Thursday, January 31, 2013

Making Money

One thing I do know is that making money is not the same as starting a business.
For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money. You can be the most creative software designer in the world. But if you don't know how to make money, you're never going to have much of a business or a whole lot of autonomy.

It took me a long time to figure out how to make money. Here's how the lessons unfolded.

1. Understanding the buyer is the key to being a strong seller
Understanding what people really want to know—and how that differs from what you want to tell them—is a fundamental tenet of sales. And you can't get good at making money unless you get good at selling.

2. Sell only things you'd want to buy for yourself
Cos if you want them for yourself, your friends probably want it too.You could sell stuff below what they'd pay in the store and still make a profit.

3. How, and why, to charge real money for real products
People are happy to pay for things that work well. Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love. Charging for something makes you want to make it better. I've found this to be really important. It's a great lesson if you want to learn how to make money.

4. There are many pathways to the same dollar
Don't just charge. Try as many different pricing models as you can. Remove the fear, and people will be more willing to pay you. People don't like uncertainty—especially when they have to pay for it. A week and a fixed price is certain.

5. The true value of bootstrapping
Whether you're starting your first business or your next one, my advice is to bootstrap it. Bootstrapping forces you to think about making money on Day One. There's a fundamental difference between a bootstrapped business and a funded business. It's all about which side of the money you're on. From Day One, a bootstrapped business has no choice but to make money. There's no cushion in the bank and not much in the pockets. It's make money or go home. To a bootstrapped business, money is air. Anyone can spend money. Making it is the hard part, and being forced to do it early is one of the best ways to get better at it later.

6. A word about practicing
So here's a great way to practice making money: Buy and sell the same thing over and over Buy it, and then immediately resell it. Then buy it again. Each time, try selling it for more than you paid for it. See how far you can push it. See how much profit you can make off 10 transactions. Start tweaking the headline. Then start fiddling with the product description. Vary the photographs. Take some pictures of the thing for sale; use other photos with other items, or people, in them. Shoot really high-quality shots, and also post crappy ones from your cell-phone camera. Try every variation you can think of.

Credit - if you want to read the full article.

Monday, January 28, 2013

How To Deal With Door-To-Door Salesman

They are simply employing techniques such as the door-in-the face (DITF) or rejection-then-retreat along with the contrast principle (offering a highly exorbitant price, then subsequently a lower reasonable price which is still high but because of the contrast made, seems much lower than if it was just offered initially).

Interesting twist of the mindset to prevent yourself from being guilt-tripped into buying something you hardly need/want.

From Robert Cialdini's Influence book.

Door-to-door fire-alarm companies will frequently use this approach. Typically, their product, while effective enough, will be overpriced. Trusting that you will not be familiar with the retail costs of such a system and that, if you decide to buy one, you will feel obligated to the company that provided with a free extinguisher and home inspection, these companies will pressure you for an immediate sale.
Using this free-information-and-inspection gambit, fire-protection sales organizations have flourished around the country.
If you were to find yourself in such a situation with the realisation that the primary motive of the inspector's visit was to sell you a costly alarm system, your most effective next action would be a simple, private maneuver. 
It would involve the mental act of redefinition.
Merely define whatever you have received from the inspector - extinguisher, safety information, hazard inspection - not as gifts, but as sales devices, and you will be free to decline (or accept) his purchase offer without even a tug of the reciprocity rule: a favor rightly follows a favor - not a piece of sales strategy. And if he subsequently responds to your refusal by proposing that you, at least, give him the names of some friends he might call on, use your mental maneuver on him again. Define his retreat to this smaller request as what you recognise it to be - a compliance tactic. Once done,  there would be no pressure to offer the names as a return concession, since his reduced request would not be viewed as a real concession.
At this point, un-hampered by an inappropriately triggered sense of obligation, you may once again be as complaint or noncomplaint as you wish.
Provided you are so inclined, you might even turn his own weapon of influence against him. Recall that the rule of reciprocation entitles a person who has acted in a certain way to a dose of the same thing. If you have determined that the fire inspector's gifts were used, not as genuine gifts, but to make a profit from you, then you might want to use them to make a profit of your own.
Simply take whatever the inspector is willing to provide - safety information, home extinguisher - thank him politely, and show him out the door.
After all, the reciprocity rule asserts that if justice is to be done, exploitation attempts should be exploited.

Sunday, January 27, 2013

What Your School Never Taught You About Money

I picked up some key points for easy reference in future when I will deal with these. Honestly, limited knowledge below and I doubt they are the best advice out there but at least starting from somewhere and knowing something.

