Archive for January, 2010

The Magic Of Compound Interest

January 28, 2010 by · Leave a Comment
Filed under: Money Management, Press Release 

This is an article I wrote for Smart Investor in the Jan 2010 issue. I initially entitled it “The Magic Of Compound Interest” but Smart Investor changed it to “Multiplier Effect.”

There’s quite a few typo errors in the published article in the magazine as well. Smart Investor has since apologised though.

Anyhow, here’s the original version:

Let me explain the term “Compound Interest” as simple as I can:

Compound interest simply pays you interest on your principal; then, when it’s time to pay interest again, you’re paid interest on your principal AND the previous interest that you earned.

In other words, the interest that you’re paid adds to and becomes part of the principal that accrues interest during the next period. You have a continuously growing principal amount without having to make another deposit.
But if you do choose to make regular deposits to go along with your automatically-growing principal, over time, the results can be positively staggering.

Compound interest makes your money work diligently for you, continually FEEDING UPON ITSELF to grow at a substantially faster rate than with simple interest.
It’s no wonder that Albert Einstein called compound interest “the eighth wonder of the world”.

One of the ‘secrets’ of the wealthy is long-term investments that pay compounded interest. Every savvy investor, when given a choice between a good investment with compound interest and a great investment with simple interest, will pick the good investment every time.

They know that, over time, the investment that compounds will outperform the other.

Now, this leads us to another interesting point. Firstly, what is defined as an “investment?”

An “Investment” is defined as an instrument having a two-fold purpose:

1) It generates INCOME

2) It increases in VALUE over time

Hence, if you “invest” a lump sum (known as capital), you should get regular small payments of some kind AND the actual value of the capital itself INCREASES, i.e. the lump sum gets BIGGER.

Lets take a look at an “investment” which compounds over time. Lets say you start off with a capital of USD3000. The capital then generates a consistent COMPOUNDED return of 5% every month.

Over 1 year, the investment would look like this:

Start:              USD3,000

1st month:     USD3,150

2nd month:    USD3,308

3rd month:     USD3,473

4th month:     USD,3,647

5th month:     USD3,829

6th month:     USD4,020

7th month:     USD4,221

8th month:     USD4,432

9th month:     USD4,654

10th month:   USD4,887

11th month:   USD5,131

12th month:   USD5,387

Here’s where the significant effect of compound interest can be seen more tangibly. In the first month, the return of 5% a month yielded a profit of USD150 (from USD3,000 to USD3,150).

In the last month of the year, the return of 5% a month yielded a profit of USD233 (from USD4,654 to USD4,887).

On retrospect, the “investment” didn’t have to work any harder to generate the extra absolute return. It still was 5% every month.

This is the magic of compound interest.

With simple interest, this investment would only generate a total return of 60% a year. However, with compound interest, the investment would generate a handsome return of 79.59% a year – almost 20% MORE than if simple interest was used!

Over time, the magic of compound interest can be truly mind-boggling. Your investment would look like this:

Start:  USD3,000

1st year: USD5,387

2nd year: USD9,675

3rd year: USD17,375

4th year: USD31,203

5th year: USD56,037

6th year: USD100,635

7th year: USD180,726

8th year: USD324,559

9th year: USD582,861

10th year: USD1,046,735

Here’s the GOOD news: If you start investing EARLY, you would only need to start with a small invested amount of USD3,000 to see a significant return of USD1 million in 10 years.

Here’s the BAD news: If you start much LATER, you would have to start with a higher initial capital to reach the same goal.

As an example, if you start investing 5 years later, and want to achieve the same financial results, you would have to play “catch-up” and start-off with an invested amount of USD56,037.

There’s now only ONE question left in your head.

“Which investment can give me a compounded return of 5% a month?”

Lean a little closer and I’ll tell you… FOREX Trading.

“The best time to start trading FOREX is 3 years ago. The second best time is NOW.” – Mario Singh

One For All And All FOREX!

January 25, 2010 by · Leave a Comment
Filed under: Forex 

The Forex Market is so huge that it literally encompasses most of the human race within it.

This article will explore the different individuals, businesses and institutions who take part in the Forex Market.

Let’s start with the institutions first.

