August 2007

image003.jpg“People who read Cosmopolitan magazine are very different from those who do not.” so said Donald Berry in ‘Statistics’.

Now you will just not have any idea of how apt that statement is unless you’ve actually read Cosmopolitan (really read it, not just look at the pictures) but I like to believe that fund investors who read Mutual Fund Insight are very different from those who don’t. I have believed so far that there are two kinds of fund investors-thinking ones and non-thinking ones. And those who invest their time and money in reading this magazine must be the thinking ones.

What distinguishes the two? The non-thinking ones are the ones who just follow whatever seems to be the flavor of the day. The thinking ones are those who carefully weigh their options, consider the facts and then take rational decisions. However, in recent months I have seen that sometimes, the final step is the same.

The non-thinking ones unthinkingly follow the flavor of the day. The thinking ones think carefully, then just ignore the conclusions and follow the flavor of the day. They look at returns, ratings, portfolio statistics and whatnot, but then turn around and invest purely driven by the fear of getting left behind by everyone else.

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ist2_2794331_healthy_wealthy_and_wise.jpgWealth from the old English word “weal”, which means “well-being” or “welfare”. The term was originally an adjective to describe the possession of such qualities.

We have all heard the old saying ‘health is wealth’ this I think is perhaps only about half right. If we think wealth is the key to health, then you know you’ve found good wealth to afford the comforts of life, and your worries would take a backseat. Much the opposite would happen if your finances are out of control.

I believe that the ultimate success is defined as staying alive. And the more I think about this, the more I believe it. After all, what do money, power, and good looks matter if you’re dead? For starters, smarter people are likely to have more money.

The first step towards a secure financial position starts with budgeting. You must have a budget to gauge your future positioning. A budget is nothing but an overview on how much you earn, spend, and save. This can be short-term as in case of daily or weekly budgets. It helps you to have an idea about where your money is or will be. Budgeting also helps in achieving long-term goals. For instance, if you fancy owning a Lexus after five years, you should plan to save some bucks from your pay every month and budget accordingly. If you stick to this practice, your desires won’t fail you.

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c0036918.jpgI was involved in a discussion some time back and we were discussing this and all of us thought it was ridiculous that they don’t teach a personal finance class in high school, at least not when I was in school.

Is it any wonder that when kids go off to college they rack up so much debt? According to some statistics I read that the average undergraduate has credit card debt! My friend Shane has recently done a three post job on getting out of debt and each one worth reading.

The logic behind teaching children and teenagers about personal finance is pretty obvious. Just think of all of the finance clichés that you’ve heard: start investing as early as you can, the most important factor in investing is time, don’t get into credit card debt, etc. – all things that are best to learn sooner rather than later.

And because many basic aspects of personal finance currently aren’t taught in school and are left to be learned at home, this current system seems to nurture the fact that wealthy people tend to stay wealthy and poor people tend to stay poor. I don’t think it takes a giant leap of faith to see the possible correlation.

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2005-12-19-bill-gates.jpgI read with great interest and a touch of nostalgia, the business news’s headlines that Bill Gates is no longer the richest man in the world; he has been dethroned by Carlos Slim.

Carlos Slim’s total worth reportedly now stands at about $62.9 billion; Bill Gates is only worth about $59.2 billion.

For Slim, a onetime math instructor, this was no mere academic exercise. Yes, he wanted to instill in his sons the same lesson his father – a Lebanese immigrant who started acquiring real estate in during the Revolution of 1910 – taught him: Though Mexico will have its ups and downs, don’t ever count the country out. But Slim wasn’t just teaching, he was buying. He spent $55 million on an Insurance Company. He took a stake in retailer Sanborns. He invested in a hotel chain.

Though he taught math to make money in college, Slim graduated with a degree in engineering from the National Autonomous University of Mexico in the early 1960s. He then started a stock brokerage in and began to acquire industrial companies he deemed bargains. He would reinvest the cash from those businesses or use it to acquire additional properties.

After 13 years as the world’s richest person, Bill Gates appears to have been dethroned. But there will probably be no sobbing inside his estate. The main reason: a 27 percent surge in the stock price of Slim’s wireless company, America Movil, in the second quarter.

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entrepreneur_black.gifI was tagged by Vivienne Quek, who I truly believe is an entrepreneur. OK first things first let us find what exactly an entrepreneur is? The online encyclopedia Wikipedia defines it as “someone who establishes a new entity, to offer a new or existing product or service into a new or existing market. Entrepreneurs often have strong beliefs about a market opportunity and are willing to accept a high level of personal, professional or financial risk to pursue that opportunity”.

