Financial Tips from Financial Guru, KC Lau

1. What are the three ingredients for someone to succeed financially if he/she had just entered the working world and have very little savings to begin with?
I. Always live below your means: I see many youngsters straight away buy a new car after they got their first paycheck. This is so dangerous (no pun intended). New car have more safety features, but it is dangerous to your finance. Malaysians are paying too much for car and it shouldn’t even take up 10% of your income, just to get from point A to point B.
II. Acquire entrepreneur mindset: when you get your first job, think of how it is going to help you when you want to be on your own later. You want to learn as much as possible, and as fast as possible. If there is nothing to learn anymore, go somewhere else by changing job, changing department, changing boss, changing companies etc. Employment is a paid learning platform, not a place to trade your time.
III. Network aggressively: You want to mix around with people who are more successful than you, all the time. This includes the people you have meals with, the guys you cycle with during weekend, the people you talk to in the gym. Be a fool and offer your time, your help and your assistance to those people. They will turn to you with a lot of opportunity when you prove yourself worthy.
 
2. What would you recommend for people who realised only when they are close to 40 that financial investment is a must today.
We can’t undo the past. But we can still create the future. By the age of 40, you should have got credentials on your expertise. Use that to leverage for higher income making potential. If you didn’t do much investment at age 40, just start now. It is better to be late, than never.
 
3. If I have RM20,000 today which is extra savings, between unit trust (equity) versus blue chip stocks, which should I put my money in and why
When it comes to sports, it is always about the player, not the equipment. It is the same thing in investment. With RM20k in hand, my business partner Peter Lim will use it to borrow another RM20k, and invest all 40k in stocks. Probably for Charles Tan who is a property investor, the RM20k will be put down in a property. You are YOU. You know what you are good with. So do what you are good in!
If you ask me to choose just between unit trust and blue chip stocks, I will choose the latter. Reasons: low transaction cost.
 
4. The rich buys to rent, the poor pays to rent, do you agree? There are arguments that sometimes, renting is better than buying.
I definitely agree. It is also true that sometimes renting is better than buying.
Personally, if I am single now, I would rent because I won’t be staying at one place for long. Probably stay here a few months, move oversea a few months, come back and stay somewhere else for a few months, just like a nomad. But in reality, I am married with kid. My wife loves a big garden and likes to decorate her house. So we are always settled down in our own property.
But if you are just looking at numbers in financial sense alone, without considering other factors, I would say even the rich should rent their own place to stay. The logic is simple: you can easily find a property with very low rental yield, but can hardly spot one that provide magnificent yield.
 
About KCLau:
KCLau is a very “serious” online financial educator because he is doing it full time. He has published 6 books, created more than 9 online financial courses. He also conducts online financial training regularly. Visit his main site www.KCLau.com and subscribe to his mailing list for lots of free training.