Lesson Two

Caution: I just draft the stuffs that I remember in the lesson which are not included in the handout of the instructor, so hopefully I do not interpret and remember something incorrectly

- if the dividend is too stable (e.g. hkmtr) and has regular pattern, the company may not worth investing ( look for rising dividend)

-asset is observable, but liability is not (except the creditors)

- it is almost impossible to see the return of a stock is 20% continuously ( over the years)

-what Starbucks sells is its brand as it shows customers' status

-Coke ads in Vietnam > for future return> children grow up and have purchasing power> tend to like Coke ( c.f. Disney's products )

- not everyone needs to buy insurance

-avoid buying insurance at the end of the year ( the agents are required to meet the quota every year and they rush to sell the product), buy insurance products at different companies ( risk control measure)

- NPV> 0 (reject e.g. illegal) NPV<0 ( accept e.g. Charity)

- price of real estate Vs rent

- the interest rate increases > mortgage> disastrous

- banks may not usually use compound interest

Rich Dad, Poor Dad - Robert T. Kiyosaki

Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and the Middle Class Do Not!


by Robert T. Kiyosaki

Frankly speaking, it is not a very interesting book. I have spent nearly 4 weeks to read it since I fell asleep thousands of times when reading it. Still, I insisted on finishing it

If Robert's dad with a Phd is already called "poor dad" , my father must be the most desperate dad in the world=.=, I want to be a rich kid and that's why I force myself to read it until the end

Btw, I think I still can get some insights from it...at least it shows the frameworks I may not think about before

I just recommend it to university students/adults especially the ones without any business background...some of my friends read it in their high school but when I asked about what they have got, they just said they forgot and many of them just read part of it as it is too boring...

I can say Robert is a successful salesman and investor. That's why " Best-seller" instead of " Best-writer" was printed on the cover of the book

I think HK tax system is better than that in the US. US government taxes a lot on personal income and it seems that everyone is working hard just for submitting the tax. The rich is smart enough to use their money as their personal corportion expenses before being taxed by the govt

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Notes for myself:

- Having good education and good grades are no longer enough to guarantee that you can have a secure future( job security is doubted), the school just teaches you how to work for money ( passive life controlled by the company) and trap in the rat race( retire earlier, retirement means freedom)

- "play it smart" instead of " play it safe" by awakening our financial genius...manage risk and fear instead of avoid them

- a job is the short-term solution to a long-term financial problem

- the lack of money instead of the love of money is the root of evil

-when the company fired employees, the market likes it, the stock price rises, no job security can be guaranteed, the investor( the owners of the company is the winner)

-MPF in HK is similar to 401K in the US

- don't let the emotions/feelings>illusion ( greed, fear,ignorance....ignorance intensifies fear and desire) control the thinking and take action based on emotions >>the traps!!

-learn to use emotion to think, not think with your emotion

- the poor and middle class work for money ( earned income), the rich have money work for them (passive income- real estate and portfolio income-paper assets)

-financial freedom > the ability to convert earned money into passive and portfolio income

-financially literacy>read and understand number is a part of it

-rich people acquire assets ( generate income and positive cash flow), poor and middle-class people acquire libilities ( expenses) and they think they are assets -home ( be aware of the cashflow)

income >work for owner, expense> work for govt, libility> work for the bank

-mind your own business and build asset column

-ride a bke, after wobbling > a piece of cake

-need strong reasons(don't want and want) which are greater than the reality: the power of spirit (ambitious?)to make you rich

-choose to learn money everyday

- invest frist in education to train your mind ( books, seminors, courses etc) , open to new ideas and possibilities from different successul people

-listen > speak ( 2 ears 1 month)

-don't be chicken littles and be true to yourself and be willing not to go along with the crowd

you become what you study- choose what you study carefully

-find faster formale > skills are priceless

- self-discipline is always crucial

-manage the time, people and your personal time well

-financial IQ >> 1) accounting ( understand the financial statements and the company's strengths and weaknesses) 2) investing 3) understand mkt/economic condition ( supply and demand, maybe emotion-driven mkt 4) Law ( tax advantage and protection)

-management of cashflow, ppls and system( personal time), sales and understand marketing, communication skills

-know deeper and deeper > specialized skills (choices diminish> inflexible> trapped>need a very stong labour union to support )

-know a little but a lot> and work with smarter ppl to learn their specialities

obstacles even the one is financially literate

1) fear of losing money ( if u hate risk, start early, no rich person never lose money, put a lot of eggs into a few baskets only>focus)

2) overcome doubt & cynicism ( chicken little due to the noise outside> play it safe but not smart)

3) laziness (solution: a little greed)

4) habits ( pay yourself first> a lack of money is the motivation and inspire you financial genius> asset buy luxuries> be like the heros based on the situation) take actions before the financial rewards

5) arrogence ( ego + ignorance)

- get started > strong reason, learning and learning

other materials: (a audio report of the book)

http://www.richdad.com/RichDad/ProductDownload.aspx?id=3

ha, I have found that the id ranges from 2- 10 after trying to see whether other books' summary reports are available, I think it is a good material and provides the summary and the whole picture of the book

Lesson one

Caution: I just draft the stuffs that I remember in the lesson which are not included in the handout of the instructor, so hopefully I do not interpret and remember something incorrectly