Central Banks

Central banks take part in the Forex Market primarily for the following two reasons:
1)    Fix monetary policies
2)    Regulate interest rates

In short, this would affect the supply and demand of their national currency in the financial system. At times, some central banks are known to “intervene” by buying or selling their own currency. An example is Japan, when the Bank of Japan intervened in 2005 by selling the Yen. This had the effect of “weakening” their currency, which helps their local exporters.

Another recent example is Venezuela, when President Hugo Chavez devalued the Bolivar by 50% in early Jan 2010, also in an attempt to boost exports in a sluggish economy.

Commercial Banks & Hedge Funds

Commercial banks and hedge funds participate in the Forex Market to make money. That is the short answer. In today’s terms, more than 50% of banks’ income is derived from Forex. More so than housing/business loans!

I was in a local bank the other day, and I saw a notice that said, “Interest rates for deposits upwards of SGD300,000 is now at 0.4%.” Is that pathetic or what? And that’s for a WHOLE YEAR! I make more than that in ONE TRADE!

Businesses/MNCs

Businesses take part in the Forex Market for a few reasons:

1)    Hedge against currency fluctuations

Some businesses are more affected in the changes in Forex rates than others. A prime example would be importer/exporters. Japanese exporters are hurt by a high Yen because their competitive edge is lost when their goods become more expensive to importing nations. To off-set these losses, some Japanese companies actually sell USD/JPY in the Forex Market.

2)    Business Costs & Expenses

As an example: A Japanese company based in Singapore would have to pay their overheads/salaries in Singapore Dollars. They also receive revenues in Singapore dollars. At the close of the financial year, the company would repatriate money back to Japan (which would mean converting Singapore dollars to Yen).
On a side-note, do you know that Chrysler, the car company which filed for bankruptcy protection last year, made more money in the Forex Market in 2003 than they did selling cars!

Retail Investors

This is by far, the most interesting group, and the one in which you and I belong to.
Let’s break this group up a little. I’ve identified 3 demographics of retail investors who take part in the Forex Market:

1)    20-35 years old

This group consists of students, young adults and perhaps some married couples. They trade Forex for financial education purposes and to earn a second source of income.

2)    35-50 years old

This group consists of entrepreneurs, married couples, business owners and traders. They trade Forex to have a global view on finance and to diversify their investment portfolio.

3)    50-65 years old

This group consists of housewives and retirees. They trade Forex to pass the time and earn some daily cash income. The “Japanese Housewives”, also known as the “Kimono Traders”, form a significant portion in this group!

Which group do you belong to?

You know what? It really doesn’t matter. The Forex Market is BIG enough for all of us combined! So let’s start this exciting journey today!

It’s one for all and all FOREX!

The Power Of Passion & Belief

January 18, 2010 by · Leave a Comment
Filed under: State Of Mind 

Before going into the 81st Academy Awards, the statistics between the 2 biggest rivals looked something like this:

The Curious Case of Benjamin Button: 13 Oscar Nominations


Slumdog Millionaire: 10 Oscar Nominations

At the end of the night, the score cards read:

The Curious Case of Benjamin Button: 3 Oscar WINS = 23% profit!

Slumdog Millionaire: 8 Oscar WINS = 80% profit!

The “underslumdog” had WON convincingly. What made the triumph all the more jaw-dropping was that Benjamin Button had a behemoth budget of USD167 million (compared to Slumdog’s USD15 million) AND it boasted MEGA star appeal in the form of Brad Pitt. There were NO stars in Slumdog at all.

So what happened?

Here’s an excerpt from Christian Colson’s (Slumdog film producer) acceptance speech during Oscar Night:
“Together we’ve been on an extraordinary, extraordinary journey. When we started out, we had no stars, we had no power or muscle. We didn’t have enough money really to do what we wanted to do. But what we had was a cast and crew who were unwavering in their commitment and whose talents are up on the screen for all of you to see. We had a shared love for the extraordinary city of Mumbai, where we made the movie. Most of all, we had passion and we had belief and our film showed that if you have those two things, truly anything is possible.”

What fine words. Anything IS POSSIBLE when you have passion and belief.

