171) To Believe Or Not To Believe

This is a very interesting question.
My Rule #3 says, "Don't Believe".

Don't easily believe others. Please do check and verify the information. Your internal bias make you believe someone you already believed before. In a way, that is how your brain reduces its data processing workload.

Your brain will try to reduce the data processing as much as possible. One good example is when you were attending classes. You were just sitting on the chair and hardly move the whole day. However, at the end of the day, you feel very tired. In fact you will feel more tired than after running 10km.

Now, how about believing in yourself?
Do you need to believe in yourself?

Many motivation quotes you received and motivators will say to believe in yourself.
In my postings and articles, I also write about Don't Believe.

This is a confusing, right?

It may look like a conflict initially. But, the context applies to different situations.

There are certain times you want to believe in yourself.
However, there are also many times when you don't want to believe yourself.

If what you believe will make you move forward, become better, stronger, higher and more positive, you want to Believe in yourself.

If what you believe will make you stop, make it become worse, weaker, lower and more negative, you Don't Believe in yourself.

Ask yourself, "Why Not?"

When you hear Cannot, Ask Why Not?

Many times you will stop and say "Cannot". It is the easiest and safest thing to do. You don't want to try new things and take risks. The FEAR feeling will appear. Many negative and harmful thoughts will appear.

You have been conditioned since young of the bad things that happened when you try new things. You have heard of the many failures when people try new things.

An example is by watching ghost movies. After watching ghost movies, you will start to imagine the horrors when you go into an empty old house. You believe that something is hiding behind the door or inside the cupboard.

There have been many false beliefs that had conditioned you.

 
There had been so many false beliefs.

A good example is that people used to believe that the earth was flat. You will fall off the earth if you travel far out the sea. In current times with space exploration and pictures of the beautiful earth, we laughed at the old beliefs.

 

How to overcome the fear or negative feeling? 

One good way is to challenge your beliefs.
Ask yourself 4 Questions:

Why Not?
How To?
What Else?
Which One?

More about the 4 Questions in this link
http://highlevelrules.blogspot.my/2017/07/4-high-level-coaching-questions.html

  

In conclusion,


Don't Believe In Limitations,
Do Believe In Expansions.

A beautiful quote for you...

170) Benefits of DCA

170) What are the Benefits of Dollar Cost Averaging?

What is DCA?

Dollar Cost Averaging (DCA) simply means buying an investment with a fixed amount of money on a regular schedule over a long term, regardless of the price.

For a share or equity investments, the prices are volatile. The prices go up and down depending on the economy and market conditions. Investors want to buy at the cheapest price. Buy at the lowest price and sell at the highest is an easy concept to understand.

Simply put, Buy Low and Sell High.
It is easier said than done. Below is an example of a company share price movement for the whole of 2016.


It is easy to spot the highest and lowest price for a past event. Who can tell what are the price directions in the future?

It is very difficult to predict the price movements. When a stock price has gone up, it can go even higher. After go higher it can turn back down or go even higher. Trying to find the best time to buy is called market timing.

Many times, while trying to time the market, investors did not start investing at all. 
They just could not find the right time.
 

 

Refer to the graph above for a case study. You had bought lump sum $8000 at $10 in Jan. You have a total of $8000/$10 = 800 units. Your investment is still $8000 when the price is back to $10 in Aug. The total return is 0%.

DCA is used when you keep buying $1000 on monthly basis over the 8 months.

In Jan, you get $1000/$10.00 = 100.00 units.
In Feb, you get $1000/$14.00 = 71.43 units.
In Mar, you get $1000/$9.00 = 111.11 units.
In Apr, you get $1000/$13.50 = 74.07 units.
In May, you get $1000/$8.00 = 125.00 units.
In Jun, you get $1000/$8.50 = 117.65 units.
In Jul, you get $1000/$7.50 = 133.33 units.
In Aug, you get $1000/$10.00 = 100.00 units. 
Total Invested = $8000. Total Units = 832.29
Average price = $9.61 per unit.

