You Don't Need Luck to Make Money, once you learn this rule

[Dennis Ng]

Hi ngtfook,

well, you have just proven what I said, that by being wrong 6 out of 10 times, one still get richer, so you don't need luck to become Richer if you LEARN how to invest.

Look at my stock portfolio which I show what stocks I buy/sell, and it is quite clear that my average is 7 out of 10 times correct, that works out to a return of 27.5%. Once you really know how to invest, it is very difficult to be wrong 6 out of 10 times.

My current stock portfolio of 8 stocks is currently 7 out of 8 make money.

Of course, in real life, some stocks we make 100%, 200% returns, much more than 50% returns, and some stocks we make 30%, lower than 50%. The actual returns may vary and in some years, one might make 50% returns and in other years, eg. 2011, one might not make much returns. However, my main message is once you learn this rule, you don't need luck to become Richer. Hope people get this message.

Cheers!

Dennis Ng

Hi Serene,

4/10 Win with 50% upside and 6/10 Lost of 25% downside does not result in 50% gain.
Let's say if we invest 10 counters with $10K each, at the end of investment period, the gain is only 5%.

No...Capital...Win/Lose...Reliase Gain/Lost
1___10,000___1.50_____15,000
2___10,000___1.50_____15,000
3___10,100___1.50_____15,000
4___10,000___1.50_____15,000
5___10,000___0.75______7,500
6___10,000___0.75______7,500
7___10,000___0.75______7,500
8___10,000___0.75______7,500
9___10,000___0.75______7,500
10__10,000___0.75______7,500

Ttl_100,000 ________105,000 ----->> Profit = 5%

For those who never quite understood why Dennis' Upside Downside rule works, I have explained it here in a simple video:
http://www.reallifetheory.com/DecisionMakingVideo

To help 1 million people become millionaires, do spread the word by clicking 'Like' here:
http://www.facebook.com/reallifetheory? ... 2544333196

Cheers,
Serene

[sereneloong]

Dear ngtfook,

I appreciate you taking the time to do the sums and write this post. It's great that you don't simply listen to what people claim, and do your homework yourself Kudos to that.

To clarify, the 50% I mentioned is gotten when compared with one of the 10 investments made. So overall, it would be 5% if you compare it to all 10 investments.

I shall be tweaking the audio this week to make it clear.

Thank you for your feedback.

BTW if you have any real life theories you would like to share, I can make a video for you

Cheers,
Serene

[lootster]

Hi Serene,

Just want to say that I really like your video! It's very professionally made!

I especially like the one you made on saving 50% of the car loan.... I also did some research that for one to use this method, there is still some restriction faced when taking an equity loan.

There is a min amount of loan you have to take up.... as for the duration I am not sure if bank will grant an equity loan shorter than 10 years? (only brand new cars can loan up to 10 years.... used car can only loan up to the remaining lifespan of the car)

Nevertheless, it's really an "eye-opener" watching this short video!

[Dennis Ng]

Hi Serene,

Just want to say that I really like your video! It's very professionally made!

I especially like the one you made on saving 50% of the car loan.... I also did some research that for one to use this method, there is still some restriction faced when taking an equity loan.

There is a min amount of loan you have to take up.... as for the duration I am not sure if bank will grant an equity loan shorter than 10 years? (only brand new cars can loan up to 10 years.... used car can only loan up to the remaining lifespan of the car)

Nevertheless, it's really an "eye-opener" watching this short video!

In Singapore, equity loan on property charges the same interest rate as Housing Loan, thus typically the loan period you can just match with the remaining Housing Loan period. eg. you took a Housing Loan of S$500,000 for 30 years 3 years ago, now Loan outstanding S$450,000. Then take equity loan of S$100,000 making total S$550,000, over loan period of 27 years (remaining loan period of Housing Loan).

Thus, not sure why you want to take an Equity Loan of less than 10 years, Loans on Property is the cheapest loan you can ever get, why be in a hurry to pay it off, be it equity loan or Housing Loan. The truth is one of my multi-millionaire sifu, his company earns Net Profit of 4 million Australian Dollars a year, but he would NOT even want to give up chance to get any additional loan, even S$200,000 he would borrow, even though S$200,000 for him is a very small amount...

