Feelings Aside, True Wealth Require Getting Your Priorities Right

Having money with you is never going to solve anything in your life and is never a guaranteed source of personal fulfillment.  Even if I were to get my magic number (ksh. 4 Billion) today, I will definitely need some other KSh. 5 Billion more and so on.

 So the imaginary feeling of fulfillment will never come; there will always be a new target in front of you and you will consistently find yourself falling short, no matter how much money you have.

Therefore, we need to stop viewing money as a solution, and consider it a tool that can be used to grow us and challenge us to change certain aspects of our character.

Most people want to get the Ksh. 4 Billion without changing anything about themselves, which is really where the hard work is. Circumstances do not make a person; they reveal them, and what they still need to work on.

For instance, to make a “mere” Ksh. 1 million ($125,000), you need to foster financial discipline, and that may be a big lesson your current state of affairs is teaching you. I you cannot manage saving at least Ksh. 5,000 a month, bother to reconcile your bank statement or cut back at least 30 hours from your TV time every week, do not expect to make the Million.

What is the Real Fulfillment?

Without financial discipline, even if you did get the Ksh. 4 billion, you will squander it. This is the reason why those people who get loads of cash overnight lose it within a week (fishermen and gamblers are a good example). Having money doesn’t resolve the core main problems with their character.

 Another thing you will need to consider is that wealth is not a feeling.  Euphoric feelings are flighty and temporary, and unfortunately, most of us are ruled by feelings. You may not feel like cutting expenses, you may not feel like getting up on Saturday morning to be able to attend your investment group meeting. What feels good is not always right.  In the quest to chase what feels good and feel rich, we have got ourselves into major problems with our spending, priorities, debt and so on.

Since the ‘feel good’ factor only lasts a few seconds, we then need to look for something else, like new clothes, a bigger house or car.

Let us focus more on values

Without understanding that feelings should not dictate your actions, you can get your KSh. 4 billion only to spend it on temporary ‘feel good’ items and find yourself with the same problems.

Let your goals and every action be underpinned by values, not just making money for the sake of it. You could work towards building income generating investments so that you can spend time with family.

Your fulfillment will come not so much from the investment but from being able to spend time with your family. You will find that you are being driven not by what you feel but by value. Then the decision to cut down on expenses or spending time to create extra income is not seen as a sacrifice, but a choice.

Courtesy of WECEKE NDUATI-OMANGA - 

The Six Major Groups You Must Avoid To be Succesful

Building strong relationship is an important requirement for the success of your business, career or family.  For example; you may need mentors, role models, financiers, motivators etc. to succeed. However, there is some clique of people you would rather stay away from (if it is possible) or you may have to manage them properly in order to realize any appreciable success.  Everybody has his/her own group of people they consider hindrance to achieving their goals in life. Therefore, it may not be possible to list all of them in such a small space. Having said that, I am going to discuss 6 major groups of people you will need to manage for you to succeed.

1. The confused: They often do not know what they want or how to achieve it and therefore are the last group you would want to rely on for your success. In most cases they do not think clear and fast enough. Confused guys are always disoriented and find difficulty in paying attention, making decision and remembering anything. Some confused people may act aggressively or exhibit some unusual behavior. You need to understand them but never listen to them, especially when you need to make a decision. Because the best they can do is to confuse you. 
2.  The Lazy: These are the lot who just dislike work; they are poor managers of time and resources.  They are champions in blame game, never take responsibility for anything and are always missing in action. Something (if not somebody) must be responsible for their behavior - addictions to drugs, smoking, drinking,  gambling, chocolate, sex, internet, video games and emails are just but a few things they will blame for their inefficiency. Work is work and therefore do not think you can succeed without working. Whether you work smart or hard, you still need to work. Therefore it is very important to stay away from lazy people who will want you to be like them hence distract you from achieving your drams.
3. Procrastinators:  This lot is sometimes considered lazy but they have one striking characteristic – they will always push things to a later date.  They never sit down to anything as they believe “tomorrow never dies” or “tomorrow is another day”.  Procrastinators have a serious confusion of interest, very weak will-power and are never sure of themselves. They are always wary of utterly anything for fear; of success (the one they have baptized fear of failure), fear of new experience or a wide variety of challenges. In our lives we come across these guys and often tolerate them. However, these people are very distracting and therefore destructive to your success ambition. Keep this as your motto: “If it can be done today, do it immediately” 
4.  Haters: Who likes haters, anyway? You sure have some enemies somewhere, some you know but some you do not know. They do not wish you well and your failure is their happiness if not success. Why they want you to fail shouldn’t concern you because you will always have them. So just keep off these people straight away, don’t struggle to please them – you will never succeed. The 48 laws of power recommend this as a strategy; “Pose as friend, Work as a Spy.” This strategy will help you unearth your enemy’s next move against and therefore, help you plan to counter their move before they can put the trap. However, do not concentrate all your energy, resources and time in battling your enemies, consider them as hurdles which must be passed to be successful, up your game and maintain your dash to success.
5. The incompetent: These people cannot do anything right, they are wasteful, unreliable and therefore, not expected to deliver. They are biased against action and often have plenty of reasons to support their decision not to act, reasons to sit and wait for further direction, more options and opinions. They always put the entire focus on small unnecessary things; they rarely commit to anything and lack priorities. Therefore, be it advice, opinion or any form of help you need, do not contact the incompetent. Always be wary of the “arrogantly incompetent”. They claim to know everything but are actually know nothing. Apply all the performance indicators to unearth this “master of all” deceit.
6. Criminals: I have put this as a last point because I think I do not need to explain it more for you to realize the danger posed by criminals. Even with the common knowledge that; “crime does not pay”, many people still resort to crime in their quest to be successful. By crime, I mean any means of breaching the law – evading taxes, corruption, robbery (with or without violence) etc. Success is a long-term goal and requires long-term inputs. You can’t do crime forever- one day the law will catch up with you.  There is no shortcut to success, so keep away from criminals or the temptation to do any crime.

