5 Laws of Money

In Physics, there are certain laws which stays true regardless of time, such as the Law of Gravity. When it comes to personal finance, there are also certain Laws of money.

In fact, there are 5 Laws of Money which I like to share with you:

1. Money comes gladly and in increasing quantity to any person who saves at least 10% of his/her earnings (first step to Financial Freedom).

There are only 3 Cashflow Scenarios:

a. You spend more than you earn: This person has negative cashflows and is likely to end up owing other people money (eg. credit cards, friends, relatives, loan sharks).

b. You spend all that you earn: whether this person is earning S$2,00 a month or S$200,000 a month, he/she is still "Just over broke".

c. You spend less than you earn (eg. save 10% of your eanings).

as time goes by, this person will automatically get richer and richer.

Which cashflow scenario do you want to CHOOSE for yourself?

2. Money can work for you, if you become the “wise owner” of money and make money work for you. (note: you’re the Master, money is the slave, while many people are guilty of being slaves to money).

Money is just a tool. We should Love people, use money. The sad thing is there are people who Love money and use people instead.

3. Money will be safe and grow if you invest it wisely or if you invest under the advice of people who are wise in money. ie. investment knowledge is key to making money grow. You can either acquire Investment Knowledge yourself or you can invest money under the advice of people who have investment knowledge.

4. Money will slip away from the man who invests it in businesses or investments with which he is not familiar or not “approved” by people who are wise in money. ie. Ask the opinion of those who are wise in money, they might be able to offer you information or advice that can prevent you from losing money.

5. Money flees the man who falls into scams created by tricksters and conmen, who promise “impossible earnings”. One common weakness of human beings is "greed". Greed can make a person who is usually alert and smart "stupid". Greed can blind a man and is the main reason why financial scams continue to exist whether in ancient times or in the modern day.

By Dennis Ng

Is the US Credit Crises really over?

The Dows/DJIA hits a record high today amidst the drop in the dollar value causing the Euro$ to hit a record high against the USD$. The Singapore STI index have also hit a record high of 3800+pts as stock markets across all region rose significantly signalling that the US subprime mortgage credit crisis has eased.

But is it really over? Or just a death trap awaiting to sprawl on the world largest economy. Its like a major conspiracy. News of Dubai and middle east furiously buying up undervalue stocks during the subprime mortgage turmoil and the recent announcement of China launching its Investment Corp with trillion of funds to play with. Can you imagine what will happen to the US economy if China Investment Corp owns significant percentage of the S&P 500 companies? Obviously, the chinese government's refusal to revalue its RMB has a certain reason behind it causing a big hoo haa to the US feds.

The sleeping dragon has awaken.
China has overtaken Japan as the economy with the largest trade surplus with a forex reserve of $1.33 trillion(as of 11 JUL 07). As crazy as it seem, China seems to be the next super power that could shake the world's economy. China stocks has been soaring in recent years as Jim Rogers pointed out, China is the future. Truth is, No matter which part of the world u travel to, you'll find products or souvenirs having a stamp saying "Made in China". Nearly all countries, there'll be a chinatown. With Macau and HongKong boosting China's economy, i would be surprise if China remains in its conservative state. But with the devalue of US$ and the slowdown on US economy, China's manufacturing sector might be affected.

On a personal note, China is still majorly undeveloped and many people are still living in poverty. Healthcare, water, energy and transportation are still widely scarce in poorer rural areas. I do believe in the near future the wealth gap in china will be extremely wide and it risk falling back into the medieval days of lords and slaves. Looking at the amount of extremely wealthy businessman from the mainland moving out, with leading examples from Russia, maybe communism has evolve agressively?

China is finally seeking its vengeance since the day of the invasion of foreign powers after retrieving HongKong and Macau. The next big thing will be what Japan did, invading the world by using its economic powers.

China resisted devaluation of its currency during the Asian financial crisis of 1997-98, and this provided a key element of stability that contained the crisis after most other Asian developing countries were forced off fixed rates.

China has unpeg its currency from the USD$ after 10years but a floating currency this could make China more vulnerable to future financial crises.

However, China is protected by having huge currency reserves of $750bn (SGD$1300bn), built up by its years of trade surpluses. But many of these are in US Treasury bonds, which will become less valuable to China after its revaluation.

So China may start to switch from holding dollars to holding other types of currency, for example the Euros, which could lead to a sharp fall in the value of the dollar. It could also make it more difficult (or expensive) for the US government to finance its massive budget deficit.

So is the US credit crises over? Think again.

Its off the worse but its not over...

US Dollars slides further

The drastic market turmoil in US has taken another toll. Even before the fed could cut rate by another quater percentage point to 4.5%, to try and salvage the situation, the dollar slide to a new low against the euros on speculation that a government report will show a drop in US durable goods orders. All these adding to evidence that the US economy is slowing down.

In singapore, stocks strengthen for the 3rd consecutive day and the STI index remains toppish. Retail investor have to be wary about the market, if the US faces a slump it will be a a global issue. Lets hope it'll be a deflation rather then a bust. The US government intervention could only sustain for a period and lets hope it'll not lead to a chain-reaction bust to global economy. Not to mention if US wage war on Iran or Syria, the world will be in for some serious shit. On the contrary, opportunities appear when there are chaos. Will the holy grail appear? I'll wait and see.

