AmericanLit Summative Blog

Recently, in this modern world, there are more and more cases related to violent video games which effect children of all ages. Studies have provided a statistical comparisons between large groups of children who do and don't play violent video games. And it turned out to be the groups of children participate in violent video games have a higher violent thoughts, emotions and behaviors.

      

I know that nobody really actually know what was up with Eric Harris and Dylan Klebold and the reasons why did they cause the Columbine massacre. I know that it is not right to blame a single thing. But the two of the things that I think that affect and cause such violent thoughts and behaviors of them are violent video games and the US Gun Law. I think the society and the authority should do something to prevent such painful death and lost. I think the gun law in US as well as every where in the world should be stricter and tighter.Also, I think parents should really care about what games their children play. Is it violent? Is it appropriate?

There was several articles about kids kill people after playing Grand Theft Auto (GTA). Basically, Grand Theft Auto is a video game encouraging violence and awards points to players for killing people. It allows the player to make a crime, to go crazy and to simply shoot up anything in vicinity, to steal a car you like, to stomp a person you don't like, to blow away a cop in your way. 

In 2005, an eight-teen year-old boy Devin Moore lived in Alabama was convicted for the 2003 shooting at a police station. He had played Grand Theft Auto day and night for months. It had been told by a police man, Devin Moore shoot two police officers and a dispatcher as he was being detained for allegedly stealing a car. He grabbed one officer's .45 pistol and killed all three before fleeing the station in a police cruiser he stole from the station. After arrested, Moore is reported to have told the police: "Life is like a video game. Everybody's got to die sometime." The game industrial gave him a menu that pop up in his head, which offer him the decision to kill the officers, shoot them in the head and then flee in a police car, just as the game trained him to do. 

Recently, in another similar case, where an eight year-old boy intentionally shot and killed his grandmother after playing video game with a gun. The police believed that he had been playing Grand Theft Auto IV just minutes before the homicide occurred. This shows children does affect by violent video games. But another aspect of this ... where did the gun purchased? Why did they even have it?  How did he get it? Where was it placed? In the US, any eighteen and above can purchase and freely use guns. Such as in the state of Florida, you don't even need to register to purchase a gun or even a license. I am agree that during the time of war, the gun law wasn't that strict and it was stated in the American constitution that every man had a right to defend themselves. But looking at a situation, where an eighteen year-old girl could just walk in a gun show and purchase a weapon with no questions asked. Isn't it about time that the gun law in American be revised?

     

Multiply 25 Rule and 4% Rule

I learned something new in my Personal Finance class last week. I found it really cool and interesting. I would like to ask you a question. Do you know how an estimate of much money you will need in the future for your retirement? Well, when my teacher ask my class at first, I have no idea how much will i need. I was wondering is it even possible to know it. And then Mr.Hallam introduced us to this multiply 25 and 4% Rule. So basically, these 2 rules will help to guide how much you will need for your retirement and how much should you withdrawn each year so you don't go broke or bankrupt. 

So to estimate how much money you will need for your retirement, just simply multiply your desired annual income by 25. And to guide how much you should withdraw once you're retired 

• For example: 
• Multiply by 25
• I want to live on $40,000 per year in retirement; I will need to have $1 million dollars in my retirement portfolio. ($40,000 x 25 equals $1 million)
• 4% Rule
• When I retire with $1,000,000 in my portfolio. In your first year of retirement, I will withdraw $28,000. ($1,000,000 x 0.04 equals $40,000.
• The following year I withdraw the same amount, adjusted for inflation. Assuming 3 percent inflation, so I will withdraw $41,200. ($40,000 x 1.03 equals $41,200.) 

And you might ask, what if the money is running out. Well, I would say, If you have you current in an investment account, you should not worry to much. Because, eventually the money left after each month you withdrawn will continue to growth over time. 

Reflect: I was taking with my dad about one of the thing i was really considered about was the Central Provident Fund. It was really confusing, hard to understand. My dad also reminded me of this one story. One time, my family was going home on a taxi which the driver was a Singaporean, he was really open, he shared with us his story, he was complaining about the CPF. And one thing, he is really old, he should have been on his retirement. He was saying that when he was young, the government was saying all kind of thing to encourage the citizen to put their money into the CPF and promised them that will give them back their money with interest. Now, he is old, he needed that money to take care of his family and his old life. But the amount that they give out is not enough. So he still have to drive taxi everyday until now. At the time, I did not know what he was talking about, because I did not know about the CPF. I made me refuse to put a lot of my money in there because of his story. I don not is it true or not but I will have to make a lot more research about this. 