Evaluating Your Return From Employment

I understand pretty well that not all my audiences are entrepreneurs. There are a clique of those who are seeking employment either as their ultimate career option or just as a means of getting some cash to invest. With this in mind, I’m going to look at how best to evaluate a job offer once it is presented to you. You will have to bear with me if you feel I’m a little money driven, but this is the truth: “everything is business”. Therefore I wouldn’t advise you to venture into anything whose requirements surpass their returns.

You have been jobless for a while despite the level of experience and the quality of CV you possess. Finally, something good has just happened today - you have been called for a job offer. You are certainly overexcited and thrilled at the prospect of starting a new life. You are finally going to graduate from your “long-term job” of searching for a job.  You will agree o anything so long as it’s going to save the thought of going for another interview.

Whenever an offer is tabled, it’s always important to carefully evaluate it so as to make an informed decision to accept or reject the offer. You don’t want to rush into decisions which you will regret later. Consider the entire compensation – work environment, salary, perks, and benefits – not just the paycheck.  Take your time to ponder on this offer.  Weigh its cons and pros.

1.       Money Matters: Unless you are one special person committed to working for charity, you would want to consider this. This is often the first thing people consider and rightfully so.  It defines what you will take home at the end of the month and is the bulk of your recompense. Just make sure what you are being paid is satisfactory if not your worth. It may not be what you expected, but can you accept it without feeling insulted? Will it pay all your monthly bills? If your answer is no, the reject the offer straight away. You should be happy with your salary and the least must do is pay your daily expenses.

2.       Performance Bonuses: Most organization pay employees for their performance. For instance, in a sales job, your entire compensation may be in form of commissions. In other cases like pure engineering jobs, however, performance may be extremely difficult to quantify.  All the same, you need to be clear on what the company’s expectations are and the resulting payouts.  The bonuses can either be in form of commissions, salary increment or a promotion, just to recognize your contribution to the company’s overall performance.

3.        Benefits and Allowances: Find out what the employer is giving on top your salary. Get more details on life and health insurance coverage, disability, sick time, vacation, and other benefit programs. Get to know how much of your benefit plans your employer is going to pay and how much extra you will be required to remit.

4.       Travel and Working Hours: Make it clear the amount of time you are willing to put in t this job. Time is money – and whenever you invest your money, you would expect satisfactory returns. If you were used to working 35 hours a week and the new job require that you work 45 hours a week, check if you can honor such a schedule. If the work necessitates travelling, enquire how long this will take per week, the cost of such travels vs. compensation and can you commit to such a schedule? Also check the travel time to and from work, any parking fees and travel costs.

5.       Opportunity to grow: There is utterly no need to get into a company where your chances of career progression are nil. For starters, you will require checking if there is an opportunity to rise to your ideal position. Will you be contented working at the available position until the next one comes?

In conclusion, everyone has a different set of preferences. What may be good for you may not be good for another. All you need to do is sit yourself down and evaluate the job offer. Have a look at its pro and cons. Make sure the job fits your minimal standards and that it pays for every resource you spend on it – be it your health, financial resources or time. The return on investment also applies to employment. Just like any other investment option, in a job you invest your time, money, skills and life. Therefore, it is only fair if you get adequate return from these investment.

