SECRET OF WINNING BIG

Ladies and gentlemen,

I'm so excited to come forward and share my thoughts on ABC's Wealth Creation because this is my passion to do so. Shall you repeat what I say after these, A stands for Accumulation, B for Better Monitoring and Managing Wealth and C for Creation. These three simple steps are Powerful. I repeat these three processes are Simple and Powerful - They can move mountains.

Permit me to use the following examples as illustrations of these Powerful Secret Bullets:-

To begin with, assuming Daniel has monthly sole income of 5k. He spends all his income to acquire the lifestyle he wants. Leaving ZERO balance in his bank accounts at the end of each month. He will stay status quo forever, Right ? Folks. We can't have sun shine everyday. What will happen to Daniel in a rainy day ? Do you think he is going to survive comfortably with the same lifestyle if he lost his only source of income?

I give you another Scenario. Everything assumed to be the same except this time Daniel spares 2k per month for his savings with less luxurious lifestyle. For simplicity, we further assume that he places all of his savings in the Fixed Deposit with Financial Institution earning an interest of 3% per annum. At the end of the month, his saving will grow with the interest earned.

Be mindful that we are living in high inflationary regime, who does not agree? what would you think the realistic inflation rate of our country be ? let us say 6% per annum, is it fine with you guys? With the interest rate of 3% Daniel earned from the Fixed Deposit, the inflation will eat into Daniel's saving. This is because the interest earned is not sufficient to cover the inflation. Do you follow? As a result, Daniel is losing out 3% per annum in the real sense. In short, Daniel may think he is a saver ? In fact, he is a sucker and a loser. You must realize this crucial point.

No doubts your Wealth/ Net worth is still growing in number over times. But your REAL return will be in the negative of 3%. In the above case, every RM 100 you saved after a year will become RM 97 in real term. In other word, you are poorer by RM 3 because you are only able to buy RM 97 worth of goods compared to RM 100 worth of goods a year ago.

Do you think it is a wise move? But don't get me wrong that I am anti-saving in the form of Fixed Deposit. My intention here is to make you realize that you are not doing yourself justice because you have not put yourself in a better position.

Lastly, let me take you through the third scenario. Assuming that everything is the same as in Scenario II. But this time instead of saving in the form of FD, Daniel decided to invest his monthly income of 2k which earns him an average return of 10% per annum.

Even with the inflation rate of 6%, Daniel still grow his wealth by 4% per annum in the real sense. By doing so, he is growing his wealth both in absolute figure and real term. Am I speaking German to you? In short, he managed to grow his wealth, by positive 4% after netting off the inflation.

By now, who does not agree with me that we need to take positive action to hedge our money against inflation no matter what? No doubt, investment does not guarantee that you will enhance your wealth. Nothing in this world is ever certain except death and taxes. In addition, one more thing is also sure certain, that is if you don’t do or try anything, you will sure get nothing. 

In summary, we need to acquire the skills, aptitude and know how on how to invest our money wisely so as to generate the return that far exceeds or at least sufficient to cover the inflation rate.

Stay tune and I will share with you more of wealth management in my next few speeches.  

James Oh

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