Speed Reading - Part I

1. What is the essence of Speed Reading?

Speed Reading is about reading and comprehending any materials quickly and efficiently. There are two main aspects to speed reading:

(a) Speed in reading any written material; and
(b) Comprehension of the material being read.

Obviously, it’s no good if you can read at a rate of 1,000 words per minute and understand ZILCH (ZERO) of what you are reading. On the other, some people read at 10 words per minute and still don’t understand what they are reading anyway. :)

Effective Reading Speed = Words Read Per Minute (WPM) * Comprehension Level

For example, if I can read 500 words per minute with a comprehension level of 90% (i.e. answer 9 out of 10 questions correctly), my effective reading speed:
= 500 WPM * 90% = 450 WPM


2. Why should I learn it? How do I begin?

Let me ask you some questions first:
• Do you plan to go for further studies on a part time basis?
• Do you have a pile of books sitting at a corner in your home gathering dust?
• Do you keep telling yourself that you are going to read those books, someday?
• Do you have loads of written materials (articles, books, accounting standards etc.) that you need to read to keep yourself up-to-date (but never seem to have time to do so)?
• Do you have exams coming up soon and have a gargantuan pile of materials you need to understand and memorize within a month?

If your answers to any of the above if YES, then maybe it’s time to look around and see if there’s a faster way to read and understand written materials. Doesn't it seem surprising to you that some people can read books fast and understand most of what they've read? What makes them so special? The answer is simple - SPEED READING!

How do you begin? Well, I’ll be blogging on speed reading once a week. So, do drop by and you can join me on a step by step process to learn speed reading. Sounds good?

3. How much time do I need to spend?
Realistically, you only need to spend approximately one to two hours a week to start on speed reading. If you are reading at a rate of less than 100 words per minute, you should see a marked improvement after the initial two months.

4. How is it going to help me achieve my goals in life?
Knowledge is Power. There are so much written materials out there written by people with vast experience. If we can just tap into some of their wisdom and experience, it will make us better people and equip us with the knowledge to deal with life. I believe this will also help you achieve your goals in life.

5. What are the best materials on Speed Reading?
Videos – EyeQ by Dr. Akihiro Kawamura
Books - How to Read a Book by Mortime J. Adler and Charles Van Doren

Conclusion:
If you want to learn speed reading the easy way, then you are welcome to join me and we can do it together. Alternatively, do yourself a favour and buy the book above. A little investment can go a long way, especially when it comes to speed reading!

Financial Intelligence – Part IV

TIME = MONEY!

How many times have we heard the above adage? And yet, how often do we actually translate this into our personal lives?

Again, let’s consider the case of Bumbling Bill. He earns RM10K a month. Wow! What a huge salary, 10 grand a month. However, let’s break this down into time units.

To earn RM10K a month, he has to work from 8:30 morning to 7:30 evening (even though his official hours are from 8:30am to 5:30pm). Excluding lunch, he spends approximately 10 hours a day in office. He works five days a week per month.

So, he has to work 10 hours * 24 days = 240 hours (assume 24 working days in a month) to earn RM10K. That works up to about RM42 per hour. Is that a lot of money?

Gross pay per hour ______________________________________RM42.00
Less: Direct Costs Incurred Related to Work
Parking ________________________________________________(RM0.50)
Petrol _________________________________________________(RM1.00)
Tolls ____________________________________________(RM0.50)
Lunch ________________________________________________ (RM1.00)
Miscellaneous __________________________________________(RM1.00)
________________________________________________________________
Net Pay per hour (Before Tax) ____________________________ RM38.00

Less: Boss No. 2 – Inland Revenue (i.e. Tax) ________________(RM10.50)

[RM42 * 25%]
Less: Boss No. 3 – Banks [Assume RM144k loan]
(RM144K * 10% * 1/12 divided by 240 hours) _________________(RM5.00)
_________________________________________________________________
Net Pay per hour (After Tax) ______________________________RM22.50
=================================================================
Well, so you see Bumbling Bill is only earning RM22 per hour. With this information in mind, let’s interpret the manner Bumbling Bill spends his money.

Hmmm… well:

Lunch at Posh Restaurant
1. He spends every weekend going with his family to the most expensive restaurant in town. It’s more to affirm his upper class social status, rather than about enjoying good food. It costs him RM500. It only costs RM50 for him to have a meal with him and his family. What’s the point you ask? It’s only RM450 difference. Can’t a man enjoy a meal with his family once a week at a posh restaurant just to show off? Gimme a break, you say!

Well, that may be true. But remember: TIME = MONEY
Let’s look at it again.

(a) Option 1: RM500 = 22 hours of his life [ RM22.50 * 22 ]
(b) Option 2: RM50 = 2 hours of his life ___[ RM22.50 * 2 ]

Now ask yourself, is it worth slogging for over an additional 20 hours of your life just to have a posh meal every weekend? Or would you rather spend time helping your wife to cook a meal and enjoy it with your family?

