I was disappointed (and oftentimes wondering) why other people were not interested in investing in businesses or projects. Investments that I had made money from, and also investments that I had not made money from (yet). I understood if it was because of the latter reason, because ... who am I, after all? But the former?
I was enlightened after reading Robert Kiyosaki's Cashflow Quadrant. It appears that there are many kinds of investors in this world. Interesting. Can you identify which kind you are (see below)?
The first kind can be categorised as the "Nothing" investor. De nada. No money to invest. All your income is spent. For some, even the ones who 'look rich', they spend more than their income!
One of my friends told me that he had a neighbour (a senior government servant) who always borrowed $50 cash from him at the end of the month. He always ran out of cash to give his school going kids their school allowance, before the montly salary is received!
Another senior government officer bought a $60,000 car by taking a bank loan (with a higher interest rate of 6%) instead of the government loan (at 4% reducing balance rate) because the government loan was only $45,000 and he had no savings to pay the difference.
It seems that 50% of adults are in this "Nothing" category. It doesn't include you, of course.
The second category is the "Borrower". As the name indicates, you are in this category if you borrow your way through life. You borrow money from your credit card for your marriage expenses (yes, a true story!). Two babies later, your credit card loan still has not been paid.
Your favourite exercise? Shopping! Girls are usually in this category. They just can't help it when the shoes, handbags, watches etc are at 70% discount. Sometimes even without discounts (I mean, the shoes and the handbags need to be colour-coordinated, right?)
I remember a friend. He had just successfully obtained a $2 million loan from the bank for a new business. With the money from the bank, he immediately (but not wisely?) bought a Mercedes for himself, and a Honda for his wife. One year down the road, the business was not going on as planned (especially the financials). Now you understand how some 'rich' people lose their Mercs overnight? One day the Mercs is in the car porch, the next day it's missing.
Another friend bought a $360,000 condo one day. From a bank loan. Two years down the road, there was a 'professional accident'. His company closed down. He lost his job. Anyone would like a condo for sale?
The problem if you are a borrower, is not the amount of money that you have as an income. It's just that you have poor money habits. Poor habits lead to poor actions, which lead to poor results.
The third category is the "Saver". You are a saver if you save a little money every month, and keep it in a savings, or Fixed deposit (FD), or Certificate of Deposit(CD), account.
Many save not to invest. But to consume (a vacation, a TV, a $15,000 bicycle). They like cash, not credit or debt.
The only problem with saving money this way is that it gives only very low returns. Frequently, it is a negative return (after inflation and tax).
You should of course have savings like the above. Some financial experts recommend that you should have about two years of your salary as savings. So that you can maintain your present standard of living for two years, if you have no income (because of retrenchment). Or you can survive for four years at 50% of your normal standard of living.
But anything above the amount needed for an emergency situation, should be better invested at 10-15% in other safe investments. You need to study, and look out for, such investments.
The fourth category is the "Apathetic". I was in this category. I thought that "I was busy".
So I turned over my retirement fund money to a 'mutual fund' lady "to manage". For the first 3 years it was losing money (the selling price was lower than my buying price). After the fourth year, I sold out when the price was at the price that I bought. I lost the dividend amount (5% annually for 4 years), if I had just kept it in the retirement fund.
The fifth category is the "Cynic". Or the Smart Aleck. You are in this category if you know all the reasons why an investment will not succeed. It appears that cynicism is the result of fear combined with ignorance, which leads to arrogance. Wowww! What an enlightening revelation!
Cynics are therefore best avoided. They infect people with fear, disguised as intelligence. Robert Kiyosaki wrote, "The worlds of academia, government, religion and media are filled with these people".
No wonder almost all of my office colleagues are in this category. I guess if you are an employee, you will be in this category.
Unless you have the entrepreneurial streak. Such as being involved in the network marketing industry (recommended by Robert Kiyosaki, Donald Trump, and T Harv Eker).
Cynics often buy high and sell low. And then blame the market for 'swindling' them.
The sixth category is the "Gambler". The gambler thinks that life is all about 'luck'.
You know a gambler when he asks you, "Got any tips on which stock to buy?". Just as a horse racing gambler will ask you which horse to bet on.
The seventh category is the "Long-Term Investor". You are in this category if you learn, often through training seminars, before investing. You know about the power of compound interest.
