Interesting article about how Warren Buffer operates and manage his multi-billion dollars empire.

Worth reading guys!

http://news.bbc.co.uk/2/hi/business/8317072.stm

First heard this speech back in 2005 and watched this again today. Really inspiring and I always listen to this speech whenever I lost my focus in life.

It is true that money cannot buy happiness, but I rather have money and happiness together than no money and happiness. So, what you readers reckon ?

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ScienceDaily (Sep. 8, 2009) — There is more to life satisfaction than money, and public policy programs aiming to tackle poverty need to move beyond simply raising people’s income to also improving their quality of life in other areas.

These findings by Professor Mariano Rojas from Mexico’s Facultad Latinoamericana de Ciencias Sociales are published online in Springer’s journal, Applied Research in Quality of Life.

The reduction of poverty is one of the main considerations in the design of both domestic and foreign-aid programs. To date, the focus of these programs has been to get people out of poverty by increasing their buying power and there has been an assumption that raising people’s income translates into greater well-being. Professor Rojas challenges this assumption and argues that measures of life satisfaction should also be taken into account when designing and evaluating poverty-abatement programs.

Professor Rojas used data from a yearly national survey run by the University of Costa Rica covering the years 2004-2006. In addition to questions about household income and dependency on household income, he added more subjective questions about life satisfaction in general, as well as satisfaction with health, job, family relations, friendship and self, as well as the community environment.

The majority of people rated their lives as satisfactory or more than satisfactory. Not all people who were considered ‘poor’ experienced low life satisfaction and not all people who were not considered ‘poor’ were happy with their lives. Professor Rojas observed that only 24 percent of people classified as ‘poor’ rated their life satisfaction as low. Furthermore, 18 percent of people in the ‘non-poor’ category also reported low life satisfaction. It is therefore clear that poverty alone does not define an individual’s overall well-being and it is possible for someone to come out of poverty and remain less than satisfied with his life. On the other hand, a person can be satisfied with his life even if his income is low, as long as he is moderately satisfied in other areas of life such as family, self, health, job and economic.

Professor Rojas argues that social programs need to recognize that well-being depends on satisfaction in many domains of life, and that many qualities and attributes need to be considered when designing these programs, including leisure, education, the community and consumer skills (learning to spend higher income sensibly).

Professor Rojas concludes: “This paper has shown that it is possible to jump over the income poverty line with little effect on life satisfaction. Income is not an end but a means to an end. There is a big risk of neglecting and underestimating the importance of well-being-enhancing factors when focusing only on income poverty. It is important to worry about getting people out of income poverty, but it is more beneficial to also worry about the additional skills people need to have a more satisfying life.”

Original posting at:

http://www.sciencedaily.com/releases/2009/09/090907142345.htm

How to use credit cards to your advantage

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THE use of credit cards is prevalent and dominant among consumers nowadays. Much has been intimated regarding the use and misuse of this facility. The bottom line is, consumers should have good financial habits and discipline.

Let me elaborate on how prudent use of credit cards can truly benefit all individuals.

Like every household, I have to pay for basic amenities such as electricity, water and telephone monthly. The due dates of payment for these bills are usually the last day of the respective months. All these amenities can now be paid through credit cards.

My credit card statement date is the 22nd of the month and payment due date is the 13th of the following month. I can therefore settle all payments after the 22nd of the month and get billed by the credit card company only on the following month.

This means the credit card bill need only be settled before the 13th of the month. For example, an electricity bill that needs to be paid by Aug 31 is only settled on Oct 13. Hence, I have gained 40 days credit.

This is not all. Most credit cards now award bonus points. You get redeemable points for every ringgit you spend. Points accumulated over the months and years can be used to redeem household or living items which are most likely on your wants list.

You will not feel that guilty spending on these items through your bonus points redemption. But of course, you have to settle your credit card bills fully every month. With discipline, you can truly use a credit card to your advantage.

LIONG KAM CHONG,
Seremban.

