How to be rich?

- How did you make your first million?
I didn't. My parents started a business and I sold the business in 2007 nearer to the $10million range.

- How long did you take?
The negotiation was done and agreed within a month. The business itself was in existence since 1980s and it has sort of stagnated.

- If you were to do it again in today's context, how much time do you need? Would you do it differently and how?
With the proceeds from the sale, I have invested it into a diversified portfolio of bonds and equities to generate passive income. Theoretically, the portfolio should give me a capital gain and passive income combination of a million dollar annually. Practically, I really did lose a million last year and gain a million this year and has since gone positive (ie, total networth is more than when i started in 2007).

My game plan is to double the investment proceeds for 1 market cycle (my guesstimate of around 3-5yrs from 2009). Once that is done, I will get out of the market forever and become a small time property developer (ie, buying land and rebuilding). From this recent experience, I find that investments in stock market no matter how safe requires a lot of constant monitoring versus properties. Stock market investments gets to you mentally. I speak from experience as our previous business has a commercial property that is leased out to a tenant and it was really a hands-off approach till the time for contract negotiation (effectively a 3+3yrs contract).

- If I want to be rich, what's your advice for me?
It seems to me that the only way to be rich for most who aren't suitable for the corporate ladder is a business or to make a bet on property(owing to its leverage). It's harder comparatively to make a million from stocks without leverage (and rightly so!).


- What is the most important lesson you picked up in the process of getting rich?
Positive Attitude. If you think you can, you can. No one wants to be near a whiner.

- What do you think is the most important habit that helped you?
In terms of managing millions in the market, I think I am managing as much as some of the small-time fund managers in the financial industry. So, as a "fund manager", I find the need to be emotionally in control of your mood towards the market as very critical. You will never imagine the kind of stress of managing your family's money versus someone else's money. You are risking your skin in the game unlike the real fund managers who are risking your money for their bonus.

I had sleepless nights during the time I lost a million (though it was around 12% of the portfolio). However, I stayed calm and evaluated the investments on its merits and cons.

From this crisis, I picked up a concepts that i think is very critical to the success of the investment portfolio :-
1) Believe in the boom/bust cycle and take appropriate action towards your investments - Increase your cash allocation and if possible, get out of the market totally. I used the Dow Phase Theory and P/E & Yield of the market to identify the approximate point in the market cycle. You can't time the market but you can get out before the top. The same can be done for getting into the market.
2) Portfolio Money Management - Position Sizing(no one investment can hurt you financially but still can make a difference to your portfolio) and Trailing Stop Loss(cut loss and let your profit runs - take care of the downside and the upside will take care of itself)
3) Fundamental Analysis - I diversify and found quantitative fundamental analysis to be able to identify financial stable companies. I buy stocks that are undervalued in terms of P/B, P/E, Free Cashflow & Dividend Yield and have found that market do revert to the mean when investors risk appetite increase. Likewise, you should find that high P/E and Low yield might be unsustainable when investors risk appetite decrease as seen in the last crisis.
4) Mutual Funds, Hedge Funds are of no use when market turns down. So, remember to sell them away when market turns no matter how good they have performed in the past bull. I lost most of my money in the funds and managed to break-even on my portfolio because I started going into the market late April buying up undervalued stocks.

- Any missed opportunities? Can I make use of these opportunities?
Market is fairly priced now. If you have not got into the market at all, why not just start by investing in tranches. Start with 20-25% of your total invested capital now and if there is a market dip in october or nov, put in another 20%. Probably in Dec, another 20%. You get the idea. Most investors wait and wait and wait and finally get in AT THE TOP.

The key is to let your profit run and cut your loss. So as long as you have your money management in place, you will be in good hands.

Regards,
WJ.

Originally Posted by Unregistered

- How did you make your first million?
I didn't. My parents started a business and I sold the business in 2007 nearer to the $10million range.

- How long did you take?
The negotiation was done and agreed within a month. The business itself was in existence since 1980s and it has sort of stagnated.

- If you were to do it again in today's context, how much time do you need? Would you do it differently and how?
With the proceeds from the sale, I have invested it into a diversified portfolio of bonds and equities to generate passive income. Theoretically, the portfolio should give me a capital gain and passive income combination of a million dollar annually. Practically, I really did lose a million last year and gain a million this year and has since gone positive (ie, total networth is more than when i started in 2007).

