Tuesday, October 31, 2017

WHY (LOWER) MIDDLE CLASS CANNOT GET RICH?













- relevant to careful entrepreneurs and wealth planners.

Also visit FACEBOOK : Unmistakable Marcus Ong


Image result for family home

Pic 01: Trap in your OWN home, locked by loans

Image result for bit coinThe majority of middle-class wealth is locked up in unproductive assets or assets that only become available upon retirement or death…(Pic 01)



   

 Pic 02: Little fund for fantastic investments. 

Image result for stock market apple

 Pic 03: insufficient fund to own wonderful businesses like Apple, Facebook, Amazon, NetFlix, Google.


Few families [have] the financial wherewithal to invest in bitcoin or an alternative hedge such as precious metals. (Pic 02 and 03)

The limitation on middle-class wealth isn’t just the total net worth of each family; it’s also how their wealth is allocated: The vast majority of most middle-class family wealth is locked up in the family home or retirement funds…

The majority of the wealth held by the bottom 90% of households is in the family home, i.e. the principal residence. Other major assets held include life insurance policies, pension accounts and deposits (savings).

What characterizes the family home, insurance policies and pension/retirement accounts? The wealth is largely locked up in these asset classes.

Yes, the family can borrow against these assets, but then interest accrues and the wealth is siphoned off by the loans. Early withdrawals from retirement funds trigger punishing penalties.

In effect, this wealth is in a lockbox and unavailable for deployment in other assets.

Majority income earners fund their house-occupied installments and car installments which accounts for majority of 60% to 80% of their Net Pay. This leaves little or no income opportunity to invest in Revenue Generating Assets such as Stock Market, Properties to rent out or Business ventures. 

Take 2 Scenarios of Adam and Benjamin. Both are married with 1 child. Their spouses are working too with combined income RM12,000 per month.

TABLE 1

Adam - Buys and Stay in House Column1
Investing in Home Occupied Asset Monthly Cashflow
Combined Income  RM12,000
Tax and Pension contribution  -RM1,800
Loan: House/Condoimium worth $600,000  Installements  -RM5,500
Loan: Honda Civic worth 120,000 Installements -RM1,800
Food and Utilities  -RM2,500
Net fund for Investment  RM400


Year Cash savings RM4,800


20 years Net Present Value  RM67,200
Invest in Stock Exchange over the 20 years period assuming 6% Returns RM49,862
TOTAL RETURNS  RM117,062
House at Present Value RM600,000
Total Wealth  RM717,062


 TABLE 2
Benjamin - Rents an Apartment Column1
Investing in Revenue Generating Asset Monthly Cashflow
Combined Income  RM12,000
Tax and Pension contribution  -RM1,800
Rents an Apartment  -RM1,500
Loan: Honda Civic worth 120,000 Installements -RM1,800
Food and Utilities  -RM2,500
Net fund for Investment  RM4,400


Year Cash savings RM52,800


20 years Net Present Value  RM739,200
Invest in Stock Exchange over the 20 years period assuming 6% Returns RM548,486

RM1,287,686

Table 1 above shows Adam has only net savings of RM400 per month. After 20 years, he only has RM117,000 available investment fund and  family's wealth is RM717,000.

Contrasts with 

Table 2, Benjamin rents a nice condominium. This frees up resources to invest over 20 years amounting to 739,000 which is regularly invested in Business Income Generating activities.
 
Column1 Column2
Difference in wealth between Benjamin and Adam 
Adam RM717,062
Benjamin RM1,287,686
Difference  RM570,624
Benjamin is wealthier than Adam by almost 80% 79.6%

 Verdict: Table 3 shows that Benjamin has almost 80% more wealth than Adam, a vast difference of over RM570,000.

Compare these lockboxes and limitations with the top 1% in society, which owns the bulk of business equity or Stock Market assets. Business equity means ownership of businesses; ownership of shares in corporations (stocks) is classified as ownership of financial securities…


 Image result for robert kiyosaki

 Pic 04: Why the rich gets richer? Read the above book. Very educational and transformational to your life.


The mean value of business Stock Market Shares are concentrated in the top 10% of families… while the value of the biz equity held by the bottom 90% has flat-lined. (pic 04)

Assets either produce income (i.e., they are productive assets) or they don’t (i.e., they are unproductive assets). Businesses either produce net income or they become insolvent and close down. Family homes typically don’t produce any income (unless the owners rent out rooms), and whatever income life insurance and retirement funds produce is unavailable.


 Image result for retiree
 Pic 06: Seriously? Wealthy when approaching the grave?


This is the key difference between financial-elite wealth and middle-class wealth: the majority of middle-class wealth is locked up in unproductive assets or assets that only become available upon retirement or death - You are only wealthy when approaching death? Is that good planning? See Pic 06

The income flowing to family-owned businesses can be spent, of course, but it can also be reinvested, piling up additional income streams that then generate even more income to reinvest.

