Key Ingredients to Securing Your Financial Freedom

Do you own a luxury home and/or a luxury car? Many people would take pride in owning such expensive properties and become asset rich. Your assets can be your house, car, cash on hand, bank deposits and investments. You could measure your assets by estimated market value. However, take a pause and take a good look at the other side of the equation. In the accounting sense, there is an opposing element called the "liabilities". How much liabilities do you have? Your liabilities are often debts, such as personal loan, credit card debt, housing loan, car loan, etc. Take stock of your total assets and liabilities and calculate the difference. You will have what we call the "Net Worth". If your total assets are greater than your total liabilities, you have a positive net worth. In simple terms, your money is working for you. On the reverse, if your total liabilities are greater than your total assets, you have a not so good situation called the negative net worth. In simple terms, your have too much debt and need some healthy cleansing!

Bear in mind your assets may not be worth much to you until or unless you achieve a positive net worth. It is also arguable whether a person's home should be classified a true asset. The reason is simple. Suppose you own a half a million dollar home, what are the chances you may settle for a cheaper home after selling your house? For most, it is difficult to go backwards! You probably want to get a decent new home reflecting the current standard of living and/or your "wish" list. Not forgetting, housing prices would probably have gone up over the years and although you may have settled a nice percentage of capital gain over your old home when you sell it, you might still have to settle for an even more expensive new home, plus renovation! Cost of renovation could also get out of control easily if you don't manage your budget tightly.

Besides net worth, another key ingredient is cash flow. I have explained before that cash flow is essentially a reflection of your total income over total expenses. The most important element here is having a positive cash flow, where your income exceeds total expenses. What you should do is to differentiate what gives a positive cash flow. For example, rental property is a good source of cash flow and could be a good source of generating positive cash flow. However, before concluding that it is a good piece of rental property to invest, make sure you take into account all the monthly expenses, including loan installment amount, upkeep expenses, maintenance fees, monthly utility bills, etc. Once you deduct the rental income against all the other related expenses, you will determine whether such piece of property gives you a positive or negative cash flow return. Therefore, don't just jump into any piece of investment before you have fully covered all the potential estimated expenses against your expected income!

So, have a true reflection of your financial position and gun for the positive net worth and positive cash flows, the key ingredients to securing your financial freedom.

Saudi Telekom Buying Strategic Stake in Malaysia's Maxis

Fresh from a recent concluded move by Malaysia's leading telecommunication company to be taken private by its owner, Ananda Krishnan, at a whopping USD1.16b (RM4billion), news just came out that Saudi Arabia's state-owned Saudi Telekom is buying a strategic stake in Maxis for USD3billion! This represents a 25% stake and is a significant boost for the future earnings of this leading telecommunication company that is now planning to expand their business aggressively in other parts of Asian region, particularly India and Indonesia. The strategic stake is believed would allow the Malaysian operator to negotiate more favourable terms with vendors and service providers and help create value for its parent company's shareholders.

5 Critical Success Factors to Wealth Creation

What would you do when your business is carrying a product? Obviously you need to market it. Targeted marketing campaign is essential in promoting your product to your targeted market and in producing awareness. A successful marketing campaign is only one aspect. You need to establish clearly the unique selling point and market it using these unique selling point. You need to understand what entices the target market to purchase your product and therefore target your market accordingly. You may also establish a sales force to help you or your organization to further sell your product. In doing so, you are expanding your reach to specific targeted companies or individuals who are interested in your product. In addition, this adds a personal touch to further differentiate your product from the competitors. In return for the converted sales, you compensate your sales team with an attractive incentive scheme or bonus. In short, one should be willing to give in order to reap the financial gains. This acts as a major catalysts for your sales team to convert prospects into sales. Besides marketing and selling, you need people to take care of back room administration, such as human resource, procurement, logistics, accounting, etc. Salary and staff benefits are of course important elements in motivating this group of people to perform their duties and fulfill your set goals and targets, but these are not the only ones. As a business owner, one needs to demonstrate great leadership in setting clear strategic vision and targets, and driving the business forward. Last but not least, a business owner needs to possess inspirational skills to be able to inspire your key company resources to attaining these goals and overcoming all complexities and obstacles.

In seeking successful business ventures, the above 5 critical success factors are the must haves. The same principles apply to those seeking to achieve financial freedom. In seeking more avenues for passive income generation, one needs to be able to apply these key principles towards wealth creation. Once the "systems" are in place, one can then expand their effort and energy in exploring other business opportunities with the ultimate objective of securing multiple source of income.