Speeches given by my instructor - Simon Lee in Financial Planning Executive Program provoke my thoughts

- Life is like four seasons ( young = spring, work life= summer, near the time of retirement= autumn, old = winter)

- 20-year education, 40-year work life, 30-year retirement > 40-year income supporting your 70-year life

-professionals are not afraid of exams

- buy the real estate directly from the developer and skip the agents and buy at a discount price

- never buy a car which is superior than your boss's one

- work place is not your playground, don't post any of your family photos unless your colleagues are your true friends (i.e. don't let your boss know your relationship status or financial status because they may be guidelines for your boss to fire you)

- the power of compound interest tells that the younger and the larger you have already invested, the wealthier you can be)

- corporations can be long lasting and are always aggressive to look for the profits, but people are not, their ability to take risk declines with their age

-the destruction of time value of money is disastrous

- you can estimate the number rationally (aeroplane 900km/hr, car 50-110km/hr, bullet train in Japan 3xxkm/hr, so man cannot run 100km/hr)

- some people go to the amazon.com to see the preview( the first few pages of the books) and claim that they have read thousands of books ( very funny phenomenon)

- the unfair status between the bank and the public

《看見價值: 巴菲特一直奉行的財富與人生哲學》- Mary Buffett, David Clark

看見價值: 巴菲特一直奉行的財富與人生哲學
The Tao of Warren Buffett: Warren Buffett's Words of Wisdom: Quotations and Interpretations to Help Guide You to Billionaire Wealth and Enlighten - Mary Buffett, David Clark

Immediately become a little Buffettologist after reading this book and make me search more of his related books and his company- Berkshire Hathaway as well ( it is a high-valued company which helps its shareholder get satisfactory return every year but I have checked the " admission fee" to be a shareholder is stunning...US$102,200 per share!!!!!! Alhough I can't find the board lot, I am sure the one who can afford to buy are all millionaires...)

It was written by Warren Buffett's daughter-in-law

Although here are totally 125 quotations of him, some of their concepts ( especially the latter part of the book are duplicated. Still, it is worthy to read...many of them are witticisms

Compared with Lee Ka Shing, I appreciate him more. Apart from being a super successful investor, he contributed 85% of his wealth to the charity...definitely a generous person...

Besides mentioning his investing approach, it also mention the importance of integrity of a corporation, management skills or even some marketing concepts etc

I find he likes to focus and emphrasize on long-term investment instead of the short-term one, he prefers high-quality stocks (which can overcome the challenges and survive) and buy them when the overall economic condition is bad

But I am pretty sure that the brokers dislike Warren Buffett since they live on the comission depending on the frequent transactions in the stock market, if everyone is like Warren, the brokers/ consultants will be starve ot death

And I believe different people should have different strategies and philosophies since their financial conditions are not the same. Warren has super huge capitals to invest which allow him to gain a lot once he decided to sell the stocks as there will be a large sum return even the return rate is normal. As a mediocrity with limited capitals, if I adopt his strategies at this moment, the return will not be so obvious even the return rate looks good. ( although he always said value-investing, spend less but has a high return rate, it can't help much if you just invest $1 even with 100% return, right?)

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note for myself

- learn from experience, but if possible, learn from the others' experience first

-the ability of calculating percentage and possibility

- don't follow the trend

- jot down something which can force you to think deeply

- buy the stock which you can predict its future growth, with the ones which can generate return before but not merely the so-called potentials and expectations, buy the companies which you can expect even after 10-15 years due to unchange behaviours of the customers ( E.g. Cola Coke Budweiser)

- experience is important then academic theories

- " When the tide goes out, you will know who is swimming naked" > find out this person before the tide goes out

- the companies which fired employees and claimed to say it is a cost control measure was having bad cost control already

- do what you like and believe that you will be excel at that aspect one day

- self-marketing/ self-selling based on others' needs

- value investing - the company's fundamentals economic condition is important, good management cannot help much c.f. buy high-quality companies' stocks which are underestimated when the economy goes bad, be patient and let the value of the company grows


-accounting > business language> language of the game

- don't buy the stock which the company needs a large sum of capital to grow/ to develop its news products and thus they are unable to expand and acquire new companies or rebuy the stocks ( e.g. GM)

- don't cut price to protect te brand name

-popular and hot stocks can't help you to earn, never follow the irrational public 反向操作

- don't lose money since the principal is the key of success under the power of compound interest

-prevention is easier than getting rid of the problems once they emerge

-choosing the stocks is like choosing your life-long companion

-reply on you independent thinking rather than the analysts, consultants and brokers

- the little the compensation you pay, the higher the value you can get

- overdiversification is originated from ignorant

-don't buy some stocks you are not familiar with and with a blurred future

- buy resourse-monopoly industry (e.g. coal, road etc)

《智富掌門人──踏上理財顧問成功路》- 冼健岷

《智富掌門人──踏上理財顧問成功路》- 冼健岷
It is well-written by the chief distribution officer of Convey Financial limited ( one of company of independent financial advisor)

It is an informative book which shows the career path of a financial consultant

I know more about it and that's part of motivations of me taking the CFP course at CUHK

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note to myself: 保監 >保險中介人考試 >paper1,3,5
証監>證券及期課從業員資格考試> 香港證券專業學會從業員資格證書( 證券) > HKSI papaer 1,7,8