Increase Your Financial IQ

(True or ) Your house is your greatest asset
For over 10 years I've been telling people that true assets put money in your pocket. For most everyone I know, their house takes money out of their pockets every month. The recent spike in foreclosures in the US only further proves that your house is not an asset.

( or False) Mutual funds are one of the easiest ways to save money
The reason people love mutual funds is because they are so easy. In my opinion they are also one of the worst ways to get rich because they require little or no financial intelligence. The results they provide enrich the fund more than they do you.

( or False) The US dollar is worthless
Since the US abandoned the gold standard in 1971, the US dollar has consistently been able to buy less and less. It is definitely worth less. This is why savers are losers-their dollars lose value every year. To get ahead, you need to be an investor, not a saver.

( and ) Real Estate and Gold are risky investments
Always remember that you can make or lose money in anything. Ultimately, it is not gold, stocks, real estate, or any investment that makes you rich-it is what you know about gold, stocks, real estate, and money that makes you rich. Ultimately, it is your financial intelligence, your financial IQ that makes you rich.

By : Robert Kiyosaki

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How To Create a Budget

Creating a budget may not sound like the most exciting thing in the world to do, but it is vital in keeping your financial house in order. Before you begin to create your budget it is important to realize that in order to be successful you have to provide as much detailed information as possible.

Ultimately, the end result will be able to show where your money is coming from, how much is there and where it is all going.

Here's How:

Gather every financial statement you can. This includes bank statements, investment accounts, recent utility bills and any information regarding a source of income or expense. The key for this process is to create a monthly average so the more information you can dig up the better.

Record all of your sources of income. If you are self-employed or have any outside sources of income be sure to record these as well. If your income is in the form of a regular paycheck where taxes are automatically deducted then using the net income, or take home pay, amount is fine. Record this total income as a monthly amount.

Create a list of monthly expenses. Write down a list of all the expected expenses you plan on incurring over the course of a month. This includes a mortgage payment, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, auto insurance, retirement or college savings and essentially everything you spend money on.

Break expenses into two categories: fixed and variable. Fixed expenses are those that stay relatively the same each month and are required parts of your way of living. They included expenses such as your mortgage or rent, car payments, cable and/or internet service, trash pickup, credit card payments and so on.
These expenses for the most part are essential yet not likely to change in the budget.
Variable expenses are the type that will change from month to month and include items such as groceries, gasoline, entertainment, eating out and gifts to name a few. This category will be important when making adjustments.

Total your monthly income and monthly expenses. If your end result shows more income than expenses you are off to a good start. This means you can prioritize this excess to areas of your budget such as retirement savings or paying more on credit cards to eliminate that debt faster. If you are showing a higher expense column than income it means some changes will have to be made.


Make adjustments to expenses. If you have accurately identified and listed all of your expenses the ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense.

If you are in a situation where expenses are higher than income you should look at your variable expenses to find areas to cut. Since these expenses are typically essential it should be easy to shave a few dollars in a few areas to bring you closer to your income.


Review your budget monthly. It is important to review your budget on a regular basis to make sure you are staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.

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What Is Your BEST Investment ?

What is the best investment for us? Many of us would answer stock, properties, unit trust, takaful, investment-linked, and so on.

But in fact the best investment would be to invest in ourself. We can get so focused on investing in other things - our possessions, our financial investments, our properties, our businesses, etc. - that we can forget to invest in our greatest long-term asset, ourselves. My point here is to educate ourself. We invest in ourself because we live the life of continuous education.

This self-investment could be reading books, e-books, magazines, listening to audio books, attending workshops, surfing info blogs & websites or any number of possibilities that focus on improving yourself in every way. The reality is, the more you can invest in yourself, the more you will contribute to your own future. We can also guide ourself to differentiate which is good or bad, and which is halal or haram for us, when we educate ourself.

And this is the best investment that we can ever make in our life.

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Understanding Mudarabah

Mudarabah is a contract between a capital provider and an entrepeneur, in a partnership contract. The capital provider or known as Rabb al Mal will provide the full amount of capital upfront to the entrepeneur (Mudarib). And the resultants profit will be shared according to a pre-determined profit sharing ratio by both parties.

Generally there are 2 types of Mudarabah, that is restricted (Muqayyadah), and unrestricted (Mutlaqah).