There are two schools of thought about what makes an entrepreneur. The first is that anyone can do it if they really want to, provided they put in the effort. The second is that you have to be a certain type of person and, if you are not that type, you are wasting your time.

This theory that anyone can become an entrepreneur is absolute nonsense. The ‘born or made’ question appears to be the basic argument between nature and nurture. Certainly if one is born with certain personality traits, they will assist in entrepreneurship. It seems fairly obvious that entrepreneurs are both born and made. Perhaps they also evolve.

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gorilla.jpgWhat do you say? Doesn’t every investor want to own great stocks? Of course they do and so do you, but the “great stocks” I’m talking about are usually the ones a well-meaning neighbor or co-worker tips you off to as the next Microsoft or whatever.

Usually these stocks fall into three categories:

Ornaments – all shiny on the outside, but hollow and easily broken at the slightest touch. They capture the attention of investors easily distracted from sound investing principles with their glitter, but ultimately fail because they are not viable businesses. In six months, no one will remember its name.

Bicycle – What your friend doesn’t realize is that this stock is tied to an economic cycle which is about to swing in the opposite direction.. She bought the stock when demand was high and the stock was fat, things are going to change soon and the tires are going flat.

Great but late – Your friend is right about the stock, it is great. Unfortunately, the market has bid up the price past the point where you can realistically expect to make any money. This is the “buying high” part of the equation that results in losses (buy high – sell low).
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22762432.jpgI am a bit of a gambler but am not the normal type of punter who you may see in the bookmakers on a Saturday afternoon. I am the kind of gambler who only likes to bet on what you might call a racing certainty. I love the thrill of all things to do with gambling but in my opinion there is nothing better than riding the stock market wave. What I mean by this is attempting to make money from investing in stocks and shares, trying to predict when to buy and sell etc. In this article I will write about the reasons why I believe more people should invest on the stock market.

Some people avoid the stock market because “it’s too risky.” But it can be riskier to not invest. If you put all your savings under your mattress, it probably won’t be enough to sustain you in retirement. If it’s all in a bank account earning 3% per year, on average, then that will barely keep up with inflation, at most. You can do better than that.

Many reasons for many people to do investments, one that can be very common to most of us is to make money. There are also personal reasons that you’ll want to start or join an investment club. You’ll finally have the opportunity to play the stock market in a safe environment that may be low risk and lets you learn more about a subject that greatly interests you.
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whittington3.jpgThe soap company’s marketing head is taking the CEO through the plans for the new product launch. He shows the big boss two versions of the new soap, one that costs $10 and one $20. When the CEO asks, “What’s the difference?” the marketing whiz replies, “No difference, sir, some people like to pay ten, some like to pay twenty.” I was reminded of this ancient joke while I was talking to an acquaintance of mine whose job it is to sell investment products to very rich people in a part of the world that is exceptionally well-endowed with such people. My friend was extolling the virtues of ‘high-end’ portfolio management type of products, which I have never thought to be a good way to invest. “You don’t understand how the really rich think. They want exclusivity. These guys already have all the money they need – what they want is an investment product that is made specifically for them.”

This really struck a chord in mind, more so because, as it happens, I have with me a great deal of first-hand information about the performance of Portfolio Management Schemes. Over the last few months a lot of people have gotten in touch with me complaining about how they’re making less money in these schemes than they would have made had they invested even in average equity funds.

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credit-cards_69.jpgThe two leading credit card companies in the world today are the competitors Visa and MasterCard. They both operate along very similar lines. While Visa can claim to have almost a billion cards issued, MasterCard has over twenty five thousand banks issuing its cards and it is difficult to find any difference in the number of locations worldwide that accept the cards, which is now estimated at over twenty million.

In fact, as far as most consumers are concerned, there is no real difference between the two. They are both very widely accepted in over one hundred and fifty countries and it is very rare to find a location that will accept one but not the other.

However, neither Visa nor MasterCard actually issue any credit cards themselves. They are both simply methods of payment. They rely on banks in various countries to issue credit cards that utilise these payment methods. Therefore, the interest rates, rewards, annual fees, and all other charges are issued by your bank and when you pay your bill you are paying it to the bank or institution that issued your card and not Visa or MasterCard.

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