The only way to offset inflation with your savings is to grow the savings over time faster than the inflation rate. The average inflation rate per year is around 1% to 2%. The rate may varies every year but the average per year over the past 10 years is roughly that. If your savings remain static to the current value, its real value will be depreciating by 1% to 2% as you can buy less goods with those amount.

This is why it is important to put your savings into investment portfolio. A low-risk portfolio could gives return of investment rate of 4% to 5% in 10 years, a high-risk portfolio could reaches up to 10% of return. Even with low-risk portfolio, you should be able to vest your savings against those 2% inflation rate.

A low-risked investment portfolio mostly consists of carefully picked mutual funds, bonds, and even blue-chip stocks. A high-risk porfolio may consists of volatile stocks, and high yield investments. It is extremely important to start building your investment portfolio now. Do it and you will see how your savings grow over time. I even have so friends who have such mixture of low-risk and high-risk portfolio. Their portfolios are so vested that they could still ride through the last recession with profits. It is amazing that some of them did not even start out with big amount. Be it $100 or $1000, start investing today for your financial freedom!

Successful traders like us understand the importance of having a personal plan before entering the trading arena. I believe that a lot of people, even some of my friends, jump into the stock market with little idea of why and how they are going to trade. That would be similar to going into a casino without knowing how much losing or winning you are going to undergo before calling it a day. So, here is the first thing to do before you put all those money – write your personal trading plan!

You can define and write out the rules that you will follow as you entering a trade decision. This includes your money management strategy and other details of your trading system, if you have one. You must have a trading plan if you want to be successful on the trading market. Do it and follow it through during the actual trading.

Unfortunately, writing a good trading plan needs discipline and commitment. Are you ready? It won’t be an easy task! If you think you are not ready to put in such effort, I believe you don’t have to read further. Just the thought of the word “discipline” could scare a lot of potential traders. Continue reading if you are not scared of such commitment.

Many people are likely to break rules, even the ones they have set for themselves! How many people have made new resolutions but never actually follow through those resolutions after a while. You could not afford such half-hearted commitment when it comes to trading. You must realise the importance of demanding the highest level of discipline from yourself to execute according to your personal trading plan with extreme prejudice! A personal trading plan has to feel right for an individual person. It is unique for each person as every individual is unique and has different approach when it comes to crucial decision making, and there is indeed a lot of critical decision making when it comes to trading. Make sure you are comfortable with your trading plan. If you are not comfortable with your trading plan, you will very likely to stop following it as the time goes. The personal trading plan is to be respected but it should also be fine-tuned once in a while.

So, take your first step by drafting a personal trading plan. Pass it to your friend(s) , family or me and ask for opinions!

Once you personally agree with the plan, use it as guidelines in your actual trading sessions. All this really requires certain character traits. You must have patience, commitment, desire and discipline to execute it all. It takes time and a lot of fine-tuning along the way to be successful in trading. If you think you are ready to trade seriously, start by developing your personal trading plan!

I think that is all for today. I will touch more about the personal trading plan in my future posting. There is only one thing stopping you now, and that is you! Put in the required effort and don’t look back.

1. Remember to keep a record of the issued cheques. Be prudent and keep a record of the details of the cheques. Banks normally send account statements only on monthly basis! The terms and conditions of the bank accounts usually indicate that the customer should notify banks of any discrepancy within a certain period, i.e. 7 days or 14 days after the cheques are cashed in. By the time you discover the discrepancy from the account statement, which comes at the end of the month, the banks are not liable for it anymore.
2. Make sure that you have sufficient funds in your bank account. Always make sure that there is sufficient funds in the account before those cheques are sent! Otherwise, you may incur bank charges when the cheque is processed. Normally, there are two types of fees that could be imposed by a bank: the administrative fee for the return of the cheque, and the charge fee for the overdraft (OD) interest. If you issues a cheque for $1,200 when (s)he has only $1,000 in the bank account, you will be charged overnight OD interest on $200 when the cheque is processed. The actual interest rate varies for individual banks. Your account will automatically go into an overdraft position to cover the insufficient funds. This is regardless of whether you requested for the overdraft and yet you are liable to pay those interest.
3. Always cross your cheque! I can’t emphasize more here. Always, and always cross your cheque. Cross the cheque if you don’t want it to be cashed directly or if you don’t want it to be transferable. A cheque may be crossed by drawing two parallel lines across the top left corner of the cheque. You should also cancel the word “or bearer” on the cheque and add the words “Account Payee Only” or “A/C Payee Only”. This means the cheque can only be credited into an account belonging to the payee. However, if you intend to have the cheque encashed by the receiver, do not cross the cheque, leave the words “or bearer” intact and do not write words like “Account Payee Only” or “A/C Payee Only” on it.
4. Write the payee’s name and the payable amount clearly. And, Check all the details before signing! Make sure that the handwriting on the cheque is clear and legible. Write the payee’s name and the payable amount clearly. Ensure that the words are spaced such that there is no writing space for subsequent unauthorised editing. Any excess space should be struck off, i.e. by drawing a line across the space. Always write amount in numerical digits and also words! Put the word “ONLY” at the end of the amount for the non-numerical one. Do not use the backslash character (/) as the decimal point since it could be misread as the digit one (1). If there is any correction to do on the cheque, strike the word off with a single line and write the correction on top of the striked word. Sign in full against the corrected word, i.e. beside or on top. Lastly, check all the details before signing it! Remember, once it’s sent, it’s too late to check.
5. Avoid writing post-dated cheques! It is not advisable to write post-dated cheques. Such cheques are not cashed immediately by the payees when they received them. They may misplace the cheques and ended on wrong hand.
6. Never sign a blank cheque! Unless you want to give all your money to the payee, I don’t think I need to say more on this! Of course, I won’t mind if you would send me a signed blank cheque!

