8 Wealth Building Secrets from J Paul Getty

Let the Wealth Building Secrets of one of America's greatest and famous Billionaire, J. Paul Getty inspire you to a great Achievement.

One of the shortcuts to building wealth is to learn from those who have achieved great wealth.

The late Billionaire John Paul Getty was known as one of the greatest wealth builders in American history.

He was kind enough to distill his building wealth rules for anyone who desires to amass wealth like him to follow.

Do you want to be fabulously rich? Then learn from the master wealth builder himself, and follow in his footsteps:

Building Wealth Secret No. 1:

To build wealth today, you must be in your own business.

You may think that the corporate executive with a $100,000 salary is better off than small shop owner, but the executive will be hard-pressed to double his income and taxes will eat up most of any increase.

The simplest peanut vendor has unlimited opportunity to expand his business and his income, and even salesmen, who in most cases are able to write their own paychecks, can control his sale increases himself.

Building Wealth Secret No. 2.

You must have a working knowledge of the business when you start and continue to increase your knowledge of it as you go along.

If you don't know what you're doing when you start, your mistakes will be costly and often unnecessary, and you won't be able to keep up with the technological explosions in any field.

Start smart and stay that way.

Building Wealth Secret No. 3.

You must save money in your personal life and in your business venture as well.

Discipline is the key to saving money. You must develop the will power to deny yourself immediate gratification or the temptation to gamble on the quick buck. Resources will be needed for expansion and should be guarded carefully.

Building Wealth Secret No. 4.

You must take risks, both with your own money or with borrowed money.

Risk-taking is essential to business growth.

Nelson Bunker Hunt is admired for his guts in trying to corner the silver market, not scorned for losing money on this deal.

Some of the richest men have staked their entire fortunes and lost, several times over, before the risk-taking paid off.

Back those risks with good judgment, experience, commitment, And the right support.

Seek advice on risks from the wealthy who still take risks, not friends who dare nothing more than a football bet.

Building Wealth Secret No. 5.

You must not only learn to live with tension, you must seek it out.

Thrive on stress! If it means getting physically fit, having a psychiatric overall or losing 50 pounds before you can handle it, do it.

Once you can learn to thrive on stress, you will not only enjoy it, you will seek it out willingly and enthusiastically and wonder how you could live any other way.

Men of means look at making money as a game which they love to play.

Consider it serious business and you will suffer far more stress than you need or want.

Keep your perspective or your stress level will rocket beyond your control.

Building Wealth Secret No. 6.

Build wealth as a by-product of your business success.

If wealth is your only object in business, you will probably fail.

Wealth is only a benefit of the game. If you win, the money will be there.

If you lose, and you will from time to time if you play long and hard enough, it must have been fun or it was not worth it.

Building Wealth Secret No. 7.

Patience.

This is the greatest business asset. Wait for the right time to make your moves.

Let your business grow naturally, not by pressing your luck.

Building Wealth Secret No. 8.

Diversify at the top.

Once you've made it, you'll understand that any business is limited in the challenges it offers.

You'll want and need other games to play, so you'll look for other ventures to hold your interest.

Malaysia SME backs soft loan idea

EVERY year, the SMI Association of Malaysia receives complaints from its members about the difficulties of securing credit.

President Chua Tiam Wee says while companies with good track records do not face a major issue in this area, start-up companies and those with less-than-rosy track records continue to have doors shut on them.

Wee suggests two solutions. The first is his call on banks to evaluate the applications of small and medium enterprises (SMEs) carefully and to try to understand the nature of their business and industry.

The second is a call to empower SME Bank to collect deposits, along the lines of a commercial bank.

“This may then help the bank to increase lending to SMEs,” he says.

Chua says SME Bank currently relies on Government funding and its paid-up capital of about RM1.35bil is very small.

How does a bank rate the credit worthiness of an application?

AmBank (M) Bhd retail banking managing director Datuk Mohamed Azmi Mahmood says banks would generally assess five credit factors of an applicant.

These are character, capacity, capital, condition and collateral.

Azmi says character refers to the borrowers’ “willingness” to repay while capacity refers to their ability to generate adequate cashflow to repay the loan.

The remaining three factors – capital, condition and collateral – can be mitigated or compensated by the favourable economic climate and government-guaranteed schemes such as those under Credit Guarantee Corp (M) Bhd (CGC) and Syarikat Jaminan Pembiayaan Perniagaan Bhd, he says.

