Rich Dad Success Stories

A compilation of Sucess Stories. Very inspirational and content rich.

One thing I noticed was the gross rentals illustrated were all in excess of 10% in most cases.

For example, ( pg 11) a property bought for USD98,000 was grossing USD1,040 per month ( x12 = USD12,600) was was about 12.8% . If you can finance it for 5%, then you have 7.8% to work with to pay all the miscellaneous!

In eg 2 , a USD89,000 house was grossing USD950 per month ( $11,400) , giving gross yield of 12.8%. The financing was at 7.37%.

Eg 3 was a gold mine! A house for $50,000 was rented at $1,010 ( $12,120 per year )!! Giving 24% gross yield! With interest at 7.4%, plenty of room to move!

So, now the idea is to get an RM100,000 apartment and rent it for RM1,050, then I will get 12.6% gross yield too! Current mortgage rate is about 7%... hence 5.6% to play with!

Now, try to get a Gross Yield of at Least 10%.... as Management fee wil take 1% off, Assessment fees 1%, Insurance and repairs 1%. Leaving 7%. If you are conservative , take another 1% off for vacancy loss, leaving 6%. If your financing at the bank is 6%, then you break even. If you are financing from your FD at 3%, then you make 3%!! And if you rental is increased to 12% , then you make 2% ( with mortgage) 5% ( with cash from FD!)

So, it is not so dificult, right?

At pg 179, there was a formula for Marketing, namely :

(1) Concept
(2) Development
(3) Product Launch
(4) Market launch
(5) All system go!

And there was a part where you should live on increased sales, and not debts!

CONTENT rich, plenty of stuff to work your brains with!

Rich Dad, Poor Dad

One will never finish reading this book as getting rich is a continuing life-long learning process!

The six secrets ( as a refresher course )

(1) The rich do not work for money. Money works for them

(2) Assets bring in cash flow. Liabilities suck it out. To be rich, keep accumulating assets. Turn active income into passive income the fastest you can.

(3) Mind your own business. Keep your day job, but work your money at night.

(4) Taxes and corporation. Tools of the rich.

(5) The rich create money.

(6) Work to learn. Not work to earn money.

Very profound principles. Very powerful.

He also lists the Obstacles to Getting Rich...

(1) Fear ( of losing ) and how you handle fear ( low APtitude, high aTTitude game)
(2) Cynicism
(3) Laziness
(4) Bad habits
(5) Arrogance

And to Start, here are his 10 rules :

(1) Reason greater than Reality. Have a list of "DON'T WANTS" and "WANTS" to motivate you.
(2) Choose daily. Every dollar that gets into our hands can be turned into assets or liabilities. The choice is yours.
(3) Choose friends carefully. A rotten apple gets all the apples in the basket rotten.
(4) Master a formula and then learn a new one
(5) Pay yourself first. Let the others scream at you, it motivates you to find more money, it forces your brain to work.
(6) Pay your Broker Well
(7) Be an Indian giver. Always get your original investment back.
(8) Assets buy Luxuries.
(9) Heroes. Find someone to emulate.
(10) Teach and you shall receive. Docendo decimus!

And some extras to start...

(1) Stop doing what you are doing
(2) Look for new ideas : seminars, books, someone who has done it before.
(3) Take action!

In pg 190, he made a comparison between buyers of supermarket goods and buyers in the stock market. When a supermarket gives discounts , people flock to buy. When they raise prices, consumers shop elsewhere. In reverse , when stocks become cheap, people dare not buy. When prices go up, people rush in.

Now 15 years after reading the book, I finnaly found out why. The supermarket is displaying "fundamental economics" whereby when prices go up, people stay away. In contrast, the stock market is where "auction economics" is at play. The higher the price, the more people want it! This realisation also helped me become a better trader and investor. Traders practise auction economics, they buy high, sell higher! And they will never catch a falling knife! An investor, in contrast, practises fundamental economics : buy when there is blood in the streets! Buy low, sell high!

Bet Robert knows about this but has yet to put it in any of his books... perhaps I will write a book called " Rich Son, Poor son"and be the next best seller?

Now, where has my assets accumulating blueprint gone to....?

The Biggest Game in Town

Got this book at the BigBadWolf clearance at South City, Seri Kembangan( parking was RM1 for the 1st 12 hours!)... for RM5!

Very informative, very much like Trading for a Living, it's Poker for a Living.

If you are a trader, highly recommended.

A few gems ...

" It's easier to sleep when I lose than when I win. When I win, I'm all pumped up and excited. I can't unwind myself as quickly as I can when I'm down and semi-depressed"...pg 55

Very real. Especially for Traders too.

" In order to play high stakes poker, you need to have a total disregard for money" ...pg51

At that level, poker is a game , and the chips are just a way of keeping score. Just like what Kiyosaki said. At super -rich level, the rich just wants to keep score. And money is the measurement.