Here’s a couple more examples for you to chew on:
1) Andrea Bocelli

Bocelli lost his sight when he was 12. Went on to become one of Italy’s finest singer/songwriter/producer. To date, he has recorded 7 complete operas and has SOLD OVER 65 MILLION ALBUMS. Bocelli is now the biggest-selling tenor of all time, outstripping even Pavarotti.

2) Manny Pacquiao

30 year old Filipino boxer. Was living off the streets as a kid. Today, he is rated by Ring Magazine as the #1 pound-for-pound boxer in the world. He took home USD15 million in his last fight against Ricky Hatton.
These are the 2 qualities that can give you ASTRONOMICAL SUCCESS.

I’ll share with you another secret. Listen.

PEOPLE BUY INTO PASSION.

People are curious to “have what you have” when they see you living with passion.

What’s your level of passion and belief when you trade FOREX?

Do you truly see it as a tool for wealth creation and human evolution?


“For those who believe, no explanation is necessary. For those who don’t, none will suffice.” – Joseph Dunninger

Greater Things Have Yet To Come

January 11, 2010 by · Leave a Comment
Filed under: General 

This is a poem I wrote to commemorate the launch of our new FAST Program in FX1. Its called “Greater Things Have Yet To Come.”

Money, Money, Money, they say its so funny,
I don’t get the joke, my bank account is tiny.

I came across a course, it was taught by FX1,
The people really cared, it was a lot of fun!

The secret I found, to get more instead of less,
Revealed to me in class, where I learnt MSS.

The course blew me away, it was out of this world,
It catered to the needs, of men, women, boys & girls.

Fear, greed, ignorance especially hope,
If I have these traits, I’m walking a tight rope.

A window to my soul, now I know its true,
when I started trading, I didn’t have a clue.

Learning, Earning, Creating, now I know its meaning,
I got all this and more, just from Forex Trading.

They told me its a lie, this evil called poverty
Let us all unite – come and stand with me!

A network around the world, of a million millionaires,
We will all get there, its a game of bulls and bears.

Trade after trade, profits I slowly see,
Layer after layer, I’m also loving me.

Greater things have yet to come, and greater things are still to be done,
The time is NOW, the place is FX1.

Shakespeare

Singapore Is The Most Wired Nation On Earth

January 4, 2010 by · Leave a Comment
Filed under: General 

It has been reported that SINGAPORE is now the most wired nation on earth, with the household broadband penetration rate hitting 99.9 per cent.

The figure, given by the Infocomm Development Authority (IDA), puts Singapore ahead of countries traditionally thought of as powerhouses in the wired world: South Korea (92 per cent), Hong Kong (83.8 per cent) and Taiwan (76.8 per cent), going by figures from research firm Frost & Sullivan’s 2007 study.

It also handily beats the Government’s own target, of a 90 cent penetration rate by 2015, set in 2006 as part of a 10-year masterplan to transform the country and economy by promoting the adoption of infocomm.

But although Singapore’s broadband penetration rate is close to 100 per cent, it does not mean that almost all households here have broadband access.

This is because some households have more than one broadband line – a home connection and a portable modem, for instance.

Following guidelines set down by the International Telecommunications Union, which are used by many countries, Singapore calculates household broadband penetration rate by dividing the number of household broadband subscriptions by the number of households here.

Subscribers to paid mobile broadband services – those who hook up wirelessly to the Internet via portable modems – are included as well.

But the count excludes subscriptions to 3G mobile data plans and Wi-Fi hotspots, which are generally not home-based.

The exploding popularity of broadband is a result of big cuts in the prices telcos charge for access, and much higher access speeds.

Three years ago, when household broadband penetration rate was just 50 per cent, telcos were charging $47 a month for Net-access speeds of 512kbps.

Now, a user can surf at speeds of 10MBps for less than that.

Another push factor is the telcos’ practice of giving out free personal computers or laptop computers to encourage people to sign up.

This is big news. It shows that most people in Singapore have some form of broadband access, which would make FOREX trading more convenient for the average person to reach.

All a person ever needs to trade FOREX is 2 things:

1) Laptop or mobile phone

2) Internet Connection

It just got easier in Singapore!

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