DEBT
Good debt is any debt where it is possible to earn a return that is higher than the interest on the debt
A housing loan is the cheapest loan anyone can get. Instead of using savings/cash to pay off housing loan asap, channel cash into higher-yielding investments (shares, land banking, traded endowment).
Just for comparison's sake, interest rates on
housing loans are 3-4%
car loans 6%
renovation loans 8%
GE money ezycash 20%
credit cards 24%
INSURANCE
A simple guide to remember is that term plan is for temporary needs. Life plan is for permanent needs.
Term plans provide coverage for a specified time period.
*Having guaranteed renewability in term insurance is important in the event that you can renew it after it expires even if your health condition deterioriates.
- Temporary coverage for loans in the event that you are unable to pay for it in the case of death / total & permanent disability
Whole life insurance provides coverage for life.
- Critical illness
Unlike coverage for total and permanent disability, which only kicks in upon both total and permanent disability, disability income insurance covers all four scenarios:
1. Temporary disability
2. Total and permanent disability
3. Partial and temporary disability
4. Partial but permanent disability
AVIVA & Great Eastern are the only 2 who provide disability income insurance in Singapore.
Insurance for child's education
Endowment or investment-linked plan to build the education fund and to add another "reducing term insurance" and a "waiver of premium rider" to provide the protection needed.
You can easily get 3-4% annual returns on single premium endowment even if you do not know how to invest
Get any single premium price quotation from any insurers in Singapore to verify

GAMBLING VS INVESTING
Make your investment decisions with both open eyes
Diversify money into different stocks, different asset classes such as stocks, gold, silver, property, UK endowment plans and so forth.
Ensure that we comply with Warren Buffett's first rule of investing - not to lose our capital.
Increasing popularity of ETFs
Know the risks of it.
1. Market risk (price fluctuations, but less risky than investing in individual stocks)
2. Forex risk (if quoted currency is different from home currency)
3. Tracking error (usually insignificant though)
How to generate annual returns of more than 4% by investing?
UK traded endowment plans
Land banking investments
Fine wine investing




The Art of Non-Perfectionist

...it struck me that over here, we spend all of our time PRACTISING music, but never really playing it. Piano, uke, etc… practicing to get “good enough” so one day we’ll actually play. But… I think music sounds better shared, with warts and off key notes and forgotten lyrics and all. So… everyone just take out whatever you’ve been practicing hard to get “good enough” at, and just show it to (or play it for) someone anyway. Trust me you’ll have a better day.
- Teng Yen Lin

It speaks volume to me about how much time we spend on our passion/art/sport, and sometimes getting too serious about it and always wondering when it will ever become good enough to be seen. I've kinda forgotten how to 'have fun' with what I love doing because I get so uptight about getting it right 100%. I should remind myself to accept mistakes, laugh about it, get better, and have fun. Having too much focus on getting it done the perfectionist way sometimes backfire more times than I would really like it to.

Monday, January 07, 2013

How To Spend Money

I may not be the most qualified person to dispense advice on the right way to spend one's money. But here's something to ponder upon.

Money can buy happiness, and here's some research showing how we can spend money in order to maximise our happiness.

1. Help others instead of yourself.
People feel significantly happier when they reflect on a particular time they spent money helping others. Receiving a gift from a romantic partner strengthens the likelihood that the relationship will continue over the long term and lead to marriage.
Giving to charity evokes similarly positive feelings.
"Given how deeply and profoundly social we are, almost anything we do to improve our connections with others will improve our happiness as well - and that includes spending money," they say.

2. Buy experiences, instead of things.
One reason why experiences make us happier than things is that experiences are more likely to be shared with other people, and other people are our greatest source of happiness.

3. Buy many small pleasures, instead of a few big ones.
People are happier when they get frequent small pleasures like having coffee with friends at Starbucks or a getaway with loved ones over the weekend, rather than pouring money into large purchases such as a sports car or a dream vacation.
That is not to say that there is anything wrong about having big purchases.
"But as long as money is limited by its failure to grow on trees, we may be better off devoting our finite financial resources to purchasing frequent doses of lovely things, rather than infrequent doses of lovelier things."

Sunday, January 06, 2013

How To Forgive Yourself

You have to find a way forward. You can say, 'I'm going to work to improve myself so I never hurt another person that way.' And then you need to atone, to make the lesson you learned mean something. Do this, and you will be able to look in the mirror again.

Wednesday, January 02, 2013

Thank You For Smoking

My favourite lines from the movie:


Joey: What happens when you're wrong?
Nick Naylor: See, Joey, that's the beauty of argument. When you argue correctly, you're never wrong.

Tuesday, January 01, 2013

Start of 2013

I've learnt 2 important lessons that will carry me further along into the new year:

One. What doesn't kill you, makes you stronger.
Two. Ask not what your family can do for you, ask what you can do for your family.

With my guiding light, I hope to blaze through to the new year, and my anchor holding close to my heart.