Month: November 2020

Residual income lifestyle 23 Nov

Why you must understand residual income before you can gain wealth.

Most wealthy people have a residual income. They understand what it means.

What Is Residual Income?

 ‘Money that comes to you regularly whether you work or not’

Or as Investopedia says in a very long drawn out explanation:

“Residual income is income that one continues to receive after the completion of the income-producing work. Examples of residual income include royalties, rental/real estate income, interest and dividend income, and income from the ongoing sale of consumer goods (such as music, digital art, or books), among others. In corporate finance, residual income can be used as a measure of corporate performance, whereby a company’s management team evaluates the income generated after paying all relevant costs of capital. Alternatively, in personal finance, residual income can be defined as either the income received after substantially all the work has been completed, or as the income left over after paying all personal debts and obligations.”

To start receiving residual income one must Invest in thyself!

To become wealthy from nothing is not so much about luck but about knowledge, knowledge costs time and effort, and getting out of your comfort zone to make some positive changes to your life. So how can you go from zero to hero in the financial world.?

 First you must use some effort to start reading and read more to educate yourself, almost everyone on Earth has access to some books or an internet café somewhere, so that is no excuse, also don’t be shy, find wealthy people to ask for advice, believe it or not wealthy people actually love being asked for advice and will give it freely over the price of a coffee!

Wealth starts when you invest in your knowledge

Some guys have all the Luck (Labouring Under Correct Knowledge)

Wealthy people are not in the main lucky, they were just taught by wealthy people and or learned everything the hard way by making what they thought were original mistakes or as we entrepreneurs call it ‘life learning’ to get the experience that is needed to become financially sound.

Before you become wealthy, you really must define what is wealth and what it means to you. I have met some people working in bakeries and pubs serving customers all day who are wealthy, because they have found what made them happy, it is never for us to judge what makes our fellow beings happy!

 So, ask yourself what makes you happy, and what do you have to do to find that bliss, life is short start today!

Time and money.

There seems to be two kinds of people I have met:

One is the corporate slave, he has what most would deem ‘the lifestyle.’ The house the car, the holidays, kids at good schools with a bright future, robust medical, all the things that society has taught you will make you happy!

But underneath all this Corporate slave is miserable, he knows that one wrong word to the boss can take all this away and leave him with very little and at his age he would struggle to get anywhere near what he has now, the bank would be completely callous if his monthly payment stopped and the bills piled up.

Corporate slave is cash rich and time poor!

The second stereotype I have met is:

The hapless dreamer or the ‘Beach Bum’, who wakes up each day with the beach lapping at his door and the sweet song of the birds, no boss to answer to and tells himself the freedom is worth it. However, he lives in a dilapidated old camper Van, and wonders where the next meal is coming from, and dreams about winning the lotto or how his latest online scheme will make him rich overnight and get his wife back and the kids will adore him again. He is always waiting for the perfect wave.

Beach Bum is time rich and cash poor!

What is real wealth? To me is to have enough money and the time to spend it.

One way the rich find their wealth is understanding what residual earnings or recurring payments is. 2 basic ways to gain residual income are:

Becoming a Zombie property Investor.

The most popular and easily understood is rental income. People invest in property, invest in the repairs and make it habitable again, and then rent it out and receive lease payments each month. Or sell for a tidy profit.

It all looks so easy on the television as so many television shows are dedicated to following people at auctions who buy up derelicts and fix them up and then get a tenant in.

Apocalypse Villa

To me the television shows are not really painting a fair or accurate picture, they are always going to show success stories because they sell better than misery.

I believe behind every successful zombie property investor is someone who over many years bought, lost, cried real tears, went back to work at a job, saved up again, bought, made a bit, hired and fired, lost friends, lost money, good workers and rehired again then started to see some success, and spent time and effort to learn the trade.

It would not surprise me to find that most successful landlords spent much of their life on construction sites learning the basics as apprentices.

