What To Look For In An Investment?

Investment is NOT risky!

Most of the time, when people hear about the word "INVESTMENT",  first word that goes into their mind is "RISK".

However, one of the most famous quote by Warren Buffett is "Risk comes from not knowing what you are doing!"


Easier said than done! How do we know that we already knew about the risk we are getting into?

Well, let me share with you 2 simple factors that I look for in an investment:

1. Does this investment gives me capital gain in the long run?
2. Does this investment gives me cash flow?

I shall further elaborate to you on this 2 factors:

Capital gain in the long run

Due to the scarcity of resources (i.e limited of land in the example for real estate investments), we know that over a long period of time, prices for properties will appreciate.

Therefore, in the long run very likely you will enjoy capital gain for your real estate investment as well as stocks if you buy them at the right price.

Cash flow from investment

While waiting for your capital to goes up 2x, 5x or even 10x, you need cash flow too!

For example, if you bought houses and rented them out, you will have cash flow in the form of rental. If you bought equities and hold them, you will have cash flow in the form of dividends!

So, when both of these investment becomes over-valued due to market's sentiments (nobody knows when though), not only you get to keep the cash flow that you have collected over the years, you get to enjoy your 2x or up to 10x capital gain from your original capital investment!

Otherwise, you would also be far better off if you choose to reinvest those cash flow!

How You Can Retire Immediately

Do you know that you can retire immediately?

Contrary to popular belief, not necessary you need to be "old enough" to retire.

When I said old enough, usually people will think of by the age of 55, 62, 65, 70, 80, 90 etc

All these numbers are the official retirement age in all over the world.

So, if you can retire young, would you still choose to retire old?

Certainly not! Everyone wants to retire young. Who wants to travel the world when they are old and frail?

Well, if you desire to retire young and strong, please continue to read on and I will show you the way.........

How to retire young?

If you have been investing for quite sometimes, by now you should know that listed companies that pay dividend usually pay in the mode of certain frequency, i.e yearly, semi-annually, or quarterly.

If I can share with you a way that you can have your salary every few days instead of once a month, would you believe?

Well, I know you wouldn't. 

But still, I will let the cat out of the bag.

And here is the formula:

Invest in 30 companies that pay quarterly dividend (do take note to invest in the right company at the right price).

If you do so, one year you will get paid 30 x 4 = 120 days!

We all know that there are 365 days in a given year. Therefore, roughly every 3 days (365 divided by 120) you will get paid once!

Isn't that simple?

Yes! It is that simple! Most people think too much and procrastinated for way too long and that is one of the reason why they couldn't retire early!

And if you know how compounding works, you will know that the longer you take action, the longer you will take to retire.

So, take action now and retire immediately!

Should I Invest In Bitcoin?

"Bitcoin value should goes up to $10,000 in 2018! You gotta buy it now!", said one of my friend.

"How do you know?"

"Well, it was only a few hundreds few years go, therefore, according to the chart or trend, the price should be around there by 2018!", exclaimed my friend.

So should we buy bitcoin now? (Watch my video here and understand my perspective!)

While most people are buying this cryptocurrency now, my contrarian mode immediately was turned on. Perhaps its now the moment for me to find ways to short this "currency" now.

Probably now its the moment for transferring of wealth from the ignorance to the well-informed ones........

Do I have bitcoin? Of cos I do! But I get it for FREE! (Watch how I get my bitcoin for FREE here!)

So should you invest in Bitcoin? Well, if you have read my previous posting quite sometimes ago, the answer is pretty obvious!

How to Accumulate Wealth

How to accumulate wealth?

Most people know how to make more money, i.e they can choose to drive uber after their office hours, or find additional jobs for additional income.

However, not many people truly understand how to accumulate wealth.
So why wealth accumulation is so important? ( find out more about wealth planning model here)

The main reason is because you want to have more time; wealth is a measurement of time and being rich monetarily is a measurement of dollars and cents.

We only have limited of time and we have unlimited of money, we shouldn't be trading our time away for money! We should deploy our money to work harder for us!

Therefore, one thing you must remember is that wealth accumulation is not about how much you can earn, but rather, how much you can save and retain that wealth.

The Importance Of Rebalancing

Why is it important to rebalance your portfolio?

Assuming you bought your share at $1 which gave you 5% dividend yield. After few months, the stock went up to $2. 

What's your dividend yield now?

If you have followed through this blog, you would know that now the dividend yield becomes 2.5%. Simple math right?