You are actively pursuing your financial goals. With the appropriate planning. You know your expenses. Your debts and liabilities. How much to invest per month. You are not 'flashy'.
My friend's husband drives a 10 year-old Volvo. Stayed in the same double storey terrace house for the last 30 years. But all their four children were sent to overseas universities. $30,000-50,000 per year per kid. He is, of course, a millionaire (through property development).
The eight category is the "Sophisticated Investor". You are here, if you create your own deals. With at least 25% return-on-investment (ROI).
You are financially savvy. You know how to manage risk. You are focused. Once you have one investment 'running on automatic', then only you diversify.
Bad times do not deter you. You can see opportunities, whether in good markets or bad.
The property market in the United States is extremely bad. Prices are going down every month. House foreclosures are increasing monthly. You see the opportunity to invest. To make 19-26% returns. To be a 'banker'. You can consider yourself a sophisticated investor if you can arrange the deals, and organise the investments.
The ninth category is the "Capitalist". You organise other people's money, talents and time. You get paid for results. For creating a new company. A new organisation. Returns of at least 100% is expected.
A guy in his mid-thirties forms a new company. To market an existing product. From an existing multinational.
He will create millionaires in the process. He will also become a millionaire in the process. He used an idea to become a millionaire. The idea of how to create (and capture) a bigger market for an existing company.
A person bought a rubber plantation (not using his money, but the bank's) and turned it into an exclusive housing enclave. He now has his own plane. He is a capitalist.
Olden day capitalists include Henry Ford. Present day capitalists include Richard Branson.
The moral of the story? What type of investor you are, will determine where you will be. Decide what you want to be, and take the necessary action (or inaction).
It also means that, if you are looking for an investor for your project, do not be easily disappointed. Not many people out there are true investors (category 7, 8 and 9). Be thankful when you find them.
I wish you Success in your undertakings, and Good Health and Wealth to you and your family. Take care!
Showing posts with label credit card debt. Show all posts
Showing posts with label credit card debt. Show all posts
Sunday, December 21, 2008
Wednesday, October 29, 2008
Credit Card Fraud by Banks?
Have you ever tried calling your bank to enquire about your credit card? I called CIMB Bank Card Centre, yesterday and today, to enquire about my Credit Card Account balance.
The banks are now very technologically advanced and sophisticated. Once you call their number, a recorded message comes on. You want to speak English or Bahasa Malaysia? You want card services etc etc?
When you dial 'O' to get to a person, the recorded message immediately tells you "Our Customer Relation officers are currently assisting other customers. Please hold and you will be attended to shortly". This is repeated every minute ... ad infinitum. In Banking speak, it means "We are very busy to attend to you. Go away and disappear into the black hole in the Universe". Either 1,000,000 customers are making enquiries, or they actually have no one to answer your enquiry. What do you think?
While no one is answering your call, they provide recorded messages telling you that you can achieve your dreams by using their services. I think the banks are in the selling-to-customers-who-call business, not in the business of talking to their customers. I believe they also get a cut from the telephone companies, because when the banks keep you on the telephone by not answering you, but by getting a recording machine to pass messages to you, your time on the phone increases. You pay more for telephone charges.
After 5 minutes, I gave up. Must be millions of people making enquiries with their credit card accounts. Well, in the present financial turmoil around the world, this is a big possibility, I guess.
Actually, I believe the banks are in the business of increasing your blood pressure. Perhaps they want to know whether you are a patient customer. I think they have an award for the most patient customer.
It seems that the banks have never heard of customer service. When you attend any customer service training, you are informed that you should not let the phone ring more than 3 times ....ring ring ... ring ring ... ring ring (6 seconds?). The banks think this 6 seconds only is bad for their business. There's no time for their recorded sales messages to be heard by customers!
To me, making the customer wait 5 minutes on the line to hear recorded sales messages is cheating the customer. It is a fraud on the cutomer. For wasting his telephone expenses. For wasting his time.
The moral of the story? If you plan to telephone your banks, don't waste your precious time. Please note that they have no time for you. (Unless you owe them $1,000,000?). Instead, send a recorded message to talk to the banks' recorded messages. Or you just have 2 credit cards instead of 16. Where are the scissors?