A Short Story

        A widow had to work hard to bring up her son.  This was after her husband left her when their little son had turned two. Being a widow, having no permanent job and supporting her son, she is not well-off. Mary and her son, Max lived in a small rental house nearby the country side.

        The silence of the night was broken by the sound of typing keyboard. It was already twelve, but Mary was still trying to type as many documents as she can. It was one of her extra job which she hoped to find some extra money. There were so many times that Max had persuaded her to quit that extra job, because he was worried about her health condition. Nevertheless, she just brushed aside.

         As she tirelessly typed those countless documents, Max took a peek at her as he was lying on bed. She looked haggard recently and even her eye bags were getting darker. Max couldn’t stand to look at her any longer. He shut his eyes and silently cried through the night.

      Mary didn’t want Max to have the same life as she did. She wanted him to concentrate on his studies and get good results. As time flew by, Max finally graduated his high school with honor and received scholarship from a university in USA. Mary was really happy yet sad and went round telling her neighbors. She couldn’t wait till the day he would be successful and the day she will move to live with her beloved son in the crowded modern country. But on the other hand, Max was really happy to live far away from his mom who he thought an old unfashionable ugly woman.

      Time passed by, Max had his own family; he married to a lovely girl and had two adorable daughters. He would never tell them anything about his single mother. Six years away from home, yet he had never visit his mother. The only thing he did was sending a plenty of money for his mother each month. He thought that it was enough to pay back her for raised him up.

     One day, Max’s wife opened the main door and there was an old ugly woman. Max was in shock when he recognized that it was his mother.

         “My little son, my son, I miss you so much.” Mary cried out.

         “Who is your son, granny? I don’t know you!” Max busted out.

         “What are you talking about? I am your mother, Max. I miss you” she said.
        “Go away. I said I don’t know you. Otherwise, I am going to report to the police!” Max screamed.

       “Oh, I am sorry, I got the wrong person. Wish you and your family healthy.” she said in a deep voice. She walked away in tears. Max was too crying pain inside.

        Two years later, Max went back to his country side. He went back to the small rental house where he spent a quarter of his life. He knocked on the rusty metallic door and hoped to find his mother running out and hug him. As he was knocking, a neighbor came and asked him “Are you Mary’s son? Where have you been for the last seven years? Your mom passed away one year ago. I am sorry to say that but she left you this letter.” My finger could hardly open the letter; they were frozen after I heard that news. The letter was stained with his mother’s tears. Max couldn’t stand it and his tears started dropping down.

        “My dear little son, I know that one day you will receive this letter. I know that it is too late for me and you to meet again. But son, don’t be sad. Just read what I am going to write and you’ll know that I am always with you. The money that you sent to me, I didn’t use anything because I know that it is going to be useful for you, not me. Remember the time I ran for jobs, I save every single cent to send you to school and provide you everything. With this money, you will have to use it wisely, okay! And there’s another thing that I never did tell that you injured your right eye when you were three. Doctors were hopeless and there were no other ways to save it. So I gave my eye to you. My wish came true, I will always be with you, I can see what you are seeing, I can feel what you are feeling, and I will cry and laugh with you, my dear. Lastly, I wish you and your family happy. And I do really miss you my little son. Good bye. Just remember that I will always be with you no matter what.”

      “I will always be with you no matter what” Max regretted for neglected his mom. He finally realized what Mary did for him and all the love she gave to him. “Mom, I was wrong, please come back with me, I deserved to die, not you. OH… what did I do? Mommy…!” Max screamed and shouted and felt more regret than ever. He collapsed on the floor and tears ran down his eyes. Memories flashback in his eyes and he would never forgive himself for what he had done.

Progress Blog

In my Personal Finance class, we are assigned a final project called Real Life Project, which we have to create a realistic scenario of yourself 3 to 4 years after we graduated from colleges or universities.

The aim of this project is to help us with our future finance, to get an idea how to deal with these situation later on. I am sure that almost everyone will have to deal with the income and the living costs. Even if the situation is not the same with what we've planned, we still have an idea and will have to change the plan in order to adapt the new situation.