My game plan is to double the investment proceeds for 1 market cycle (my guesstimate of around 3-5yrs from 2009). Once that is done, I will get out of the market forever and become a small time property developer (ie, buying land and rebuilding). From this recent experience, I find that investments in stock market no matter how safe requires a lot of constant monitoring versus properties. Stock market investments gets to you mentally. I speak from experience as our previous business has a commercial property that is leased out to a tenant and it was really a hands-off approach till the time for contract negotiation (effectively a 3+3yrs contract).

- If I want to be rich, what's your advice for me?
It seems to me that the only way to be rich for most who aren't suitable for the corporate ladder is a business or to make a bet on property(owing to its leverage). It's harder comparatively to make a million from stocks without leverage (and rightly so!).


- What is the most important lesson you picked up in the process of getting rich?
Positive Attitude. If you think you can, you can. No one wants to be near a whiner.

- What do you think is the most important habit that helped you?
In terms of managing millions in the market, I think I am managing as much as some of the small-time fund managers in the financial industry. So, as a "fund manager", I find the need to be emotionally in control of your mood towards the market as very critical. You will never imagine the kind of stress of managing your family's money versus someone else's money. You are risking your skin in the game unlike the real fund managers who are risking your money for their bonus.

I had sleepless nights during the time I lost a million (though it was around 12% of the portfolio). However, I stayed calm and evaluated the investments on its merits and cons.

From this crisis, I picked up a concepts that i think is very critical to the success of the investment portfolio :-
1) Believe in the boom/bust cycle and take appropriate action towards your investments - Increase your cash allocation and if possible, get out of the market totally. I used the Dow Phase Theory and P/E & Yield of the market to identify the approximate point in the market cycle. You can't time the market but you can get out before the top. The same can be done for getting into the market.
2) Portfolio Money Management - Position Sizing(no one investment can hurt you financially but still can make a difference to your portfolio) and Trailing Stop Loss(cut loss and let your profit runs - take care of the downside and the upside will take care of itself)
3) Fundamental Analysis - I diversify and found quantitative fundamental analysis to be able to identify financial stable companies. I buy stocks that are undervalued in terms of P/B, P/E, Free Cashflow & Dividend Yield and have found that market do revert to the mean when investors risk appetite increase. Likewise, you should find that high P/E and Low yield might be unsustainable when investors risk appetite decrease as seen in the last crisis.
4) Mutual Funds, Hedge Funds are of no use when market turns down. So, remember to sell them away when market turns no matter how good they have performed in the past bull. I lost most of my money in the funds and managed to break-even on my portfolio because I started going into the market late April buying up undervalued stocks.

- Any missed opportunities? Can I make use of these opportunities?
Market is fairly priced now. If you have not got into the market at all, why not just start by investing in tranches. Start with 20-25% of your total invested capital now and if there is a market dip in october or nov, put in another 20%. Probably in Dec, another 20%. You get the idea. Most investors wait and wait and wait and finally get in AT THE TOP.

The key is to let your profit run and cut your loss. So as long as you have your money management in place, you will be in good hands.

Regards,
WJ.

I think the market is overpriced now. The danger of currency devaluations in the western world is very real. The impact they will cause will be very hard to predict. But it's definitely a house of cards.

Originally Posted by Unregistered

I think the market is overpriced now. The danger of currency devaluations in the western world is very real. The impact they will cause will be very hard to predict. But it's definitely a house of cards.

How should the man in the street prepare himself? Can he take advantage of the situation? Or is it a case of heads they win, tails the men-in-the-street lose?

Dear Adminstrator,

Would you create a poll on how much a worker can save in a year?

[admin]

Originally Posted by Hummingbird

Dear Adminstrator,

Would you create a poll on how much a worker can save in a year?

Sure. Thanks for the suggestion.

[dream4real]

Originally Posted by Unregistered

I am 36 years today and accumulated my 1st million (only liquid assets excluding property) when I was 34 years. I had no inheritance and made little money from my investments. I agree that having luck and a mentor plays a great deal, but you also need to create your own opportunity for luck to happen.