Wishing you Success in your undertakings and Good Health and Wealth to you and your family. Take care!
P.S. I had exactly similar previous experiences with two other banks. I gave up after 5 minutes. I think the banks have the same customer service training at their training centres. Do the banks expect me to listen to their recorded messages 24 hours a day?
P.P.S. Had to call RHB Bank (one day after writing the above) because I was making an on-line purchase. Same thing happened, except that after 4 minutes, the recorded message says that their customer service agent is busy and will get back to me soon ... then the line is cut! Happened twice consecutively! What will the banks think of next?
P.P.P.S. After the failure at RHB Bank above, one hour later I called Citibank. After less than a minute responding to the answering machine ... CONGRATULATIONS! ... TO ME! ... for finally achieving success! 4 Malaysian Banks appear not to have any humans inhabiting their call centres... only recording machines! (or aliens disguised as recording machines?). 1 International Bank has a live, warm human being at the end of the phone line.
The score: Citibank 1, Malaysian Banks -4 (minus 4, also known as "the pits"). Do you recommend that I cut-up all my 16 credit cards, except Citibank's?
The banks are now very technologically advanced and sophisticated. Once you call their number, a recorded message comes on. You want to speak English or Bahasa Malaysia? You want card services etc etc?
When you dial 'O' to get to a person, the recorded message immediately tells you "Our Customer Relation officers are currently assisting other customers. Please hold and you will be attended to shortly". This is repeated every minute ... ad infinitum. In Banking speak, it means "We are very busy to attend to you. Go away and disappear into the black hole in the Universe". Either 1,000,000 customers are making enquiries, or they actually have no one to answer your enquiry. What do you think?
While no one is answering your call, they provide recorded messages telling you that you can achieve your dreams by using their services. I think the banks are in the selling-to-customers-who-call business, not in the business of talking to their customers. I believe they also get a cut from the telephone companies, because when the banks keep you on the telephone by not answering you, but by getting a recording machine to pass messages to you, your time on the phone increases. You pay more for telephone charges.
After 5 minutes, I gave up. Must be millions of people making enquiries with their credit card accounts. Well, in the present financial turmoil around the world, this is a big possibility, I guess.
Actually, I believe the banks are in the business of increasing your blood pressure. Perhaps they want to know whether you are a patient customer. I think they have an award for the most patient customer.
It seems that the banks have never heard of customer service. When you attend any customer service training, you are informed that you should not let the phone ring more than 3 times ....ring ring ... ring ring ... ring ring (6 seconds?). The banks think this 6 seconds only is bad for their business. There's no time for their recorded sales messages to be heard by customers!
To me, making the customer wait 5 minutes on the line to hear recorded sales messages is cheating the customer. It is a fraud on the cutomer. For wasting his telephone expenses. For wasting his time.
The moral of the story? If you plan to telephone your banks, don't waste your precious time. Please note that they have no time for you. (Unless you owe them $1,000,000?). Instead, send a recorded message to talk to the banks' recorded messages. Or you just have 2 credit cards instead of 16. Where are the scissors?
Wishing you Success in your undertakings and Good Health and Wealth to you and your family. Take care!
P.S. I had exactly similar previous experiences with two other banks. I gave up after 5 minutes. I think the banks have the same customer service training at their training centres. Do the banks expect me to listen to their recorded messages 24 hours a day?
P.P.S. Had to call RHB Bank (one day after writing the above) because I was making an on-line purchase. Same thing happened, except that after 4 minutes, the recorded message says that their customer service agent is busy and will get back to me soon ... then the line is cut! Happened twice consecutively! What will the banks think of next?
P.P.P.S. After the failure at RHB Bank above, one hour later I called Citibank. After less than a minute responding to the answering machine ... CONGRATULATIONS! ... TO ME! ... for finally achieving success! 4 Malaysian Banks appear not to have any humans inhabiting their call centres... only recording machines! (or aliens disguised as recording machines?). 1 International Bank has a live, warm human being at the end of the phone line.
The score: Citibank 1, Malaysian Banks -4 (minus 4, also known as "the pits"). Do you recommend that I cut-up all my 16 credit cards, except Citibank's?
Tuesday, September 23, 2008
Action - Just Do It
How do you start on your journey to financial happiness? The answer is: NOW! Of course it would be better if we had started it yesterday. Or 10 years ago. Or when we were still babies (for those with financially-savvy parents who "loaned" us some money).
