The best investment one could make

I had a friend who recently got married, and I had a chance to catch up with him and his wife not long ago. Somehow during the conversation, we ended up talking about investments and what is the best investment one could make. Most people would think property, share market, land or even gold or commodities, but what my friend said definitely surprised me. His answer was: financial literacy. 

Most people probably aren't so familiar with this term, but to put it simply, you'd find it very hard to function normally if you were illiterate. You wouldn't be able to read street signs, fill in forms, pay bills or read instructions. Financial literacy is a similar concept, where if one does not have a full grasp of how money works and how wealth is created, we fall into a trap that most people fall into - a less than desirable financial situation. 

A simple example is this. Most people, myself included, were educated to find a stable job (which implies stable income). We therefore invest 16 years of studies if you include tertiary studies to receive a qualified certification, which will hopefully get you this stable job. It costs an average student $216,000 AUD to go through Primary and Secondary education, and a further average of $98,000 for a Bachelors degree over 4 years. (Figures taken from http://www.studyinaustralia.gov.au/) This becomes more than $300,000 AUD of investment into a qualification. Out of all university graduates in 2009, around 75% found full time jobs, with certain degrees as low as 50% (Source: Graduate Careers Australia, Graduate Destinations 2011). Certain studies include students looking for work, or students continuing further studies within the same category of those who are "employed", further skewing the data to falsely favor potential benefits of a university degree. 

Having said all that, the above is just a simple example, and I respect that many people study for more than just monetary reasons. However for myself, I discovered these things while I was in University. I realized that it was no longer viable for me to continue down the career path of my university degree, but to rather venture into the world of business and entrepreneurship. I have been blessed until now to see success that I would have never seen in my uni degree. Financial literacy has and I believe always will be integral in the life of someone who wants to be successful or impact the world, because everything that needs to be done requires financial backing. Therefore I challenge you today, invest some money into financial literacy, read some books by the gurus and start to understand how money works. This renewed perspective will give you a head start over most of the world. 

Sixth Sense in Stock Investing?

Do sixth sense exist in investing? What do I mean sixth sense?Without checking the technical analysis and fundamental analysis, using our own feeling to buy XYZ stocks.

I am sure everyone does it before, without looking the TA and Fa in detailed, just take take 5 year graph and check some latest new...then bang! :D

To be honest I did it long times ago. The last Global financial crisis hit almost every country to some degree of extend.I picked one hypermarket business, simply shoot it. :D. The FA was terrible,the price keep dropping everyday. I check some news regarding the company, knowing that the major shareholder do M&A at the unreasonable price, causing the existing shareholder burn their wealth at least 40%.

The main confidence I got to blindly buy this stock because myself are a frequent shopper there.I know their restructure of business will improving for the next three years.It turns out a profit for me. What a good sixth sense.

How about my bad sixth sense?The insurance company that I used to hardly understand its financial statement. The blue chips drops 50% from its peak. This time I thought I was lucky enough, believe my sixth sense again, I decide to buy then do research before too late too anticipate this bargain. How does it turn out? The stock still stuck in the same price it used to be the time I bought it!After I investigate the reason behind, it is almost hopeless to hope for rebound in the short period of time.What a bad guess..

So Sixth sense reliable?No...but it was fun :D

Money management investing in stock market

Money management sometimes play much more important roles when comes to investing.

What do I mean by good money management? Many expert especially professional trader, focusing on how to manage their money to achieve "win more,loss less". Sound really simple and common sense,but people sometimes blindly risking their money too much expose to unnecessary risk just by catching the trend.

Some really common sense method to me like "pyramid" method, Dollar cost averaging and Lower average cost.

(1) Pyramid method according to some expert, the higher the share price, the lower amount you would've to invest in the stock.However, when the share price become lower than you initial entry price, you don't catch the falling dagger, instead focusing on stop losses.By this you should achieve gain more, loss less.

(2)Dollar cost averaging states that you place some amount of money for regular period regardless where the share price going.

(3)Lower cost averaging, same as pyramid method but the lower the share price compared to your initial entry price, the more you buy.

Common sense tell us every method has its own way to apply and when to apply.

Pyramid method (1) is the best way for trading method.Most trader cares about major trend,focusing on the volume of trading and momentum, ignore the value of the shares. For this reason alone, you don't know the value of share and might be easily catch a falling knife.This is the method I usually apply on short term investment (usually few months to 1 year type). I like occasionally trade sometimes, pick something that I am really confident to feel where the major trend going. Unfortunately, usually only made very little money from this type of investment purpose( Not for trading purpose). Sometimes your effort doesn't feel worth it. Honestly, this type of investment I usually treat it as hobby, trading when I feel it is the right time.