    So far, I've done my first and second phase of my Real Life Project. But there is one thing I was questioning myself many times is about the "Transportation" part. Since I have to include in the taxi cost for my transportation after i graduate since I am not getting car, I don't really know how much should I factor for the taxi. I kept asking myself how much should i factor for it.
    For "Home savings", i think it's fine because I used the previous project that i've done, which is the real estate project. I am going to buy a house in Kuantan, Malaysia and lease it for rent. By doing so, it will also help me pay off the mortgage quickly.

Discussion with parents:

As i was doing the "Transportation" part, i wondered whether to buy a car or not. So I asked my parents during our dinner time. My mom said it depends on my finance and also the job that I chose. And she also reminded me how expensive to buy a car in Singapore. So since I am going to be a chemical engineering, I don't think I will need a car to travel place to place like a salesman. It's also convenient to go by the Mrt and buses in Singapore since the government recently and will increase the price of the COE and ERP. Added to this, I think I will need a little more time to settle in my job, to find a fix, stable job. I don't want to not have enough money to pay for the car insurance, maintenance,... in the worst case like loosing my job.

American Expat? Should not buy Actively managed funds!

If you are an American expatriate, you would probably live oversea for sometimes now. You would probably also have invest a small amount of your money to a IRA, which you can only put up to $5000/year if you are under 50 years old, and $6000 if you are older than 50. But just by invest this little $5000 a year, that will just give you nuts when you're retired. That means your investment mostly would be put in banks or invest in taxables accounts.

So far we know Actively managed funds and Passively managed funds are taxable accounts.
But which of these should American expats invest?
Based on a study: http://www.nerdwallet.com/blog/investing/2013/active-mutual-fund-managers-beat-market-index/

That shows the Average Returns for active fund are likely higher than index fund by 0.12%. Wait, now, have a look at the Average Returns, which is telling active fund now gives you less than the amount index fund gives you. From the Average Returns before Fees and Average Returns without looking at the fees yet, you can conclude that active funds would have higher fees and higher taxes compare to index. It is also proved by this data. 

• There are 2 main ways that you could make money by invest your money in taxable accounts:
• Dividend - A share of profits received by a stockholder or by a policyholder in a mutual insurance society
• Capital gain (price appreciation) - An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price

And these money will be taxed as it is an income, roughly 2% from dividend, and roughly 8% from capital gain.

• For capital gain, it will be taxed in two ways:
• Short term - taxed at a higher rate
• Long term - taxed at a lower rate

Now, what is a active fund manager do to managed his fund? Yes, he keeps buying and selling stocks. If you invest in his fund, you would likely to have different stocks each year. By doing so, they will have to pay SHORT TERM tax - which is held within a year, taxed at a high rate. But the other way around with passive funds.

Reflect:

Article: Hello passive, goodbye active: fund investors make a switch
Link: http://www.ft.com/intl/cms/s/0/3aa2cd62-d4da-11e2-9302-00144feab7de.html#axzz2kRquihXV

This article shows that investors finally realize how the high fees and costly active funds are. The number of investors in passive is increasing recently.  In the past four years, assets held in passive investment funds have more than doubled, and the sector now accounts for $1.3tn of US investors’ assets – just under one-tenth of the country’s gross domestic product. People turned their backs on active fund and favor low-cost passive fund mainly because of the feeling of dissatisfaction. They realized that they usually have to pay for indifferent service by active managers as well

Tulip mania ( Tulip Craze Bubble)

Tulip Mania

• Generally considered to be the first recorded economic bubble

• The Tulip Mania of 1636-1637 was an episode in which tulip bulb prices were rising to incredible heights before collapsing and plunging the Dutch economy into a severe crisis that lasted for many years.

But,WHAT IS ECONOMIC BUBBLE?

• Economic bubble is a situation in which prices for securities especially stocks, rise far above their actual value.
• This trend continues until investors realize just how far prices have risen, usually, but not always, resulting in a sharp decline.
• Bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in short order

Where and Where did it occur?

• Where: Holland
• When: 1634-1637

• Tulip Mania mostly occurred in Holland but England and Germany did experience small amounts of the mania
• In 1593, botanist Carolus Clusius brought tulips from Constantinople to Holland for research. He refused to give or sell any to the locals, so some of his neighbours stole some of these exotic new bulbs.
• This started the Dutch tulip trade. Tulips popularity and price increased dramatically  

How did it occur?

• People started to buy the bulbs and store them
The price was getting higher and higher due to bulbs was getting less and hard to find. 
• Bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in short order
• Others started selling house and assets or any thing that could change into money to get those bulbs
• The Dutch made a huge profit by fooling the foreigners and those not knowing much about tulips.

