Saturday, September 12, 2015

I spent 5 years studying rich people, and here are the 9 best pieces of advice I can give you about money - Thomas C. Corley

I spent 5 years studying rich people, and here are the 9 best pieces of advice I can give you about money

Thomas C. Corley, Contributor

Sep. 4, 2015, 12:04 PM

Theo Wargo / Getty ImagesWealthy people have a handful of common habits surrounding money.

What secrets about managing money do the rich know that the average person doesn't?

I spent five years trying to answer that question. I asked 233 millionaires 144 questions and discovered that the rich have certain specific money habits we all should adopt immediately.

Below are some strategies that helped the rich get rich:

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Flickr / _dChris

Keep a close eye on where you're spending.

1. Track spending.

Know where your money is going. Look at your bank and credit-card statements every month. You'll uncover certain expenses for things you're not even using, such as club memberships, subscriptions, and automatic charges for services you've never used.

Often these automated charges occur after you enroll in some "free" promotion, where the free part expires after a promotional period.

2. Periodically audit expenses.

Many expenses can change over time — like insurance costs. They can go up or down over time. Make sure you are paying the lowest insurance rates for homeowners, auto, and life insurance.

Check your health insurance. You could be paying for dependents who left the nest, are on their own, and have coverage through their employer.

Cable and internet costs can increase without you being aware of it. Calling your cable or internet provider to secure the lowest fees available should be an annual process.

Periodically shop cellphone plans. Increased competition in the cellphone industry is driving down monthly rates. Make sure you aren't paying more than you have to.

Joe Raedle / Getty Images

If you need a new car, buy used.

3. Purchase good quality used cars.

New cars lose value as soon as they come off the lot. Buying good quality used cars allows you to take advantage of this loss in value anomaly prevalent in the auto industry. Forty-four percent of the rich in my study purchased good quality used cars.

Typically these are cars coming off a lease. They may be two or three years old. At 125,000 miles, most cars will require some annual repairs. Expect to incur about $1,500 a year in repair costs when you hold on to cars beyond this 125,000-mileage mark.

That is still significantly less than you'd spend on a loan or lease for a new car.

4. Use coupons.

Even the wealthy in my study engaged in this money-savings habit. Thirty percent of the rich used coupons to buy food.

Why pay more than you have to on groceries or other expenses?

Flickr / Cole Camplese

Housing shouldn't take up more than 30% of your monthly take-home pay.

5. Keep your housing costs below 30% of your monthly net pay.

Contrary to what you've been led to believe, most of the rich don't live in McMansions. Sixty-four percent of the rich in my study live in modest homes.

6. Bargain shop.

Far too many make spontaneous purchases, paying more than they otherwise would.

That's a Poverty Habit. Shopping for bargains and taking advantage of sales events is a Rich Habit.

Joe Raedle/Getty Images

If you're going to use credit cards, take full advantage.

7. Take advantage of credit-card reward dollars.

Many credit cards have rewards programs attached to them. Typically, these rewards programs generate reward dollars that you can use at participating vendors. For example, the American Express reward program gives you about 88% back on every dollar you spend using an American Express credit card.

One of the participating vendors with American Express is Barnes and Noble, and 50,000 American Express Rewards Dollars translates into $500 in Barnes and Noble gift cards. You can buy 20 $25 Barnes and Noble gift cards and give them out as gifts for occasions like birthdays and holidays, and it'll cost you nothing.

8. Establish savings goals.

The rich make a habit of allocating their savings into different buckets, or categories. In order to do this, you need to establish an overall amount of savings you're willing to set aside each month.

For example, if you decide to set aside 10% of your monthly income, you might allocate 5% into your retirement bucket, 2% into your specific expense bucket, 1.5% into your unexpected expense bucket, and 1.5% into your cyclical expense bucket.

Sharon Mollerus/flickr

Make your savings automatic so you can focus on other things.

9. Automate the savings process.

This is where the rubber meets the road: implementation. Automatically direct each of the above savings amounts into each bucket's separate account via automatic withdrawal from your net pay or from your bank account.

