Author: Create Wealth Through Long-Term Investing and Short-Term Trading

The Best Secret in Investment and Trading – Compound Interest

Albert Einstein’ once said that Compound Interest was the greatest mathematical discovery of all time“, and some said this is the 8th Wonder in the World of Investing & Trading. Before you make any investment or buy a stock, you have to look at the expected “high” rate of return on capital (ROC), but it is the compounding of the interest (or ROC) on that principal or capital which creates the biggest returns over time. The compounding of profits, or dividends, or interest or ROC applies in all financial markets, so if you are a short term stock market...

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Saving, Life Insurance and Investing

What are the main differences related to Saving, Life Insurance and Investing? Saving is NEVER an INVESTMENT and will never get better return as it is almost risk free. There will NEVER be such investment product where there is almost risk free and yet gives good returns. All investment products by nature carry risks and you may potentially lose some or all your investing capital. The provider of such investment product need to be able to earn good margins for them to assume the risks on your behalf. In another word, they assume your risks and expected to be...

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Safety Net in the Market?

Once upon a time, in the Land of Unknown, there was a hut. Inside the hut, it was total darkness except for some dim light shining upon a wooden beam which was placed in the middle of the hut from one end to the other. The beam was wide enough with the help of the dim light shinning upon it for someone to see the beam and walked on the beam towards the other end. One day, Mr. Not Knowing called me for a challenge. He said: “Paid me a fee, and if you could cross the beam to...

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When Market moves, were you be ready?

Remember this in your heart: The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth. – Dr. Alexander Elder How do successful Investor/Trader differ from Amateur? Some important factors to note: 1) Hard work – They spent their time studying the market, companies, industries, and sectors. They understand their businesses. And, the traders will pay more attention to financial news, and market movement. The traders had a keen eye for how their market might be moving, and how the...

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Home for Living and not for profit taking

Quote from Albert Yang , http://createwealth8888.blogspot.com/2009/02/buy-your-house.html A man is not a man; until there is a house that he may call his castle. A woman is not a woman; until she has a place she may call her home. And neither a man nor a woman can say anything about their house, until they are the masters of it, and own it outright and unencumbered. ——————————————————————————– Many years ago, my neighbour who was staying one floor below me told me he was selling his 4 rm HDB flat and bought another resale 4 rm HDB flat in another part...

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Art of Survival

The art of war teaches us to rely not on the likelihood of the enemy’s not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable.” – Sun Tzu, The Art of War The art of survival teaches us to rely not on the likelihood of the LOSSES’s not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable.” – Createwealth8888,...

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Stock picking is part science, part art, part luck, part tuition, and always uncertain – “not precisely knowing.”

A while ago I could have been convinced that if I put in a lots of effort into FA , TA and watching the market closely to gain knowledge, skills, market view, and a lots of experience, and with intelligence would produce some good returns from the stock market. But, while the intelligence and experience will help me avoid unnecessary risks, apply money management, reduce day-to-day emotional stress, it doesn’t assure me of the desired returns from the market. The market does whatever it wants, rational or irrational, it’s just the market. It is always uncertain and not precisely...

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Negative Equity – Can you can survive out of it?

Your brokers love you most if you use leverages and margins for trading. Why? The rules are there to protect them but definitely not you. If you got it wrong, you are wiped out due to your own greediness. Your brokers WILL NEVER LOSE. Your BROKERS ARE NOT YOUR FATHER OR MOTHER!. They exist to make money for themselves, but they always seem to be there to HELP you to make money. They also appear to be your GOD OF FORTUNE. At least, some of them will behave like your friends or personal financial consultants. When you use your...

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The Buy and Hold Investors’ Nightmare

Being a Buy and Hold investor is like living through a nightmare where you find yourself the main character of the Greek “Myth of Sisyphus.” Futile and Hopeless Labor: In this myth, Sisyphus is condemned by the god Zeus to an eternity of futile and hopeless labor. He must roll a heavy stone to the top of a mountain. But then the stone rolls all the way back down … and Sisyphus has to push the stone back up again to the top. A sentence of “futile and hopeless labor” is similar to the situation that Buy and Hold...

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Active and Passive Investing

There are 2 types of Investing. Passive Investing and Active Investing. One requires frequent time and effort in seeking opportunity, while the other requires less frequent time and effort. Passive Investing could be thought of as a stock account that pays high interest (dividends). You add the stock, and passively it grows. Hopefully, You can look back in 10 years and find that constant addition made you a nice growing wealth. However, it can be very disheartening, instead of growing wealth, you are staring at diminishing wealth and made you feel poorer. Passive investor can be thought as a...

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Active Income and Passive Income

1) What is Passive Income? Passive income is money received on a regular basis, with little effort required to maintain it. Some examples of passive income are: Repeated regular income, earned by a sales person, generated from the payment of a product or service that must be renewed on a regular basis, in order to continue receiving its benefits – also called residual income. Rental from property; Royalties from publishing a book or from licensing a patent or other form of intellectual property; Earnings from internet advertisement on your websites; Earnings from a business that does not require direct...

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The power of compounding in investing

Time could help regular-savings-plan investors chalk up a considerable sum of returns. Clearly, the initial investment sum plays an important role in the sum of returns. Let’s say you invest $100,000, assuming an investment return of 20%, you would get $120,000 in total. The sum would diminish to $12,000 if you had invested only $10,000 at the same rate of return. So some people may have an illusion that investment only work well for people who invest large sums of money. Well, not exactly. Even if you invest a relatively smaller amount, you could make a very good return...

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investment property: What You’re Getting Yourself into?

As the prizes of goods swing and the stock market fluctuates, more and more people are finding investment property as a good business venture. This means that more and more people are buying land not to occupy it but for the purpose of securing capital gains or renting it out to others. Why go this route? As any book will tell you, land is an asset that does not depreciate. And as foreign markets are putting up more businesses in Asia, it is not a wonder that land has become a very precious commodity. In Singapore alone, appreciation rose...

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When it comes to Money Management – irrational behaviour?

A 45-year-old widow – believed to have lost HK$5 million of her late husband’s insurance money in Lehman minibonds – was discovered on Thursday night trying to kill herself, local media reported. Irrational behaviour – dump all eggs to buy one Golden Goose to lay golden eggs and hopefully to grow into a Golden Cow. Having lunch with a colleague, she has about $200K saving and thinking of dumping into property next year. Wise investing or irrational behaviour like dumping all eggs to buy one Golden Goose to lay golden eggs and hopefully to grow into a Golden Cow....

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What is Wealth? I am not Rich nor a Millionaire

Wealth has also been defined as “the amount of time an individual can maintain his current lifestyle for, without any new income.” For example if a person has $1000, and their lifestyle dictates $1000 per week of expenses, then their wealth is measured as 1 week. Under this definition, a person with $10,000 of savings and expenses of $1000 per week (10 weeks of wealth) would be considered wealthier than a person with $20,000 of savings and expenses of $5000 per week (4 weeks of wealth). The difference between income and wealth Wealth is a stock that can be...

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