I was an auditor with a prestigious Big 4 for a couple of years when I started out my career. I started out with a measly $1.6K/month and even after 3-4 years experience, my pay only hit $4/month. I could have to stuck to a safe job, but I got sick of the job because I did not enjoy it and it did not pay well as my wife a banker was already making $7K/month after 3-4 years experience.

I knew then that to make decent bucks, I knew I had to join a career that gave me the opportunity to make the big bucks. I knew that banking/fund management was the lucrative career. I basically created my own opportunity by cold calling, sending out unsolicited CVs and religiously applied for all possible jobs I saw on the newspapers. I finally received a few job offers and finally took the job that I thought offered the most potential.

It turned out to be the right pick as after 4-5 years, I made $500-600K per annum. I was lucky to have a boss (mentor) who was fair to me and compensated me fairly.

So actually I think its always a combination of factors that leads to success or wealth. Luck and having a mentor always plays a big part, but creating the opportunity is important. Working hard alone gets no where, you need to work hard in the right career to get there.

I also know of a friend who became a millionaire because he had the foresight to invest all his savings into one prime property. He was not rich, but he had saved hard and had the guts to take the risk and create that opportunity. With that one property alone, he made a cool million.

So I think the key is that you have to create the opportunity and then let luck play its role.

Hi unregistered, care to share what is the skillset that allowed you to get into banking? I'm also interested to get into banking, where I've identified my interest in credit management. However, it seems to me that the industry is only willing to accept people with a degree in finance, so I'm kind of stuck. I possess a degree in Computer Engineering, and have been working in the IT industry for around 5 years now. But I realise that is not what I really want to do, and at the same time I want to achieve my personal goals.

I am contemplating getting myself a degree in finance, but in the meantime I will also like to seek some advice on whether there are alternative methods of getting accepted into the industry? Would you be so kind as to offer some advice?

Thanks.

Originally Posted by dream4real

Hi unregistered, care to share what is the skillset that allowed you to get into banking? I'm also interested to get into banking, where I've identified my interest in credit management. However, it seems to me that the industry is only willing to accept people with a degree in finance, so I'm kind of stuck. I possess a degree in Computer Engineering, and have been working in the IT industry for around 5 years now. But I realise that is not what I really want to do, and at the same time I want to achieve my personal goals.

I am contemplating getting myself a degree in finance, but in the meantime I will also like to seek some advice on whether there are alternative methods of getting accepted into the industry? Would you be so kind as to offer some advice?

Thanks.

I'm not "Unregistered", but I can share from my personal experience and observations.

You can try getting a finance degree, but you will face stiff competition from fresh graduates who are cheap to hire and full of energy and bright ideas. This route is possible, but there are opportunity costs and risks.

Alternatively, you can get a finance + IT/Maths hybrid degree, such as financial engineering, and you'll get a better chance getting into quant related type of jobs in a bank, working in the front office. You'll suffer less pay cut, and things can be promising. If you are good and lucky, you can even make it to be a trader or work in a hedge fund. You have to prove your worth early, since age is catching up.

The third option I can see is to just get into the IT division of a bank and move laterally until you find a suitable role. I had similar background as you and I took this lowest-risk route. I was lucky to find someone willing to hire me into IT. I tried and I got in. I'm now doing front office development and pay is a comfortable low 6-figure.

All said, I have to manage your expectations. It's extremely tough to do very well given the extremely talented competition you will face. Academically, I was among the top 0.1% in my cohort, but whether it's lack of luck or experience or skills, I'm still struggling to achieve a "breakthrough". Further, you'll notice that the mid to senior management in foreign banks are always the "foreign talent", with a handful of "occasional" locals making it to low middle management where admittedly the pay is a quite comfortable 200k and above.

[dream4real]

Originally Posted by in bank

I'm not "Unregistered", but I can share from my personal experience and observations.

You can try getting a finance degree, but you will face stiff competition from fresh graduates who are cheap to hire and full of energy and bright ideas. This route is possible, but there are opportunity costs and risks.

Alternatively, you can get a finance + IT/Maths hybrid degree, such as financial engineering, and you'll get a better chance getting into quant related type of jobs in a bank, working in the front office. You'll suffer less pay cut, and things can be promising. If you are good and lucky, you can even make it to be a trader or work in a hedge fund. You have to prove your worth early, since age is catching up.