No wonder wealth is increasingly concentrated in the hands of the top 5%: those who own productive assets have the means to acquire more productive assets because they own income streams they can direct and use in the here and now without all the limitations imposed on the primary assets held by the middle class.

KEY SUMMARY 
1. Don't let your fixed income get locked in non-revenues generating assets. Rent an apartment. 
2. Educate yourself on how to set up business and invest in Stock market which is a form of owning businesses
3. Don't limit yourself and be contented with Fixed Income salaries for the next 30 years. You won't have enough to retire

the most important lesson: 

4. Seek out business opportunities that doesn't eat up your investable fund. Seek intellectual and marketable knowledge and generates income. 

 Image result for donald trump direct selling

 Most important lesson - Pic 07: Invest in Revenue generating activities. 


Donald Trump once said that if he loses everything ie bankrupt, he will venture into network marketing. 

Seek out world class company to partner with to do your business with little or no financial risks. 

What are they? 

You can contact me at marcus_ong88@hotmail.com to find out. 


 Source:
Charles Hugh Smith, 2017






Thursday, October 5, 2017

Creating Value for Customers is similar to pursuing a girlfriend?

Imagine, a guy tells a lady of his love why he needs her. What would he say?

"I can't live without you, babe!" - Huge mistake.

Image result for can't live without you

 Are you adding value to your customer?


How about this? 

 Image result for male housekeeper        Free Life time Service, I provide.

"Won't you need a reliable person provide for family? You love children. You love trust and warmth in family. I can fulfill that. I offer that for FREE in your lifetime." (goose pimples, here - haha)

 - BETTER proposal? You are trying to add value to your customer - or future wife.

 

 

How are you creating value for your customers?

Are you really creating value for your customers, or merely claiming to?  Its not about YOU but the customer.

You can’t add value to the customer until you truly understand your customer


As Barry Farber says in State of the Art Selling, “You cannot relate to a man in business without understanding his business.  A man in the oil business wants you to understand the oil business, and what a drilling rig is, and what upstream and downstream means, and what crude and refined is, and what’s OPEC and domestic, and who his competitors are, and his recent history – has it been good or bad and why.  Too many salespeople don’t know anything about business, let alone the client’s business.”

EXAMPLE: If you want to sell a car, ask if the prospective customer need or want one in the first place.



Image result for sultan of brunei cars warehouse

Does Sultan of Brunei need or want another Sports Car? Blue, maybe? 

 

Know Your Customers

The first step in becoming a true Value-Adder is to Know your Customers.  Remember, value is a perception, the customer’s perception. So don’t assume you already know what’s important to your customers, or how they define value.  

 

The Process of getting to know your customer



Step 1: Do the research


    
Image result for science research
 Pic 02: Research on your prospective

Do the work. Start by doing some research on the market in general.  Look for industry studies, reports, and articles that provide insight into your customers, their competitors and what’s important to them.  This may take some time and effort, but you will find that the return far outweighs the effort. 

Step 2: Start a meaningful dialog
Most business professionals love to talk about their business. Unfortunately sellers fail at listening.  Worse, they fail to engage customers.

 Image result for listen man
 Pic 03: Listen!

When you get them to talk about their business, their goals and their frustrations, you’ll find all the information you need to add actual value.  So, before your next meeting, vow not to talk about yourself, or your product or service.  Instead, ask some simple questions that will help you understand the customer’s business model, how his world is changing, what is working and not working, and where you can help.  That simple adjustment just might mean the difference between yes and no. 

Step 3: Ask the RIGHT questions
It’s unlikely that you could create value without asking the right questions.  You want to ask your customers the right questions to you can learn more about them and determine how you can best add value.

Image result for questions to ask a man

Pic 04: Questions to understand customers better.

Your Personal Value Add
Research suggests that a big part of the value equation is you, the salesperson.  You and I can sell the same product or service, and even work for the same company, but our solutions and ultimately our “value-add” will likely be very different.  Each of us brings to the table different competencies, attitudes and behaviors.


The Payoff
The payoff for becoming a true value-adder is real and substantial.  For starters it makes for an easier sale.  Customers look forward to your visit.  They already want to do business with you. They seek you out. 

Image result for marriage

 Yep, you got your lifetime customer- wife, I suppose. Add value!


Another payoff from value creation is that you rarely ever have to worry about price. That is, so long as you keep the focus on the customer’s definition of price.  Tom Reilly, author of Value Added Selling Techniques, said, “If you define value in customer terms, they pay for it with a higher selling price. Conversely, if you define value in your terms, you pay for it with a bigger discount.”


Disclaimer note: In social life, this is more than commercial transaction. The above is merely to illustrate how to add value to improve sales persuasion. In social circle and love, a Spanish proverb states, "Love is mad, if not, then it is not love."

Well, she marries you because she doesn't know why! Good on ya.

Comment anonymously below your thoughts on how to secure sales. 

To your Profitable Future, Today

Cheers.


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