Azmi says borrowers must show good character, management competency and ability to repay existing loan obligations and other creditors.

“The lack of credit history for those applying for bank loans for the first time can be mitigated and compensated by relevant supporting documents such as updated financial accounts, bank statements and letter of award,” he says.

He says it is important that SMEs maintain proper book keeping to ensure that these documents are available when required, especially their audited financial accounts. “Loan applications from sectors or industries that the Government is promoting will also have a better chance of having their applications approved,” Azmi says.

He says SME loans make up a fourth of AmBank’s loan portfolio to corporates and enterprises last year.

Hong Leong Bank Bhd group managing director Yvonne Chia says loan applications that show good repayment capacity, acceptable business risks and account performance track records will be considered favourably.

She says financial assistance to SMEs comprised 40% of Hong Leong Bank’s business banking portfolio as at March 2010.

Meanwhile, HSBC Bank Malaysia Bhd deputy managing director (commercial banking and director sales) Thomas Varughese says one of the main reasons to reject an application is the lack of financial information that can show the sustainability or viability of a business.

For instance, he says, many SMEs do not pay enough attention to managing their financial position to portray a picture of success, or to show evidence of business continuity.

This makes it difficult to approve the application, Varughese says.

“Poor credit history of the SMEs, including that of its directors and/or guarantors is another issue,” he says.

Varughese says if the SMEs or their associated directors or guarantors have exhibited poor credit history, which is shown in missing payments on their existing loans including personal loans and credit cards, this will give a negative impression on the overall credit assessment.

To secure a loan, he says, SMEs should have a detailed business plan that explains why the loan is needed in the first place.

“It will also be helpful to provide information about the business (company or management profile), nature of the business and financial statements or accounts for at least the last two to three years,” he says.

Varughese says the provision of well-thought-through cashflow statements can also provide further evidence for the need for the financial assistance, adding that SMEs may visit HSBC website for guidance on how to apply for loans.

He says that as of last year, more than 22% of HSBC’s loan portfolio is SMEs loans.

Varughese says the bank is not keen to finance businesses that may be considered as unsustainable or destructive to the environment.

“At HSBC, we believe that being a sustainable business is not only about delivering profitable long-term growth, but also about maintaining a stable environment and building healthy, educated communities,” he says.

Different Between Rich and Poor Mindset By Eker

Eker lists seventeen ways in which the financial blueprints of the rich differ from those of the poor and the middle-class.

1. Rich people believe: “I create my life.” Poor people believe: “Life happens to me.” (This is HUGE. Every successful person I know is control of her life. Unhappy people are constantly complaining to me how this, that, or the other thing prevents them from doing something.)
2. Rich people play the money game to win. Poor people play the money game to not lose.
3. Rich people are committed to being rich. Poor people want to be rich.
4. Rich people think big. Poor people think small.
5. Rich people focus on opportunities. Poor people focus on obstacles.
6. Rich people admire other rich and successful people. Poor people resent rich and successful people. (This is important, too — it seems to hold true among my friends.)
7. Rich people associate with positive, successful people. Poor people associate with negative or unsuccessful people. (Another important one.)
8. Rich people are willing to promote themselves and their value. Poor people think negatively about selling and promotion.
9. Rich people are bigger than their problems. Poor people are smaller than their problems.
10. Rich people are excellent receivers. Poor people are poor receivers.
11. Rich people choose to get paid based on results. Poor people choose to get paid based on time.
12. Rich people think “both”. Poor people think “either/or”.
13. Rich people focus on their net worth. Poor people focus on their working income.
14. Rich people manage their money well. Poor people mismanage their money well.
15. Rich people have their money work hard for them. Poor people work hard for their money.
16. Rich people act in spite of fear. Poor people let fear stop them. (This is big for me right now. I’ve accomplished most of the goals I set for myself, and need to set some new ones. But I have this nagging fear, because I’m moving into the unknown. Eker says that successful people act in spite of this fear. They move beyond worry, they “fake it til they make it”, learning as they go. Unsuccessful people do nothing at all.)
17. Rich people constantly learn and grow. Poor people think they already know.

The Mindset: Poor – Middle Class – Rich

The first step to change is Awareness.

