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.
Monday, 30 September 2013
Monday, 23 September 2013
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
"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
Thursday, 12 September 2013
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,...
Tuesday, 10 September 2013
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.
Photo: Marc Royce
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.
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.
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.
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.
Sunday, 8 September 2013
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.
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.
Wednesday, 4 September 2013
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?
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?
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