MONEY MASTER

Recently when I discussed setting a financial goal with some friends, and one of them talking about reaching personal net worth more than six times from our current annual income in another four years. Well, at first I thought reaching that kind of personal net worth is quite impossible, but after doing some calculation I believe reaching personal net worth of six times our annual income is possible, at least reaching closer to that amount. First, we must realize that it is not possible to save 100% of your annual income. We have expenses, loan and many more which will takes up huge percentage of the annual income, unless of course, we have very low amount of expenses and loan. Even then, we cannot deny that we are not going to save 100% of our annual income, else how are we going to survive in this world where everything needs money? Back to the real issue, how I suddenly come to the conclusion that the financial goal is achievable, at least for me, but at one condition, which is I ...

I believe that nobody ever suspects what happened to Lehman Brothers about a year ago would actually took place. And if that is not enough, let us take a look at one of the struggles that the Wall Street wizard, J. Christopher Flowers had to endure lately. Of late, Flowers is struggling to salvage a series of ill-timed investments that he made just before the financial crisis got really ugly and dragged already distressed institutions down further than he thought possible. His billion-dollar stakes in Japan's Shinsei Bank and in Hypo Real Estate and HSN Nordbank, both in Germany have crumbled. Such is the impact of what many claimed to be the worst economic crisis ever since the Great Depression. Probably some of us want to know how the economic crisis all started? Not long ago, a US homeowner did something that he hadn't done for quite a while. He sold his house for less than the listed price. When enough other sellers did the same, the house prices that on average had more t...

In previous post of Managing Debt , I talk about some brief overview of good debt and bad debt. This post suddenly come across my mind when my brother feel so "unhappy" cannot use future money to buy his train ticket for the Hari Raya holiday. When the transactions failed to be done with the credit cards, my mom ask him to go to the station and buy direct with cash. Then he frowned and say, "Sigh, cannot use future money." Debt or some would say future money can hedge the inflation or make the money work for us provided we have the discipline in repaying the debt. One of the example, is the credit card - my brother buying train ticket scenario. He has the money in which he can either use for buying train ticket or just top up that amount of money to buy a stocks, which he is confident will be giving him about 7%-10% gain. Thus without using the credit card, he cannot buy that stocks (which can be good or bad, but then that is another story). But with the credit ca...

The recent so-call bull rally has last for almost six months, and while people are predicting that the market will be having a bad day in the month of September as September has always been a bad month for stocks, market continue their wild run after few days of fear. This mini bull rally reminds me of something call profit from patience. For most traders, selling after some percentage of profit and cutting loss is a norm. The illustration below is to show the comparison both investors A and B, where A will sell his stock once reach 10% while B is holding stocks for some time. Assuming both of them buying stock Z which is yielding 4% a year. 6 months continuous bull run resulting the price go from 1.00 to 3.00 For investor A, From 1.00 to 1.10 (10%), A realized gain is 10cents Then stock continue to move up 1.30, and A buy it back and because sentiment is extremely bullish, he will sell at 30% profit. So, once hit 1.70, he sell it again. A buy again when price drop to 1.60 and sell at...