Ladies and gentlemen,
Who wants money? (Raise your hand and wait for response)
Who wants wealth? (Raise your hand and wait for response)
Yes, that is exactly what I want to share with you today. I feel very privilege to stand before you to talk further on the ABC of Wealth Creation because this is my passion. Let us do this together, A stands for Accumulation, B for Better Monitoring and Managing Wealth and C for Creation. These three processes of wealth creation are Simple yet Powerful. I repeat, these steps are Simple and Powerful - If you doing it right, they can move mountains.
To illustrate my points further, please allow me to use the following examples on how this Powerful Secret Bullets work:-
To begin with, assuming Daniel has a 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? As we all know that the sun does not shine every day. What will happen to Daniel on a raining day? Do you think he is going to survive the same lifestyle if he lost his only source of income? Definitely no, right?
Let me give you another Scenario. Assuming that everything is the same except that this time Daniel leads a simpler lifestyle. He spares 2k per month for his savings. 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 grows with the interest earned. Are you following me so far?
Be mindful that we are living in high inflationary regime, who does not agree? What do you think would be the realistic inflation figure in our country? Let say 5% 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 is not sufficient to cover the inflation. Do you follow? As a result, Daniel's wealth is losing out 2% 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 vicious point.
No doubts his Wealth/ Net worth is still growing in number over times. But his REAL return will be in the negative of 2%. Every RM 100 he saved after a year will become RM 98 in real term. In other word, he is poorer by RM 2 because he is only able to buy RM 98 worth of goods compared to RM 100 worth a year ago.
Do you think it is wise for him to do so? But don't get me wrong that I am anti saving in the form of Fixed Deposit (FD). You may do so for emergency purpose or for a short term tenure. Here, I just want you to realize that you are not doing yourself a deserving favour because you have not benefitted anything.
That was the 2nd scenario. Lastly, let me take you through the third scenario. Assuming everything is the same as Scenario II. But this time instead of saving in the form of FD, Daniel decided to invest his monthly saving of 2k which earns him an average return of 9% per annum. Daniel may be a bumiputra like Haji Hashim who could invest in ASB which yield between 9% to 12% interest!!
Even with the inflation rate of 5%, Daniel’s wealth still grows by 4% per annum in the real sense. By doing so, he is growing his wealth both in absolute amount and intrinsic value. Am I being understood here? In short, Daniel managed to grow his wealth by positive 4% after netting off the inflation of 5%
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 taxes and death. Another thing which is also certain, if you don’t do anything, you will surely get nothing.
In summary, we need to acquire the skills, the aptitude and the knowledge on how to invest our money wisely.We must generate the return that far exceeds or at least is sufficient to cover the inflation rate.
Stay tune and I will share with you more of wealth management in my next few speeches.
Thank you.
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