Friday, February 24, 2012

Entrepreneurship Insights: Ten habits of highly effective inventors

1. They note down their ideas in a notebook (just like my Investment Notebook!). Every idea is worth considering.

2.They think through their ideas over and over again before applying for patent.

3. They do their homework and invest a lot of their time doing extensive research (through internet, malls and prior patents for similar ideas).

4. They are good salespeople and can make good sale pitches.

5. Passionate about their ideas.

6. They constant improvise their concept to solve existing problem. They have no qualms seeking inputs and making revisions to their first prototype.

7. They are fiercely persistent and do not give up easily. When one experiment fails, they recover from the initial setbacks and try again.

8. They work well with partners. Good ideas are often turned into great ideas when shared with like-minded inventors or partners.

9. They are versatile and will not hesitate to let go. They experiment, learn and improve and know when to let go.

10. They enjoy the process of inventing and creating a business. Only very small percentage of ideas ultimately makes money. But effective inventors often thrive on the challenge of making money out of creative ideas.

Magically yours

Tuesday, February 14, 2012

Investment Notebook 2011: Gold ETF

Below is an article on gold ETF extracted from SGX published in 2011:

1) SPDR Gold Shares® (GLD) ETF participation has increased in August on account of the volatility that has coincided with Standard & Poor’s downgrading the credit rating of the United States to AA+ from AAA.

2) Unlike Gold Futures, the GLD ETFs do not extend leverage to the ETF buyer and sellers.

3) In Asia, the GLD ETF is cross-listed in SGX, Hong Kong and Japan. SGX maintains the largest market share of GLD with over 53% of Asia volume transacted on SGX.

4) Spread-wise, the GLD ETF has the most competitive average spread of 9.487 bps where the average spread of GLD in HK and Japan are 12 bps and 11 bps over the past one week.

SGX currently lists 84 Exchange Traded Funds (ETFs) that cater for a number of assets, investment strategies and risk appetites. The events of August have seen participation growth in the SPDR Gold Shares® (GLD) ETF that has coincided with the rising price of gold that reached a new high as measured by the London Gold AM Fix closure of US$1786 on 11 August.

The GLD ETF is a cash-based ETF, implying that the ETF is investing into the actual basket of constituent stocks that the ETF is tracking against the benchmark index. In its thematic research paper entitled “Gold: hedging against tail risk”, the World Gold Council WGC) argues that Gold can be used to manage risk in a portfolio in certain circumstances. In the report, tail risk is defined as infrequent or unlikely events that have consequential negative effects on an investor’s portfolio when they occur.

While the study is of interest, markets are dynamic and characteristics can change. Investors should appreciate that the price of gold can be subject to sudden upside and downside moves, and that past results do not guarantee future performance. Investors must be comfortable with market risks before participating in this market.

Magically yours

Monday, February 13, 2012

Entrepreneurship Insight: Five reasons you should not quit your job to start up your own business

Starting up a business is not easy and very often, it can really take over a person’s life due to the huge efforts and financial commitments required. Therefore normally I would not advise anyone to quit their job and start a business because that could be a recipe for disaster. Do it right and your life changes drastically for the better. Do it wrong and your life goes spirally downhill. So always plot your move carefully and make sure you do your homework before making the big escape from the rat race. Below are five reasons why you must never quit your job and start up your business.

Starting up a business needs time
Starting a successful business takes time. Do not be fooled by media reports of young entrepreneurs achieving overnight success and becoming incredibly rich. Founders of Microsoft, Google and Facebook actually went through a lot of hardship, trial and errors before attaining wild success at international platform. They had made a lot of mistakes and setbacks before achieving business successes. Henceforth, learn from others mistake and avoid the potential pitfalls. It could be a long time before your business makes any profit, so make sure you hold a job while going through the phase of starting up a business.

Bills, bills and bills
Unless you are born with a silver spoon, we all have bills to pay and worry about. Quitting your job would hurt your pocket especially if your business has not started to earn sustainable revenue. Your relationship with your spouse or family members could also be strained if you are the sole breadwinner. So make sure your household finance is in order and in shape before you made the plunge.

Do it for the Passion, not for the Money
Not everyone starts a business for the sake of money, but for an entrepreneur to be successful, he must have the passion. If you are creating a business primarily to get rich, your focus will only be on money, sales growth and on expansion for the sake of expansion. You will lose sight on refining your business ideas, improve your product, increase product variety and enhance your customer service skills. So always ask yourself the reasons for starting your own business. Is it because you feel it is your calling and something you feel so passionate doing it over and over again every day? Or do you want to quit and start up a business because of the freedom? Quitting your job and starting a business might be a tempting but risky option, especially if you are doing for the sake of money and freedom.

We all live in a connected society. At some points in our lives, we all need some form of help from friends, colleagues, associates and schoolmates. Being in a job allows you to build up your network in your industry and could prove helpful in future when you start up your business. So before you quit, ask yourself what sort of reputation you think you have built up over the years and can your current network help you in your business empire?

People’s skills
Many entrepreneurs failed to realize that starting a business consists of a business idea and sales. You can have the best product in the world but if you can’t sell, the business will not make it. Period. And in order to sell, you need to have people skills. You need to have persuasive skill to convince buyers and investors. You must have good presentation skills to get investors to buy in your ideas. The best platform to gain these skills and experiences is through your job. Always observe the best performers in your office. Learn from them how they negotiate, how they present and how they market their products. So before you resign from your job, ask yourself whether you have acquired these people skills and if not, my advice is to stay on and keep learning!

Magically yours.

Sunday, February 5, 2012

Investment Notebook: Opportunity Fund Part II

In my previous posting, “Investment Notebook: Opportunity Fund”, one of my readers posed this question to me “how many percentage of my net worth coming from the return of my stock investment, would I consider it has made me rich”. This is a very interesting question and it has set me pondering hard for several days. One thing for sure is that I did not have a clear cut answer to that question but nevertheless, I shall try my best to reply.

Rate of returns VS net worth yield
When I invest in anything, normally I look at the potential rate of return on my investment capital. For example, if I rent out a HDB flat I would set a yield target of 10 -15%. Likewise, when I invest in stock, my target is value appreciation of 10-20%. For example, when I activated my “Opportunity Fund” in 2008, I made a return of about 17% from my stock investments of S$20,000. Setting return target based on personal net worth is another matter altogether. It requires one to consider their personal income, fixed assets (housing, CPF,etc), insurance policies, investments (gold, shares, property,etc) at that point of time. Furthermore, one’s net worth changes all the time, subjected to economic situation. For example, we may get retrenched and lost our sole incomes due to downturn. So I would say it is not easy to determine one’s net worth.

My best investment
If I have to consider the percentage of net worth coming from my stock investments that I think will make me become “rich”, I would say it has to be at least 1000%. When I obtained my degree in 2005, my father helped to pay the student loan of $22,000. I had since repaid him back several years ago and “recouped” the investment. I must say my education was my best form of investments as it had opened many doors for me, allowing me to be gainfully employed for the last 7 years.