Borrow Good Debt to become Richer is one of the Secrets of the Rich, correct me if I'm wrong, but I guess you are still stuck with a middle class mindset on paying off the equity loan ASAP.

This is also the "sifu" who said that I'm wasting my time trying to teach middle class to change their mindset to the Rich, becos he said that it is an uphill task and mindset is probably the most difficult thing to change...he advised me why not focused on growing my business and becoming Richer myself, without going through all these hardwork of changing mindset when few would change even after I teached them. I responded by sharing with him I want to emulate the child in the "Starfish story", that even though I can only save a few starfish, but for each starfish that i saved, it makes a difference to that "starfish". He said that for himself, he treasures his privacy too much and would never step out to teach like I do, becos by doing so, I'm out in the open in the light, which can be dangerous to me and family as well.

He is a Singaporean that emigrated to Australia 23 years ago (now an Australian citizen) and a Singapore PR, he comes back to Singapore every month to visit his mother and would get together with me for "coffee sessions" probably once every 2 months.

[sereneloong]

Thank you lootster for watching, thinking AND taking action to find out more!

In the video, I mentioned that "if your car loan were calculated like a home loan" to show the difference in interests payment. (As you know, one should only change one variable at a time in maths to clearly show what the change in savings would be.) I was not actually advocating any tenure. But it is possible for the tenure to be as low as 5 years. So 10 years is possible too.

Like Dennis says, usually one would prefer to take up a longer tenure for home loans (or equity loans tied to home loans) as it is quite possibly one of the cheapest loans available. In fact becoz of the current lower interest rate (about 1%) coupled with the higher inflation rate (between 5- 6% now), one is actually "making money" (5% minus 1% = 4%) by taking a loan! Which is why even the founder of Facebook takes a home loan!

BTW when you take up an equity loan tied to your home loan, you don't have to declare exactly what you are using it for. So they would not be looking at what car you are buying, or how many years it has left. The loan is granted based on the current value of your home, how much you can borrow (60% for second prop onwards, or 80% for first prop) as well as your debt servicing ratio. This was briefly mentioned in that last part of the video. May I ask what other restrictions are you referring to? Good to share if there is other info others can also get to learn and apply. The only other thing I can think of is that when we say home loan, we mean one from a bank. You can't refinance a HDB loan.

For those who haven't seen the video 'How to save 50% on your car loan', here is the link. Just click and scroll down to the 4th video...
http://www.reallifetheory.com/classroom

Hope this is helpful!
Serene
P.S. Will you be using this real life theory in your life? If so, pls share the savings / results to inspire others. Thnks!

[Dennis Ng]

just to reiterate, Equity Loan is only possible for Private Properties. HDB flat cannot get equity loan, NOT allowed.

Thank you lootster for watching, thinking AND taking action to find out more!

In the video, I mentioned that "if your car loan were calculated like a home loan" to show the difference in interests payment. (As you know, one should only change one variable at a time in maths to clearly show what the change in savings would be.) I was not actually advocating any tenure. But it is possible for the tenure to be as low as 5 years. So 10 years is possible too.

Like Dennis says, usually one would prefer to take up a longer tenure for home loans (or equity loans tied to home loans) as it is quite possibly one of the cheapest loans available. In fact becoz of the current lower interest rate (about 1%) coupled with the higher inflation rate (between 5- 6% now), one is actually "making money" (5% minus 1% = 4%) by taking a loan! Which is why even the founder of Facebook takes a home loan!

BTW when you take up an equity loan tied to your home loan, you don't have to declare exactly what you are using it for. So they would not be looking at what car you are buying, or how many years it has left. The loan is granted based on the current value of your home, how much you can borrow (60% for second prop onwards, or 80% for first prop) as well as your debt servicing ratio. This was briefly mentioned in that last part of the video. May I ask what other restrictions are you referring to? Good to share if there is other info others can also get to learn and apply. The only other thing I can think of is that when we say home loan, we mean one from a bank. You can't refinance a HDB loan.

