Welcome to the University of Nottingham Malaysia Campus

One of my seniors once said " I'm never ever coming back to this stupid, stupid university again! " at the end of his undergraduate course, yet he is still here today pursuing his Masters qualification. LOL.

Another senior told me that in this uni, be prepared for assignments, assignments and more assingments ( did I mention more assignments? )

Anyway, this got me and and friends thinking the other day of a joke that is applicable to students who hail from this studious university.

A bald youth enters a hospital to see his/her doctor.
Nurse: I'm sorry for asking but are you a cancer patient?
Student: No,I'm a University of Nottingham student.

Gap Between Rich and Poor

Just a quick tip people; did you know that the richest 20% of Malaysian society owns 54.3% of it's wealth?

This information was sourced from the Human Developement Report 2006 done by the UN.

I dunno bout you, but I was shocked when I saw this. Apparently Malaysia has one of the highest income disparities in South East Asia. Something should be done about this widening gap between the rich and the poor.

Whichever way this problem should be handled, I'm more in favor of a market based approach instead of the usual bumbling government approach and it's bureaucracy. Restrictions on business should be lifted to encourage more people into this area which in turn will raise employment levels as well as raise the competition for competent workers, which in turn will drive wages higher.

Any other suggestions as to how we can tackle this growing problem?

Boleh Tumpang-kah?

An interesting idea I came across from the internet. Imagine you and some other shoppers gang up together to get a group rate discount from the shopkeeper for the stuff you want to buy, like that 40 inch plasma TV or them Nike sneakers. Brought to you by the folks @ tumpang.com

Interesting concept, check out the following link to find out more. Viva La Capitalism!

The Extinction of RPGT

Recently the government of Malaysia has abolished their RPGT (Real Property Gains Tax) on properties sold in Malaysia. On the upside, those who stand to benefit the most are of course people who are thinking of selling their property, fixer-uppers, those who would buy a dilapidated house, fix it up and renovate it and sell it for a quick profit, and those companies who are in the property development business. On the downside, expect property prices to sky rocket, perhaps as much as 25% in the short term.

The capital gains tax omission not only applies to real estate investments here, it also applies to stocks. As far as I know, Malaysia is one of the few countries in the world that does not have a capital gains tax on any profits gained from an increase in share price.

There is some speculation however that the government may be preparing to launch their GST (Goods & Services Tax) very soon and that is one of the reasons for the recent and sudden abolishment of the RPGT. This would mean that we consumers here would be paying more taxes when we spend our money for food, entertainment, and so on. Of course there will be some essential items that would not have GST but when it does come out, we all have to be more careful of our spending in Malaysia. Potentially though , during the national budget this year,the government could announce a reduction of income tax payments as well as corporate tax to compensate for the launch of the GST.

So before people start complaining about the GST and it’s implications, here is a quote from the Joyce Gon, a writer from The Edge Malaysia;

“So, before anybody starts complaining about another yet another tax, they must ask this question - would you rather pay tax as you earn or as you spend?”

The 4 Financial Mindsets of People

Many people view their money matters differently. In my opinion we can devide them into 4 mindsets, the communist, the blind consumerist, the stupid capitalist, and the rich capitalist.

The Communist

This person believes that the current capitalist system is evil and that instead of being motivated by money, everybody should be working towards a common good for all mankind. This person does not believe the marketing hype of companies who are all fighting for their money. Allergic to credit or taking loans, they insist on saving and buying things in cash whenever they can. Often idealistic and extremely risk adverse, they would rather live well beneath their means (i.e.; buy no-brand clothes, generic food products, take the public transport etc.) saving most of their income in bank fixed deposit accounts earning mediocre incomes which are below the expanding rate of inflation every year.

The Blind Consumerist

These are the people who do not believe that ‘tomorrow’ exists. These people are allergic to money and happily exchange the money for other things. Corporations love this class of people as they are the one’s who are most susceptible to their marketing voodoo. Credit cards are a must for these people. To these people, bank loans are a wonderful way to pay for that trip to Fiji or that new furniture seti in the living room. Often these people are the early adopters of a new fangled gadget and the one’s who are most sensitive to the latest fashion trends. These people only consume ‘branded’ products as anything else is beneath them. Their idea of a retirement plan is the assumption that the apocalypse will happen way before they have to save up money for retirement. Their worst quality is the constant need for instant gratification.

