Wednesday, December 28, 2011



I will borrow topics from my favorite book "Rich Dad, Poor Dad" by Robert Kiyosaki. Most of my topics are an elaboration from the book and the sole purpose is just to share it with my friends. I have no intentions of breaching any sort of patent or copyright laws in any way. I also have no intentions of doing any sort of plagiarism so therefore the topics will be written in my own words, although the essence has been used from the book.


My dear friends let me first thank you for your response and views on my last blog. It has given me the confidence to write more.


Have you come across any individual where you ask them what's your business and they replied "I'm a banker, or doctor, or engineer, or teacher, etc."

You might have come across someone who might have told you their designations like, "I'm an IT manager, or marketing sales, or administration manager or HR and Personnel Manager."

Some might have even told you their job descriptions, "I'm a Marketing Head of a Television Channel looking after sales for the sub-continent and managing a team of young, energetic and highly motivated ambitious females who assist me in building relationships with clients."

My point is that I am asking what's your business? You have turned around and told me your profession or occupation. You have told me your occupation of someone else's business. It's not your business where day and night you put in all your efforts hoping that your boss will reward you after his company is doing well. It's not your business which has grown quadrupled profit or its balance sheet multiplied in billions. It's not your business if the company offers private jets or leisure cruise to its directors.

You think working for MCB Bank since its inception has become one of the largest banks in Pakistan with a balance sheet in billions of rupees. Mr. Mian Muhammad Mansha is the owner of MCB bank who is the first Pakistani to get into the Forbes Billionaires list is quite frankly not your business. To top it off you think Mian Mansha's business is banking? You think his profession is a banker? He's in the business of acquisition. He is a business tycoon. He lives off by taking over companies and hiring people like us to run it for him. 

Don't get me wrong. I have nothing against the guy and the people working at this bank. MCB Bank is a very stable bank with one of the highest branch network and deposit base. They are the pioneers of introducing branchless banking and not to forget MCB is a strong brand name. It's a pure Pakistani bank which has shown tremendous growth over the years and is a success story but it's not mine, yours or anyone's story. Its Mian Mansha's story.

You have to understand that the rich have money working for them and the poor/middleclass help them make money. If you want to get rich you have to have money working for you. (This is another topic, to be written later)

Now you need to know how to mind your own business? Just like any business you need to have the capital. In my last blog I told you how to save. Your savings should be used as capital. Now that your capital is ready I told you how and where to invest. That is like acquiring assets.

Follow the chain:
Savings à Capital àInvestments à Assets

Now that your assets are ready you need them to work for you. You need to be selective and prudent on your assets. The objective is to acquire assets that give you a good return. Obviously some assets might turn sour and some will be good but your objective will be achieved.

After that give yourself a pat on the shoulders and tell yourself "YOU ARE MINDING YOUR BUSINESS!"

Wednesday, December 7, 2011

“The love of Money is the root of all evil” Or “The lack of Money is the root of all evil”

"The love of Money is the root of all evil" Or "The lack of Money is the root of all evil"

I simply love this line from Rich dad, Poor dad by Robert Kiyosaki.

It's so true when Mr. Kiyosaki says that the subject of money is taught at home and not in schools. He really hit the hammer on the nail with this line.

My mom would always say don't spend all your pocket money. She would say if you have Rs. 100 only spend Rs. 75 and save the Rs. 25. I was young and I didn't really understand this concept but now I think it's an amazing way to save.

The subject of money is very simple and you have to understand how it works. Money makes the whole world go round and round. It's like the nursery rhyme that my son listens to, "The wheels of the bus go round and round".

It is very unfortunate that this whole debt system is the core engine of the global economy. If I had my way I would just stick with commodities and spend what I earn. Anyway, you already know that countries print their currencies on their gold reserves and total domestic debt. There is a ratio that needs to be maintained. Then it's the matter of imposing and implementing fiscal and monetary policies to maintain the value of the currency. Countries then concentrate on trade and investment volumes to build their foreign exchange reserves.

This is obviously all macro level let's try this in micro economics; where we try to make enough money to make ends meet. Now this point pertains to the people who are in the rat race called salary class. Their basic objective is to find a job. Work hard, get promotions and climb the corporate ladder. This is not a bad choice for those people who want to just stay in their comfort zone. Then they make the biggest mistake of their lives because they rush into a situation which tempts them to take out their credit card and get drunk in debt.

Now I have already spoken about the beauty of debt it always has two sides; one you can work for debt or let the debt work for you. Read one of my earlier posts to get an idea.

Imagine that you have a whole lot of debt around. You are working twice as hard to pay off your debt hence your focus is on money. You get obsessed, loose focus on your environment and act like a retard that has popped a pill with a bottle of whisky.

Let's turn it around; if you had a lot of debt working for you and had surplus of money then you would be in state of total bliss. The question is how to get to this situation. It's very easy, spend wisely and save every month.