You get more units when the price is lower. You get less units when the price is higher.
  
By buying regular and fixed amount, the Average Cost per unit is $9.61.

You may understand about asset diversification. You can diversify and spread your investments into different assets, funds and countries.

Dollar Cost Averaging is to diversify the Market Timing.
You spread the timing into the market.

So, what are the Benefits of DCA?

1) Buy at the Average Cost. Not the highest nor at the lowest price.
2) No need to time the market. Can invest regularly all the time.
3) No stress on buying at the wrong time (at highest price).
4) Disciplined and consistent method to accumulate wealth.
5) Easier to prepare small amount for investment. Compared to difficult to get a large lump sum.
6) Easy to decide to invest. No extensive research and spend lots of time to find the best time.
7) Automatic investment via Direct Debit Instructions. No need to remember when to invest.


Now, what are the Disadvantages of DCA?

1) Not suitable for low volatility and up trending prices. Example: bond fund and money market funds. It is best if you invest lump sum immediately when the price is lower, before it gets higher.

If you do DCA, you are just buying at higher and higher prices. This is called Averaging Up.




More details in the links:

Should you do Dollar Cost Averaging with your Bond Fund?
http://highlevelrules.blogspot.my/2017/07/should-you-do-dollar-cost-averaging.html

Time In the Market vs Timing the Market.
http://highlevelrules.blogspot.my/2017/10/time-in-vs-timing-market_24.html

169) Unit Trust Business vs Other Business

169) What are the differences between Unit Trust business vs Traditional business?

Traditional business

1) Have a shop. Meaning rental, water, electricity, telephone, fax, etc.
2) Need to employ staff. Meaning have staff problems.
3) Keep stock and display items. Have to carry items around. Keeping stock in store rooms.
4) Incur stock delivery charges.
5) Handle cash or credit card transactions. Accounting & consolidating amount issues.
6) Cash flow issues. Cash stuck into stocks.
7) Bad debts, payment and collection issues.
8) Risk or robbery, theft, fire, flood, damages, etc. Need to buy insurance.
9) Specialized skill required in the business. Training can cost thousands.
10) Time consuming to keep open during business hours.
11) Operates on certain hours only.
12) Not possible to close business for a long time.
13) Business limited to shop locations.
14) You pay for your own holiday trips.
15) Clients can go to your competitor and you lose everything. Nothing to hold the clients to you.
16) Income are based by products you sold. Only active income, no passive income.
17) Your stock may have expiry date and become old fashion, Worry of old stocks.
18) May be affected by health issues like Covid-19 scenario. Cannot open for business.

Unit Trust Business

1) No shop, no office required.
2) You can do it on your own. Recruit others as business partners. They do their own similar business.
3) No stock, no store room.
4) No stock to deliver. No delivery charges.
5) No cash, no credit card. All via existing bank systems.
6) All in cash terms. No cash tie up in stocks.
7) No debts. Only collect cheques.
8) No robbery, fire or flood risk. In fact, can even get free insurance.
9) Simple sales and technical skills. Training provided at very low cost.
10) Flexible hours.
11) Can do any time convenient to you.
12) Possible to take a long break.
13) Can do business anywhere.
14) You can win awards and get free holiday trips.
15) Clients investment are always in your Asset Under Management (AUM). Unless they redeem all the investments.
16) Active income from initial sales. AUM gives Career Benefit. It is the passive income stream.
17) No stock, no expiry dates. Unit Trusts gets better as it gets older.
18) No issue of meeting clients. Business can still operate via online.


Link to article on Why Should You Consider Becoming a UTC?
http://highlevelrules.blogspot.my/2017/07/why-should-you-consider-becoming-utc.html

168) Give Sales to Your Clients

168) Not Only Get Sales, But Also Give Sales

You must have read or heard about the book of 7 Habits of Highly Effective People by Stephen R. Covey.