What is the first step? As simple as it sounds, we must decide what we want. Put a figure to our "happiness" objective. To have $100,000 in 10 years? To have $1,000,000 in cash when we retire in 20 years time?
Our mind is like a heat-seeking guided missile. It must be given a specific target. Otherwise it will get confused. It may even not take off. Worse, if it takes off wothout a specific target, it may self-destruct.
Once the target is given, then the missile knows where to go. The direction. The speed. All these will automatically be calculated. Similarly for your $1,000,000 target in 20 years.
What is the second step? It is to make sure that you PAY YOURSELF FIRST. Any income that you get, pay your self first. Simple to understand, ain't it? But for some people (that does not include you, I presume) it is difficult to DO! This is the first FINANCIAL HABIT that we need to nurture.
For a start, how much should you pay yourself first? Ideally, a minimum 10%, to be put into a savings account. If you are really, really challenged, then anything would be better than nothing (i.e. not starting). A journey of a thousand kilometres begins with a single step. Just do it!
The secret to doing this is to automate the process. How? Give a standing instruction to your bank to transfer your salary to a particular savings account. You are cheating yourself if you use an ATM (Automated Teller Machine) card to withdraw it later. So do not get an ATM card for that savings account.
What's the third step? NEVER BUY ON CREDIT. If you cannot afford it (i.e. you have no cash!), don't buy it. You are not trying to look rich; you want to be rich! If you use a credit card, make sure you have the money to fully pay the credit card balance in FULL at the end of the month. Buying on credit makes the bank or the merchant rich and happy, not you! (Though you may look good!)
If you can just carry out the above 3 simple steps, do you think you will be changing for the better? Would it be a good start? If yes, do it now!
The moral of the story? We can only achieve our financial objective, if we do it NOW through the right financial habits!
I wish you Success in your undertakings, and Good Health and Wealth to you and your family. Take care!
What is the first step? As simple as it sounds, we must decide what we want. Put a figure to our "happiness" objective. To have $100,000 in 10 years? To have $1,000,000 in cash when we retire in 20 years time?
Our mind is like a heat-seeking guided missile. It must be given a specific target. Otherwise it will get confused. It may even not take off. Worse, if it takes off wothout a specific target, it may self-destruct.
Once the target is given, then the missile knows where to go. The direction. The speed. All these will automatically be calculated. Similarly for your $1,000,000 target in 20 years.
What is the second step? It is to make sure that you PAY YOURSELF FIRST. Any income that you get, pay your self first. Simple to understand, ain't it? But for some people (that does not include you, I presume) it is difficult to DO! This is the first FINANCIAL HABIT that we need to nurture.
For a start, how much should you pay yourself first? Ideally, a minimum 10%, to be put into a savings account. If you are really, really challenged, then anything would be better than nothing (i.e. not starting). A journey of a thousand kilometres begins with a single step. Just do it!
The secret to doing this is to automate the process. How? Give a standing instruction to your bank to transfer your salary to a particular savings account. You are cheating yourself if you use an ATM (Automated Teller Machine) card to withdraw it later. So do not get an ATM card for that savings account.
What's the third step? NEVER BUY ON CREDIT. If you cannot afford it (i.e. you have no cash!), don't buy it. You are not trying to look rich; you want to be rich! If you use a credit card, make sure you have the money to fully pay the credit card balance in FULL at the end of the month. Buying on credit makes the bank or the merchant rich and happy, not you! (Though you may look good!)
If you can just carry out the above 3 simple steps, do you think you will be changing for the better? Would it be a good start? If yes, do it now!
The moral of the story? We can only achieve our financial objective, if we do it NOW through the right financial habits!
I wish you Success in your undertakings, and Good Health and Wealth to you and your family. Take care!
Delayed Gratification
If we do not know how to handle the "small" money, we will never know how to handle the "BIG" money.
My nephew, when he was 7 years old, would save his "school canteen" money (for snacks) and not have anything to eat during class-break. My nephew would keep the money, and after school would go and spend it on toys at the street corner shop. His father was not a happy man. He was afraid his son could face starvation. But the little boy had actually shown a very good FINANCIAL HABIT. The habit of DELAYED GRATIFICATION.