You should follow this free five year plan. Every month you should save 25% of your salary, if you do this for a year you will end up having 3 salaries in your account. Then you should go and buy a government bond which is risk free. Now you have your first debt working for you.

The second year you again save 25% of your salary, which will result in 3 salaries at the end of second year and you should buy silver or gold coins. Rent a locker and lock them away. Be sure you are covered with insurance. Now you have commodities working for you.

In the third year repeat the process and save 3 salaries. Now you should invest in high dividend stocks. Look at the stock market and invest 75% of your third year savings in high dividend paying companies and the rest in high capital gain. Now you have the stock market and corporations working for you. (Don't pay attention to short term dividend and capital gains. We have to avoid that. You have to have a 5 to 10 year horizon when investing in the stock market)

Now in the fourth year you end up having another 3 salaries to spare. Most countries have REITs (Real Estate Investment Trust). Go and buy those units and put the papers in your locker. Now you have real estate working for you.

In the fifth and final year save another 3 salaries and have a business plan ready. Your business plan should be your ticket out of the rat race. For example you can have a business plan on how to get into the confectionery business if you have a sweet tooth. Now you have a business working for you.

By the beginning of your 6 year see how your wealth has accumulated. Trust me you are going to be so better off by a lot of people. You will have 5 years of fixed income saving which is compounded annually. Your commodities, stock market portfolio and real estate investment will yield you at least double digit returns.

Your objective should be to get a return on your portfolio equivalent to your current rat race salary in 5 years. Once this is achieved get rid of your job. Leave the rat race. Get into your business plan and work for yourself.

It's true business at times can be risky but no risk no gain and you should now have the comfort that your salary is hedge by the return of your portfolio. Now isn't that a fair deal?

Tuesday, November 22, 2011

The Commodity Age

Let's talk about commodities. The telecommunications and technology rally ended with the dot com crises in 2000. The financial and banking sector came to a halt in 2008. Currently this is the age of Commodities.

You will notice that the commodity price trends have been increasing over the years. There were some dips but overall the trend has shown constant growth. A lot of hedge fund managers invest in commodities to hedge their investments. It provides them a safe passage if an investment went bad. This technique has been successful. Let’s not get into the working of how a hedge fund works. You can find many articles on the internet.

As the crises unfolded there was a huge need to balance the economy. China’s number one consumer is the US. Obviously China’s concern is the possible erosion of its trillion dollars reserves. To offset the effect of erosion China has opted to restructure US dept obligations to give support to the economy. It then took another dynamic step which increased the Gold prices. According to World Gold Council’s statistics publication; China had increased its gold reserve from 600 tonnes to 1054.1 tonnes which was an increase of more than 75% in the 2nd Quarter of 2009.

When reviewing that publication I saw some interesting facts. Right after China’s decision of increasing its Gold reserves, India had also decided to do the same by increasing its reserve from 357.7 tonnes to 557.7 tonnes which was an increase of more that 55% in 4th Quarter 2009. In 2011 the major buying was done by Korea where it increased its reserves by 14.4 tonnes to 39.4 tonnes which was in increase of 173%.

Why does a country accumulate Gold reserves? In the earlier times currency value was determined by the country’s gold reserve. Now it’s determined by the Economy and Monetary Policy. I would agree with you WHAT A SCAM!

Anyway, this was the reason for rising gold prices and more or less if you look at the gold price trend it has been increasing since 2000. I am including the Gold price trend from Reuters.

Analyst and Stock gurus are all placing their bets on Gold going to unchartered territory. They foresee a bullish trend for the long run.

Gold has always been a safe haven for investors.  The problem is it’s too expensive. As a saving habit I always give advice to my friends and colleagues invest small but do invest in this commodity. Another option is Silver. As they say very cloud has a silver lining. 

Sunday, November 20, 2011

Get Good Grades (GGG)

Why do we strive so hard to get good grades in colleges and universities? Good grades mean good job, good job means inflow of money, which concludes to building of wealth. Why do we build wealth? So we can have a good life. Get married and have kids. Some might say we need wealth to have power.

What is power? Let's classify it in three classes. We have financial power, physical power and intellectual power. Each one of these classifications is dependent on each other. But in my opinion the intellectual is the most powerful element which can help you build on money and health. So the conclusion, improve on your intellectual.

Mr. Kiyosaki said don't go to a business school to get a good job, go to a business school to acquire a corporation. 

Everytime I read this line in his book it knocked me off my feet. Many of us go to universities and end up giving all our time and effort just to learn finance. Our basic objective is to learn to get a good job. Why don't we learn finance and accounting with the objective to acquire a corporation?

For those of you who still want to get employed I would recommend to get a sales job. A sales job will give you the insight that you need. Try to investigate this point in your CEO or look at any successful businessman and see his background. All successful business men have great selling skills.  They all have been salesmen in one time or another.

You don't need a flashy degree for a sales job. Yes but a degree will increase your intellectual power.

