Friday, September 28, 2007

Compound interest

One of the things I learnt while building my financial wisdom is compound interest. It is also know as the rule of 72. The concept is adding acccumulated interest back to the principle so that the interest is earned on interest from the moment on.


Attached is a graph to illustrated the growth of the principle being over 10 years in 2%, 5% and 7% compound interest.





This leads towards not touching the savings for an extended period so as to earn as much as possible.

Have a blessed day!

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Thursday, September 27, 2007

Another bank account

I read this story today of another type of bank account. Time to start depositing =)
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A 92-year-old, petite, well-poised and proud man, who is fully dressed each morning by eight o'clock, with his hair fashionably combed and shaved perfectly, even though he is legally blind, moved to a nursing home today.

His wife of 70 years recently passed away, making the move necessary. After many hours of waiting patiently in the lobby of the nursing home, he smiled sweetly when told his room was ready. As he maneuvered his walker to the elevator, I provided a visual description of his tiny room, including the eyelet sheets that had been hung on his window.

"I love it," he stated with the enthusiasm of an eight-year-old having just been presented with a new puppy.

"Mr. Jones, you haven't seen the room; just wait."

"That doesn't have anything to do with it," he replied. "Happiness is something you decide on ahead of time. Whether I like my room or not doesn't depend on how the furniture is arranged .. it's how I arrange my mind. I already decided to love it."

"It's a decision I make every morning when I wake up. I have a choice; I can spend the day in bed recounting the difficulty I have with the parts of my body that no longer work, or get out of bed and be thankful for the ones that do. Each day is a gift, and as long as my eyes open, I'll focus on the new day and all the happy memories I've stored away. Just for this time in my life. Old age is like a bank account. You withdraw from what you've put in. So, my advice to you would be to deposit a lot of happiness in the bank account of memories! Thank you for your part in filling my Memory bank. I am still depositing."

Remember the five simple rules to be happy:

1. Free your heart from hatred.
2. Free your mind from worries.
3. Live simply.
4. Give more.
5. Expect less.

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Saturday, September 15, 2007

The Master and the Steward


The Master and the Steward

This chapter starts with the statement that money is a tool that can be used for great good or great ill. John Wesley preached a sermon based on Luke 16:9. He said:

It is a excellent gift of God answering the noblest ends. In the hands of his children, it is food for the hungry, drink for the thirsty, raiment for the naked. It gives the traveler and the stranger where to lay his head. By it we may supply the place of a husband to a widow, and of a father to the fatherless. We may be a defense for the oppressed, a means of health to the sick, of ease to them that are in pain; it may be eyes to the blind, as feed to the lame; yea a lifter up from the gates of death! It is therefore of the highest concern that all who fear God know how to employ this valuable talent; that they be instructed how it may answer these glorious ends and in the highest degree.

John Wesley then went on to give us three simple rules concerning money:
  • Gain all you can.
  • Save all you can.
  • Give all you can.

This chapter gives a glimpse of understanding on both the poverty and the prosperity theology. The theology that provides a pivot between these two extremes views in tension is the theology of stewardship. We have a stewardship responsibility to manage all resources (i.e. talents, treasures, time and territory) faithfully and wisely, according to the will of the Master. Our ultimate goal is to be able to give a account of all that He has given to us.

Have a blessed day!

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Monday, September 10, 2007

Managing Money based on the oldest best selling manual



Being trained in engineering, I understand the importance of reading manuals. This habit helps in a lot of the projects I have been working on.
Therefore as I start looking for principals of financial wisdom, I started with one that is based on age old values (for some of us by our maker). A recent book that I am reading is ‘God own$ - Managing Money the Biblical Way’ by Benny Ho. This book answers views and application of money and is full of solid theology, practical wisdom and, if applied, life changing truths. It is based on the oldest best selling manual.