(2) Dollar cost averaging, usually from my observation it is preferred by dividend hunting investor. Personally think, this method is only good enough for a stock that can compound adequately and pay good dividend.Most people apply this method to a wrong stocks from beginning. Some stocks that lack of growth, while paying good dividend, in other way defined by me as riskier bond ( capital gain is limited but dividend is given constantly like bond). For example, REITs which is very popular class of investment now.Other blue chips stocks that are obviously matured do behave in this way too. For entertainment purpose, I will share the stories from what I heard.:) There is one uncle that I heard, he constantly using this method to buy HSBC  (HKSE:0005) stocks in HKSE. What happen when HSBC do involve in sub prime crisis and the last money laundering scandal in US and mexico done by HSBC? The share price drops like no tomorrow.This method obviously only apply to high income individual, you can afford to put regular amount of $$ at the sametimes when bargain comes, you can buy a lot. This is very good for someone who really rich in cash and high income.

3) Value investor favourite for Lower cost averaging. But value investor should be careful of value trap.Besides this is a really good method to buy during stock market in recession. Once again, provided you choose the correct stock!

The line between frugal and crazy

You don't have to go very far down the path of being frugal to reach the point where people start questioning your sanity. (You bicycle to work? Even though you have a perfectly good car?) On the other hand, there's no idea so crazy that there aren't some frugal folks out there who swear by it. (I hesitate to suggest an example, for fear of offending some of our committed readers.) Still, there is a line where frugality becomes pathology. In fact, there are two lines. We have names for them.  We call them stingy and miserly.

The English language is rich with words to describe personal economic behavior. There are words people use when they're happy that you're not spending too much: thrifty, frugal, provident. There are words people use when they're not so sure: sparing, parsimonious. These are the words people use when they're unhappy that you're not spending more: stingy and miserly.

The fact is, though, that these words work pretty well for marking the dividing line between normal behavior and crazy behavior.

Does it make you happy?

Miserly is the easy one. The word miser shares a common root with miserable, and the classic misers in literature (Charles Dickens' Ebenezer Scrooge, Robert Louis Stevenson's Ebenezer Balfour) are wretched, miserable creatures--desperately unhappy despite their wealth. Misers aren't just normal people who choose to hoard money. Being miserly is a pathology akin to anorexia nervosa--a miser refuses to spend money because he feels his life is out of control; refusing to spend money is a futile effort to take control.

The nature of the pathology, though, is that this behavior doesn't produce happiness. You sometimes find parodies of happy miserly people (Scrooge McDuck, for example, takes great delight in his swimming pool full of money), but real misers are just sad and lonely.

So, that's the first "frugal or crazy" check: Does it make you happy? If you do the frugal things you do because you like living that way, then they're normal-frugal, not crazy-frugal, no matter what other people think of them.

Riding my bicycle for transportation gives me great joy (as does walking for transportation). I really like going to the library. (There are some things I like better, but it's a short list.) My wife spins and weaves and knits because she likes it--the beautiful, warm hats, sweaters, mittens, and scarves are something of a bonus. Either one of us can make a better lunch than any fast-food joint. Neither one of us lets the other hog all the fun of baking sourdough bread.

Most of these things are frugal, but that's not why we do them.

On the other hand, you may be doing things because you think they're frugal, but that you hate. Maybe you buy cheap shoes that hurt your feet because they're so much cheaper than good shoes. Maybe you keep on using a bar of soap until it's just a tiny sliver, because your mom always did. Maybe you reuse tea bags. Any of these are fine frugal ideas if you like the results. But if they make you unhappy, and yet you do them anyway--that's when you start getting into the area of crazy-frugal.

Other people may think your frugal choices are crazy. But the test of crazy is not whether "normal" people do stuff like that. The test of crazy is whether your choices support the sort of life you want to have. Be especially wary when your friends and relations start saying things like, "Why are you still doing X? You make good money--you can afford to do Y!" If doing X makes you happy, stick with it.

Are you deciding for yourself?

Stingy is tougher. The word stingy turns up when people talk the effect on them of spending decisions made by someone else. A boss can be stingy with raises. A husband can be stingy with money for groceries. A father can be stingy with an allowance. A cook can be stingy with meat in the stew.