" In the free enterprise system, you have to assume that each guy is the best judge of what he does with his money. If someone wants to bet $30,000 in a poker game, that's his privilege. Society may consider it a bad judgement, but if that is what he wants to do, you can't fault him for it. That's America!" ...pg 63

That is also Las Vegas. That is also Bursa Malaysia if someone wants to buy 1,000,000 of XYZ - CD!

Finally...


"the guy who invented gambling was bright, but the guy who invested the chip was a genius"...pg 52

" a player who freezes at the sight of a fifty dollar bill, thinking it could buy him a week's food at the supermarket, will toss 2 green chips into the pot without even hesitating if the odds are right!


Viva Las Vegas! Viva Bursa!

SuperFreakonomics!

I have been reading books in October 2011, but just did not make time to write them down. So, this November , I will review 8 books, 4 for October and 4 for November.

Well, I'll start tomorrow.... :)

Be Your Own Financial Planner

Week 3 : Sept 2011

Another book by the TrueWealth Publishers ( Azizi Ali), written by Jade Haven. I like this Malaysian publisher, with topics ranging from Stock markets, Financial planning, Properties, Swiftlet farming...anything to do with making money!

This book starts with the Basics : Risk Profiling, Time value of money,Cash Flow, Net worth, Debt management ( Car , House, Credit cards ), Planning.

It then goes on to explain the aspects of 4A's : Asset Protection ( Insurance ) , Asset Accumulation ( Cost Averaging, Higher returns, Inflation, Risk Minimisation ) , Asset Preservation ( Allocation, portfolio rebalancing, Trust Nomination, Tax Planning ) and finally Asset Distribution ( Wills, Living Trust ).

Jade's purpose of writing this book is to share her knowledge... and if you go through her book, you will get a "big picture" feel of what financial planning should be.

If done properly, you should be able to "work for fun, and not for fund!"

Note her idea of Value Cost Averaging, Higher Returns, Living Trust. Very useful for me.

Book can be bought online from http://www.bookplanet.com.my/index.php?target=products&product_id=177 . Cost rm39.90.

A Profitable Guide To Technical Analysis

Week 2 : September 2011

This is a beginner's guide to Technical Analysis...and do not be fooled by its simplicity.

Many traders get caught up with too many complexities and forget to read the obvious writings on the wall!

I particularly like these parts :

(1) Market seasons ( pg 29)

(2) The tools required for Different Market Scenarios ( Direction, Momentum, Volatility ) ( pg 74) .

(3) Patterns and Formation ( Trend Reversal, Consolidation, Candlesticks pattern ) ( pg 50)




And what can I add to enhance the knowledge found in this book?


(1) I prefer to label the market trends as : Up , Down, Sideways
Then Add the Volatility : Volatile, Non-Volatile
Then Add Standard Devaition : Normal 1, Volatile 2, Extreme Volatility 2-5

Hence, my market pulse will have the 3 factors above.

Once identified, i will then proceed to look for the tools to trade.


(2) The tools required. I generally participate in Trending markets ( Up and Down ) only, so I stay out in Sideways (hence , i do not use RSI or Stachastics). I also use the Support / Resistance lines with particular attention to the Slope. I also like Moving Averages, in particular Guppys.


(3) I am a great fan of Patterns. So, I also look our for Continuation, Indecision, Reversal patterns. Breakouts to me can mean Breakout to CONTINUE, and Breakout for REVERSAL. Make sure you can differentiate the two Breakouts.


Conclusion :

This book to me , addresses many problems faced by beginners, in that they are not sufficiently exposed to the BIG PICTURE trading, ie failing to identify firstly, the market pulse and seasons. Winston covered this area well. I suspect many newbies get caught up with too many technical indicators and they get confused easily as indicators are just that, indicators. Perhaps they think that indicators is all , be all to trading. Alas...naked trading with just PRICE action can roll in the money as well!


In the realm of 3M's in trading namely , Method, Money Management, Mind... this book has emphasis on the Method aspect only. Very little emphasis on the other 2 M. For starters, I recommend SUPER TRADER by Dr Van Tharp ( on Money Management) , and TRADING FOR A LIVING ( Dr Alexander Elder ) ( for all 3 M ) , and TRADING in THE ZONE ( Mark Douglas ) for Mind.


You can this book at http://www.profitableta.com/ or at all leading bookstores.

The Beginning...

Week 1 : September 2011

Do you remember what the book that you read over the weekend?

" What I hear, I forget...
What I see , I remember...
What I do , I understand...."

- LaoTze

So , to understand what one reads, one must put it into practice.

And one can start by review the book.

Start now.... read one book a week ... ( or a wise saying a week )

And ...review it once a week too!