In restricted Mudarabah, the capital provider imposes certain restrictions as to where, how and for what purpose his funds are to be invested. As for unrestricted Mudarabah, the capital provider authorizes the Mudarib to use or to invest the fund in a manner which he deems appropriate without laying down any restrictions as to where, how and for what purpose the funds should be invested.

GIA (General Investment Account) is one of the example of Mudarabah partnership you can find nowadays. Most of Islamic bank in Malaysia providing this General Investment Account for its customer. In GIA, the account holder will be capital provider, and the Islamic bank as a Mudarib.

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Examine the Roots of Overspending

To build wealth and reach financial independence, you simply need to spend less than you earn. It is an easy concept to understand, but why is it so difficult? To answer this question, you need to examine the roots of overspending. When you know what factors drive your spending, you can fight back and save money so that you can spend less than you earn.

Easy Access to Credit

For most people, this is the biggest reason for overspending. Just take a look in your mailbox and you’ll quickly see why. People are flooded with credit card, mortgage, auto loan, and refinancing offers on a daily basis. Oftentimes, simply filling out the short form or jumping on their website will be all it takes to obtain a new line of credit.

It can almost feel like free money. They send you a card with a $2,000 limit, so it is easy to think that you now have access to more money. While you do have access to this additional credit, the real problems start when you’re charging things that you don’t have the cash to pay for. It is all too easy to think about the small monthly payments instead of the total purchase price.

Easy Access to Cash

Remember the days when you had to get a paper check from your employer, make a trip to the bank to deposit it, and then keep cash on hand or write checks? Those days are long gone, and most people have access to their bank account 24 hours a day. This can be dangerous.

When you had to rely on keeping enough cash on hand or carefully balance your checkbook each day, the act of spending money meant you had to do a little planning and some simple math. Now, all you have to do is swipe your debit card like you would a credit card and the funds are electronically whisked out of your account. When you aren’t physically handing someone money or a check for a purchase, it can almost feel as if you aren’t spending money at all. Try using cash to get your spending under control.

Misusing Credit Cards

Credit cards can be a great tool when used properly. In the early days, these cards typically required that you paid the balance in full each month. This came in handy as you could make purchases without using your own cash and then repay it all at the end of the month. Effectively, this is an interest free short-term loan. When used as intended, this can be a powerful financial tool.

The problem is when you begin to let the balance carry over from month to month. If you make a $200 purchase on your credit card and find out that at the end of the month you can’t afford to repay the full amount, you’ve started down a slippery slope. It may start with good intentions while you promise yourself that you’ll have enough next month, but more often than not, that doesn’t happen.

This is when the high interest rates on the cards really begin to hurt you. The card company makes the minimum payment due a very small amount, which means that you can afford to make the payment, but if you continue to just pay the minimum, you’ll end up spending the next 20 years paying off that original purchase and spend more on interest than the cost of the original item. That is no way to build wealth.

Giving in to Temptation

Have you ever had a friend or co-worker come up to you and suggest a fun activity? Everyone loves going out and having a good time, but you have to make sure that it is in your best financial interest. We all need to enjoy life, but it is important to know when to decline. It can be easy to simply go out to eat or to the movies and just pay for the evening with your credit card, which if you don’t pay off in full each month means you’ll be paying for that evening for a long time.

Don’t squander your financial future for a few guilty pleasures today if it isn’t in your budget. If you know that you can’t afford an activity, don’t cave in. Instead, invite your friends over for a dinner party, game night, or some other activity where you can still enjoy time together, but without breaking your budget.

Spending to Feel Good

Let’s face it—buying yourself something feels good. Whether it is a new pair of shoes, the hottest new video game, or even a good book—we all enjoy getting something new. There is absolutely nothing wrong with this, as long as you don’t go overboard.

This is where it can pay to set aside a little “fun money” in your budget. Take a few dollars out of each paycheck and tuck it away for times like these. You’ll feel good about your purchase whether you make it with cash or by credit card, but you’ll feel even better when you don’t have to spend the next two years trying to pay it off with 20% interest.

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An Opportunity to Invest in Gold

For months now I've been wanting to invest in gold. Since end of last year, analysts have highlighted the prospects of gold and there are many forecasts about how high the price of gold will escalate to in 2009 itself.