Habit 4 is to "Think Win-Win".

Have you ever thought on how you can also do the "Think Win-Win" with your clients?

Your clients had been giving you money by buying your products and services. How do you help your clients?

Based from a book by Robert B. Cialdini, Ph.D., titled Influence: The Psychology of Persuasion. There are six principles of influence. The first is Principle of Reciprocity.
It basically means, people will feel obligated to repay what was given to them.

Well, how do you give sales back to your clients?

Here are some ideas you can use.

1) Product & Service List
Recommend their product and services to your other clients. Create a list of your clients product and services and share them with all your other clients. Inform your clients to contact you if they need any products and services listed in your list. You will assist to link the buyer and provider.

Do not share the company names and contact details in the list. This is to protect their confidentiality as well as your customer base list. You do not want another person to start contacting all your clients.


2) Business Network Meeting
You may have heard or attended other business groups networking meeting. For example Business Network International (BNI) and Business Networking Club (BNC). There are membership based and only 1 person can represent 1 product or service.

Instead of joining that group, you can create your own informal group. Invite few clients together for a networking session. Meet at a convenient place and have a relaxing time getting them to know one another.

3) Informal Gathering
You can also invite your clients for an informal function. It may be just for a lunch or teh tarik session. Or something bigger like a festival open house, birthday party, golf session, karaoke, running session, bowling, etc. Any activity that allows people to interact with one another. Organize an activity and invite only your clients for a gathering.

Do different sessions with different clients. It is better if you keep the group small to medium size for a more closer interaction.

When you do these activities, your clients can see the networking opportunity that you give back to them. You are doing something to help their business. 

You not only Get Sales, but also Give Sales to your clients.

The other benefit is that your business and work will be more fun. Think and do activities outside your normal routine.

When your clients get business from your activities, they will feel more obligated to continue with your business and even recommend others to you.

By doing the networking activities, you can now practice 3 of the 7 habits.
a) Habit 1: Be Proactive
b) Habit 4: Think Win-Win
c) Habit 6: Synergize

Happy Networking to you.

167) Higher vs High

167) Higher is not same as High.

Lower is not same as Low.
Lower can mean higher than low.

Higher is not same as High.

Higher can still mean lower than high.

Confuse?????

Let's say the lowest possible score is 0 and the highest possible score is 100.

So you can expect anything above 75 is high and anything below 25 is low.

Lower than 100 can still mean 95. It is still very high when compared to the low of 10.

When you are using Lower or Higher, you are actually comparing with another level. That level is what determines the high or low in more absolute terms. 

A simple example.

Let's assume you in a building and you are on Level 5. The highest point of level 5 is still lower than level 7. To go higher to level 7, you have to leave level 5 altogether. You have to break the level 5 and level 6 before reaching the lowest point of level 7.

To break through higher, you have to leave your comfort level and go even higher. Most people did not even know other levels exists. They are happy with where they are after reaching the highest point of level 5.

If someone had already shown you that there is level 7, you know that level 7 exists. Then, there is no fear. It may be tough, but you know it is possible for someone to reach there.

Challenge yourself to search for higher level.  Is there a level higher than level 7?

You will never know unless you try.

 

.

166) Project Lower Investment Return

166) Why You Should Project A Lower Investment Return

There are times when you will be asked to project or estimate a rate of return for the investment you proposed. You will be tempted to put a high return rate number to convince your prospect of your investment products.

You may have heard the concept of,

Under Promise, Over Deliver.

and

Lower Expectation, Higher Success;

Higher Expectation, Lower Success.

It basically means, if you put a higher return rate, the chances of achieving the high return is lower. If you put a lower return rate, you will be more confident that it can be achieved.

If the Engineering field, it is called the Margin of Safety. Engineers use a lower number to calculate the required material. It will end up with the design is stronger than required. It is also to create some extra space for unforeseen circumstances.

Similarly in financial planning, you should use a lower return rate for growing money. There can be many circumstances to affect the actual returns. Especially in investments, the situation is very dynamic and very unpredictable.