So maybe yearend would be a good time to visit the states? I believe the USD$ will drop to a low of $1.42-1.45 against the SGD$. But hiking fuel prices is forcing major airlines to increase their fare. I guess people holding on to euros are laughing their ass away now. Meanwhile, its time to hold on to cash rather then equities. I might not invest my money in stocks yet but i might consider going back in to forex. This time round i am betting on the Swiss Franc.

Gambling considered a social problem?

The highly debated controversial issue about how Singapore government(National Council on Gambling Problem) will try to tackle and improvise solutions to handle the post-IR gambling impact that might cause a social problem to singapore's society.

An extract from Channelnewsasia

SINGAPORE : Every social service centre in Singapore should have trained counsellors to identify problem gamblers.

This tops the wish list of the National Council on Problem Gambling, which will soon begin its second term.

The council also wants to reach out to more young people by working with schools.

It says the fundamentals to tackle problem gambling already exist but it wants to do much more.

The council has just ended its first two-year term and now wants to focus its next two years on refining and expanding its current activities.

That is why it wants to train at least one staff member in every social service centre to identify people with excessive gambling habits.

Professor David Chan, Service Delivery and Research Sub-Committee, National Council on Problem Gambling said: "There is a need to make sure that these services are integrated, that individuals that come and seek help are properly referred. Sometimes individuals with problems don't come to seek help, and the challenge is how then for us to reach out to these individuals."

Over 250 social service staff have already been trained to identify problem gamblers in the past two years. But the council feels that this is not enough.

The council says the issue of problem gambling is still relatively unexplored, not just in Singapore but in other parts of the world.

So for the past two years, the council has been working to plug the information gaps.

Currently, an International Advisory Panel is being formed to beef up the council's expertise in research, service delivery and prevention measures.

More details are expected to be announced in the next two months and young people will continue to be the council's focus. That is why it hopes to include problem gambling as part of the school curriculum.

Debra Soon, Youth Sub-Committee, National Council on Problem Gambling, said: "We know from our informal feedback that certain schools would have used the impending opening of the integrated resorts as a topic for discussion and we'd like to be able to see whether or not we can work with schools to get more of these topics in."

The council begins its second two-year term with five new members.

While it is optimistic of the progress made so far, it says it will get a better feel of how it has performed when results of its annual survey on public attitudes towards gambling are released in the coming months. - CNA/ch

In a typical singaporean chinese family, nearly everyone will gather to gamble during chinese new yr. I've young cousins as young as 6yrs old who knows how to play blackjack and even Daidee(Big2)!
In my opinion, it's not really a bad thing if you think about it. If your children are trained to take calculated risk when they are young, more then often they'll grow up to be more prudent with their money. Some might even hate the idea of gambling!

I feel that the National Council on Gambling Problem would only aid in helping people cope with the gambling urge but will never eradicate its root. Usually, gamblers are stubborn people and believe that they are able to beat the odds, therefore refusing to accept losses and hoping to recoup what they have lost.

Losing is never the worse demon, winning is. Reason being: when people win or make a big amount of fortune from gambling, there's a tendency that they get overconfident and think that they are good in the game and naturally able to beat the odds. And when they suddenly suffer a minor setback, they get emotional by refusing to accept defeat and pray to god and hope that luck will be on their side in the next bet. More then often, they often end up losing their pants and/or end up with piling debts.

I think one of the council's biggest challenge is tackling the issue of illegal money lending(loanshark) to minimise the risk exposure of individuals and their family members. However, educating the young maybe a foundamental way in reducing the social impact.

There's only so much the council is able to do even if singapore doesnt open up the casinos, i do believe there're so many illegal means to fix their gambling urge in and out of singapore.

Well i guess we will have to wait for the IR to be ready to be able to see the impact. Gambling is all about risk and money management. I see everything in life as a gamble as every decision you make in life doesnt always make u a winner. Losing teaches you to accept a whole new experience in life.

So 1 question to ask yourself, Does investment = gambling?
I guess its just a thinline that divides them.

Overly focus on chasing profits

I was overly focused in trying to generate as much $$$ as i possibly can. I have dream that i would make enough capital to start my own fund management firm. Its been 2 and 1/2 years since i started this blog. I realise i am under-utilizing my own knowledge and this blog's potential. I definitely have the bandwidth to do better. Especially in regards to balancing work, relationship, life and money.
However, I believe most people share the same achievement as me, to have a strong passive income, so that we are able to enjoy and see the best of life. Ultimately, achieve financial freedom! I have decided to have a focus point for this blog.

I'm gonna revamp this blog to an investment/life/money blogs for young startout people like myself or people who believes in making money sense on things. Knowledge is power.
Its never too late to realise your full potential in life.

I am picking up my momentum and starting to grow my money again. Recovering from the battles with my inner demons, greed has a great side effect! I'll share some of my personal experiences in the gambling and investment industry. I'll also share some interesting articles that i've ponder upon if i personally find is interesting to share.

Anyone who ponders upon this site and would love to contribute some ideas will be appreciated. Do drop me a comment.

Cheers.

Soup of the day...

Finish every day and be done with it.
You have done what you could.
Some blunders and absurdities no doubt crept in;
Forget them as soon as you can.

Tomorrow is anew day; begin it well and serenely
and with too high a spirit to be
encumbered with your old nonsense.

This day is all that is good and fair.
It is too dear, with it's hopes and invitations,
to waste a moment on yesterday.