I've enquired from banks and goldsmiths about the price of gold coins. It's not that cheap so though I am an interested investor, I hesitated. The resale value should be a lot higher if I were to sell it back into the market in the future but I can't be sure if they would fetch the returns I expect. So I sit and wait and continue to ponder if I should actually buy the physical gold or search for other alternatives.

You can't imagine my excitement when I came across an advertisement in the papers yesterday from Public Bank. The bank is now offering a Gold Investment Account which allows the investor to buy and sell gold without having to keep the physical gold. How it works is that you put in an order to buy the gold by grams at the prevailing selling rate of the bank. You will be given a passbook that captures your every order. When you want to sell it, you can do so at the prevailing buying rate and you get your cash back. Alternatively, you can also request to have the physical gold when you sell, but there are additional charges involved in insurance, etc.

But you have to bear in mind that this investment account does not pay interest during your holding period. You make your returns merely by trading gold with the bank. If the price of gold rises as it is expected to, then this is a good long term investment to get into. You just need to be careful that you take into account the spread of the buying and selling rates so that you do not sell out at a losing rate.

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A Blog Post by Singapore's Youngest Millionaire

Some of you may already know that I travel around the region pretty frequently, having to visit and conduct seminars at my offices in Malaysia , Indonesia , Thailand and Suzhou ( China ). I am in the airport almost every other week so I get to bump into many people who have attended my seminars or have read my books.

Recently, someone came up to me on a plane to KL and looked rather shocked. He asked, 'How come a millionaire like you is travelling economy?' My reply was, 'That's why I am a millionaire.' He still looked pretty confused. This again confirms that greatest lie ever told about wealth (which I wrote about in my latest book 'Secrets of Self Made Millionaires'). Many people have been brainwashed to think that millionaires have to wear Gucci, Hugo Boss, Rolex, and sit on first class in air travel. This is why so many people never become rich because the moment that earn more money, they think that it is only natural that they spend more, putting them back to square one.

The truth is that most self-made millionaires are frugal and only spend on what is necessary and of value. That is why they are able to accumulate and multiply their wealth so much faster. Over the last 7 years, I have saved about 80% of my income while today I save only about 60% (because I have my wife, mother in law, 2 maids, 2 kids, etc. to support). Still, it is way above most people who save 10% of their income (if they are lucky). I refuse to buy a first class ticket or to buy a $300 shirt because I think that it is a complete waste of money. However, I happily pay $1,300 to send my 2-year old daughter to Julia Gabriel Speech and Drama without thinking twice.



When I joined the YEO (Young Entrepreneur's Organization) a few years back (YEO is an exclusive club open to those who are under 40 and make over $1m a year in their own business) I discovered that those who were self-made thought like me. Many of them with net worths well over $5m, travelled economy class and some even drove Toyota 's and Nissans (not Audis, Mercs, BMWs).

I noticed that it was only those who never had to work hard to build their own wealth (there were also a few ministers' and tycoons' sons in the club) who spent like there was no tomorrow. Somehow, when you did not have to build everything from scratch, you do not really value money. This is precisely the reason why a family's wealth (no matter how much) rarely lasts past the third generation. Thank God my rich dad (oh no! I sound like Kiyosaki) foresaw this terrible possibility and refused to give me a cent to start my business.

Then some people ask me, 'What is the point in making so much money if you don't enjoy it?' The thing is that I don't really find happiness in buying branded clothes, jewellery or sitting first class. Even if buying something makes me happy it is only for a while, it does not last. Material happiness never lasts, it just give you a quick fix. After a while you feel lousy again and have to buy the next thing which you think will make you happy. I always think that if you need material things to make you happy, then you live a pretty sad and unfulfilled life.

Instead, what make ME happy is when I see my children laughing and playing and learning so fast. What makes me happy is when I see by companies and trainers reaching more and more people every year in so many more countries. What makes me really happy is when I read all the emails about how my books and seminars have touched and inspired someone's life. What makes me really happy is reading all your wonderful posts about how this BLOG is inspiring you. This happiness makes me feel really good for a long time, much much more than what a Rolex would do for me.

I think the point I want to put across is that happiness must come from doing your life's work (be in teaching, building homes, designing, trading, winning tournaments etc.) and the money that comes is only a by-product. If you hate what you are doing and rely on the money you earn to make you happy by buying stuff, then I think that you are living a life of meaningless..

By Adam Khoo In Money

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