Also it seems to me that the investors who now have the time and money have numerous properties in their portfolios not just one or two, so they either start with one that may take a year or so to buy, fix up, advertise and rent out. Then spend 5-10 years repeating the process to get a few good properties behind them and maybe even outsource to a rental payments company to collect rent, make evictions, advertising, and general ongoing maintenance of properties easing the burden on the original investor, so they can start to enjoy time and money!

Equities

Investing in stocks and shares are the very foundations of every pension and savings policy that ever was and ever will be.

Your pension company did not take your cash each month whilst you were working hard and stick it in a bank! You would end up with a few pounds over what you have saved over your lifetime! No, they take your cash and each month invest in stocks, shares and a balanced portfolio of high-risk investments, to low-risk investments over a period between 10-50 years and your savings start to accumulate and interest starts to grow and grow leaving you with much more than your basic capital you saved!

Investment is a study of time like geology, the most successful investors understand that real growth comes from time, not the daily goings on of the markets.

Time and knowledge will see your cash multiply on itself to leave you a lump sum that you can take a percentage of each month to live on when you stop work. That is the very nature of investing. It should be a very boring job like farming because seeds grow so slowly in the beginning and at the end always grow fast.

Investing in stocks over a balanced portfolio over time is a safe as houses, as long as you balance the risk, accept the losses and accept the gains with the same composure.

But again, you must take the time to educate yourself how the stock market works, it is  not so much how every single political decision in every single country effects the prices each day, be like the Omaha Oracle Warren Buffet who confessed he just reads headlines of the financial papers, unless he is really interested in a particular company and always invests in things he likes, simple advice from one of the most wealthiest investors ever!

Over the past 200 years investing in the stock market has made long term investors very good returns, sure you can recite so many burst bubbles where the stock markets plunged disastrously in particular years. But look over the long term and you see constant growth!

Dow Jones – DJIA – 100 Year Historical Chart

Many market depressions over the past 2 centuries cleaned out unsophisticated investors (ordinary people with no financial acumen after fast buck).

one of the most famous was 1929 crash on Wall Street on the American markets which influenced the whole world, history has taught us that greed and over speculation by nonprofessional investors who were mostly to blame for a massive fall.

Come out of the little picture and see the big picture!

I am talking over many years the cash has always grown. Investors dusted themselves off and came back and learned to expect downturns, they are part of growth. Even the stock markets itself learned many lessons over time and brought in many rules to protect the investors.

Just take the last 1000 years of blue-chip stocks as an example:

Point is if you left 100 U.S.D. in the bank over the last 100 years and your left it to your grand kids in your will they would be lucky to have 1000 U.S.D. whereas the Grandad that stuck 100 U.S.D. in the stock markets in 1920 in a reputable company who practiced balanced investing, well his grandchildren would probably not need to be a corporate slaves on the residual income from such a massive inheritance to be able to live on a beach in a really amazing camper van eating oysters and caviar each day, if that’s what made them happy!

To find your happy, have a chat with our safe and profitable financial people who can help you make balanced choices where to put your savings.

International Education Thailand 9 Nov

British English, or American English Education?

Warning to grammar police some parts of this blog post are about pronunciations so turn down your spelling radar!

Tomaytoes, Tomartoes let’s call the whole thing off, so the song went.

For Oxford educated elitists, grammar Nazis, who constantly attack me believe it or not dear reader, and Americans who have never set foot outside their own state, the debate between the Queen’s English (Only she and her family speak like that I promise!) and the way English language pronounced everywhere else, is a hot debate.

The question really is if you have children do you want them to have aloominum sidings or alew-minnium sidings, anyways only Americans even know what a siding is!

The British introduced the language to the Americas when they reached these lands by sea between the 16th and 17th centuries. At that time, spelling had not yet been standardised (stet! add to dictionary again, Google swears it is spelled with a z, z is worth 10 in Scrabble for a reason!). It took the writing of the first dictionaries to set in stone how these words appeared. In the UK, the dictionary was compiled by London-based scholars.

Black Adder and the one about the Lexicon.

Meanwhile, in the United States, the lexicographer was a man named Noah Webster. Allegedly, he changed how the words were spelled to make the American version different from the British as a way of showing cultural independence from its mother country.