The third option I can see is to just get into the IT division of a bank and move laterally until you find a suitable role. I had similar background as you and I took this lowest-risk route. I was lucky to find someone willing to hire me into IT. I tried and I got in. I'm now doing front office development and pay is a comfortable low 6-figure.

All said, I have to manage your expectations. It's extremely tough to do very well given the extremely talented competition you will face. Academically, I was among the top 0.1% in my cohort, but whether it's lack of luck or experience or skills, I'm still struggling to achieve a "breakthrough". Further, you'll notice that the mid to senior management in foreign banks are always the "foreign talent", with a handful of "occasional" locals making it to low middle management where admittedly the pay is a quite comfortable 200k and above.

Hi, sorry about addressing you as "Unregistered", as I was not able to see your nick in the post.

Your sharing has indeed given me better insights on how I can move into the finance industry. Guess I should try out the 3rd option too, instead of just thinking about getting a second degree. And seriously, you are already above average, and I sure have lots of catching up to do!

I agree with you, we all have our own "breakthroughs" to achieve. And it always seem so difficult at first, but I personally believe that victory is sweet. And this is what keeps me going. I've not achieved as much as you and am definitely not in any position to advice or have anything to share, but I believe given your current achievements, you'll achieve your breakthrough pretty soon! Let's all work hard together!

And seriously, thanks for the sharing!

Originally Posted by Salary.sg

My Paper interviews the co-creator of the "Chicken Soup for the Soul" self-help books.

Mark Victor Hansen made his first million at age 35. He's now an accomplished wealth guru coaching people and giving seminars around the world (obviously making more money).

Like other self-help gurus, Mark has advice for people who aspire to be wealthy. Let me gloss over the standard stuff and highlight what I think is important.

Standard stuff (mostly vague):

- Have a vision
- Be a team player, work with people
- Have a system of generating wealth quickly (but how?)
- Have "tools"
- Save 10% of what you earn, donate 10%, and invest 10%

Here's what I think is useful: find a mentor. Yes, get someone who's been there and done that to coach you. (But I don't think this is the same as attending get-rich seminars, so please save your money.)

If you're lucky to find such a mentor - maybe a close relative or a good friend - ask him these questions politely:

- How did you make your first million?
- How long did you take?
- If you were to do it again in today's context, how much time do you need? Would you do it differently and how?
- If I want to be rich, what's your advice for me?
- What is the most important lesson you picked up in the process of getting rich?
- What do you think is the most important habit that helped you?
- Any missed opportunities? Can I make use of these opportunities?

I want to add one more question: Do you think luck plays a part?

The reason for asking this question is that luck is a very much underrated "quality" for getting rich. Too many people are saying it's just hard work, having a "system", perseverance, networking, etc. But you actually need to be lucky to have a good brain, to meet the right people, to be at the right place, to invest at the right time, and so on.

So, it helps if your mentor can give you an understanding of how luck plays a part in getting rich.

Luck do play a part in getting rich, just like some believe that leader are born. The fact is there are more Leaders make than born and there are more people who get rich by having a "system" than Luck.

I know of many great leaders and bosses who make more mistakes than anyone else in the street but the different is how they overcome it and better themselves from the experience learn. They dare to fail and focus on end result instead of temporary setback. Many successful people have more story to tell on their mistake learn than the luck that they have.

Conclusion is that Leader can be make and also getting rich can be without luck. Why I say so is because Lincoln is one of the most unlucky person I know and became a great leader! With born leadership and good luck just accelerate your success but not necessary sustain your success. To sustain success is almost always a result of a good "system" or believe system.

To improve the believe system is about an open mind and dare to fail attitude which is also commonly know as AQ - Adversity Quotient. Be humble to ask and read a lot to learn from others will help to shorten the learning curve.

Another good example is that having good brain in terms of IQ will not help in success if the EQ and AQ is low. With high AQ, EQ and IQ will definitely ensure success, but all the Q can be develop just need time. Some are faster learner, some are slower or some are not willing to learn. Success can happen in young age, in middle age, and even old age like the KFC story, and the key reason of happening at different stage is when you start learning that success is not a matter of Luck or IQ.

So break away from the myth that Luck is important and always envy others but not doing anything to improve.

if you have bought 250k worth of most stocks during march lows. you would have a million by now.