Car Loan
2. Bumbling Bill has a loan of RM144K which he used to finance the purchase of his Toyota Camry. Like they say in Malaysia, “Gaya mesti ada” [Loosely translated, it means “Must have style”]. So what, you ask!

Well, he pays loan interest = RM14.4K per annum, which translates into:
= 640 hours [RM14,400 divided by RM22.50], equivalent to
= 80 effective working days = 3.33 months [80 days/24 working days a month]

There you go! Instead of one boss, you have two. No wonder you get so tired and grumpy. So that's why those bankers can afford to drive those Mercedes and wear nice suits. And don't get me started on credit cards [subject of my next post!]

CONCLUSION:
Remember, TIME = MONEY.
So spend your MONEY wisely, so you have more TIME to do the things you want in life.

Financial Intelligence – Part III

Consumerism is a dis-ease!

Why do I say that? Let’s see what happens in a typical day at work.

We wake up. Brush our teeth and change into our working clothes. Hop into our car to drive to work. Switch on the radio. Listen to the news and songs.
1. Listen to advertisements.

On the way to work, as we drive we see some billboards.
2. Look at the advertisements.

Reach work on time. Open the morning papers and read the daily news. All over the places, we gloss over most of the advertisements… except the interesting ones and we…
3. Look at the advertisements.

Oops…it’s time to start work. So we do…suddenly we receive an sms…
4. And realize it’s an advertisement.

We go for lunch and hop over to a nice restaurant.
5. And see some posters of some sexy and skimpily clad lady holding a can of beer, oops another advertisement.

Go back from lunch and start checking our Gmail, and:
6. Notice some advertisements.

Go back home and watch TV and get swamped by:
7. Audio-visual advertisements.

Even a normal working adult gets swamped by advertisements every day. Are all of these advertisements relevant or useful to us?

What’s the purpose of advertisements?
(a) To inform consumers of the products and services available to us;

(b) To create demand for products and services that are non-essential. By doing so, charge premium prices for something we don’t need or want (but are fooled into thinking we should have!)

(c) To create insecurities and fool us into thinking that spending money on certain products/services is an adequate replacement for compassion, listening and spending time with our family and friends.

Purposes such as 2 & 3 are insidious but we are so used to it that it barely provokes any outrage any more. Advertisements are so subtle nowadays that it’s amazing that how they are researched to trigger our emotions so that we spend, spend and spend! Think about the whitening beauty creams by the cosmetics company. The more insidious advertisements I have seen include:

Advertisement I
A lonely couple staying in an old town. The old man has nothing to do. Every day he goes to the kopitiam to have several cups of tea. He’s all alone. Goes back home. Silence…

The son calls back home. Offers to install a Cable TV for him to watch movies. The father hesitates… Moments later, the house is full of life [and all is well].

Advertisement II
A father… shopping for a piano for his son. Suddenly sees his wife playing a violin fluently. He only has enough money to buy one musical instrument.

Credit card comes to the rescue. Smiles all around. Love… gained by spending more than he can earn.

The message:
1. By subscribing for pay TV for your dad in the village, all will be well. You don’t need to go back home to visit him and your mother once in a while to talk to them and take care of them. Simply spend more MONEY! Pay TV is an adequate surrogate for a son. Heck, maybe they shouldn’t have given birth you and save the money for pay TV.

2. Even if you can’t earn enough to pay for both the musical instruments, it’s okay. Just borrow money from the bank and pay more interest on the credit card loan @ 18% per annum. Please contribute more to the banks' profits, since they need it. It doesn’t matter if you are selling your kid’s future education funds. Even if he ends up as a laborer (or kuli) because you couldn’t afford to send him to college, it doesn’t matter. Why? Getting him a piano that you can’t afford, is more important than his future education. What’s important is NOW! Not what’s going to happen in the future. Or maybe you can borrow from the bank for his future education by mortgaging your house.

What is Happening?
We are being bombarded by advertisements every day that have one CONSISTENT MESSAGE:

“SPEND, SPEND AND SPEND SOME MORE! YOU’LL BE LOVED BY YOUR FRIENDS AND FAMILY FOR DOING SO. IT’S YOUR RIGHT! YOU CAN HAVE IT ALL NOW! DON’T WAIT! OH - BTW YOU ARE ALSO HELPING THE ECONOMY!

Think for a minute! You may think that you are not affected by advertisements. Are you really sure? If so, why are advertisers spending BILLIONS placing advertisements over all types of media (radios, television, newspapers, Internet etc.)

What has this to do with Financial Intelligence?
Well, Consumerism is the ANTITHESIS of Financial Intelligence.