Automating your savings forces you to live below your means because you save first and spend what's left.

Money management is a process. Accumulating wealth is a process. It's all one big process this thing we call financial success.

But if you don't have a process or adopt good money habits, like the rich in my study, you will never be able to save. It just won't happen.

When you develop good money habits, you feel like you are finally in control of your life. It's empowering and it will increase your wealth over time. Keep in mind that it took most of the wealthy in my study 32 years to become rich. Accumulating wealth takes time and discipline.

Friday, September 11, 2015

GOLDMAN: Oil is on the verge of plunging to $20

Mike Bird

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Flickr / Ray Bodden

Oil prices have been on a roller-coaster ride over the past year. West Texas Intermediate (WTI) oil tumbled late in 2014 from over $100 (£64.78) a barrel to just around $45 a barrel early this year.

After a recovery back to around $60 a barrel during the early summer, prices have gone through the floor again, down to $45.12 on Friday.

But oil could go even lower.

The price of a barrel of oil could go to just $20 soon, according to Goldman Sachs analysts led by global commodities research chief Jeffrey Currie.

There's a huge surplus of oil in the world, stemming from both buoyant supply and weaker demand, and that could leave prices at levels not seen in decades. Here's a snippet from Goldman's latest note on oil:

The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China's slowdown and its negative EM feedback loop ... While not our base case, the potential for oil prices to fall to such levels, which we estimate near $20/bbl, is becoming greater as storage continues to fill.

That's the level oil was at for most of the 1990s — though of course, $20 then was worth more than $20 now.

Finviz.com

Goldman's base case — its most likely scenario — is that WTI oil prices are at $38 in one month and $45 in 12 months. That's a serious cut, from forecasts of $45 in one month and $60 in 12 months previously.

Effectively, the bank is now saying US oil producers need to go out of business for oil to rebound again, since the analysts "believe the market requires non-OPEC production to shift from our prior expectation of modest growth to large declines in 2016."

But that's not certain at all — US producers have been surprisingly resilient to the plunge in oil prices that began at the end of 2014. WTI is now sitting at below half the level it was for most of 2014.

When prices recovered a little earlier this year, US producers began to bounce back, and the decline in rig numbers reversed. Goldman's note says that has probably had an impact on the world's major producers, who would like to squash the American oil industry:

OPEC's resolve in growing market share has likely strengthened following the pick-up in US activity that occurred this summer once WTI prices returned to $60/bbl. Despite the fiscal challenges that low oil prices create for OPEC producers, the alternative of reducing production would similarly undermine long-term revenues.

In short, Saudi Arabia and the world's other major oil nations are willing to wait it out and keep the supply up. With Iran's nuclear deal looking relatively likely, another major source of oil will emerge in the near future.

The analysts also show that a long period of lower prices is possible, with a chart of how much it costs different producers to make a barrel of oil:

Goldman Sachs

There's a steep climb, and some fields will have to go heavily into debt or shut down if prices plunge to such a low level. But much of the production can be done with oil prices below $25 or ever below $20 a barrel.

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Europe: Stocks trim weekly gain, unable to shake off Fed concern

SEP 12, 201512:24 AM

[LONDON] Concern persisted over an impending Federal Reserve rate decision, sending European stocks lower for a second day.

Declines in telecommunications shares contributed to losses after opposition from the European Union led Telenor ASA and TeliaSonera AB to scrap a merger of their Danish businesses. Rival TDS A/S slid 7.7 per cent as the news ended its prospects of facing less competition. Telecom Italia SpA, a target of takeover speculation, slipped 3.1 per cent.

The Stoxx Europe 600 Index dropped 1 per cent at the close of trading, paring its weekly advance to 0.7 per cent. After rising for three straight days, European shares slid yesterday as strong US labour data stoked concern about a rate increase. A report today showed American consumer sentiment fell to a one- year low.

"A lot of people are sitting on the sidelines and taking some money off the table ahead of next week's FOMC meeting," said Markus Huber, a London-based senior sales trader at Peregrine & Black Ltd.