Maximizing Your Investment Income

In the previous post, we discussed what income return is, how to identify and differentiate it from other types of returns.  In that post we covered the rationale behind making investment for income and the need to generate replacement income, more so if you are investing for retirement.

In general, a return is the money gained from your investment. For instance, if you buy a stock at $1000 and after one year you sell them at $1500, your return on investment is $500. You made a return on your investment because you sold your stocks at a profit. In percentage, your return is 50% ($500/1000).

A part from selling to realize profit, you may earn return if your investment generates some income on a regular basis. For instance you buy a residential house worth $100,000 and rent it out. The property then generates $10,000 in rent per annum.

In this case, you still own your property but receive a return of $10,000 annually. Therefore, your yearly return is 10 percent ($10,000/$100,000). It is this kind of return (income return) that is referred to as yield. Yield is the answer to “what guaranteed gain (return) will I get from my investment?”

Remember, when you are waiting to sell your property or investment position, the return is not guaranteed until the sale date. However, with regular steady income, you are sure of return.  Therefore, yield (income return) has no relation to the price of your property – whether it falls or goes up. It is all about receiving the money.

Weighing your investment Options

Yield concept is used in various investment decisions dealing with income driven investment options including bonds, rental property and even company stocks (in terms of dividends).

“Dividend Yield”, is simply an expression of your cash return (through dividends) if you were to buy the stock at that particular price.  The company issuing the share will have to pay you that dividend irrespective of the prevailing share market price. Therefore, if your investment objective is geared towards income, then yield is a vital parameter to look at when making investment choices.

Going back to our rental house example, assuming now you get an opportunity to buy another rental property for $500,000 and it will earn rent of $36,000 per year. A good amount of money, isn’t it?

You may be lured into thinking that this is more money ($36,000 compared to $10,000). However, the yield in this case is 7 percent ($36,000/$500,000) which is obviously lower than the 10% from the first property. Faced with these two scenarios, the best option (if you can access the required fund) is to buy 5 of the first units and earn $50,000 a year.

As said before, capital gains have their place in investment, but you will definitely require your investment to generate some income. The yield may be far more important to you than capital gains since it is this yield that will sustain you.

With all this in mind, it is therefore advisable to compare the different investment options available in terms of yield. This because you will get the most out of your investment through passive income as opposed to growing the asset value.

Gold Rush: The Summer Olympics Lesson for our Businesses

The opening ceremony of the 2012 Summer Olympics is just around the corner, millions of fans around the globe will be “superglued” (literally) to their TV watching all kinds of sports (some which are rarely televised – fencing, for instance) and cheering on athlete’s, some we barely heard of.

In the broadest sense, these athletes participating in the Summer Olympics are small business owners. Athletics is a business, the athlete a business brand/product and their goal is to be the best in the world. To achieve this, an athlete must manage their timetable, build their relationship with agents, coaches, sponsors and fan, still be part of the society.  

How does this differ with an entrepreneur, a business man or an investor? You may find some differences but am going to focus on some similarities here. Let us look at the lessons an investor/business person can learn from the Summer Olympic athletes. I could find these three lessons for our business from the London Olympians:

1.      Keep setting new targets

For any athlete, a personal record (PR) is not considered a static point in life. Whenever they achieve a personal record, a new one is set – almost immediately. In business, success comes from stretching your goals just beyond what you think is possible. Whenever you achieve a goal set another, immediately. Having a clearly spelt out goal keeps you focused even when things seem unstable.

2.      Be flexible and swift

An athlete’s life can be quite unpredictable. You may work so hard for something but it keeps evading you before your own eyes.

I recently talked to my wife’s friend who was a Kenyan Olympic marathon team hopeful. For all the time I have known her, she has been working hard, waking up very early in the morning to train in the cold weather in Eldoret. She has one dream - to participate in the Olympics. Her completion time just fell short of the London Olympics qualification time at Kasarani Sports grounds. She was so disappointed but was prepared to start training for the next Olympic Games. That will be four years from now, if am not wrong.  She already has a four-year plan for herself and a renewed focus on her goal.  

Athletes endure wins, losses, ups and downs all for the love of the game and the focus on nothing but winning.

In business, you must be able to adjust, be willing to take the highs and lows along the way. Being flexible and agile and adapting to changing circumstances sets successful businesses apart.

3.      Be strategic. Stop saying “yes”

An Olympic athlete’s life is quite demanding. Outside training, the demand on their time is endless: appearances, media requests, the needs of their team mates, family obligations….just to mention a few.

