly raised the teapot and began pouring tea into a cup. It was slowly filled up and the tea started to overflow onto the table. The general stopped his laugher as the tea began to drip onto his clothing. The general shouted, “Stop that, can’t you see it is full?”

The master stopped the pouring and smiled at the general, “You are like this cup of tea. It is full and cannot be filled up anymore. Come back to me when it is empty.”

The morale of this story is one must clear his or her opinions before learning new thing.

For those who want to achieve financial freedom, please remember to keep your mind open for any opportunities. Search for opportunities rather than waiting for the opportunities to come to you. And one more thing, "Less educated" sometime can be a good thing too.

Jack and Jill

Just to share a financial story about Jack and Jill.


Jack and Jill were providing a service to their village by fetching pails of water from the hill to the villagers. They were paid based on each pail of water fetched to the villagers.

After fetching the water for 1 year, Jill thinks of a idea. The idea is to make a pipe from the hill to the village, so that they no longer had to go up and down the hill any more. After hearing Jill's idea, Jack shouted "What a stupid idea, how are you going to build a pipe from the hill to the village. Since you are so free, why not go and fetch a few more pails of water to earn more. Stop day dreaming and get back to work"

Jill ignored Jack comments and started to think of how to build the pipe. She spent one year to figure out on how to build a pipe from the hill to the village. She spent another one year to build the pipe. In these two years, she earned 50% less than Jack, due to the commitment on learning and building the pipe. Jack always mocked her as a crazy girl in the village during the two years.

After the completion of the pipe, Jack was still going up and down the hill to fetch water. Jill however has a better life now. She just needed to turned on the pipe in the village to fill up water for the villagers. Also she can now charge less than Jack.

The villagers were very happy and satisfied with Jill's service as it is fast and efficient. More villagers are willing to get the water from Jill rather than Jack as they do not want to wait and is cheaper. Sooner or later, Jack was workless as no villagers want to get water from him. He regretted what he said to Jill in the past few years.

The morale of the story:
1) Have a open heart when someone share a idea with you. Do not shoot down their ideas or mock anyone based on your ignorance. There is a saying in one of the Zen stories, "You must empty your own cup first, before other people can fill up the cup for you."

2) If you keep doing the same thing without any improvement or better services, sooner or later you will be replaced. There is no such thing as stable job now.

3) If you failed to plan now, you plan to fail in the future.

4) Building a pipe from the hill to the village is the same as building up your assets. The more assets you have, the higher your passive income will be.

Purpose of this story:

Many people are afraid of doing something different from the majority. When someone want to try out new thing, they are often mocked or discouragement by the majority due to their ignorance. My stand is do not be afraid of trying out new things.

What is financial freedom?

What is financial freedom?

Before explaining what financial freedom is, there are two terms you need to know. They are active incomes and passive incomes.

What is active income?
Active incomes are incomes that you get by doing some services for other. One example of active income is money that you earn by working for other. There is nothing wrong with this type of income, but this is not the income that will make you rich. You are using time to exchange with money. Logically the more you work, the more you earn. But what if you suddenly couldn't work anymore, for example you become very sick permanently? This source of income will stop too. Normally people will only focus on this source of income, which is why very few become rich after working for their whole lives.

What is passive income?
Passive incomes are incomes that you received without doing anything at all. Yes, you can treat it as money dropping from the sky. So how can it be possible? Some examples are rental you collect by renting out your room or the whole house, interest that received in your fixed deposit and dividends that you collect from your stocks. People who focus on this source of income will slowly become richer and eventually their passive income is more than their active income.

For the term financial freedom, it means that your passive income is more than your expenses, and you will no longer need to have any active income (or need to work anymore).

Building a Billion- Dollar business

Building a billion-dollar business




By NOAH KAGAN



EVER since I was a little kid I wanted to be rich. I think most of us do; however, we might not think about how to get there.



I once had a friend who was a child prodigy, highly respected by the Silicon Valley community. His sole goal was to create a billion-dollar business - nothing else mattered. Because of this, he rejected ideas that were either way too small or did not monetise well enough.



He took one year to develop different ideas and one idea in particular grew very large. However, at the end of the year, he threw it all away. This was because despite having millions of users, he had no real product, no value, no love and no engagement. His main problem was that he put the business before the users.



Having spent a lot of time both failing and succeeding, I have assembled some advice for aspiring entrepreneurs on how to build a billion-dollar business.



1. Focus



Focusing on how you can become a big business is the first mistake. Instead, it is better to focus on creating something ultra-valuable to your users.



Focusing on large billion-dollar exits only sets your business too far in the future and misses all the details you need to get there. The question you should be asking your users is, 'How would you feel if we were not around any more?' It is when they answer that they cannot live without it, that you know you have a winner.