If you spend on something that you:
• DON’T REALLY NEED
• DON’T REALLY WANT
• THOUGHT YOU NEEDED (because of advertisements)
• THOUGHT YOU WANTED (because of advertisements)
• THAT BECAME CLUTTTER (because you never used it after the first couple of weeks)

Then you have just wasted your money and turned it into CLUTTER. Put up your hands…have you ever spent your money on such junk? (e.g. dumb bells, exercise machines, trashy fashion magazines)

SO, NEXT TIME – TURN OFF THE RADIO, STOP WATCHING SO MUCH TV AND RELAX! JUST REST YOUR MIND! I’D RATHER YOU BE MORE SANE THAN GROW IN-SANE, BY LISTENING AND WATCHING ALL THOSE ADVERSTISEMENTS!

Financial Intelligence - Part I

1. What is the essence of Financial Intelligence?
Simply put, FI is about living within your means. Sounds simple, doesn’t it? Unfortunately, something that is common sense seems quite uncommon these days.

FI is a prerequisite before you start deciding to invest. Why? Put simply, if you don’t have any money, what are you going to use to start to invest? You could borrow money from the bank or loan sharks to do so. However, I wouldn’t call that investing. That’s more like gambling.

2. Why should I learn it? How do I begin?
Let me ask you some questions first:
· Are you living in debt?
· Are you spending more than you are earning?
· Are you just barely making enough to eke out a living?
· Do you have nightmares when it comes to looking at your finances?
· Can you afford to retire when you reach retirement age? And if you can’t, have you decided what you are going to do about it?
· Do you come to work in a job that you hate but can’t afford to quit because of all your commitments?

If your answers to any of the above if YES, you better start thinking NOW! Money is not going to drop out of the sky. And how are you going to improve your finances? Well, by using Financial Intelligence!

How do you begin? Simple… read on. There are a lot of good books out there. Unfortunately, most of us have neither the patience nor time to read them all. So, I’ll distill the principles from these books. The main obstacle in practicing Financial Intelligence will be SELF DISCIPLINE. It’s either enjoy now and suffer later. Or discipline yourself now and enjoy later. You decide!

3. How much time do I need to spend?
I have a simple answer. Every MINUTE of your life! That’s right, you are going to have to spend every minute of your life being financially intelligent.

4. How is it going to help me achieve my goals in life?
You heard the adage “Money Makes the World Go Round!” Money can also help you achieve your goals, whether it’s to be financially independent, go travelling or saving enough for your retirement fund.

5. What’s the best book on Financial Intelligence?
IMHO, it’s “Your Money or Your Life” by Joe Dominguez and Vicky Robin. If you have time, please buy the book and read it. Trust me; it’s one of the best investments you can make.

AH SHUCKS! I DON'T WANT TO BE A MISER [OR A SCROOGE!]
I know what some of you are thinking [see above]. So let me make one thing clear. Financial Intelligence is not about looking at one side of the equation (i.e. scrimping and saving money and being a scrooge generally!)

There are always two sides to the equation:
1. Cash Inflow
2. Cash Outflow

Most of the time, Financial Intelligence seems to be very limiting in the sense that FI is telling you that you can’t spend on the things you want or on the things your wife, children or family want. Well, don’t look at it that way.

FI is only telling you – live within your means. If going on a trip to Europe is so important to you, think about how you can earn more money. Whether it’s getting a part-time job or selling insurance, you decide!

After all, someone wise once told me
“It’s good to have an employee that can help me save a couple of cents, but I would rather have one that can help me earn the dollar!”

Same goes for your personal life. It’s good to save a thousand bucks by buying a less sexy handphone! But it’s better to be earning an extra five thousand bucks a month doing a part time job. Hey, then you can afford those gadgets you want to buy! But don't spend more than what you can earn! [i.e. like buying a Ferrari just because you are making five thousand bucks more a month!]

So are you ready to begin your life-long course on Financial Intelligence? If so, wait for my next post.

I have a great fairy tale that I must share with you (shh…I heard from my fairy god mother, so it must be true). And what has a fairy tale got to do with Financial Intelligence, you ask? Well, stay tuned and find out!

Fundamentals of Investing – Part II

Ah, I just love the irony of money.

The more you have, the more you’ll get and the less you’ll need.
The less you have, the more you’ll spend and the less you’ll get.

Sounds cryptic? Let’s compare the two persons in the diagram above:

Do you see the crucial difference between Haji Bakhil and Bumbling Bill?