Let’s do a case to study the impact of over projection. You can use the Financial Calculator app.

Let’s say Ali & Bob are currently 30 years old and both want to retire as a millionaire at age 60. Both agreed to invest monthly using the Direct Debit Instruction (DDI) method. 

Ali is projecting to earn 10% per year.
Bob is projecting 6% per year.

Scenario 1: Ali

Future Value = $1,000,000.

Annual rate = 10%.

Periods = 30 years (360 months).

Compounding = monthly

Payment monthly = $438.73

Note: the "negative" symbol is to show Ali's money was paid out into the investment.

This means that Ali will be a Millionaire if he saves $438.73 monthly for 30 years and the annual return rate is 10%.

Scenario 2: Bob

Future Value = $1,000,000.

Annual rate = 6%.

Periods = 360 months.

Compounding = monthly.

Payment monthly = $990.55.

This means that he will be a Millionaire if he saves $990.55 monthly for 30 years and the annual return rate is 6%.

After 30 years, let's assume the actual return is at 8% per year. 
Let's see what are the amount accumulated after 30 years of investment.

For Ali,

Payment monthly = $438.73

Annual rate = 8%.

Periods = 360 months.

Compounding = monthly.

Future Value = $658,224.50.

Ali is having a shortfall of $1,000,000 - $658,224 = $341,776.

Ali has to find more money to reach his goal to be a Millionaire.

He most probably have to defer his retirement and continue to work.

For Bob,

Payment monthly = $990.55

Annual rate = 8%.

Periods = 360 months.

Compounding = monthly.

Future Value = $1,486,117.39.

Bob is having a surplus of $1,486,117 - $1,000,000 = $486,117.

Bob can achieve his $1,000,000 earlier and have more money for his retirement. 

If the actual return is only 6%, Bob will still achieve his goal of becoming a millionaire.
Let us see what is the amount Ali will have if the actual returns is only 6%.

Ali is going to have $442,914 only. 
It is less than half a million, less than half of his goal.

If you are his financial consultant, how are you going to explain to him that his achievement is less than half of the goal? Who is at fault and who to blame? 

Projecting a higher or lower return will not affect the actual returns.

PROJECTIONS ARE NOT REAL.  
It May or May Not Happen.

The actual returns are based on FUTURE market conditions and investment strategy of the investment. Past performance is never a guarantee that it will happen again. Never use past performance as indication of future performance.

Although it is more impressive to project a higher return rate, the success rate is lower. 
Improve your Safety Margin by using a lower return rate projection.  
 

Having more money will never be a problem. The problem arise when you don’t have enough. The time lost will never come back.  

You cannot go back to the past and start all over again.

It will not help much if you are over optimistic about your investment returns. 

Would you rather have a SURPLUS or a SHORTFALL?

An old proverb says it all.

"Better Safe Than Sorry"

If you want to monitor and track your investments, go to this article and the download an Excel file. You can enter your projected return and update the data on yearly basis. It will show if you are having a Surplus or Shortfall as compared to your projections.

http://highlevelrules.blogspot.my/2017/09/invest-expenses-for-retirement-plan.html

165) Investment Portfolio Allocation

165) Track Your Investment Portfolio Allocation

Use this Excel file to monitor and track your Unit Trust investment portfolio. It is divided into different categories by asset types. Use it to monitor the percentage changes.

Do a review and rebalance the amount in each category to adjust back to original agreed upon percentages.

When the Equity percentage had increased higher compared to Bond, it means that the Equity had made higher returns. A simple strategy commonly used in called "lock in profit". You may consider to sell some equity and take in the profit now.

The opposite is also true. If the Bond percentage had increased higher compared to Equity, it may mean that the Equity had reduced in value and it is time to buy some more..

Get the link to the the Excel blog here:

https://drive.google.com/open?id=1YrgP5_CPCrgeZdYItqf_mEA2jRB8MWE5

Watch the video below on the concept of Rebalancing during stock market ups and downs.