GET SET FOR A WILD RIDE ; FENGSHUI INDEX

Get set for a wild ride: Fengshui Index
By Dawn Zeng
IF YOU are an investor who likes a smooth ride with little volatility, it might pay to sit out the next 12 months.
That's because riding the Golden Tiger is anything but smooth.
Don't take our word for it. The wand bearers at CLSA Securities in Hong Kong have been crystal-ball gazing to compile their annual Fengshui Index on what lies ahead.
In short, it looks rough - and history, after all, is on their side.
They warn that the typically tumultuous Tiger years are not for the faint-hearted. Stock markets tanked in 1962 and 1998, the year of the Water Tiger and Earth Tiger respectively, then-US President Richard Nixon resigned over Watergate in 1974, and August 1998 marked the start of the Russian financial crisis.
But if you are armed with courage and conviction, opportunities abound, according to the CLSA gurus - who have nailed some trends previously but would readily admit that the tongue-in-cheek index has not always proved reliable.
Recall that some of their predictions for the Year of the Earth Ox last year were right on the money: Gold surged past US$1,000 an ounce and the market bottomed despite bearish sentiment at the start of last year.

Thinking Big Is the Plan

Thinking Big Is The Best Plan

Years ago, when I was just starting my real estate investing career, I came across a property with a for-sale sign on it. I called the broker and asked, "What can you tell me about the property, and how much does it cost?"

The broker politely and patiently said, "It's a commercial building with six tenants. There's a chiropractor, a dentist, a hairstylist, an accountant, and a bail bondsman. The price is two million dollars."

Losing Big
I almost choked. "Two million dollars?! That's way too expensive!"

Thirty years ago, $2 million was a lot of money. And instead of looking at the property, I let the price frighten me off. I never looked at the deal, and just assumed that the seller was crazy, greedy, and out of touch with the market.

Today, there's a luxury hotel on the same site. It's spectacular. I estimate the property to be worth at least $150 million, and maybe more.

Cheap Lessons
Not seeing the potential of that deal taught me many lessons. Here are two important ones:
• Sometimes you learn more by being stupid and making mistakes.
• The person with the better plan wins.

In the above example, my plan was just too small. In fact, the only plan I had at the time was to collect the rent money from the tenants, cover my mortgage and expenses, and put a little in my pocket. And 30 years ago, I knew that the rent from six small tenants couldn't possibly pay for a $2 million property.

I later learned that the property's eventual owner bought it for full price – with terms. He put $50,000 down as an option and asked for 180 days to put the rest of his plan together. During those 180 days, he gathered his investors, a builder, and his tenant, a major hotel chain.

If he hadn't been able to put his plan together, he would've lost his option money. Instead, before the 180 days were up, his investors paid the $2 million in cash, and he spent the next three years getting the project through the city planning commission and finally began construction. He won because he had a better plan.

Mind Expansion
Donald Trump often says to "think big." He definitely does so, but by nature, I don't. My excuse is that I come from a small town in Hawaii. My family wasn't rich, so when it comes to money, I tend to think err on the side of caution. Over time, my thinking has become medium-sized when it comes to spotting opportunities, but I'd still like to think bigger.

One of the reasons I enjoy doing business in New York and having Trump as a partner on different projects is that he makes me do just that – because if you don't think big in New York, you get kicked out. If I thought small, I wouldn't be on television, cutting book deals with major publishers, or talking in front of tens of thousands of people in arenas like Madison Square Garden.

Currently, I'm working on a real estate project to present to Donald. Consequently, I find myself pushing my thinking, expanding my context, and thinking of luxury, not just price. Even if Donald doesn't like the project and we don't partner on it, just preparing to present the project to him has required me to think bigger and come up with a better plan.

A Blast from the Past
About a year ago, someone called to say that there was a spectacular condominium that had just come up for sale. She wanted to know if I was interested in looking at it. Of course I said, "Yes." I wanted to see what her definition of spectacular was, and trust me – it was spectacular. She then said, "And the price is only twenty-eight million dollars. But I believe you can pick it up for twenty-four million. At that price, this condo is a steal."

Once again, I heard myself saying what I said so long ago: "That's too expensive." But, as I said, that lesson from 30 years back proved to be priceless: After hearing the think-small person in me comment on the condo price, I took a deep breath and asked myself, "What's my plan?" Then I asked myself, "What's wrong with my plan?"

I didn't buy the condo, but I did come up with a better plan. Over the next few days, I realized that the reason I couldn't afford the condo was because my business was too small. If I wanted to afford such a luxury residence, I needed to come up with a better plan for my business. Today, I'm working harder than ever to improve it – not because I want the condo, but to be able afford such a condo if I someday decide I want one.

Plan Ahead
In many of my Yahoo! Finance columns, I've written about my concern over the devaluation of the U.S. dollar. As the dollar drops in purchasing power, it often pushes up the prices of real assets – quality real estate and equities. My fear is that many people may not be able to afford tangible assets and become poorer as the dollar declines. This drop in purchasing power also widens the gap between the rich and everyone else.

One method of staying ahead of rising asset prices and the declining dollar is to think bigger and come up with better plans. As important as financial and business planning is a plan for personal development and self-improvement. I'm often asked to invest in people's business plans, and one of the reasons I turn many of them down is because a big plan requires a big person who's spent time on personal development. In a lot of cases, a business plan is far bigger than the person with the plan – that is, the dream is bigger than the dreamer.

Today, I'm glad I missed out on that $2 million property all those years ago. The best lesson I learned from it is that I can have a better life if I have a better plan – and a plan to become better person. So what's your plan?