Why Did It Occur?

• People started to value tulip bulbs so much that they could sell their assets to get one
• In the market like this, people started to act irrational
• They started to invest to the bulbs when they see other making money from doing it

HOW MUCH A SINGLE TULIP BULB CAN TRADE WITH!!

Item	Value (florins)
Two lasts of wheat	448
Four lasts of rye	558
Four fat oxen	480
Eight fat swine	240
Twelve fat sheep	120
Two hogsheads of wine	70
Four casks of beer	32
Two tons of butter	192
A complete bed	100
A suit of clothes	80
A silver drinking cup	60
Total	2,500

***A good trader could earn up to 60,000 florins in a month-- approximately $61,710 adjusted to current U.S. dollars

Bubble Burst!!!

• The height of the bubble was reached in the winter of 1636 – 1637
• So one day, people concerned about the price. It isn't worth paying that huge amount of money for just a single bulb
• And since people start realizing it, the price went down a lot
• When the price went down, they realized that if they don't sell it fast. They are going to go broke
• People started to panic
• Everyone started selling tulip bulbs all at one time. 
• As we know, when everyone start selling things all at time, there is no market. No one want to buy them anymore. 
• And when no one want to buy, as we know, it happened recently, the market go down. 
• It caused A CRASH!

What Can We Learn From This?

Don't chase and buy things just because many people are getting lots money from it. It may benefits you in the short run not in the long run. 
Not to invest in only a single stock or a single bond.
Make sure you DIVERSIFY YOUR PORTFOLIO! and REBALANCE YOUR PORTFOLIO!

Relfect:

Article: http://business.time.com/2013/09/16/explaining-the-financial-crisis-why-do-we-still-not-know-what-happened/

This quote shows that there are lots of book written about the economic bubbles in the past and how to recognize or how to avoid the bubble and the burst. But it seems like they don't help anything at all. I think this would have something to do with human psychology, the way we think. I think that people just crave to have a lot of money in a short run but they don't think about what will have next, or what will happen if they invest their money in a long run. Because no one will know when the market is going to drop. 

How non-americans invest their money

Essentially, a non-american can't just go and buy or sell stocks in US market. But there's no law against non-citizen trading U.S securities. To do so, you need first open an account either with brokers or on a trading online site or in person from the offices or one of bank group branches. They can put conditions on your access to the market and will require some basic information -- as well as money -- to open an account

So Mr Hallam showed us how a non-american can invest their money with a Singapore based brokerage called DBS Vickers. As he already opened an account, he can easily log in anytime with a DBS security device, which the password change every time you press the red button. Everything become really easy to do. You just need to follow the steps. One thing that is really important, that you need to know what stock you are going to invest in and how the quantity you are going to buy or sell. Example: Vanguard Total Stock Market ETF , the ticker (aka symbol) is VTI or Vanguard 500 Index Inv, it's ticker would be VFINX. You also need to know where you are going to trade your stock at, such as American Stock Exchange (AMEX), Toronto Stock Exchange (TSX or TSE). 

After you enter everything, things will be automatically go to where they should be. BOom! Your money will be ripped off and you will receive the amount of shares you wanted. Sometime, after you submitted your order, it may appear something like PEND, which is pending, the stock market have not open. But don't worry it will automatically do the magic when the stock exchange open. 

Reflect: I was asking my mom about the shares that I recently knew about. I asked her that did she buy it through the brokerage. She did not buy it through the brokerage. There's some offer within the company that they offer her an offer that she can buy shares directly from the company. They will give her half of the money which she invest when she buy the shares. She can buy the shares but she can only sell it back to the company and they will have no reason to deny it. And just like buying stock in the market, she can sell them with the market price. I think it's kind of cool how we non-american can buy shares directly from the U.S company and paying no transaction cost or any fees, which save us lots. 