The Stupid Capitalist

The stupid capitalist is a variation of the blind consumerist. These people do believe that a tomorrow exists and that it is crucial to make investments for a financially secure future. However, these people often lack the knowledge to invest and are often propelled by sheer greed. They believe that you must risk all to make big profits, so they gamble, speculate on the stock market, or join pyramid schemes. Although some of the lucky few do make some money, the laws of probability are against them and most end up losing their shirts. Milder versions of these type of people can be seen drowning in their own debts from making too many bad investment decisions. Sometimes these people just never learn from their own mistakes and frequently make the same bad investments over and over.

Rich Capitalist

These people are normally financially stress free. They embrace the current capitalist system as they can see that it provides people with opportunities to become wealthy. They know that the key to making money from investments is not by taking big risks but by taking calculated risks. So how do these people do it? They are constantly evolving and learning. They always seek to expand their knowledge and to learn from their past experiences (especially if they had lost money previously). They are patient and do their own in-depth research before making any investment. Part of their psyche have the characteristics of a communist (saving money) but these people seek to use this money to fund their latest investments that in most cases will give them handsome returns. One of their key qualities is delayed gratification.

What's your investment IQ?

If you would like to know what is your investments IQ, especially in stock market investments, then look no further.

I came across this Investment IQ test after reading the book ‘The Winning Investment Habits of Warren Buffet & George Soros’ by Mark Tier. It is on his website and a brief registration process is required before you can begin. Don’t worry about the registration, as the registration process is just so that you can receive the results of your test by e-mail.

I like this test because in the results it will tell you what your strengths and weaknesses are and how they can be improved. So what are you waiting for, give it a shot and see what your investment IQ is!

One path to Billions

I was once told at a business seminar I had attended what it takes to become a billionaire. Surely, there are many ways that one can amass the fortune necessary to become obscenely rich, but here is one systematic way to become a billionaire.

From the diagram, the first step is to own a business, most billionaires today own businesses. Think Bill Gates (Microsoft) and Ted Turner (CNN). In business, your potential income will be very high but in most cases it is not very stable. The income from business would go up and down depending on the current prevailing economy. So what can you do stabilize this roller coasting income? You go to the next step.

In step 2, you invest your excess cash in real estate. Most billionaires own at least a few properties. This is because owning real estate allows us to stabilize our income. It is the rental income from such properties that allows for our income to be stable. This is because rental income is very predictable, passive and consistent. After all it is a basic human need to have shelter, a need which is second only to Food and Drink and let’s face it, some people just can’t afford to own property or be bothered to own it. Nonetheless, in order for us to become a billionaire through real estate alone would take us almost forever (although I’m not saying that it can’t be done this way, it’s just that is would take a hell of a long time), which is why you need to proceed to step 3.

When you have reached this stage, it is assumed that you now have more that enough cashflow every month coming in to sustain your current lifestyle. For example,let’s say that your monthly rental income is RM100,000. Now let’s say you only use RM20,000 to maintain your current lifestyle while the other RM80,000 is left alone. Since rental income is predictable, passive and consistent, we know that the following month will bring in another RM100,000 and another spare RM80,000. So what do you do? Here’s the fun part, you gamble it all on the world financial markets (i.e. stock market, global commodities, forex etc.). Investing in the world financial markets allows us maximum leverage to make a lot of money with very little cash. And of course, since that money that you will be using is money that you can afford to lose, the risk element is all but almost non-existent. Eventually you would hit the jack pot and then you will achieve your dream of owning at least RM1 billion in cash!!!

Be warned though, you still need to invest time and effort equip yourself with the necessary knowledge, skills and determination if you really dream of becoming obscenely rich one day. At least now you can have some idea of how to become a billionaire one day.

The Automatic Business

After reading through the book ‘The E-Myth Revisited’ by Michael E. Gerber ( by the way I highly recommend this book ), it has shown me that although most people go into business in order to achieve financial freedom, what they have got themselves into instead is financial slavery !

Most small businesses that are started up today will eventually die within the first 5 years ( and the one’s that do survive normally aren’t making that much money either). The problem is most people go into business with the idea that our boss is an idiot and that even a monkey could run a business. Although you may think that your boss is an idiot, wait until you get into business (where your employees will also probably think you’re an idiot ). However, the main point to remember when we are to start a business is to create a business which would be able to run with or without your supervision. We should think of every business undertaking as if we were to franchise it.

In a franchised business, everything has been well documented and the procedures have been streamlined. In this sort of business, anybody, given enough training, could run it and still make a profit. This is because the founders of such a business have gone through great effort to ‘systemize’ their business. This is also why franchises are sometimes referred to as turn-key businesses (like starting up your car with your keys).

Therefore, the main focus of any budding small business owner, if he/she wants to be successful, is to systematize their business to run with or without them. Remember, we should be working ON the business not IN the business, and systematisation can help us to achieve this mantra.