I read an article once about a family where the father was a scary, controlling, frugal monster. He micromanaged every detail of the family's budget, with his wife acquiescing to all sorts of bizarre rules about where money could and couldn't be spent. Reading the article, though, I was disturbed to find that, although the guy was clearly a crazy person, about half of his supposedly crack-pot frugal notions seemed perfectly normal to me.

Once I gave it some thought, though, I realized that what made this guy a crazy person was not the extreme frugality, it was the scary, controlling monster part. Reasonable people can differ on whether washing and reusing plastic bags is out on the lunatic fringe. But yelling and screaming at your spouse because you found a used plastic bag thrown away in the trash--that's scary crazy. Buying the cheapest brand of toilet paper is fine (as is buying a more expensive brand, if you like it better and can afford it). Monitoring how many sheets of toilet paper your kids use and punishing profligate use--crazy.

If you're choosing for yourself, you can be just as frugal as you want without crossing the line into being stingy. But when you're making decisions for other people, their opinion counts too.

Of course, just disagreeing with your spouse, children, employees, neighbors, or friends about how much money is the right amount to spend on any particular category of purchase doesn't make you crazy.

What is crazy is trying to resolve these sorts of disagreements through means other than communication, negotiation, and compromise. Even with children, where the parent has to make the decision (even if it's just the decision to let the child have its own way), communication and negotiation is the way to go. Insisting on always having your own way, even if you're right, is crazy.

But you can afford it!

People who want you to spend more money will often point out that you can afford whatever expenditure they want you to make this time. But the fact is, the question of "crazy or just frugal" never comes down to whether you can afford something or not.

This is asymmetrical, because the opposite question does come down to what you can afford: it's almost always crazy to spend more than you can afford. (I say "almost" because there are exceptions: necessary medical care, food when your family is hungry, shelter when they're homeless--it's not crazy to provide the necessities.)

Just like English has plenty of words for thrifty behavior, it also has plenty for the opposite: squander, prodigal, spendthrift. Those words, though, seem to have fallen into disuse.

We live in a time and place where the concept of "necessities" has been redefined up to the point that people consider you as abnormal--as a crazy freak--if you don't spend money on things that all humans got along without for a hundred thousand years of human history, and that most people in poor countries still get along without.

What you can afford is not what makes your choices frugal or crazy. The right question to ask is: What makes you happy? If you want to stay happy, you'll want to follow up by asking your spouse and children what makes them happy. And you'll need to give at least a moment's thought to what your friends, neighbors, colleagues, and even passing strangers think. But don't do it because you think their opinion of your lifestyle has much to say about whether your choice is crazy; do it because people's opinions can influence their actions, and their actions can affect you.

Lifestyle choices that make you and your family happy are never crazy, no matter how other people choose to live.

4 Amazing Life Lessons from Scrooge McDuck

When I was a little boy, Donald Duck was my favorite comic series, and I used to read it every week. The ducks are caricatures of us human beings, which makes it interesting reading, and there are always some philosophical lessons to be learned in the comics.

One of the most interesting characters is Scrooge McDuck — a greedy capitalist that is the richest duck in the world. His only goal in life is to get richer, no matter what he has to do in order to succeed financially.

Like in every person and duck, there are both good things and bad things in Scrooge. We can learn from both the positive and negative sides of the world's richest duck. Maybe there is something that he has done right to get into the financial position he is, or maybe his greediness is a something we should avoid. It is up to you how you decide to see it.

Here are four important areas in life in which we can learn something from Scrooge.

Wealth

Heavenly heather! The genie in the magic lamp! The fortunes I could own! I could have the world's biggest diamond! No! The world's biggest diamond mine! No-no! All the diamond mines! No! The entire mining industry! Yes, yes, yes! I can see that this is going to take some careful thought.

According to Carl Barks, Scrooge is worth five billion quintiplitilion unptuplatillion multuplatillion impossibidillion fantasticatrillion dollars. No matter what the actual amount is, Scrooge is never satisfied with it and always wants more.

While the good thing about Scrooge is that he has been able to build his fortune from the scratch by clever moves and working hard, moderation apparently isn't one of his virtues.

Of course, most people want a certain amount of money to get a decent living in a Western society, but after a certain point, additional money does not make us any happier.

Giving does.

When you have enough (which is, by the way, often quite little compared to Western standards), why not learn from Scrooge's mistakes and, instead of trying to get more things to yourself, give value to other people and focus on making other people happy?

Even some of the world's richest men like Bill Gates and Warren Buffet have given a huge part of their fortunes away, and there is certainly a reason for it. It makes them happier than keeping the money.