To go through all these, the athlete needs to weigh and prioritize. You just cannot be everywhere at the same time. Similarly, in business you can’t take on everything from everybody.

Beginners often find it hard to reject an offer. They often console themselves with the notion that “beggars can’t be choosers”. You can deliver that consignment fast, attend a charity fundraiser, and even offer our products at a discount almost equal to if not more than the profit we would make. We can do all these to earn your business. However, this is business; you have invested something in it. You should build a good relationship with your clients for its growth. But, again, you do not want that same process to distract you from achieving your financial goals.

Saying “yes” is in itself not a bad thing. However, you need to think of how accepting the request will help you achieve your business goals. Is filling that request a strategic step in achieving your desired goal? Or will it be a distraction?

It is no surprise that most Olympic Athletes are successful business owners and investors outside their sports. The vital skills in athletics also serve them well when it comes to business. You may not be a gold contender in the upcoming Summer Olympics in London but you can at least take some lessons from these athletes to help you propel your business to a world-class level.

Investment Option: Why Invest in Forex Market?

If you are an investor interested in casting a wider net and expanding his investment portfolio, you may want to try something beyond the normal investment range. At that point when bonds and stocks just aren’t working out, there is only one investment option to try out – the Forex market.  If you are wondering what Forex trading is, well, Forex is simply a short form of “foreign exchange”. Forex market deals with the trading of one currency against another. Due to the fluctuations in the currency exchange rates, forex traders can either make a profit or a loss depending on which side they are. The prevailing exchange rates can either be favorable or unfavorable. Most investors consider forex trade risky but I believe the risk only come in when you actually do not understand whatever you are doing and thus rely on luck. With that said, then why would you want to venture in forex trade? The truth is, Forex investment offers many advantages that other investment options cannot.

1.       1. Fewer investment options

One of the benefits of Forex trading is that you are only presented with a few selections to choose from. You may only get 20 currency pairs to trade from a typical forex broker.  Compared to stocks which literally have thousands of choices to make, choosing a forex currency pair to trade is much simpler.

In the bond and stock markets, you may be easily overloaded with information. To come up with a decision (an informed one for that matter), you will have to study the company’s financial statement and even use other advanced criteria. In short, you must understand what is going on in the company and in most cases, to do so; you will need the advice of a professional. In foreign exchange, however, you only need to specialize in a small number of currency pairs.

2.       2. Trade with leverage

Another advantage of Forex trading is your ability to trade with leverage. Forex offers a larger leverage than any other financial market. While you can only get about 2:1 leverage in stock market, Forex traders can enjoy up to 500:1 leverage. This means, as a Forex trader you can control a huge amount of money with your small investment capital.

Even though this may look dangerous, Forex brokers employ it so that you will never lose more than you have invested. Every broker has his/her minimum margin requirement. Your account should always be above that balance and in case of a fall below it, the broker will simply close out that position and prevent your account balance from going into the negatives.

3.       Savings in Transaction cost

Stock brokers always go through an annoying process of having to pay a commission to the stock broker each time they transact. If you trade more frequently, these commissions will add up and badly eat into your profits. In contrast, it is possible to work with forex brokers who do not charge a dime for transaction.

This possible because most forex brokers are paid by the spread (the difference between the bid and ask price).  This difference is often nominal and therefore helps you save on your transaction costs when compared to other markets.

4.       3. Market size and liquidity

Forex market’s large market is an advantage on its own. In terms of number and money, forex is by far the largest market on earth with over $40 trillion in volume daily. This means the forex market is so huge that no single entity could corner it over a long period.

The large number of players involved increases the market’s liquidity. Whenever you offer a trade, it will be filled instantaneously.  

5.       4. Trading anytime

What about this? You can actually trade any time: early in the morning, late in the night or during normal working hours. The fact that forex trading does not have a central hub makes it possible for traders to access their trade, via a computerized exchange, 24/7.  A part from the weekends, you can trade all the time. This gives you more time to trade and make money and is even feasible for those investment starters who are still in full time employments.

Investing in Forex Trade

Even though forex trade has all these benefits, it is not for everyone.  If you really have interest in Forex and want to give it a try, it is would be wise you open a demo account with a forex broker.  You can then down load and install the trading platform on your computer and trade in demo mode until you feel comfortable. In the demo mode, you do not have to invest any money. Therefore, if you lose the play money and do not like the venture you will be free to quit with no loss.  Forex, just like any other financial market, offers you a chance to get rich but if you may also lose your investment. All you need to succeed in the Forex market is knowledge and discipline. If you are ready to learn and can stick to a particular investment strategy, then you can make plenty of cash.