Robert Kuok Hock Nien’s notes on the past sixty years (On the occasion of Kuok Group’s 60th Anniversary 10 April 2009)

(1)        My brothers and I owe our upbringing completely to Mother. She was steeped in Ru-Jiao – the teachings of Confucius, Mencius, Laozi and other Chinese sages. Ru-Jiao teaches the correct behaviour for a human
being on his life on earth. Mother gently, and sometimes strongly, drummed into the minds of her three boys the values of honesty, of never cheating, lying, stealing or envying other people their material wealth or physical attributes.

(2)        Father died on 25 December 1948 night without leaving a will. Following the Japanese surrender, he had re-registered the firm as a sole proprietorship. We went to court to get an appointment as managers, permitting us to continue to manage Tong Seng & Co. The judge said that, as there were two widows, the firm and the estate should be wound up.

(3)        We decide to establish Kuok Brothers Limited. In mid-January 1949, five of us met at a small roundtable in our home in Johore Bahru. Present were my MOTHER, cousin number five HOCK CHIN, cousin number twelve
HOCK SENG, my brother HOCK KHEE nicknamed Philip (a.k.a. cousin number seventeen), and myself (a.k.a. cousin number twenty). We sat down and Mother said, “Nien, would you like to start?” I said, “Fine, yes I will
start.” To cut the long story short, we got started, and commenced business from a little shop house in Johore Bharu on 1 April 1949 .

(4)        As a young man, I thought there was no substitute for hard work and thinking up good, honest business plans and, without respite, pushing them along. There will always be business on earth. Be humble; be straight; don’t be crooked; don’t take advantage of people. To be a successful businessman, I think you really need to brush all your senses every morning, just as you brush your teeth. I coined the phrase “honing your senses” in business: your vision, hearing, sense of smell, touch and taste. All these senses come in very useful.

(5)        Mother was the captain of our ship. She saw and sensed everything, but being a wise person she didn’t interfere. Yet she was the background influence, the glue that bound the Group together. She taught my cousins and my brothers and me never to be greedy, and that in making money one could practise high morality. She stressed that whenever the firm does well it should make donations to the charities operating in our societies. She always kept us focused on the big picture in business. For example: avoid businesses that bring harm, destruction or grief to people. This
includes trades like gambling, drugs, arms sales, loan-sharking and prostitution.

(6)        We started as little fish swimming in a bathtub. From there we went to a lake and now we are in the open seas. Today our businesses cover many industries and our operations are worldwide but this would not have
been possible without the vision of the founding members, the dedicated contributions and loyalty of our colleagues and employees, and very importantly the strong moral principles espoused by my mother.

(7)        When I hire staff I look for honest, hardworking, intelligent people. When I look candidates in the eye, they must appear very honest to me. I do not look for MBAs or exceptional students. You may hire a brilliant man, summa cum laude, first-class honours, but if his mind is not a fair one or if he has a warped attitude in life, does brilliance really
matter?

(8)        Among the first employees were Lau Teo Chin (Ee Wor), Kwok Chin Luang (Ee Luang), Othman Samad (Kadir) and an Indian accountant called Joachim who was a devout Roman Catholic and who travelled in every day from
Singapore where he lived.

(9)        I would like on this special occasion to pay tribute to them and in particular to those who were with us in the early days; many of whom are no longer here. I have already mentioned Lau Teo Chin (Ee Wor) and Kwok
Chin Luang (Ee Luang) and Othman Samad (Kadir), there are others like Lean Chye Huat, who is not here today due to failing eyesight, and Yusuf Sharif who passed away in his home country India about one and a half years ago
and the late Lee Siew Wah, and others who all gave solid and unstinting support and devotion to the Company. It saddens me that in those early difficult years these pioneers did not enjoy significant and substantial
rewards but such is the order of things and a most unfortunate aspect of capitalism. However through our Group and employee Foundations, today we are able to help their descendants whenever there is a need to.

(10)      I have learnt that the success of a company must depend on the unity of all its employees. We are all in the same boat rowing against the current and tide and every able person must pull the oars to move the boat forward. Also, we must relentlessly endeavour to maintain and practise the values of integrity and honesty, and eschew and reject greed and arrogance.