Columbine 2

As I was keep on reading the rest of Columbime, one thing really struck me about the relationship between Eric and Dylan. In my opinion, from an angle I don't think Eric and Dylan carried a "true-friend" relationship. It was more like a leader and a follower type, Eric was a leader and Dylan was a follower.What ever Eric did, Dylan followed. Eric smoke Camel, Dylan followed. They seemed to appear to be close but I feel like almost it was forced to happen. They didn't choose pick each other but just had common in Zach. After Zach started dating Denon, Dylan felt like he just lost a best friend and the threesome was over. Dylan considered Zach his only best friend but did he ever consider Eric his best friend? I don't think so. From that day, Eric and Dylan committed crimes together. I also feel that Dylan made Eric's life become so easy. Whenever Eric and Dylan committed crimes, Dylan would be the one take all the works, eg: Eric just watched around left Dylan with all the works when they were breaking in the van and trying to steal stuffs. Plus, I think Dylan didn't want to do the massacre, he was just following Eric because Dylan was actually fall for it, he wouldn't shoot other students when Eric was not there,he was just pretended like he didn't see them. Sometimes it makes me feel bad because Dylan literally have no nothing against the plans Eric planned whether he wanted to do it or not.

Car, Real Estate, and IRAS Project

We had two and a half week to work on our projects. People got to choose a project which they would like to do. One was Car Cost Over 5 Years, other was Real Estate for Cash Flow, and the last one was about IRAS. Our class took 3 weeks to get all our presentations present.

As I mentioned in my previous blog, I chose the Real Estate for Cash Flow because it is something that close and related to me and my future, it's also kinda interesting. This project helps me find out which house should I invest in and which ones i should not. This project really get me on searching for real estates which are currently promoting on the internet. This project is to shoot an aim for an at least 9% gross rental yield. Plus, we need to figure it out how much is the down payment, how much the the loan, how long you will save up enough for the down payment based on your expected after tax salary + expenses, and how long you will pay off all of the mortgage.

The car project is to figure out which car is best to buy in a 5 year term. This would be included every single cost when you actually own a car. I was blur by how many things we actually have to pay when owning a car in the presentations presented, eg: brakes change, insurance, tires, windshields, oil, gas, maintenance,... and lots more tiny little things. This project would aim for buying a car with a good, convince price, and selling them after 5 years with not so bad price. To find for the selling price, we can compare and figure it out with a similar car 5 year older and similar travel distance.

IRAS which is i found really interesting. So basically it was a saving plan with restrictions. There were few types of IRA, but the 2 most commons would be "Traditional IRA" and "Roth IRA". So what are the differences between these two?
 From what I know from the awesome presentations, with a traditional IRA, you will get tax deduction for the savings you put into your account. The deduction reduces your taxable income. But when you withdraw the money, this money will be considered as an "income" so the government will charge you with a taxable income. And there's a penalty that if you withdraw the money before the mature age, there will be an additional 10% tax on that early distribution. There also are restriction whether you can get the deduction from the IRA. You must begin withdrawing money from a traditional IRA beginning with the year when you turn age 70.5 years old. With Roth IRA, provides potentially tax-free savings and distributions. You don't get a deduction in Roth IRA but distributions from a Roth IRA are completely tax-free. Roth IRA do have income limitations. 

Refect: So, I was talking with my dad about the project that i did, which is the real estate one. I was telling him that I am so going to buy a house in Malaysia and put it on rent with a good price and going to sit on my butt collecting money from the tenants. He was much really excited and thought that it was really cool because he would never thought i would know something about these kinds of stuff. My parents are looking for a for sale condo to stay. So I advised them to look for a good gross rental yield, even though i know that we can't get a 9% yield in Singapore. But if it has a pretty good gross rental yield, so even if we don't want to stay in that condo, we can actually put it on rent and get a quite good money. 

Columbine Golden Line 1

"From the outset, before they even had names or identities for the gun-men, Tv reporters depicted the boys as a single entity. "Were they loner?" reporters kept asking witnesses. "Were they outcasts?" Always they."
"Yeah, outcast, i heard they were."

 I choose this lines to be my Golden Lines because I am really upset with how people judging Eric Harris and Dylan Klebold without knowing much.  The mass killers were often described as loner, as outcasts . But were they really as people described? They were not! They had a group of close friends. They hang out with friends week after week. Eric was attractive, always enclosure girls; he was a ladies' man. He had lots of chicks. Both Eric and Dylan had prom dates the weekend before the attack. Each of them was quite a brain. They broke the rules, cut class, tagged themselves "Rebel" or after a favorite liquor, but they did homework and earn a slew of A's.
Me myself, I don't think Eric and Dylan were outcasts, too. By wearing black things doesn't mean they are outcasts. I think they just wanted to do something new and different, they just wanted to have a new feeling and be themselves. So that they can express them with confidence. They have good friends, "Their friends respected one another and ridiculed the conformity of the vanilla wafers looking down on them." pg.147

Real Estate for possible Cash flow

My Personal Finance project is due next 2 week. There are 2 choices for this project. You can either do about owning a car in 5 year, Tax Sheltered Plans or Real Estate for Cash Flow. I choose to work on Real Estate for Cash Flow because it probably is the most familiar thing with me. I have no knowledge as well as the idea on Tax Sheltered and I don't really know much about car's fees so I didn't choose them. 