When relocating to Thailand or you are a long-term expat and your children born in Thailand are now ready to start school, you may need to find a suitable school for your children. In Bangkok, there are many British schools intended to make life easier for children moving to the country from the UK. These schools use a curriculum that follows the curriculum currently used in the UK.

International schools in Thailand

However, the curriculum is also modified to meet the international standards for educational institutions. Enrolling your child in a British school should make their transition a little easier. It may provide less of a culture shock for your child to attend a school that includes other students that come from British families.

You also have many options to accommodate your scheduling needs. For example, there are boarding schools that offer part-time and full-time boarding. There are also schools that follow normal school hours.

The Bangkok international school market is well served with over 70 schools including 38 British schools, 21 American schools and 23 I.B. schools. While the British Curriculum puts a lot of emphasis on G.S.E. subject exams and the A –levels, the American curriculum lays more emphasis on student choice and freedom. These curricula also differ from the way they are managed or accredited to the actual content.

The best countries for education are ranked based on a perception-based global survey. This survey used a compilation of scores from three equally weighted attributes: a well-developed public education system, would consider attending university there, and provides top-quality education. As of 2018, the top ten countries based on education rankings are:

So, based on this you are probably better to have a British educated child, they will easily pick up Americanisms from the movies!

One thing is for certain if one parent is not Thai, then you do not have the right to send your children to the Thailand state schools, whether you wanted to or not. And just being born in Thailand does not entitle you to an automatic Thai passport or citizenship, so it will be a choice of paying for an international school or them climbing the walls for eternity!

I think the teacher is on drugs!

If you like me dear reader and you have a child with learning difficulties, then you are in for a harder ride as there are very few internationally recognised special needs schools available in the Kingdom.

Another problem standing in the way of treating L.D. (Learning Disabilities) students is a lack of special education teachers. Reports tell us that there are currently only around 350 special education teachers in Thailand in the Thai public sector despite a soaring demand for such specialists.

Chulalongkorn University, host to the prestigious Faculty of Education, has only two professors teaching Counseling Psychology, Guidance and Special Education degrees.

The course takes in an average of 20 students per year.

To ease the issue, the Faculty of Education should offer scholarships for prospective students who have L.D. to create a generation of L.D. teachers intimately familiar with the experience of learning difficulties.

The problems for Non-Thais with learning disabilities grows exponentially from there.

Regular Schooling Costs

As with a lot of things in Bangkok, the costs are also lower than other parts of the world. Fees range from $5,000 a year through to $30,000 at the high-end schools. This compares well with other parts of Asia and Europe. 

Now you are beginning to understand why that middle aged Financial Advisor was harping on about school fees when you were single and free in your mid-twenties back then in the 1980-90’s , he knew then that if you cut down on your drinking by just a pint a day and put that cash away then , with compound interest and generally good sound basic financial acumen, not taught in schools I may add,  school fees would not even be a concern for you right now!

If You find you are a middle aged Dad, let us face it  Southeast Asia is rife with this kind of happening as the climate and many other factors blatantly obvious to long term expats to the Kingdom make an ideal breeding ground (sorry could not resist) for the Thai/European Look-krueng (mixed race child) that are all over the television shows on Thai TV when they grow up.

YayaYing famous Mixed race Celebrity.

 If you are now wondering how to get your kids packed off to school, then perhaps you already have the cash available in your pension pot, but you forgot you are now entitled to some or not all of it

If you have a QROPS (Qualified Reccognised Overseas Pension Scheme) or any kind of pension, and you need some cash quick to pay for a decent school then perhaps we can help with a QROPS encashment or a better jurisdiction and tax efficient vehicle for your hard-earned savings.

We are just a coffee away! Contact us here

Cash portfolio 4 Nov

Have you converted your portfolio to cash? Breakfast with our finance guru.

Being close to a good financial manager who is closer to you and your needs more than a large fund manager who manages billions from thousands of clients he has never met, comes with dividends.

Over the weekend I had the privilege of being treated to breakfast in an Irish pub by one our financial gurus. Sadly, many tourists to Thailand are conspicuous in their absence and we seem to be the only ones there. His passion for the finance industry always surprises me, let alone his passion for greasy Breakfasts!