So if you choose not to rebalance by selling partial or all of your shares, not only you wouldn't be able to grow your portfolio, you would only have paper gain of that $1 ($2-$1).

And certainly, market tends to be a "weighing machine" in the long run. Your $2 worth of shares might soon becomes $1.50 or even half of your initial purchased price, $0.50.

What should I do?

• Rebalance it - You can choose to sell half or all of your shares at $2 and use the proceeds to buy another counter which gives you more than 5% dividend yields (Assuming your desire dividend yield is 5%)

• Sell and wait - If there are no better opportunity, you can choose to sell at $2 (ultimately you already doubled your return, don't be greedy to wait till $3 or $4) and hold cash to wait for better opportunities.

A Great Company Is An Asset!

Truth about Asset vs Liability 

As most of you already knew the difference between an asset and a liability.

However, knowing and having a deep understanding can mean a different thing.

It is only through deep understanding then we will put our knowledge into action.

Personally, as I fractured my hand recently and couldn't produce active income for more than two weeks. I began to have a deep understanding of what's an asset really means and the more you have the easier your life will become.

Likewise for liabilities, the lesser you have the better it is.

Therefore, I would like to make sure you understand it as much as I do; that an asset put money into your pockets even if you don't work.

A liability take money away from your pockets even if you don't work!

Remember, the keywords here is even if you don't work!!!

We want to acquire as much asset and eliminate as much liability till the income from the assets are able to replace our expense.

Position Sizing

How to do position sizing for stocks

There are few ways to do position sizing (how much you should allocation into your portfolio)

One of the easiest way based on $100k investment will be:

Firstly, you can utilise 30% which is $30k to buy under-valued or fair value stocks. Do remember to look out for companies that pays out at least 4% in dividends (Well, would you rather put the money into your CPF special account which give you 4% interest or invest in companies which give you less than that?)

Secondly, reserve 30% of that cash ($30k) and invest when a mini crisis has arrived.

Last, you can then choose to show hand your remaining 40% cash ($40k) when major crisis came.

What above mentioned is one of the easiest way for position sizing. Do you have any other easy way to do position sizing? If yes, what do you think is a better approach?

Please comments below.......

When to Sell?

Knowing when to sell is important!

Knowing what to buy, when to buy and how to buy are as important as when to sell.

I would like to share with you some of the factors as listed below of when you should sell your stocks:

1) Over-valued (Sell it when its over-valued especially when you know for sure that their earnings are unable to keep up with their share price. A high PE ratio is one of the good indicator telling you this)

2) Mistake (Admit that if you made a mistake. For example you might thought that company A is the market leader however, after more analysis, you realise that the actual market leader is company B)
3) Max 8 (If you would like only 8 stocks to be in your portfolio, then when you spot a company which is way under-valued, you should sell away the one that gives you the least return)

4) Story no longer hold true (Some company failed to be innovative and over time become irrelevant, for example Nokia, kodak etc)

5) Over-heated (You will know it when everyone you know or even stranger i.e hairdresser, cleaners etc start to talk and speculate in stocks investment.)

Portfolio Management

Is diversification important?

For many investors out there, most know that the importance of diversification.

But how much diversification do you really need? What are the number of stocks you need to own in your portfolio?

Research, experts and gurus have proven that it is important to diversify adequately but not excessively.
Although personally I would recommend around 30-50 in a portfolio, but for those who are CFA (Chartered Financial Analyst) holders, you guys definitely would recommend not more than 30.

So which are the exact numbers?

Well, if you really understand about those companies that you invested in (all of them) around your finger tips, then you can diversify around 8-10 of them. Though the real guru said that 6 are enough to make you super rich.

Last but not least, just remember that you shouldn't be investing more than 20% of your portfolio in any stock. Just in case of human error (ultimately everyone will make mistake no matters how intelligent they really are).

As the saying goes; rule number one "Don't lose money" and rule number two "Don't forget rule number one."

Twin Engines to Financial Freedom

Basically, there are two main "engines" towards your financial freedom.

One is to create a business while the other is to invest.

For those business owners out there, you certainly know that it's not easy to start up a business. Especially when there are lucrative market out there, soon a lot of competitors will come in and snap up your market share.

So what are the alternative? Well, if you can't create your own business, you can invest in others' successful business.

This can be done through buying listed companies' shares (at the right price) or buying company's share through private equity (usually only accessible for individual high net worth or institutional investors) before they went listed.

Do you know any other engines? Or you would like to find out my third engine which I have built over time here?