(11)      A few words of caution to all businessmen and women. I recall the Chinese saying: shibai nai chenggong zhi mu (failure is the mother of success). But in the last thirty years of my business life, I have come to the conclusion that the reverse phrase is even truer of today’s world: chenggong nai shibai zhi mu. Success often breeds failure, because it makes you arrogant, complacent and, therefore, lower your guard.

(12)      The way forward for this world is through capitalism. Even China has come to realise it. But it’s equally true that capitalism, if allowed to snowball along unchecked, can in many ways become destructive. Capitalism needs to be inspected under a magnifying glass once a day, a super-magnifying glass once a week, and put through the cleaning machine once a month.

In capitalism, man needs elements of ambition and greed to drive him. But where does ambition end and greed take over? That’s why I say that capitalism, if left to its own devices, will snowball along, roll down the hill and cause a lot of damage. So a sound capitalist system requires very strongly led, enlightened, wise governments. That means
politician-statesmen willing to sacrifice their lives for the sake of their people. I don’t mean politicians who are there for fame, glory and to line their pockets.

(13)      To my mind the two great challenges facing China are the restoration of education in morals and the establishment of a rule of law. You must begin from the root up, imbuing and infusing moral lessons and
morality into youth, both at home and from kindergarten and primary school upward through university. Every Chinese needs to accept the principle of rule of law; then you have to train upright judges and lawyers to uphold
the legal system.

(14)      Wealth should be used for two main purposes. One: for the generation of greater wealth; in other words, you continue to invest, creating prosperity and jobs in the country. Two: part of your wealth should be applied to the betterment of mankind, either by acts of pure philanthropy or by investment in research and development along the
frontiers of science, space, health care and so forth.

http://www.irwandahnil.com/2007/01/15/bagaimana-menyediakan-sebutharga/

While it is a worthwhile effort by Irwan Dahnil, the sample still uses 80% English and does not meet my requirement.

Where else can I get a proper reference? Luckily, I found a RM2.50 Bahasa Melayu booklet designed for UPSR students in a local bookstore and from there crafted a 99% Bahasa Melayu version of quotation or sebutharga in Malays.

Please feel free to download the sample files for your own usage.

http://blog.moneylah.com/download/sebutharga.doc

http://blog.moneylah.com/download/sebutharga.odt

http://blog.moneylah.com/download/sebutharga.pdf

I saw this letter today at The Star’s Letters page and I truly felt sorry for the author. It must be hard for the author right now pondering how he is going to feed his family after being retrenched. Here is a copy of the letter appealing the government to exempt people aged 50 and above who got retrenched from paying taxes.

Don’t tax retrenched workers

I AM a Malaysian in my early 50s, and was recently served with notice of retrenchment by my employer. I appeal to the Government not to tax the payment I received as compensation for loss of employment.

Even though the tax relief amount per year of service was revised during the mini-budget, long-serving workers like me still have to pay a substantial amount of tax on our retrenchment benefit.

My MNC employer was caring enough to provide a retrenchment benefit higher than the statutory requirement. Hence the retrenchment benefit I received exceeds the tax relief allowed by the Government, and I have to pay tax on the balance. I can ill-afford to pay the tax in my present jobless state.

At my age, it is extremely challenging, if not impossible, to find a new position. I depend on every sen of my retrenchment payout to keep my family afloat while I search desperately for alternative sources of income during these trying economic times.

Many long-serving colleagues around my age are in the same tenuous position.

I appeal to the Government to demonstrate more compassion and sympathy for our plight. We have been productive members of the workforce and faithful taxpayers over the years, but now find ourselves in dire straits due to the economic downturn.

Please provide full tax exemption on total compensation for loss of employment received by retrenched employees, especially those above 50 years of age.

50+ RETRENCHED MALAYSIAN,

George Town.

I wish that this kind situation will never happen to me or anyone that I know. But in this age of downsizing, job security is truly a myth.