Rising Foreign Interest in Malaysia Real Estate

The latest property research released by Credit Suisse has indeed given a great dose of positive injection and reinforces my view that Malaysia property market is on the rise. According to Credit Suisse Research, Malaysia property will experience property asset inflation due to the wealth effect of the stock market, government pump-priming and foreigners snapping up high-end property as a result of perception that it is relatively undervalued compared with other major regional countries such as Hong Kong and Singapore, coupled with an undervalued currency. Credit Suisse also noted that the rise in the stock market would have generated tremendous wealth and should act as a stimulus for domestic consumption. Credit Suisse predicted that Kuala Lumpur could be the next property play after Hong Kong and Singapore. They also observed that visiting fund managers have been deviating from the normal routine of company visits to view property developments in Kuala Lumpur, Penang and Johor.

The rise in property interest is attributed to the Malaysian Government's recent relaxation of policies and plan to speed up public sector service delivery and reduce red tape. These new policies include:
- Foreigners are allowed to buy residential properties priced above RM250,000 (USD71,429) per unit without the approval from the Foreign Investment Committee, and no limits on the number of units;
- Foreigners are entitled up to 70% financing based on the property valuation (freehold property);
- waiver of Property Gains Tax

However, the research also pointed out that Malaysians have yet to become positive on the Malaysian property market. Not surprising, given the typical scepticisms of local community. The trend in Singapore is reminiscent of this as it also took a major move before the average Singaporeans became convinced.

On the other hand, there has been rising interest in properties in Pulau Langkawi (a popular resort island located at the north of Peninsular Malaysia). It was reported that purchasers from Hong Kong and Singapore made up the largest number of foreigners taking up residential properties here in Langkawi.

There is also strong interest in the commercial segment. According to Regroup Associates executive chairman, Christopher Boyd, the freeze on office buildings in Kuala Lumpur since the Asian financial crisis had led to pent-up demand in the downtown area and growth of more decentralised business precincts in the outer areas of the city as well as the suburbs where good accessibility and public transportation could be found. This is evident judging by the strong growth of office and retail market in the following Klang Valley areas such as Damansara Heights, Mutiara Damansara, Bandar Utama and Damansara Perdana.

How To Lead Your Life To Earn Multiple Source of Income

When it comes to earning a living, most people resort to trading time for money and work hard for money. They end up spending long hours in a day trading off their time to earn money. The truth is the moment they stop working, they stop earning. The common mode of trading time for money are employment and self-employed. When we were growing up, we were often told by our parents the importance of finding a good job after our study and work hard to earn a good living. Employment gives people a false sense of financial security. After all, predictability equates less risk and you can certainly count on it. However, most people do not realize that financial security and job security are two separately elements that are equally important. Having financial security does not mean one has job security. Conversely, without job security implies little financial security. A higher salaried position often comes with greater responsibility, work tension, and performance expectations. One may lose his job if he simply does not perform up to expectations. Let's not forget in today's competitive landscape, corporate profitability ranked above everything else, often at the expense of staff retention and employee satisfaction. An employee in the late 40s or close to retirement age will typically feel lesser of a job security as companies prefer fresher and younger talents (at a far lower pay!). With the spate of mergers and acquisitions these days, many employees end up being redundant, and there is nothing they could do about it. These are mere facts of life that we have to accept and get on with it.

It's not to say employment income is not good or cannot lead to greater wealth. It's a case of single source of income is simply not good enough by today's standard. The risk of losing this single source of income is highly possible given the reasons above. It is therefore imperative that one should look at securing multiple source of income. Multiple source of income is also an excellent platform to earning passive income, serving the ultimate goal of achieving financial freedom.

In creating multiple source of income, one should look at money making opportunities that can be self generated and dependent on a reliable SYSTEM. Besides reliability, the system must be automated as much as possible. It is also important that this system must be able to leverage on 3rd party or external resources in generating added capacities. However, initial effort and hard-work may need to be sacrificed in order to build a long-lasting income-generating machine, but the effort is truly well worth it.

Following are some common examples:

- Network Marketing
- Franchising
- Recurring income such as monthly or yearly renewable memberships, subscriptions, property rental income, dividends from stocks, Bond yield and other interest bearing instruments
- Patent or Product Royalty
- Collections from vending machines, etc.
- Internet business

Another important element when evaluating an income-generating opportunity is to understand the financial return, i.e., Rate of Return or Return on Investment (ROI). It's much better to focus your energy and effort into a high ROI opportunity. At the very least, the net ROI should at least double the inflation and the average time deposits in a bank. There again, one's ROI target should also be aligned to the set financial goals, so that collectively the multiple source of income is able to achieve the goals.