The second step to change is Understanding.

Find out what current mindset do you have:

POOR CLASS

Who: Employees, Laborers, Wage Earners
Education: High School or College Graduate
Most Valuable Resources: Paycheck salary
Resource Focus: Salary or Hourly wage
Time Setting: Next Payday
Major Financial Goal: To Survive until next payday
Cash Flow Management: “How much do I have in my wallet?”
Investment Sources: The government
Expected Rate of Return: Get Rich Quick
Advisor: Broke Friends and Family

MIDDLE CLASS

Who: Employees and Self Employed
Education:Values a College Education
Most Valuable Resources: Short Term Investments
Resource Focus: Networth (home & personal effects)
Time Setting: Long-Term
Major Financial Goal: To built up a vast net worth by age of 40 to 65 years old.
Cash Flow Management: Understands the value of CFM
Investment Sources: Invest in products or services created by others
Expected Rate of Return: 10% to 30%
Advisors: Financial Planner, accountants

RICH CLASS

Who: Entrepreneurs & Investors
Education: Values only “street smart” education from peers / self learning / what works
Most Valuable Resources: Time and Long Term Investments
Resource Focus: Cashflow, Net worth (real assets) and Network
Time Setting: Adapt to each financial goal or investments Financial and Time Freedom
Cash Flow Management: Understands that Cashflow Management is the key to all wealth foundation.
Investment Sources: Create products and services to sell to the middle class and masses.
Expected Rate of Return: 50% to 300%++
Advisors: Themselves, each others, selected professionals and mentors.

How to Set S.M.A.R.T Goals

In financial planning, the most important thing that you need to do is to set financial goals. Your goals could be controlling your spending so that you could pay off your study loan or buy a home/car. Regardless of what your goal is, ensure that it is SMART i.e. specific, measurable, realistic and can be achieved within a certain time frame. So learning to identify and set clear goals is key to your success in life. Your specific goals will depend on a number of factors-your values, age, financial situation, and interests.

Sample of financial goals controlling your money so you have a little left over every month paying off debt having an emergency cushion in case of car break down or medical emergency buying a home buying a car saving for retirement purchasing "big-ticket" items, like electrical appliances planning a vacation

What is SMART goal?

Example: Johan's goal: To save for a vacation in Pulau Redang that costs RM1, 000 in 4 month's time. He needs to save RM250 per month.

Specific To go for a vacation in Pulau Redang – NOT want to go for a vacation Measurable Need to have RM1,000 – NOT need to have money Attainable Must save RM250 per month – NOT waiting for someone to give free traveling gift voucher Realistic To go to Pulau Redang in 4 month’s time – NOT to go to London in one month’s time based on RM250 savings per month Time-bound To buy it in four month’s time – NOT when I have money

10 Super Saver Tips for a Financially Stress-Free Campus Life

10 Super Saver Tips for a Financially Stress-Free Campus Life

It’s not easy, and it’s definitely not cheap to be a student nowadays. Other than studying and completing assignments, good students also need to be able to manage their money smartly. Failure to practise good money management in campus may even disrupt your studies.

Fortunately, good money management for campus students can be easily kick-started by practising simple money-saving techniques. Securities Industry Development Corporation (SIDC), the training and development arm of Securities Commission Malaysia, would like to share with you 10 basic “Super Saver” tips that will help you achieve a pleasant and financially stress-free campus life! Upon reading this article, you should be able to apply these handy tips and change your own financial habits on campus.

Super Saver 1: Practise the 10% Rule. The 10% Rule essentially means saving 10% of whatever money you have every month. So, every time you receive your PTPTN loan, MARA loan, scholarship or even allowance from your parents, make sure that you save at least 10% of it. This practice will also help you to be financially consistent and disciplined in future.

Super Saver 2: Establish an Emergency Fund. Sometimes, emergencies in the form of unexpected incidents MAY require you to spend significant amounts of money. For example, your vehicle could break down, you may get sick and need to be hospitalised, your PC or laptop could malfunction and require expensive repairs, or you could encounter other money-related issues. That’s why it’s good to establish an emergency fund. This way, if you ever need to spend money suddenly or on short notice, you would not have to worry about where to get the money from. However, always remember: An emergency fund should be used for EMERGENCIES ONLY!

