Financial Management With Money Sense

I would like to share my personal opinions, ideas, knowledge and experiences related to financial matters. Although I have no formal education on financial, but I have a little hands-on experiences in trading stock and investing in property. This blog is basically a platform for me to share and learn from others who are more experienced and knowledgeable.

I grew up without knowing much about financial planning. My parents didn’t mention about it. The school didn’t teach on the subject. Like many of you, I learnt from experiences the hard way. I made many mistakes and lost a lot of money in the stock market. I did what most stock investors did, buy and sell stocks even though I don’t know how to do it correctly. I bought stock base on the advice of others and that is very unwise.

I am an opportunist and constantly on a look out for investment that I am comfortable with to invest. I prefer to invest in things which I can see physically, such as property, business and stock.

I believe we all need to earn and save. But more importantly I must also invest so that my savings will grow. With high inflation and low saving interest rate, live can be difficult a decade from now. With the same dollar, you can’t purchase much. In about five years ago, a cup of Kopitiam (coffee shop) coffee costs 60 cents. Now, a cup of coffee costs SGD 1.00. There is a 40 per cent increase in price over the five years period. Obviously, with increasing oil prices, changed weather and world economy crisis, prices of things are more likely to increase than decrease in the future. As such, the way to go is to be careful with our finances and manage our own home economy well.

Currency : Varios Mexican Pesos bank notes and coins on white background

Are you looming with tens of thousand dollars consumer debts? What kind of impact does the mountain of debts have on you and your family?

Basically, there are two types of debts,

(1) ‘Good’ debts – debts incurred to buy goods that are likely to appreciate in value over time, e.g. property, gold, antique).

(2) ‘Bad’ or consumer debts – debts incurred to buy goods that depreciate in value over time, e.g. car, branded goods, mobile phone).

If you have consumer debts that roll over every month, you need to reduce it immediately. You are actually paying compound interest on your credit card balance. If you have invested in stock market using margin, you may need to reduce your investment portfolio. Otherwise you will face serious financial crisis when the market crash suddenly.

Some people love to invest in properties and took a few mortgage loans. However, their properties will be repossessed by the banks when the property bubble burst. It doesn’t make any sense to subject yourself to high leverage, risking your possession (house, car, yacht) being disposed when market crash or losing your job during the economy downturn.

The bible said, ‘The love of money is the root of all evil”. I say, “Lack of wisdom in money management, leads to destruction”. Greed and fear cause the stock market to moves up and down over time across the board. Day traders are trading base on this momentum trending. Be warn, this way of ‘investing’ in the stock market is liken a casino. It is not for the weak hearts.

You need to be wise and understand the basic principle of living in today’s volatile economy. You need to live within your means; save, invest and grow your money. There are many hardworking people who live within their means and save for their future. However, they don’t know how to invest and grow their savings. Inflation erodes the value of money and they are unable to live comfortably after their retirement. Many old folks have to continue work full-time past age 65 even when they wish to pursue other interests. It is something you can avoid, only if you decide to do something about your life today.

Saving and investing are necessary. Before you decide which investment tools to use, do your research and learn everything about it before you invest. Remember, never invest in something which you don’t fully understand or you don’t have the time to monitor. If you are thinking of starting your own business,¬†try out doing it part-time while keeping your day job.You have to be very passionate about going into business before you invest large sum of money into it. Do your analysis and market research well before you invest in any form of business or investment instruments.

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