Education

It appears that Scrooge isn't properly educated and has quit school at an early age, but it is unclear why he did it. However, Scrooge is a clever duck and is always willing and ready to learn new things — which is much more important than formal schooling.

Getting a nice degree will open some doors in life, that is for sure. It also never does any harm to be educated. In my opinion, however, the most important things that I have learned during my studies are how important good language skills and networking with the right kind of people are — everything else can be learned quite quickly from books or Google, when needed.

Willingness to learn new things constantly is much more important than formal education, and usually the most important things in life are not taught in school, anyway. At least I wasn't being taught social skills or how to make my own living by starting my own business — I have to learn those things by myself.

Appreciate education, but remember that education can be anything you do to learn new things in life. It isn't just formal schooling.

Morality and Beliefs

As a businessman and treasure hunter, Scrooge always needs to set new goals and face new challenges. For Scrooge, there is always another rainbow, so to say. His motto is "Work smarter, not harder."

We should all learn from Scrooge's positive attitude towards success and work. Like he believes, it is possible for everyone to do almost anything, if there is just enough persistence involved.

You should also always remember to work smarter, not harder. The amount of work becomes insignificant if you are doing the wrong things, so focus on doing the most important things efficiently and try to skip all the insignificant tasks.

Scrooge seems to have a personal sense of honesty that offers him an amount of self-control, but as a businessman, he often resorts to aggressive tactics and deception by manipulating people and events towards his own ends.

It seems that some successful entrepreneurs are quite selfish and only give to other people when they expect to get something in return in the future. If you have seen the movie There Will Be Blood, you know what I mean.

I don't think that any amount of money in the world is worth losing yourself in the process. When you lie in your dying bed, do you want to be remembered as a greedy and lonely guy who was filthy rich or a lovable person who made everyone feel good and whom everyone loved?

Relationships

Here I sit in this big lonely dump, waiting for Christmas to pass! Bah! That silly season when everybody loves everybody else! A Curse on it! Me — I'm different! Everybody hates me, and I hate everybody! — First line, inChristmas on Bear Mountain (1947)

Scrooge is described in some comic strips as an old, bitter, and lonely person, who does not enjoy being around other people unless it involves making more money. It is a caricature taken to extremes, but I don't think that it is too far from truth for many people around us.

The inability to build good relationships is a major obstacle when trying to find happiness. Maybe some people enjoy being alone more than others, but deciding to hate everybody and assuming that everyone hates you is an extreme example of harmful negative energy.

Before you get bitter because of feeling lonely, try to see if there is something wrong with your own attitude. Other people are often mirrors of our own attitudes, so it is very useful to test what happens if you, just for one week, decide to only think good things about everyone and genuinely assume that everyone likes you.

It easily becomes a self-fulfilling prophecy that makes you happier in a short period of time.

Should you get a credit card?

The misunderstanding in this world is that debt is always bad. Governments, corporations, small businesses, working individuals, even students all have DEBT and it is believed that DEBT will be the downfall of society. However debt is not itself the evil force behind recessions, repossessions, retrenches and credit crunches!

BAD DEBT is the problem. Debt itself can be a wonderful tool when used effectively. However when used ineffectively, ‘good’ debt can quickly turn to ‘bad’ debt which can leave you in a nightmare situation. So before choosing which credit card is suitable, make sure you keep the following in mind before applying:

SaveMoney Credit Card Reminders

1. Credit cards are not additional income streams so don’t increase daily expenditure just because you can spend on credit.

2. Always borrow as little as possible and pay the debt off as quick as possible because the quicker you can repay, the cheaper it will be for you.

3. Beware of the Credit Card fees because If you fail to repay in full, you’ll pay interest on the whole amount regardless of any payments made.

4. Avoid late payments as it may lose you any cheap interest rate deals, pay penalty fines and/or hurt your credit rating that may affect future credit card applications.

Should I still get a Credit Card bearing in mind all these potential hazards?

As mentioned earlier, credit cards are not the root of the problem. In fact, if you are disciplined, credit cards have many benefits. It can help keep track of your monthly expenditure, push your monthly payments until after your salary gets paid, earn you rewards or even save you money if used correctly.

Much like lighting a match that has many positive uses such as lighting a candle or providing light for a short period of time, there is a reason why parents always tell children “do not play with fire.” This is because young kids do not know the extent of damage fire can cause in the wrong hands. Same applies for credit cards so keep in mind the following Save Money points.