Super Saver 3: Cultivate a habit of investing. You should start as soon as you can in order to obtain more returns from investments. Take advantage of compounding interest by saving your money in suitable investment products. Do your homework first by reading prospectuses, financial and annual reports, business magazines and more. By establishing some familiarity with the concept of investing, you can then pick and invest in the product that best suits your risk appetite, financial goals and budget.

Super Saver 4: Price-check when you shop. By comparing prices and searching for bargains, you’ll be able to save money whenever you go shopping. Price-checking also teaches you to adopt a more careful and patient approach when shopping. The best part about being a patient and careful shopper is that you will not succumb to impulse purchases and you will always strive to obtain the best value for your hard-earned money!

Super Saver 5: Cut up the credit card. A study conducted by the Department of Statistics Malaysia regarding bankruptcy caused by credit card debt among Malaysians showed that 50% of them are under the age of 30 years old. In other words, college students and young working adults make up 50% of Malaysians who are declared bankrupt. Whether you own a credit card or your parents “gifted” a supplementary one to you, always ask yourself: “Is having a credit card really necessary?” Remember, be responsible when using a credit card, either as a primary or supplementary holder because somebody (either you or your parents) will have to pay the bill!

Super Saver 6: Reduce your bills. Keeping the fan in your apartment or hostel to a medium speed, switching to fluorescent, energy-saving light bulbs, unplugging electrical appliances that are not frequently used, and reducing the screen brightness level on your computer can help you save money on your electricity bills.

Super Saver 7: Be a smart student. Print your work on both sides of the paper, buy refills for your printer cartridge instead of buying new cartridges, borrow reference books from your seniors/friends/the library, stay with housemate(s) instead of staying alone, and eat on campus more. Generally, the services and facilities provided to you on campus such as food, accommodation, photocopying services, etc tend to be cheaper than elsewhere, so take full advantage of them! Better yet, get your campus mates together and look out for opportunities for group discounts on campus such as buying reference books or stationeries in bulk.

Super Saver 8: Take advantage of student privileges. A student card is one of the most powerful tools you can use to save money. Use it to get discounts at the cinema, bookstores, when taking the LRT, signing up for internet access, holidays, eating out, sports, entertainment and more.

Super Saver 9: Use public transport. By taking public transportation instead of driving, you will spend less money on petrol. Not a fan of public transport? Get your friends together and carpool! You might also want to consider getting a motorcycle or bicycle to save on petrol money. Always plan your journey, and remember to travel only when necessary. For example, if the place you’re going to is very near and the weather is good, why don’t you take a walk to your destination instead of driving?

Super Saver 10: Use the Internet to make calls. Instead of spending so much money on prepaid calls and top-up cards, how about making your calls on the Internet instead? Not only can you chat for hours, it also doesn’t cost you a cent (assuming you go to free wi-fi hotspots). If you absolutely must use that handphone, remember that it’s cheaper to SMS instead of call.

In conclusion, college or university is supposed to be about more than just studying. You should also be using your time in campus to discover new opportunities, experience new things and meet new friends. With so many responsibilities to handle, the last thing you want is to suffer financial difficulties because you didn’t manage your money properly and sensibly. By practising the ‘10 Super Saver Tips’ we have shared above, you should be able to enjoy a financially stress-free, fun and exciting campus life!

Tips For Investor 2010

THE economy is picking up and most believe the worst may be over. If you’ve been hiding your hard earned money under your mattress for the better part of 2009, than now may be a good time to invest it.

The question is, what and how to invest ???

Getting started

For the first-timers, or those not too familiar with the world of investments, jumping in head first into something without careful research can be costly, especially when it involves losing money. Speaking to an experienced financial planner is not a bad place to start.

“The first thing we recommend a first time investor to do is to develop a portfolio. This can be done by working with a financial planner or an asset manager. We also recommend that you carry out fundamental research first before investing ,” MyFP Services Sdn Bhd financial planner Robert Foo tells StarBizWeek.

Risks and returns

Knowing how much you’re willing to invest, and how much of a risk you’re willing to take, is the next step. Unfortunately, risk is inseparable from returns, as every investment involves some degree of risk.

Licensed financial adviser Jeremy Tan of Standard Financial Planner says: “You will need to know your investment goals and how long you want to continue investing.”