"Even though the chances of a rate hike are slim, people just want to be sure, just in case there are some comments from Yellen. We're still in a consolidation phase where it hasn't been decided whether the next major move is going to be up or down." Traders' bets for a September increase have held steady at 28 per cent this week. Fed Chair Janet Yellen holds a press conference after the decision.

Among other shares active on corporate news, Actelion Ltd. slid 5.4 per cent after confirming it's in preliminary talks with ZS Pharma Inc.

Finmeccanica SpA rallied 5.4 per cent after a person familiar with the matter said partner Eurofighter GmbH is close to sealing a multi-billion euro order to supply warplanes to Kuwait. Regus Plc climbed 2.6 per cent after a report that its founder recently rejected an approach from a private-equity firm.

BLOOMBERG

PAP wins bigger than expected with the silent majority's backing - SINGAPORE GENERAL ELECTION

SINGAPORE GENERAL ELECTION

PAP wins bigger than expected with the silent majority's backing

PM Lee calls outcome 'good results for PAP and excellent results for Singaporeans'

Chuang Peck Mingpeckming@sph.com.sg@PeckmingBT

SEP 12, 20158:00 AM

Singapore

THE ruling People's Action Party (PAP) not only won big but won bigger than expected in the 2015 General Election (GE) which ended on Friday.

The PAP scored 69.86 per cent of the total valid votes when many, while expecting the party to return to form the government, had expected its popular vote to drop below the 60.14 per cent collected in the 2011 GE.

Party boss Prime Minister Lee Hsien Loong, describing the results as exceeding the party's expectations, said they were "good results for (the) PAP and excellent results for Singaporeans".

The results signal a "fresh and clear mandate for the PAP to take the country forward", he said at a post-election press conference at 4am on Saturday morning.

Of the 89 seats up for grabs, the ruling party captured 83, against the Workers' Party's (WP) six. These include 15 of the 16 GRCs (group representation constituencies) and 12 of the 13 SMCs (single-member constituencies) contested.

The PAP regained Punggol East, which it lost to the WP in a 2012 by-election. And it strengthened its hold on Potong Pasir, which it won back from the Singapore People's Party (SPP) in 2011.

In Punggol East, PAP candidate Charles Chong beat the WP's incumbent Lee Li Lian, but narrowly with 51.76 per cent of the votes.

The PAP's Sitoh Yih Pin widened his winning margin over the SPP's Lina Chiam from under one percentage point in 2011 to nearly 32 percentage points with a 66.41 per cent win.

In hot seats Holland-Bukit Timah, East Coast and Marine Parade GRCs and Fengshan SMC, the ruling party also won convincingly by larger margins.

PAP candidates Vivian Balakrishnan, Sim Ann, Christopher de Souza and Liang Eng Hwa overcame the Singapore Democratic Party (SDP) team led by Chee Soon Juan in Holland-Bukit Timah, garnering 66.62 per cent of the vote - up from 60.08 per cent in 2011.

Emeritus Senior Minister Goh Chok Tong and his winning team, which included Minister for Social and Family Development Tan Chuan-Jin, also raised their winning votes in Marine Parade GRC from 56.64 per cent to 64.07 per cent.

In East Coast GRC, now minus Fengshan, the PAP team increased its vote from 54.83 per cent in 2011 to 60.73 per cent.

And in the new Fengshan single ward, the PAP's Cheryl Chan - who stood for election for the first time but has been doing grassroots work in the ward for a decade - beat the WP's new face Dennis Tan with 57.52 per cent of the vote.

While the PAP failed to dislodge the WP from Hougang, it managed to trim the WP's vote from 64.80 per cent in the 2011 election to 57.69 per cent.

It also narrowed the winning percentage of the WP team, led by party chief Low Thia Khiang, in Aljunied GRC from 54.72 per cent to 51 per cent.

PM Lee and his two deputies, Teo Chee Hean and Tharman Shanmugaratnam, also scored big with their teams in Ang Mo Kio, Pasir Ris-Punggol and Jurong GRCs respectively.