Even though Real Estate is the most familiar thing with me out of all but there's still a lot of things that i don't know about. So here is what I have to do. I have to choose 2 property that cost the same amount, find their gross rental yield 9% at least and even apply further with mortgage payment. 

So...now, I have to find a country that have gross rental yield at least 9%. I was searching on the internet, i couldn't find any that yield 9 % in Singapore nor Vietnam. Apparently, I have to go with safe choice, these are the country that I lived and living right now. I was stuck so i went to my parents and asked them for some help. They told me that there's no property that give you a gross rental yield of 9% in Vietnam anymore. There are used to be. And obviously not in Singapore. So they asked me to have a look on properties in Kuantan, Malaysia where we lived before moved here. We used to live in this gigantic house in Kuantan. Its monthly rent cost is RM 4,800 a month after negotiated from the initial RM 5,000. For the "Kuantanist", a RM 5,000 house is considered as a super huge house with big yard or villa (not really villa but yeah). We were expat, we didn't care about the rental. My dad just wanted to know so he asked them how much they are selling the house for, and it was around RM 550,000. 

RM 5,000 a month for rent, RM 550,000 for sale. It gives a roughly 11% yield. So i decided to choose Malaysia. 

That was basically what I was doing for yesterday. I am going to look up for the salary and salary tax in Singapore, mortgage down payment interest rate, how many years i have to pay off my mortgage,...

Rule 7

In the previous chapters of the Millionaire Teacher, Mr. Hallam so far talked about indexed investing. In this chapter, he tells us some of the response that your are might going to hear it from the advisers who buying you actively managed funds if you bring up the merits of index funds. They don't like it because it is a short step away from them making less money and not needing their service.
When you go over the index investing thingy, they will attack you with all anti-index sales talk. When they are inviting you to buy their actively managed funds, they would never say that you will make more money buying index funds.

I really like the part that when the adviser ask why should we accept an average return from index funds and that you can't beat the market with an index fund. The answer is simple: it would be true if and only if there are no 12B1 fee, no expense ratio, no taxable liability, no sales commissions or adviser trailer fees, and no operational costs.

Here's come the funny part.
Even if it ever happen, this would definitely a fantasy world for you to live. Your adviser would have work for free. No trailer fee, no commission for his/her firm. The researchers would work for free. The fund managers doing buying and selling would work for free AND even the fund accompanies could trade stock for free, too. Everything is free..
And the story that he was helping his mom to open an account, the adviser was wrong to advise him to buy actively managed funds. Part of it, It's just what they have to do, it's their job. They have to lure people to buy active funds to make some money out of it. Generally, it's not their fault but you have to be smart to make a right decision.

When Should I Stop Listening to My Financial Adviser?

By Suze Orman

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Photo: Marc Royce

Q: In 1999 I decided to take my money out of mutual funds and invest in the stock market with a financial adviser. Since I started working with him, I've lost $20,000 of my $80,000 initial investment, which was everything I had saved since I was a child. He tells me the market hasn't been good and that I need to make a long-term commitment before seeing any gains. Isn't nine years long enough? I believe my adviser spends his time on side projects instead of making money for me. I would like to withdraw my funds but am holding out hope for a recovery. When do I quit waiting? 

A: Fear and hope are obstacles to wealth, and you're paralyzed by both. You have no confidence in your money manager, yet you've been unable to sever ties; it's as if you're putting his needs ahead of yours. Your fear is fueled by a trait I see in so many women, which is the inability to act in your own best interest if you think it might hurt someone's feelings. I want you to appreciate the invaluable lesson here: When it comes to your money, no one will ever care for it, need it, or respect it more than you.

If you feel in your gut that this relationship isn't working, listen to yourself. It's time to take back control of your money and never let go again. That means leaving your adviser and hiring someone else to look after your investments—you. It's my steadfast belief that if you want to find the best financial planner in the world, look in the mirror. As I explain in "Money Management Made Easy" (page 78), every woman can handle trading without help.