Ok….. now, let us see if your reasons are similar to those I have heard over and over again when those questions were presented to most people. Majority of people have the following reasons:

• I was born poor.
• I do not have enough money to make more money.
• I’m not smart enough.
• I do not have such luck.
• I’m lacking of discipline to become rich.
• I don’t have the financial know-how.
• I’m too young or too old.
• I’m lack of high educational qualification.
• I need to support my family.

So, any of the reasons shown match the ones you have? I want you to go through all the reasons that you have listed and listed into two categories, in example, reasons that you think are within your control and reasons that you believe are beyond your control.

Everytime I do this exercise with people, it is discovered that those, who think most of their reasons are within their control, are generally more successful financially than those who think that most of their reasons are beyond their control! The reasons that you give yourself is a reflection of whether you are having the “winner” mindset or “victim” mindset.

When people with “victim” mindset do not get the results they hoped, they tend to give themselves lots of reasons that they think are beyond their control. Excuses like “I’m just not that lucky”, “I have no experience”, “I have no capital”, “I’m too young”, “I am born poor”, or “I’m too old” are all perceived by oneself. They are just lousy excuses! We know that there are many proving examples of people who have created wealth for themselves despite all those perceived disadvantages. A person with “victim” mindset tends to blame everyone or everything except himself. Instead of finding a solution, (s)he spends his time complaining and do nothing to overcome the problem. If you believe that it is beyond your control, then you are powerless to change it! If you hold onto the belief that it is beyond your control in controlling your wealth, please do not read further! Sorry, I could not help you to self-made wealth in that case.

If you want to accumulate wealth, you must firmly adopt the “winner” mindset. As the saying goes, winners take all! Winners take 100% responsibility of the results in their life! They take charge over their wealth. They own their destiny. When their sales drop, it is not because of their customers nor the economy. They strictly believe that such reasoning is futile since they cannot change such external factors. On the other hand, they will take full responsibility for the fact that they didn’t sell hard enough. When taking such responsibility for our results, we give ourselves the chance to fix it!

The moment you acknowledge your worthy self, you have granted yourself the power to be wealthy. This should be the first step, and without it, no wealth creation strategies could make a difference in your path to be rich. Till next time, I will write about the steps to financial abundance. Be a winner, not a victim! Always keep that in mind!

Actually, a person’s wealth is defined by the duration of time that (s)he can sustain his/her lifestyle if (s)he stops working. The longer we can go on living our life to fullest without working for income, the wealther we actually are. Wealth is therefore defined by,

1. our monthly expenses,
2. our liquid assets, and
3. our passive income.

Liquid assets refer to the amount of cash or its equivalents, i.e. bonds, stocks and fixed deposits. Passive income is the income that we will continue to receive even after we stop working on it. This may includes income from royalties, interest, dividends and profits from a business.

As you can now see, one’s wealth is not determined by the amount you earn. It is determined by one’s net worth, by how much one saves, spends and wisely invests! Even with just a middle class income, you could become a millionaire if you have enough financial intelligence, discipline and patience. It is just a matter of time. We will share more about how to manage wealth the correct way in our future postings.