For the non-risk taker, Tan advises placing money in a fixed deposit account, but cautioned that wasn’t a very good option.

“In an environment of high inflation and low interest rates, if you are just going to leave your money in the bank, eventually you are going to lose out,” he says.

Naturally, the bigger the risk, the better the returns. The following are in no way a comprehensive and ideal list of what to invest in, but a simple guide of what our financial planners feel are natural choices for the eager investor.

Unit trusts

Unit trust is a good way for small investors to invest for their future. For those who are unable to divest a lot of money, unit trusts are a good source of returns, says Tan.

“Investing in unit trusts is good for beginners because you can invest with limited funds.

Unit trusts also offer a broader choice of funds. If you invest in a stock, the options are limited to that company’s core business. Unit trusts investors can also redeem their investments at any time.

“In a downturn, if you want to sell off your shares in the stock market, there are risks you may not find a buyer,” Tan says.

Financial planner Wilson Low says people who invest in unit trusts also have the advantage of being advised by professionals. “Their expertise ensures that the investment decisions made are structured and well planned. With the stock market, you don’t get that luxury.”

Gold

CTLA Financial Planners Sdn Bhd financial planner Mike Lee claims that gold is a “good investment bet” for 2010. With the US dollar forecast to remain tame for 2010, a lot of investors would be turning to the precious metal for a more secure investment, he says.

“If the dollar weakens, the price of gold will increase since it is denominated in US dollars but widely used in global markets and by central banks of foreign countries.”

Low says that gold was often considered a “safe haven” in a crisis. “If something happens to the world, like a global disaster and paper currency looses value, gold can become a valuable (alternate) tradable currency,” he says.

However, the stock market provides dividends and gold does not, Low adds. Gold futures rose Monday, boosted by strong Chinese imports data and after a Federal Reserve official emphasised that US interest rates are likely to stay low, pressuring the dollar. Gold for February delivery ended at US$1,151.40 an ounce, up $12.5, or 1.1% on the Comex division of the New York Mercantile Exchange.

Property

Regardless of whether you are a first time home buyer or an investor looking at property investments, the benefits are obvious.

While taking risks in the stock market may yield higher returns, property investment can provide a more stable, steady level of income and a more secured level of return on investment.

Property generally appreciates in value and rarely the reverse. But like other forms of investments, finding the right property requires a lot of research. “Property prices have been relatively stable but it all comes down to location,” Lee says.

An analyst from a local bank-backed brokerage says 2010 is a good year to invest in the property sector. “Many developers held back their launches last year and there should be some level of oversupply this year. However, many buyers have also shied away from the market so there could be a surge in demand as well,” he says.

Tan says property is a good hedge against inflation, but points out that investors may need to bear additional costs like repairs or risk not having a tenant in a downturn.

The stock market

The stock market can be a great source of income. To relatively new investors, Tan advises that the stock market should be their “last option.”

“You have to be a specialist if you want to excel in the stock market. You have to understand the fundamentals of the stock, price-earnings ratio, yield, etc. Unless you’re an expert and understand the stock well, this isn’t for you.

“If you do invest, the natural choice would be to invest in blue-chip companies, which tend to be more stable. If you’re a small-time investor, you can’t expect to earn much by investing in penny (small) stocks,” he says.

Foo shares a similar sentiment when advising newcomers: “We discourage stocks and shares if you don’t have experience.”

Diversification

Given the broad options above, Lee says the best way to maximise returns is to diversify one’s investment portfolio.

“Investors should diversify their investments and not place all eggs in one basket. If the market goes down, then you risk losing everything.

“If you’re willing to take risks, you should invest in a mix of equities and unit trust funds. And if you have the money, you should look at your portfolio and invest in something that you have not done so already,” he says.

Tan also concurs that diversification of investments is the best option. “To invest in just one area, you must be a specialist,” he says.

Foo says an investor should continuously review his portfolio to ensure that everything is “on-track,” adding that one could also try “diversifying offshore.”

“People today are not just spending in ringgit. A lot of them are sending their children overseas, like Australia. If you’re planning to send your kids overseas, than it’s best to start early and place your money in a foreign investment,” he explains.

He cautions that one should thoroughly research before diversifying into unknown territory.

“In diversifying, you need proper information. So work with planners that have the right tools that can help create the proper portfolio for you.”

Adapted from The Star