Honestly, I doubt that the government is going to waive the tax on people age 50 and above. The government wouldn’t care less if the author and his colleagues worked hard and pay taxes all these while. Once the government tasted money, it always wanted more and more….

While reading the newspaper today, my attention turned to the UOB Bank Audited Results for the year ended 31 December 2008 or in other word, financial statement for UOB Bank.

Back in the “old days”, before I was financially educated and only know how to work hard for money. I would definitely skip these pages and ignored the content. I wondered why the banks wanted to publish their financial reports to be scrutinized by the public. “Who would read it anyway?” I asked.

Now that I realized the importance of having an updated financial statement to keep track of my financial progress, it begin to dawn on me why banks and business owners got rich as compared to a typical hardworking employee. A clear distinction is that the banks and business owners care about their bottom line and use financial statement as a tool to manage their money/cash flow.

Employees only care about their jobs and unfortunately, they are not trained or educated to understand how a financial statement will impact their financial lives and retirement.

I believe because of this simple lack of using financial statement caused many people to live on financially disastrous lives.

Many people told me that they wanted to achieve financial freedom and sadly, most of them don’t even know how a financial statement looks like and let alone achieving financial freedom. Most of these people got scammed to join “get rich quick” scheme promising “financial freedom” only to get burned later by their lack of financial education.

I still remember vividly back in my secondary school days when I first came across the subject of accounting in the “Kemahiran Hidup” class. My teacher was trying to explain the basic accounting concepts to the students such as debit, credit, balancing the monthly financial statement, “bawah ke bawa” thing and needless to say, most of us couldn’t understand what he is trying to teach us. It was a boring subject to learn during that time and accounting looks like a very complex subject to master. I left my school days learning the few accounting chapters in “Kemahiran Hidup” class only with the impression that accounting subject is important for a company to grow and not for individual.

The second time I saw a financial statement is back in 2003, when I first read Robert T. Kiyosaki’s Rich Dad Poor Dad. It was really a mindset shifting book that I seriously recommend anyone who wants to master over their financial life. In Rich Dad Poor Dad, the author stripped down the financial statement into 4 boxes that look like this:

financial statement

Essentially, a financial statement consists of 2 parts, they are: (1) balance sheets(asset and liability); (2) income statements and expenses statement. Now this 2 parts financial statement is also known as the personal financial statement. A business financial statement has 4 parts, but business financial statement is a subject beyond MoneyLah.com and I will put it aside.

A balance sheet answers the question such as how much is my financial worth? For example, if I sold everything I own and paid all my debts, how much would I have left? My answer comes from taking the total of what I owe (liabilities) and minus the total of what I own (asset). This is also known as net worth.

The balance sheet has two columns. Assets, listed in the left column should contain the things that generate money.

Example of assets:

Rental fee collected from property

Profits generated from vending machine I own.

Royalties from my copyright patents.

Dividends from shares I own.

Etc.

Note: Contrary to the accepted accounting standard…. I will use the definition of an asset as thing that put money into pocket. This is the lesson from Rich Dad Poor Dad.

Liabilities, listed on the right column should contain the things that suck money away from pocket.

Example of liabilities:

House mortgage.

Car hire purchase.

Children.

And the list goes on.

Income statement contains information such as my salary and other sources of revenues.

Expenses statement contains information such as my expenses and debts that I need to service.

Having read many books on personal finance, many authors recommended that the readers write down or update their personal financial statement once a while to see how the readers are doing financially. Some authors even provide Excel spreadsheets file that can be readily downloaded and use.

For me, I would like to improve in this area a little further. It is good to use Excel, but then it troubles me when I don’t have access to my computer or change my computer.

I want to have a web application that I can access anywhere from the Internet, an application that allows me to monitor/update my financial progress, set my financial freedom plan, work on my financial report card, planning for retirement and discuss within a community of how to be financially smart.

Is there anyone who needs the similar web application to update their personal financial statement? I bet there is and I will only find later when the MoneyLah.com takes off.

Till then, I hope my fellow readers learn about what a personal financial statement is.