The late Lee Kuan Yew's stronghold Tanjong Pagar GRC, where the PAP was challenged for the first time since 1991, did just as well under a team helmed for the first time by NTUC chief Chan Chun Sing.

Thanking voters, Mr Lee described the 78.63 per cent vote share given to him in Ang Mo Kio as a "very good result" and "very strong support".

Along with DPM Tharman's team in Jurong (79.28 per cent), the PAP team in West Coast (78.57 per cent) and Mr Chan's team in Tanjong Pagar (77.71 per cent), the PM's team attained among the best results in the GE.

The big swing in votes to the PAP reflected also the WP's poor handling of the finances of its town council in Aljunied, according to observers.

But most of all, it was a resounding vote for the ruling party's track record and clean rule - and the confidence in its leadership to shape Singapore's future for at least the next five years, if not longer.

The silent majority has spoken - and given its backing to the PAP, the observers said.

Moderate 5.4-magnitude earthquake rocks Tokyo

SEP 12, 20157:52 AM

[TOKYO] A moderate earthquake hit Tokyo early Saturday, waking residents and shaking buildings in the Japanese capital, but there was no immediate report of any damage.

The 5.4-magnitude quake, with its epicentre located in Tokyo Bay, struck at 5:49 am (2049 GMT), according to the US Geological Survey.

The Japan Meteorological Agency said no tsunami warning had been issued, and that the quake was 70 kilometres (43 miles) deep.

Residents said the quake was not strong enough to knock things from shelves. It prompted a handful of reports of possible injuries, including a woman who complained about being hurt after falling from her bed, according to national broadcaster NHK.

It temporarily stopped Tokyo subways and trains, but service was quickly resumed.

The tremor did not cause any damage to the region's nuclear facilities, according to the government, and did not affect the areas that host the crippled Fukushima Daiichi nuclear plant, which went through meltdowns after a 9.0-magnitude quake and tsunami disaster in 2011.

It served as a reminder that a huge earthquake could strike the Japanese capital - which has a population of about 13 million people - at any time.

Experts have long warned Japan to stay vigilant for the next "Big One", and a powerful 7.8-magnitude earthquake struck off the coast in May.

Residents and officials of Tokyo and the rest of the nation routinely hold emergency drills, with the government stepping up its disaster response in the wake of the 2011 devastation.

AFP

Nippon Life says to buy Mitsui Life in deal seen worth US$2.5b

SEP 11, 20157:01 PM

[TOKYO] Japan's largest private life insurer Nippon Life Insurance Co said on Friday it would buy smaller rival Mitsui Life Insurance Co in the first major deal involving local life insurers in just over a decade.

The insurers said they have not agreed on the final price of the deal, but people with knowledge of the matter said Nippon Life would likely pay around 300 billion yen (US$2.5 billion) for an 85 per cent stake in Mitsui Life.

Nippon Life, which has about US$513 billion in assets, said it expects the deal to close by end-March. Under the terms, Nippon Life will buy all of Mitsui Life from a group of shareholders and then sell a 15 per cent stake to companies including Sumitomo Mitsui Banking Corp and Sumitomo Mitsui Trust Bank. "The Japanese life insurance market is a mature one, but there is room for growth," Nippon Life President Yoshinobu Tsutsui told reporters. The deal is the first involving Japanese insurers since merger that created Meiji Yasuda Life Insurance Co in 2004.

Mitsui Life offers products that are sold at banks and insurance brokers, an area in which Nippon Life lags its rivals.

Major Japanese life insurers have traditionally hired female sales agents to market their products to entire neighbourhoods, but a growing number of customers now prefer to buy insurance at brokers or banks, where they can compare policies.

Nippon Life has previously said it could spend up to 1.5 trillion yen on acquisitions and investments at home and abroad over the next 10 years. Japan's declining population, however, is forcing more insurers to look abroad for growth.

REUTERS

Saturday, September 12, 2015