Sadly, I was hungover, and he was disappointed to be eating alone, nevertheless he wanted to tell me about one serious point that he feels many financial managers miss out on, in particular going liquid during dips and you would be blind not to see this dip coming:

“It is the USA Election week, and many pivotal Covid decisions are being made across Europe which will almost certainly mean a fall in equities across the board. Now the big boys will just take the hit, and wait for it to correct itself, which means losing a lot of your portfolio value for a while, and just waiting for the correction.

Whilst dips always happens in the financial markets,  all good financial managers expect them and know real gains come with patience and time, however you can become complacent sometimes and  rely on the long ball game, whereas real gains can be made in converting most of your portfolio to cash when you know a huge dip is imminent, because it is here and now, when our clients have liquid cash that you can pick up many stocks with, whilst they are bargain price, plus at the same time protecting your overall fund from the uncertainty of world affairs.

So instead of just absorbing the hit you knew was coming, our clients are not dropping at all, in fact they are taking advantage of the dip and growing because we are picking up some good stock at very cost-effective prices. Blue chips like Barclays and Nat West have never been cheaper right now, and when we know the markets are going to correct soon after, why not use this as a time to buy, then when the correction comes, rather than your fund dipping then rising, we get double the rise for our clients.

This is one of the advantages of a boutique financial house rather than the major institutions many have trusted their pension to, and the big institutions always perform,  don’t get me wrong, but if you can take a bit more time to go ‘shopping for bargains with your cash when you see the obvious opportunities, ’ then you can probably make quite a bit more for your clients.”

“Why did they not teach us this stuff at school?”  I asked. “Seems you don’t have to be a genius to know when a dip is coming, they are like clockwork in many instances, the basics of growth is buying at a good price and selling at profit, you don’t need a university degree to know this do you?”

“Maybe the banks and managers of massive funds don’t want everyone to know what they are doing on a daily basis” Our expert continued, “I mean we didn’t ask to see how my eggs were cooked I just trusted them to do a good job, that’s what the majority expect of their banks and financial managers.

However it is good to see that in 2020 more and more people are learning about finance, and not leaving their future to someone they don’t even know, and it really is not such a gamble in many aspects, the elections in the U.S. come every 4 years, there are many elections that happen across Europe every few months and they all effect the world economy and as long as you keep a broad eye on the news you can get a reasonable feel to when dips are coming.

Good financial management is about balance of high risk and low risk and the rest in between, it is as much about the mix between cash, Gold, equities, property and even Crypto-currencies. Also; you must take into consideration your client for example; a 20-year-old will have a completely different portfolio than a 60-year-old. Everyone is different, this is why we advise only after we get to know their individual circumstances, financial management is never a one size fits all.

Some middle-aged people are scared to meet a financial advisor as they feel they are going to tell them to stop drinking, smoking, eating, get a cheaper house, save more blah blah! And just stop doing everything fun now to retire well, when of course that is not what we are about at all. We are as much about enjoying the now as we are about having enough to enjoy the later.

enjoy life save 10%
Enjoy today with an eye on tomorrow

The most important thing is we hope everyone learns a little from us even if they don’t take our advice and after all that is all we do, offer advice, and where to put funds. If you take our advice and you choose a fund or a pension vehicle, you invest in one the big companies and not us, however we remain on hand to advise on a regular basis.

That and Pensions they already have, when I advise clients, I   often advise better jurisdictions of the management of the funds, the funds never move out of the institutions they were originally trusted to, we just know that managed better by a more pro-active team can reap massive rewards to clients.

At the end of the day the decision is the clients, just like going the doctors for an annual checkup, he might just advise you to ease up on the cigars 0r the whisky, yet at the end of the day it is your constitutional right to enjoy yourself however you see fit, it is just our advisors can help you make financial decisions that make sure you can pay for it later!”

Most of us get regular health checkups and pay a doctor for the service but few get a financial review which is free, go figure?

For a free financial review and no politics contact us here.