This doesn't mean all advisers are bad; I just don't think they're necessary for most people. You might consider one if your investments surpass $50,000 (some won't take on a client with less than $250,000). In that case, hire a consultant who charges an hourly rate, a fixed annual fee, or a percentage of your assets—say, 1 percent. (Never work with someone who operates on commission. It can raise a conflict of interest when he gets paid only if he buys and sells actively in your name.) I'm confident that over time you'll recoup what you've lost and build a strong portfolio.

From the May 2008 issue of O, The Oprah Magazine

Read more: http://www.oprah.com/omagazine/When-Should-I-Stop-Listening-to-My-Financial-Adviser#ixzz2eVVi4twW


Reflect:
I think that the person in this article should take out his/her money since the advisers are not making any more money for him/her. Instead of making some interest out of the money, they lost $20,000 out of $80,000 from his/her initial money after 9 years long. Isn't it really bad that after 9 year, they are not making any interest? Advisers are not bad, but they charges you high fees, they try to predict the market, they jump in and out. I kind of agree with the answer above that only you can make this work. You need to be wise and stand on you ground.

Build Mountains of Money with a Responsible Portfolio.

Brussels sprouts are good for us but we need more than just a bunch of tiny cabbages, we need a balanced diet. In the same vein, index fund might be good for us, too but we need a balanced portfolio as well.
The reason that we should balanced our portfolio that because bonds become parachute when stock markets fall.
This chapter Mr. Hallam introduces and talks more about "Bonds"
So what is Bonds?
According to Mr. Hallam. Bond is a secret agent with a license to kill. He would never dies, he sleeps with multiple women for like 15 years or so. He can transplant to another completely different guy.
Financial bonds are just as riveting.

Bonds don't make as much money as stock in a long term. Bonds are less volatile, bonds can save your account from falling to the bottom.
Bonds are safe to invest. As there are bonds that you can buy are first-world government bonds from high income industrial. There also are the safe bonds but slightly riskier as people called "blue- chip bonds" such as CoCa-Cola, Walmart, and so forth. There also are riskier bonds but you have to pay a higher interest, higher chance that you might forfeit on the loan.
If you invest money in index bonds, it's better to invest it in a short term. Because of chances of inflation. If it happens, you're losing money. Bond index funds are always better than actively managed bonds funds. Whether you're buying stock indexes or bonds indexes, actively management generally slashed your return because of the hidden fees.

In this chapter, Mr. Hallam how many percentage of bonds that you should have in your portfolio. Experts suggest that it should be your age minus 10. If you want it to be riskier, your age minus 20.

Conquer the Enemy in the Mirror

"Timing the market" is when you're trying to figure it out when to buy or sell. The object of timing the market is to buy low and sell high. Market is a roller coaster ride. It's up and down, turn and twist,...

Most of the investors who had invested in that fund from 1990 to 2010 don't even come close to that 10 percent gain. They put less money or stop contributing and that they would say that this current fund is not doing well, and that they will find another fund that gives a higher percent gain. But the thing they don't realize that a low percentage interest fund is the steady and stable fund. So when it gain, they are trying to put their money in. To sum up, investors and individuals are doing the opposite thing. Investors sell low and buy high!

Mr. Hallam explains the stock market by representing a dog on a leash. In a short run, the dog is going to run all over the place. No one can really predict where the dog going to be next. In the end, the dog can run way ahead or way back behind because of the leash. However, it will move in sync with earnings over the longer term. 
The stock market is exactly like a dog on a leash. If the stick market races at twice the pace of business for a few years, then it has to either wait for the business earnings to catch up, or it will get choke-chained back in hurry. 

Reflect: 
I like how Mr. Hallam tells his story about the falls of the market in 2002 and 2008. Fall is not a bad sign, instead it is a huge opportunity for people who invest their money in funds. It's a huge advantage but most people don't realize and they don't understand how the market works. Basically, after the drop, the market will grow intensely. And that is a good timing for the market, buy low sell high. Like John Bogle mentions in his classic text, Common Sense on Mutual Funds, that investors sell off the stocks instead of buying their opportunity when the market went down. 
I had a talk with my dad. I was telling him that how cool you can get a huge opportunity when the market went down. Most of people seems to flee away from it. My dad doesn't buy stock. I was asking him what will he do when the market fall, will he sell or will he buy. He went with the answer sell. But after i show him Chapter 4 and explained it to him. He was totally surprise about it. And he asked me that what if the market keep dropping?