The writer give a balanced and biblical view of money and to challenge us to view money as a means to abundant living and a tool to serve the purposes of God. A summary of the topics as follows:

Chapter 1 – the concept of stewardship in general and money in specific.
Chapter 2 – A biblical perspective on wealth
Chapter 3 – The delight of giving
Chapter 4 – grapples with monster of greed that attacks us so frequently in an affluent society.
Chapter 5 – challenges us to resolutely return to the discipline of Simplicity.
Chapter 6 – the Christian approach to investment
Chapter 7 – the Christian approach to insurance
Chapter 8 – Remember the poor
Chapter 9 – the Riches of Our Inheritance

For me, the takeaway is we are so blessed that our only appropriate response is to be a blessing to others.

Stay tuned. Have a blessed day and be a blessing.


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Thursday, September 6, 2007

Treasury bills

I was looking for a way to increase 2x the bank's interest rates as well as protecting my capital and found that this is the best kept tools - Treasury bills. Treasury bills starts with a minimal $1000 with a 3mth term and also 2-3% interest.

The article from Panzer Grenadier below describes the ways to get them. Visit his blog at fivecentstencents.blogspot.com

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How can I find out more about treasury bills by Panzer Grenadier


How can people find out more about treasury bills? In today's internet enabled world, it is shocking that an internet search for the term "Singapore treasury bills" only yields 73 results!

The top secret investment in Singapore
That shows that treasury bills are indeed the "secret" that financial institutions in Singapore appear to be keeping close to their chest. And who can blame them? Treasury bill transactions are basically borrowings by the Government, through the Monetary Authority of Singapore, from financial institutions, corporates and retail investors. But retail investors have not been educated on this very low risk and at time reasonable yielding product that is available for the low investment amount of SGD 1,000 (Singapore Dollars One Thousand Only)! Financial institutions who are primary dealers in Singapore Government Securities (SGS) do not earn any fees from their customers walking into the banking hall and asking to buy treasury bills. They need to process the application as part of their role as a primary dealer in SGS.

Treasury bills compete against fixed deposits
If bank customers put money in treasury bills, banks would not be able to borrow from them and would lose out a valuable source of cheap funds which is their fixed deposits and savings accounts. Banks are borrowing at such low rates they pay on savings accounts and then in return lending out such funds to consumers in terms of credit card debt, personal credit, car loans, home mortgages and business loans etc. Why rock their gravy train? Why make it difficult for themselves to borrow cheap funds from the domestic market to fund their profitable lending? Why not make more money?!!

We need to be more aggressive in educating ourselves
Dear reader, for too long, we have not been more aggressive in educating ourselves on low risk reasonable yield investments such as treasury bills issued by the Government of Singapore through the Monetary Authority of Singapore. For too long, we have been losing side of information assymetry. For too long, we get hit with low fixed deposit rates for our hard earned monies while banks make use of these funds for very profitable lending.

Rise up and become financially literate
It's time to empower ourselves with the internet! Rise up and get ourselves financially literate! Teach our children and youth to appreciate the value of hardwork, savings and investment. Rise up to learn more about how to get into safe and decent yielding financial assets. Learn to make use of the power of compound interest to grow our wealth, lead us to financial freedom... one realistic step at a time!

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Saturday, September 1, 2007

Lessons from my father and mother

A couple of days ago, I read this article by Panzergrenadier with interest. His mentioning of his parents reminded me of this age old value : Honor your father and mother, as the Lord your God has commanded you, so that you may live long and it may go well with you in the land the Lord your God is giving you.

As I reflect on this. I thought of my own parents. Thought they have not taught any face to face lessons on the value of money and saving/investing, the example of the life they now live about - through years of living within their means, saving and investing and now living in their golden years with self sufficiency - is one that I thank God for the heritage. The years of living with them with more than sufficient (in contentment)is also another good lesson. I am also grateful that I have still this opportunity to share with them my own investment plan as I honor them with respect and love for the sacrifices of love that they deposited in me.
In another area of heritage and honor, I am also grateful for my spiritual parents in the heritage that we receive - one is the life changing view of things not seen. There will be others which we may not see now but find in time to come.

Therefore this blog in honor of my parents, the lessons I take away are:

1. To live within our means.
2. To save and invest wisely in preparation for self sufficiency.
3. To deposit the same heritiage my parents has passed down to my children.
4. To bless others as we are being blessed

Have a blessed day!