If you have noticed, I’ve been neglecting the financial portion of my blog.

I guess this is partially because I’ve also started my editorial consultancy duties for a finance company, and I am a bit less keen on writing more financial articles. Can be quite taxing doing the same things again and again.

That aside, let’s go straight to the point. This is actually a continuation of where I left off from Random Finance Tip #2

So today’s Random Finance Tip and third of this series is……………….

You won’t want to scare her away with your fart and body odour, or start acting like a irritating punk, don’t you?

Same thing with financial institutions. They show you the most beautiful side of the deal and make it very prominent, but usually it is just 1 portion of the big picture.

The rest of the deal that they do not really want you to see are normally tucked away quietly in the fine print.

I know this very well, as I used to scan through financial products (fixed deposit and loans) and their publicized offered rates. Very often, these rates only last for a short period of time, or there is certain catch to it, such as having to put in a substantial sum first before you are able to qualify for the deal.

Can’t blame them, really. They gotta make business. They too, have to make money to put food on their families’ table. I can’t really slam them as I’ve friends working in the finance line.

However with that said, the onus and responsibility is actually on you, as the consumer, to protect yourself by understanding everything clearly first before taking the plunge.

And one of the first step is to READ the FINE PRINT!

Let’s be honest, how many here do not read the fine print or were caught out before due to not paying much attention to the fine print?

I reckon there are quite a fair bit. Nevertheless I wanna hear from you. Share with me here with your experiences.

[tags]Financial products, loans, fixed deposit, fine print, financial institution[/tags]

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I left a comment on it, and I thought I reproduce it here.

Without further ado, the second tip of this series is

“In times of sudden crisis, buy blue chip stocks”

Just in case you are wondering what the heck are blue chip stocks, let me first clarify. Nope they are not potato chips that are blue in color (Sounds yucky to me).

Blue chip companies are generally defined as big, safe, fundamentally strong companies with a market capitalization in excess of billions.

Blue chip stocks are good if you want to add some balance and diversification into your portfolio, but don’t expect any extraordinary gains. They are as safe (some people say boring which is a good thing actually) as can be. If you are looking for wild fluctuations, gyrations and excitement, you gotta look elsewhere.

So why buy in times of sudden crisis?

By sudden crisis, I mean a terrorist attack like 9/11, tsunami or hurricane devastation, death of a leading political figure or outbreak of disease like bird flu or SARS.

Such incidents usually spark off wild panic and indiscriminate selling. People are abandoning ship like nobody’s business.

You might be tempted to jump too, or stay off the market, but hold on a second!

Warren Buffett once said, “Be fearful when others are greedy and be greedy when others are fearful.”

How apt!

When everyone is panicking and selling like crazy, now it is time for you to pick up stocks like a crazed greedy mad man who seemed like he had never eaten in years! Not just any stock, but fundamentally strong blue chip companies with a solid balance sheet.

Now we are talking!

You can be assured that that the price of these companies will drop due to the mad sell off and this will represent a fantastic chance to scoop them all up at a bargain price. You probably won’t get such a good deal at the annual great sale by your nearest shopping mall.

If you think long term, and am willing to look past the short term downward spiral, the price will definitely correct itself in due time when the market has stabilized and regain it’s lost head.

Better still, look at government-linked companies like banks. The government won’t allow them to fall, so it’s a pretty sure bet in this scenario.

Blue chips have never tasted this tasty.

This strategy has worked in the past and will work in future. Just that, do you dare to go against the emotional mass crowd and walk the road less traveled? That is the question.

[tags]random finance tips, blue chap stocks, Warren Buffett[/tags]

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I’ve been wanting to have a section which will go something like ‘Finance Tip of the Day’ or ‘Finance Tip of the Week’, but as each title implies an action that will be carried out on an consistent basis (everyday or everyweek), which is one that I cannot guarantee, I decided a ‘Random Finance Tips’ would be suffice.

So welcome to the inaugural edition!

The first tip in this series is

“Don’t spend more than you can earn.“

Yes I can probably hear a few people going, “yeah but this is common sense!”

Precisely! It is common sense but yet many people continue to commit this same mistake.

In fact, if your spending is almost equivalent to your income, you are already standing dangerously at the edge. Needless to say, once your spending exceed what you earn, your financial picture is definitely not going to look pretty.

If you are one of those that spend much more than you earn, you probably need to take a look hard look at yourself and ask some questions:

1. Are these spendings just needs or wants?

2. Are they absolutely necessary?

3. Will I survive in one year time if I continue spending the way I’m doing now?

It’s not uncommon to get people complaining that they don’t earn enough, and they barely have enough money to spend. While some of these concerns are indeed valid, quite a fair bit of them are facing such problems because they are just spending on some stuffs that are unnecessarily putting a burden on their net income.

Let me give you an example. In Singapore, it is notoriously expensive to buy and maintain a car. Settling the downpayment and certificate of entitlement (COE) of the car is probably the easiest part of the process, but the upkeeping of the car is the KILLER.

If we ignore the monthly installment plus interest that car owners have to pay, they still have to pay for the road tax, car insurance, parking fees, weekly petrol top up not to mention, workshop maintenance as well. These expenses can accumulate to quite a fair bit.

Fair enough if you earn adequately or a car is really a necessity in your line of work, but quite often, I see people buying car for the sake of ‘face’, and then struggling to pay the bills. They then end up being neck deep in water. With no extra cash, there won’t even be savings to speak of, or money to invest for the future. Precarious outlook if you ask me.

There are also many people that overspend using credit just because they don’t really feel the pinch since it is on credit, not cold hard cash. However at the end of the day, you cannot escape the fact that you still have to pay the bank back. If you don’t pay by the due date, you will end up forking out even more as there will be interest charged. And don’t let me get started on credit card interest rates. Sky high if you ask me! Of course, the banks will be happily awaiting all the extra income for them.

Though that is not to say that credit cards are entirely bad. It has its benefits as well and can be a great saving tool if utilized well. I’ll save that for another day.

I’m sure you have often heard your mum nagging at you to spend within your means. Mum knows best indeed! If you are not earning much, then don’t spend so much on things you can do without!

Try this today. Record every single expenses you have, as detailed as possible, and tally it at the end of the month.This will serve as a reality check for you, on whether you are spending within your means or going over the edge. I warn you – you might be in for a shock!

[tags]Random finance tips, credit card spending, credit card interest rates, car spending, spend within your means, don’t spend more than you can earn[/tags]

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