SaveMoney’s Credit Card Top tips:

1. Best to pay off credit cards in full if you can stay within your budget!

2.  When using credit cards with 0% purchases, ensure that you don’t miss the minimum payment during the 0% period.

• Set up a direct debit to pay the minimum repayment each month of your credit card balance. This way you avoid any late penalty fees or lose out of 0% interest cards
• The minute you pay less, pay late or miss a payment, you lose the 0% bonus rate and get charged the usual high interest rate on this type of credit card.

3. For 0% easy repayment plans over 12 or 24 months for purchases such as mobile phones, home appliances etc, always meet the repayment each month.

• Otherwise you will usually lose your 0% rate over the entire term of the repayment plan

4. Apply for credit cards that can give you the most rewards from your spending habits

• If you spend a lot of your hard earned cash at certain stores, find the credit card that can give you the best return on your spending

Not sure what you should apply for?

If you still don’t know where you should be looking, why don’t you take SaveMoney’s Credit Card quiz which will do its best to help recommend you a card:

Question 1

Will you be able to pay off your credit card in full every month?

NOGo to Question 2 so we can try to minimize your interest payments to save you money.

YESCongratulations, you have landed on cloud 9 of credit card choices.  As you can pay off your credit card in full each month, you don’t have to worry about interest rates. Focus on the best card that rewards you best for your spending. For example, if you are a hardcore movie buff, then finding a credit card that gives you rewards at the Cinemas could be your ideal card. Browse through our Cashback credit cards as well as our reward credit card page.

Question 2

Will you clear all the debts from spending on the card at the end of the 0% period?

NO
Go to question 3

YES
Go for the longest new customer 0% rate for purchases available, giving you time during the 0% period to earn and save enough money to pay off the debts without any interest cost.

Question 3

Are you likely to make a disciplined effort to apply and change cards, on time, roughly every 3-6 months?

NO
Go to question 4

YES
Grab the longest new customer 0% rate for purchases available. Apply for a new credit card with the longest 0% Balance Transfer when the 0% interest period is nearly over (usually 3months or 6months) and transfer the remaining debt onto the Purchases Card.

Question 4

You need to spend using a credit card but unable to make full payments and not willing to apply for new cards every time the 0% period ends?

Your best option is to apply for the lowest interest rate credit card for purchases, and stay away from 0% credit cards. This is because after the 0% period, the interest rate will jump considerably higher than the lowest interest credit cards available out there

Basic Investing Strategy

Investing your money can be a great way to ensure your financial future. With the right investment choices, you can be sure to have money for emergencies, to put towards the education of your children, and to have available when the time comes for you to retire. There is a key word in the preceding phrase however- “right”. If you make the wrong investment choices, you may just end up where you started or worse, flat broke.

Most people who invest wisely by making the right decisions with their money follow the same basic investment pattern, although they may define it by another name. It might be that you are the cynical type who chooses to believe that the basic rules could not possibly be as easy as they seem, in an area that seems so complex. It is true. However, that these rules have withstood the test of time.

First of all, make sure that the money you choose to invest is indeed earmarked for the purpose. As in any form of gambling, there is nothing to be gained and everything to be lost when it comes to investing. Do not put up money that you cannot afford to lose should the market take a downturn.

One rule that people seem to refuse to apply in any area of their lives, including the world of investing, is lean not on your own understanding. Most of the time, this is the result of people balking at entrusting another person with their money, believing that with a little understanding they can work the market themselves. This reasoning is fundamentally flawed. In the first place, most people will not be able to begin to unravel the complicated graphs, pie charts, and statistics by which the investment world relates its information. In order to understand what the numbers mean, you will need to have some basic training. There may come a time after you have had some experience in the market that you will be able to make sound decisions on your own, but the initial get-your-feet-wet phase is not the time to attempt it. Check the background of the advisor you choose, as there are a lot of brokers out there looking for a quick fleece. The best brokers will have years of experience, a variety of investment backgrounds, and will probably cost you much less than you might think.

Think long term. Unless you invest millions of dollars initially, it will take time for your investments to mature and begin to accumulate substantial gains. The best investments are proven over time, and thus it is best to place your funds in long term choices. The details of this are plain- it is best to forget about this money in terms of a cash fall back, at least for a number of years.

Diversification is an oft-flogged truism of the investment world. A good portfolio will include cash and cash equivalents (GICs, fixed annuities), growth investments (stocks), and growth and income investments such as mutual funds. Diversification ensures that you do not have all your eggs in one basket should any part of the market experience a downturn. Note that diversification means not only investing in several areas, but also making sure that no one area contains a disproportionate percentage of your funds.

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