Haji Bakhil (aka THRIFTINESS personified)
(a) Haji Bakhil has RM100K in the bank (he has a lot of $$$).
(b) He’ll get more money as the money in the bank will generate more income for him (RM120K @ 10% interest = RM12K per annum)
(c) As he’s so thrifty in the first place, he doesn’t spend much. So every month, he saves an additional RM6K.
(d) This is a virtuous cycle. The more he saves, the more income he will earn and the less he’ll need. Heck, he probably can retire very soon at the rate he’s going.
(e) He has a lot of money and is going to spend even less (because he can use his interest income to pay for his expense) and is going to need less money (because he doesn’t have any interest payment to pay).

Bumbling Bill (aka BIG SPENDER)
(a) Bumbling Bill spends Ringgit that he earns and barely saves RM100 per month
(b) However, he needs his *toys* such as that luxurious Toyota Camry he has been eyeing and also the luxurious Bungalow in Damansara Heights. He borrows to the hilt to buy these big-ticket items.
(c) Unfortunately for him, he’s going to spend more on interest payments to the bank.
(d) He has very little, but has spent more (on interest payment) and is going to get less (interest income on his money).

Conclusion:
1. Increase your cash inflow (if you can – earning side income or through wise investments).
2. Reduce your cash outflow (by spending on things that are of value and you really want).
3, Preserve your savings and wait for the stock market to CRASH! (It’s only a matter of when, not IF). Then you can swoop on all those goodies!

Fundamentals of Investing – Part I

They say there’s a fool born every minute. I’m a person that has some faith in humanity. Still, sad to say, there are so many cases of people been swindled out of their life savings, you tend to think … hmmm…

There’s no such thing as a free lunch!

Why harp on the above? Simply because it’s true! Just because you didn’t pay for the lunch, someone else must have done so. There’s always a catch somewhere. Think about it. If you had free nasi lemak (coconut rice delicacy in Malaysia) today … is it really free?

(a) Someone must have planted the rice, harvested and processed it;
(b) The coconut extract must have been grown and extracted;
(c) The ikan bilis and ground nuts must have come from somewhere;
(d) Someone must have spent time and effort to prepare the food and place it in front of you; and
(e) The work to clean up your leftovers and wash the plates.

So what am I trying to get at?
My point is that there’s no such thing as getting something from nothing.
Example: such as making a profit from the stock market without doing any work. Sure, it this may seem to be the case but trust me, it’s not.

What is the morale of this story?

If you want to make money from investing, be prepared to put in time, money and effort into it. No one is going to do this for you (for free!).

I’m sure some of you are thinking, hey I can always rely on the analysts, brokers or unit trusts to invest for you… Again, I’d like to remind you, these people have vested interests.

Why would they want to make money for you? They just want to use your money to make money for themselves. They use other people’s money (OPM) to make money for them. That’s called leverage in fancy business jargon.

Even if you forget all the other rules of investing – just remember: Before you decide to put your hard earned money into some hare-brained scheme promising 100% return on your investment in one month…

“THERE’S NO SUCH THING AS A FREE LUNCH!”

About

What is this Blog about?

I would like to invite you on a journey of self discovery and personal development. There are three main themes to this blog:

Wonder
To share with you interesting philosophical musings that occurs to me on this voyage we call life. I will also post opinions of interesting philosophers that have influenced my outlook on life. Currently these topics are covered under Philosophical Musings.

Wealth
Let us journey together on the road to financial literacy and the world of value investing. We will look at wealth conservation, creation and attainment of Financial Independence. Firstly, let's start by considering how to manage our money and conserve wealth here.

Once you have sufficient savings, you can consider the next stage of Financial Independence, namely Wealth Generation. One of the ways to do this is by investing in the stock exchange. A summary of my thoughts on investing can be found here. Alternatively, you can read about the Fundamentals and Basics of Investing. Next, we will need to understand how to analyze audited financial statements and review the performance of these listed companies. This is covered in my Analytical Review 101 series.

Whoa there cowboy! Before you start diving in with the sharks, are you wise enough to avoid the Seven Deadly Sins of Investing? You may also want to obtain an alternative view of our economic system here.

Wisdom
Review ancient war stratagems, war & political treatises and historical events. History always repeats itself. Knowledge of the past will equip us to deal with the future.

We will review the battles that occured during the Romance of the Three Kingdoms and stratagems used. Management stratagies employed by the greatest strategist of that time, Zhuge Liang will also be explored in his book entitled The Way of the General.

Key Personal Development topics will be explored and explained from time to time. I am currently reviewing the topic on Speed Reading.

Frequency of Posting
Updates will usually be made three times a week, on Monday, Wednesday and Fridays.

Contact Me
You can contact me directly via email at wonderwealthwisdom[at]gmail[dot]com

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I encourage you to comment on any matters relevant to the post at hand. If you have any queries, I shall endeavor to answer them to the best of my ability. If you must post anonymously, please use a pseudonym at the end of your post. Please keep your comments courteous and dignified at all times and avoid using uncouth language. I shall delete any and all SPAM comments encountered.

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