"Delayed gratification" is the opposite of "instant gratification". 'Delayed gratification' means that we are disciplined enough to wait until we have the money before we buy anything.
Lack of this discipline of delayed gratification is the root cause of the catastrophic FINANCIAL TSUNAMI that has hit America in September 2008. People buy houses when they have no financial strength (i.e. spare money to pay) in case the interest rate goes up. People think that they can sell their homes at a higher price because house prices for the past 10 years had been increasing annually. Some became speculators. The bubble burst, and they all come falling down. Just like ... Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall, All the King's horses, and all the King's men, Couldn't put Humpty Dumpty again. Together with the greedy bankers who wanted to make money at all costs.
This problem can also be seen in those people who use credit cards for their purchases, and make the minimum (5%?) payment. I have friends, one a medical doctor and another a university lecturerwith a PhD in engineering, who think it is cool to pay the minimum monthly amount on their credit card balance. Don't you think that they are not using the full potential of their IQs?
If you have $2,000 of credit card debt at 18% per annum interest, and you make the minimum monthly payment only, how much in total would you have to pay? And for how long (to clear the debt)? What is your answer? [One answer estimates it as $4,600 and more than 18 years (yes...years (not months)]. Do you think it makes good financial sense?
Some studies a couple of years ago estimated that the average American owes $8,400 in credit card debt, and 20% had zero (de nada, zilch!) $ in the bank! Now we wonder why Bush has to pump US$700 Billion this week into America's financial system. By the way, do you know of a friend or neighbour (or anyone else) who has zero bank balance (some even have a negative balance...they are the exceptionally exceptional!), especially just before payday?
Moral of the story? Delayed gratification will help you gain financial stability. Pay all your credit card debt in full at the end of the month; it will save you a lot of money. It may well avert a personal financial disaster (bankruptcy!). Don't be shy... go to the bank and make the payment now!
I wish you Success in all your undertakings, and Good Health and Wealth to you and your family. Take care!
My nephew, when he was 7 years old, would save his "school canteen" money (for snacks) and not have anything to eat during class-break. My nephew would keep the money, and after school would go and spend it on toys at the street corner shop. His father was not a happy man. He was afraid his son could face starvation. But the little boy had actually shown a very good FINANCIAL HABIT. The habit of DELAYED GRATIFICATION.
"Delayed gratification" is the opposite of "instant gratification". 'Delayed gratification' means that we are disciplined enough to wait until we have the money before we buy anything.
Lack of this discipline of delayed gratification is the root cause of the catastrophic FINANCIAL TSUNAMI that has hit America in September 2008. People buy houses when they have no financial strength (i.e. spare money to pay) in case the interest rate goes up. People think that they can sell their homes at a higher price because house prices for the past 10 years had been increasing annually. Some became speculators. The bubble burst, and they all come falling down. Just like ... Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall, All the King's horses, and all the King's men, Couldn't put Humpty Dumpty again. Together with the greedy bankers who wanted to make money at all costs.
This problem can also be seen in those people who use credit cards for their purchases, and make the minimum (5%?) payment. I have friends, one a medical doctor and another a university lecturerwith a PhD in engineering, who think it is cool to pay the minimum monthly amount on their credit card balance. Don't you think that they are not using the full potential of their IQs?
If you have $2,000 of credit card debt at 18% per annum interest, and you make the minimum monthly payment only, how much in total would you have to pay? And for how long (to clear the debt)? What is your answer? [One answer estimates it as $4,600 and more than 18 years (yes...years (not months)]. Do you think it makes good financial sense?
Some studies a couple of years ago estimated that the average American owes $8,400 in credit card debt, and 20% had zero (de nada, zilch!) $ in the bank! Now we wonder why Bush has to pump US$700 Billion this week into America's financial system. By the way, do you know of a friend or neighbour (or anyone else) who has zero bank balance (some even have a negative balance...they are the exceptionally exceptional!), especially just before payday?
Moral of the story? Delayed gratification will help you gain financial stability. Pay all your credit card debt in full at the end of the month; it will save you a lot of money. It may well avert a personal financial disaster (bankruptcy!). Don't be shy... go to the bank and make the payment now!
I wish you Success in all your undertakings, and Good Health and Wealth to you and your family. Take care!
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