164) Improve Strength or Weakness

Enhance Your Strength or Improve Your Weakness?

There will always be a situation where you are faced with this decision. Do you focus your time and energy to Enhance your Strength or to Improve your Weakness.

You will probably say do both!!!!

It is great if both can be done.

However, you will have limited time, resources and energy.
If you have to choose 1 only, which one will be your choice?

Enhance Your Strength or Improve Your Weakness?

It is better to focus on one thing that you are already good. Make it the best you can. Keep your focus on only 1 thing. Make it so good that you will be known and remembered for it.

You see around.
Who is the best golf player?
Who is the best badminton player?
Who is the best football player?

We may argue who is the best player.
But, is the best football player also good at golf or even at badminton?
You will definitely say NO.

What is Steve Jobs remembered for?
Definitely you will say "Apple Phones & Computers."
Is he very good at tennis? Not sure if he even played tennis.

Do you notice that it is only 1 thing or 1 name for the best.

There is an old English proverb:
Jack of all trades, master of none.





If you are doing too many things, how can you be good at them.
Others will start to think about the quality.



Focus on one thing or one area of your interest. 
The different things you do should be related, to enhance your skill and services in that area.

You will be much happier doing things your already like and good at.

Your interest became passion. You will not mind spending many hours doing it.
The quote below says it all.

 "Find your passion, and it's no longer work" by L.A. Reid.

 

163) Benchmark of Success

The Benchmark of Success is your Expectation.

Success or Failure is decided by your Expectations.

If you have lower expectation, then you will get more success.
If you have higher expectation, then you will get less success.

For example:
Case 1: Your new business partner had been doing sales for the last 10 years.You expected him to sell at least $200,000 in the first 3 months. He managed to sell $150,000 after 3 months. Then he did not do well. His result is below your expectation and is considered a FAILURE.

Case 2: Your new business partner just finished school. He had never done any sales before. You expected your new business partner to sell only $30,000 in the first 3 months. He managed to sell $150,000 in the first month. Then he did very well. His result is above your expectation and is considered VERY SUCCESSFUL.
 
Your expectation had set the success or failure. 

Anything above your EXPECTED BENCHMARK is a SUCCESS.
Anything below your EXPECTED BENCHMARK is a FAILURE.

It is not so much about the actual result., but the expectation.

Maybe that is why we always admire those with disadvantages and achieve certain results.
If the same results were achieved by a normal person with many advantages, then it is as expected or even below your expectation.

So, set your Expectations right and adjust your Benchmark of Success.
Higher Success also makes you happier, more positive and less frustrations.

162) Chance vs Choice

162) What is the Difference Between Chance and Choice?

Both Chance and Choice will affect your life. 

Every Chance you take, can be a good choice.
Every Choice you make, can have a good chance.

Look at the sentences more closely to understand better between chance and choice.
Have you realized the difference?

You TAKE CHANCES
You MAKE CHOICES

You TAKE what is given or comes along to you.
You MAKE decisions what you want.

With Chance, you did not make the choice. You did not DECIDE.
With Choice, you did not take the chance. You DECIDE.

If you are given a good chance of success and you make the choice of not doing anything.
You decided not to do anything. You will not be successful.

If you are given a small chance of success and you make the choice of doing something.
You decided to do something. You may be successful.

You say chance of something unsure in the future.
You say choice of something to decide in the present.

Eg.
What chance of it to rain in the afternoon?
It looks most likely as there are dark clouds above.

What choices I have if it rains in the afternoon.
I can go out and bring an umbrella.
Or I can go out early before it rains.
Or I can take a taxi.

Chance is more on external factors.
Choice is more about your internal self.



You can decide for yourself, and you cannot decide on external factors.

FOCUS ON WHAT YOU CAN CONTROL.
ADEPT TO WHAT YOU CANNOT CONTROL.