Tuesday, November 15, 2011

What's a good deal?

In reality we are always searching for good deals. Some of us are searching for deals offered by promotion advertising campaigns. Well there is nothing like buy two cans of coke and get the third one for free or buy a pair of Dockers pants and get a 50% off on purchase of another. Sounds like a good deal but I am not talking about those deals.
My interest is to find a good deal that will give my early retirement dream. At the age of 45 I would like to be free of any responsibility. Imagine this, having a Pina Colada on the golden sand beach, feeling the sun and cool wind, I am in my shorts and Hawaiian shirt with a straw hat and hugging my new found freedom. This is not a vacation my friends, this is the deal I'm searching for.
Now a few things that are always starring at our face but we don't bother with them because we are always in the hope of getting a better job, a promotion or a fat bonus. After that we will just spend it in a day or pay off our debts and then buy another piece of worthless junk to get into more debt.
The irony is that the world's economy is following such a system which is highly flawed to the extend that people, organizations, corporations and even countries have fallen into their own death trap. The 2008 crises is the aftermath of some sadistic people sitting at Capital Hill who are still finding ways on how to screw the world over and over again. That is another topic.
My point is that why am I saying that the current system is ironic, this system has made us human slaves pursuing an intrinsic value that will never coexist in reality. That is also the beauty of it. You have to understand that there are always two sides of a coin. If we are slaving for this system we can make this system slave for us.
Now consider this simple example just to get you thinking. We take a mortgage loan for 20 years and the interest come to about 10% which makes a monthly payment of Rs. 15000. The situation is that you want to accumulate your wealth and you think the best way to do that is to buy an apartment or house which is an asset. Chances are that the market value will not depreciate but rather it would appreciate. (At least that's what you think and look what happened in the 2008 crises. That is a different issue and will be covered later). 
So anyway you buy an apartment on mortgage and pay Rs 15000/month for 20 years thinking that it is an asset and accumulation of wealth. Well, sorry to say it is not your asset but just a huge liability. Now the trick is on how to turn your liability working for you. It's simple "PUT IT ON RENT!"
If you put your apartment on rent for Rs 18000 to 20000 per month now look what has become of this flawed concept of lending and borrowing. You borrowed money from a bank and the objective of the bank was to lend money and get interest which is its income. Now you let someone borrow your liability and get an interest on it. Now isn't that just ironic!
What has happened over here. You now have a liability which is giving you a return. At the end of 20 years you will get your house and the market value has appreciated so that's good and you put it on rent all these years to repay your mortgage loan and also earned an extra. That my friends is called a Good Deal!

Monday, November 14, 2011

Whats the big deal?

I am really inspired by Rich Dad Poor Dad by Robert Kiyosaki. This is one man who got me thinking in another dimension.
There was no doubt that in my university days I knew that if I you study hard and get good grades, you end up having a good job. Which meant job security, climbing up the corporate ladder, fat bonuses, owning latest tech gadgets, fast cars, etc etc. Now that I have a decent job. Got the exposure. Life is good. At least that's what I think!
It was not that long that I realized that I have to pursue higher education. So I got enrolled for a MBA Finance program that everyone was doing. Again the theory goes have a masters degree get ahead of the race and be noticed by potential employers. Notice I used the word Race.
I have to thank Mr. Kiyosaki for giving an adjective to the word Race. He said its a "RAT RACE". We all are the victim of the Rat Race.
Now on a serious and professional note, the dimension that I was referring to can be summed into one word. Entrepreneur. As a risk analyst I know that greater the risk more the awards. So therefore an Entrepreneur is a risky business. Don't take me wrong, just because its risky you should hang on to your Job security and not look around. The upside to this is GREAT AWARDS. We are talking about being your own boss. Establishing you own Brand. Who knows if you work hard and be constant then you might have a corporation!
When this happens you have stepped out of the race and now you own rats doing the racing for you. 
People say that working for the financial or banking sector has its security. Well they are wrong. The truth is that there is no stability in any line of work you do. If you are looking for stability or a secure job then you are wasting your time because your approach is all wrong.
The right thing to do is find a good deal! You find the secure job just to earn money. So you are running after money. But if you turn it around. Make the money do all the running around then you have a good deal!
I know you must be thinking that we've heard this invest your money in fixed income or treasury bills or put them in some saving scheme. The question is if you haven't then you should and if you have then you should take half of your savings in put in some business venture. There is always a good deal happening everywhere you just have to be open towards it. 
For now I will leave you with this perspective. Think about it. I shall continue writing more. If you agree or don't agree leave a line or two to Broadcast Yourself! 

Sunday, November 13, 2011

Hello World

Dear Readers,

Since my first blog in 2008 I had stopped blogging. Actually alot has changed since then. I had to leave media to understand that. I will be talking about that in a bit.

So for now just for testing. This is my blog for today.

Broadcast Yourself.