Double Your Money
How you can accumulate immense wealth by increasing your financial intelligence
by
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THE GREAT MISUNDERSTANDING The Great Misunderstanding in our money world is thinking something is an asset when it is actually a liability. Liabilities (like monthly instalments, interests, repair, maintenance, insurance, taxes and depreciation) cause recurring expenses. An asset does exactly the opposite. Assets (like interest, rental from property, dividends from shares, profits from business and royalties from patents and copyrights) generate recurring income and positive cash flow for you every month. Most people suffer financially when they buy liabilities and think that they are assets. Ask anyone and he will tell you his house is an asset. Still don’t really get the gist if it? Read the previous paragraph again. Just stop thinking about appreciation for a while. It is not putting any cash into your pocket; instead, you are forking out money every month to pay for your beloved house. I don't mean that we shouldn't buy a house. We just have to understand that we need to accumulate assets to be rich, and our house, which we intend to live in right now – is not one of them. This minor oversight may cause a lifetime of financial struggle. Just because something is listed as an asset in your statutory statements submitted to the government does not really make it an asset. Don't feel bad. Many people, including very qualified professionals, always get asset and liability wrong! This is because the accepted method of accounting allows liabilities to be listed under the asset column. If you have not attended an accounting class, you definitely have a head start over those of us who need to unlearn our definitions. I know that sounds really weird. I hope I can explain this important concept of an asset by using an example from property investment. There are a number of books on the subject written by both international as well as local authors. They extol the virtues of properties that give positive cash flow, and give detailed calculations on how a property can generate positive cash flow. The Power of Passive Income from Property Investment At first, I was quite surprised at how much trouble they took to outline numerous examples of how a property investment can generate a positive cash flow of just a hundred dollars. I found the idea so repulsive that I literally threw away the book in my hands. But somehow I couldn’t get away from it. The other books by best-selling authors said the same thing. It was disgusting. Why did they go to such great lengths just to teach you how to make a hundred dollar? Do you know why I had such a reaction? It was because I was a businessman, and businessmen have overheads. My overheads each month always ran into five figures. I had to pay rental, salaries, utilities and a host of other monthly expenses, particularly bank interests. Each day I woke up, I was set back by a hundred dollars in bank interest, without doing anything. Talk about passive income – to the banks. All I understood was passive expenses. Given my expenses, how much sales do you think I would need in order to cover those overheads, not to mention making a profit? And here were guys teaching me how to make a hundred dollars.. They are so excited when they find such a property that they are like a kid who has just been given his favourite lollipop. And I was supposed to be impressed. It made my blood boil. With a hundred dollars,, how was I ever going to even get out of debt? Today, I jump for joy if I find a property that makes me a hundred dollars. What caused this massive change in me – from being repulsed at the idea of property authors and experts telling me to make a hundred dollars a month to being delighted now even if I make a smaller amount than that? I have finally discovered the secret of getting rich. It is found in just one word – assets. An asset is something that puts cash into my wallet without me working. If we keep accumulating assets, we will become rich in no time. The main difference between $100 and $100,000 is time, not to mention effort. It is much better to earn a hundred dollars without doing any work. I used to make quite a lot of money, but I had to work for years to get it. And once you spend it, you have to work again to get it. Not convinced? Think about it. Once you have a hundred dollars of passive income you have all the time in the world. There is nothing else for you to do. What do you do when you have time? You look for another source of passive income. Yes, you keep doing that just a few times and you will never need to work again for the rest of your life.
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About the Book
Here are some of the things you will learn in this brand new topic of financial intelligence: • the simple secret of becoming rich - what 90% of the people don't know and will never find out • why the poor remain poor for all of their lives • how you can tell the difference between the poor and the middle class • the most important reason why people succeed and how you can use it to create your own success story • understand and apply the 90/10 Rule of Success to multiply your money • how you can become very rich even in an economic recession • how you can avoid mistaking a liability for an asset • the new (and correct) definition of assets and how it can put you on track to financial independence • why you should avoid operating your finances on the red line, as in your car speedometer • Einstein's greatest mathematical discovery of all time, and how you can use it to become very rich • the cost of your procrastination worked out mathematically • what causes the downfall of rich and powerful people and how you can avoid it • how you can break the "three-generation curse" • the only way you can retire • why you need two jobs • how some commonly held opinions may cause you to lose all your money • discover the key behind every successful investment decision • what every successful investor does before putting in his money and how you can develop the same habit
About the Author
Andrew Chia, MBA, California University FCE, Los Angeles, California U.S.A. is a Malaysian. He is a chartered strategist. He completed the Graduate Certified programme in Business Administration of The International Institute of Chartered Strategists and was admitted as a Fellow Member of the International Institute. Andrew started his own business in management and IT in 1987, after working for six years with a leading bank in Malaysia. He went into business consultancy and has pursued studies in various fields of investment since 1997. He was exposed to various types of business setups, having worked with sole proprietorships as well as public companies. He has been a consultant to many business owners in industries ranging from the service sector to the manufacturing sector. He has been taken to the rural areas of Malaysia to help develop entrepreneur programmes under the federal government. His company also organised business tours to East Malaysia. Headed by the former Deputy Minister of International Trade and Industry (MITI) in his country, Datuk Chua Jui Meng, Andrew's company led more than a hundred businessmen from the Peninsula to Sabah in search of joint venture opportunities, particularly in Kota Kinabalu Industrial Park (KKIP). His company also organised the first SMI (small and medium industries) Conference in Malaysia, which was officiated by the former Minister of International Trade & Industry, Tan Sri Rafidah Aziz, and attended by 2,000 businessmen from both East and West Malaysia. During this period, he has seen small companies with very humble beginnings grow into big players. Kami Food, for example, operated from half a shop lot in the nineties. Today their operations cover more than ten shop lots and have spilled over to a $12 million food-processing complex built recently with very little borrowing. He has also seen profitable companies which expanded too fast staggering close to bankruptcy after being hit by the Asian Financial Crisis in 1997. Precision engineering, and many other types of engineering companies, which occupied huge complexes covering a few acres of land and employing hundreds of workers were among the main victims. Andrew is currently an active investor and financial educator. He manages funds for selected clients who are close acquaintances and is a consultant on marketing. In 2006, Andrew co-founded CharityMalaysia.com, the first non-profit online donation portal in Malaysia. He is currently also the technical advisor to BigSignboard.com, a new online web design portal. Andrew believes that financial intelligence is sadly lacking from our education syllabus. He is trying to fill this void by sharing his experience in this book so that readers can be more investment-savvy and gain financial freedom. If you want more information on the subject of financial intelligence, feel free to contact him at andrew@andrewchia.com or visit his website at andrewchia.com.