For those who haven't seen the video 'How to save 50% on your car loan', here is the link. Just click and scroll down to the 4th video...
http://www.reallifetheory.com/classroom

Hope this is helpful!
Serene
P.S. Will you be using this real life theory in your life? If so, pls share the savings / results to inspire others. Thnks!

[lootster]

Thanks for your reply Dennis and Serene..... Of cos I understand the logic behind taking a property or equity loan and making good use of it and slowly pay it off.

I don't know how equity loan works and thought bank may have some restriction that there is a min loan amount or min duration you have to take from them (obviously they want to make money from your interest right?)

So example a 5 yrs old car costing $100k but bank only grant you equity loan of $100k but with a tenure of 10 yrs than it would not make sense to take up right?

Now I know equity loan are flexible with not much restriction. Thanks for explaining!

[Dennis Ng]

Thanks for your reply Dennis and Serene..... Of cos I understand the logic behind taking a property or equity loan and making good use of it and slowly pay it off.

I don't know how equity loan works and thought bank may have some restriction that there is a min loan amount or min duration you have to take from them (obviously they want to make money from your interest right?)

So example a 5 yrs old car costing $100k but bank only grant you equity loan of $100k but with a tenure of 10 yrs than it would not make sense to take up right?

Now I know equity loan are flexible with not much restriction. Thanks for explaining!

well, for a car loan, interest is calculated on simple basis. ie on the last month of your instalment, you still pay interest on the entire loan!!! Thus, typically a Car Loan is 100% more expensive (charge you double the interest) than Equity Loan. On the other hand, for Housing loan, interest is charged on reducing outstanding loan basis. Thus, in the final few years, you pay very, very, very little interest. For example, my HDB loan taken in 1996, when first started S$1,000 of my S$1,2000 instalment goes to paying interest, now that I'm in the 16th year of my loan, about S$200 goes to paying interest and S$1,000 goes to reducing loan outstanding.

Whether this makes sense or not, do your own calculation and figure it out.

For me, I don't borrow loan to buy Depreciating Asset, I don't need a car, and also see no need to pay interest on an asset that depreciate in value by S$7,000 to over $10,000 a year. And in Singapore, you need to pay S$60,000 or more (now) to get Birth Certificate for a car (COE), I rather have a child and pay S$5 for birth certificate for a Human Being. That's why I have 2 children and no car. But there are many DINKY nowadays, Double Income No Kids Yuppies, forget to add, but own 2 cars or more.

But a Car is a "standard" item in most middle class family. Well, each person make his/her own choice. Nowadays, I'm almost 100% chauffeured by taxi, rarely take bus or MRT unless it is really faster and more convenient (depending on where I embark and disembark). My taxi bill comes up to less than S$1,000 a month since I live in the city and typically take short trips that cost mes S$5 to about S$10 per trip. And if I can't get a taxi, I just use my iphone app to call a taxi, and pay S$2.30 (off peak) to S$3.50 (peak hour) calling charges.

Becos I don't drive, while on journey, I can really enjoy myself, I can be using my smartphone to read news, I can take a nap, or I can just look out of the window and observe the people and the activities going on in the streets. I got my driving licence at age 20, but nowadays very happy not to drive (especially with the roads getting more congested and drivers (in general), getting more discourteous and like to cut lane without signaling or don't give way to you even if you signal...in the taxi, I often hear Taxi drivers curse and swear at such inconsiderate drivers...while I don't need to be agitated and engrossed in whatever I want to do at that moment - feeling is really Zen.

Once again, I like to reiterate for some people, a car is a necessity, for most people, it is a choice, and it is just my personal choice not to own a car and sharing the reasons for not buying a car. It is not just dollars and sense, but also I enjoy many intangible benefits of not owning a car, eg. no need to worry, or to take care of my car. NOT asking anyone to follow me, we make our own Choices in life.