Ideas on how to become rich - Some Great Ideas by Jack Welch
I have been busy with my Economics examinations and have not had much time to blog, but I received a very nice email from someone who had some interesting tips and ideas on wealth and money making, because she read a book by Jack Welch. Thus my post for today is "Some Great Ideas by Jack Welch" on how to become rich and successful. A short introduction to Jack Welch in case you aren't sure who he is or in case you wish to have a reminder:
John Francis Jack Welch was former Chairman and CEO of General Electric and is incredibly rich and wealthy, having successfully managed GE from 1981 to 2001. He is known for his uncanny business acumen and his wise business strategies that have done very well.
Here is the contribution by Sally, and here is what she wrote to me (edited):
Some great ideas by Jack Welch
"I am in SIM reading this book by Jack Welch and these are some of the tips which I thought I would like to share with you:
a) invest in people
people matter in our lives, value good friends and people
b) dominate your market or get out
This is like what you said to me and sounds exactly like the advice you gave to me! This is a good idea.
c) never sit still - we have to be relentless and restless because sitting on our butts, we cannot achieve anything great.... and the ship can only sail when it leaves the port of safety. This is a good idea as well!
d) one should also think service - according to Welch, one should also know how to provide good service and in particular better service, better than someone else... because people remember your service after the product is gone and waned.
e) forget the past and move on to the future -- what is gone is gone, the most important thing is to harness energy for the future because that is where we can embrace the new and look forward to new things and new money making opportunities and ideas.
f) learn and lead - life is about learning everyday, and life is also about leadership. We should learn new things every day and learn how to be leaders!
g) no bull - do not bullshit , be honest and straightforward - this is typical Jack Welch!
h) kill bureaucracy
i) stick around - be persevering and persistent, for money making opportunities and new ideas are always around the corner, and finally
j) manage the corner store - look out for things that seem insignificant and keep track of what is going on... I realise that I have to make sure that I am keeping abreast of what is going on around me. That's all I have to share regarding Jack Welch and his great ideas.
All these tips from Jack Welch of GE"
Thanks to Sally for her invaluable contribution to my ideas on how to become rich site! Thanks for reading and more important posts here on finance, investment and money making ideas to come soon. Thanks and cheers!
Ideas on how to become rich
Ideas on how to become rich - Some Great Ideas by Jack Welch
Special series - how to survive a recession, part 4
Special series - how to survive a recession, part 4
I have written several articles on how to survive a recession here on my ideas on how to become rich site. You can navigate to the articles on how to survive a recession here:
Special series - how to survive a recession, part 1
Special series - how to survive a recession, part 2
Special series - how to survive a recession, part 3
In this post I shall be dealing with ideas on how to survive a recession if you happen to be hard hit by a recession. The first and most important idea is that prevention is always better than cure, and that sound financial planning and sound savings plans should have been the most important thing before any recession strikes, or for that matter, before any depression strikes (where a depression is basically a worse and prolonged version of a recession).
The question is: how do you survive a recession if you happen to be hard hit by one? Here are some practical ideas on how to survive a recession if you happen to be hard hit by one... good luck!
1. Education is important. Get more education and more skills.
There are many types of education, some professional and some academic. Now is the chance for you to pursue higher education or some form of learning where you can acquire new skills and new abilities that can be applied to finding and maintaining a job. The key fact is that in the 21st century, earning money will be tied to knowing skills and knowledge that can help you make money and help you work better. Education is more important than ever before to help you make money, and people who skip school or have not attained education are more likely to suffer from structural unemployment. That is not a palatable fact, but it is true that to earn money in the new knowledge based economy that is globalised, knowledge, education and skills are key critical factors to earning money and making a living.
With respect to financial education, sites like mine provide ideas, and you can actually get financial certification that will put you in good stead when the economy recovers. Try an MBA, or an accountancy degree, or some other financial certification such as an ACCA, CFA, CPA and the like, as these financial certifications will be very useful to you, job-wise as well as financial knowledge-wise. Prevention is always better than cure, and therefore not getting into a bad situation in a recession is always a good idea.
2. Adjust your expectations, in terms of job scope, salary and wages. Try out for other jobs, maybe even lower paying ones.
Usually recessions lead to massive unemployment because people get laid off. The thing is that if you happen to lose your job, that is not the end of the world, because you can find a new job - if you are willing to take the hit on the income and willing to work longer hours for lower wages. The question is how to survive a recession, remember? Hard work, lowered and adjusted expectations, and the willingness to adapt to the changing economic conditions - all are the necessary things to do.
3. The most important thing of all that you must do in a recession - tighten your belt!
The most important thing to do during a recession is to make the necessary reductions in expenditure, which basically means that you have to spend less. Spend less, spend less! You can spend more when the economy recovers and when you have a high paying job. The reality is that sometimes people are forced to do things out of necessity, and surely a recession is one of the biggest factors forcing people to spend less money, which they should during a recession.
Some financial advisors have even suggested cutting up credit cards and downsizing or even moving to smaller homes and selling home objects, although that might be very extremist. Just reduce expenditure, and there should be no need to go to such extreme lengths. If you need the money, however, then there might be no choice and you would have to bite the proverbial (financial) bullet.
The basic key and basic strategy for surviving a recession is therefore to reduce costs and try to increase income, if one has been laid off and has lost a high paying job. Maxim to live by during a recession - attempt to reduce costs and maximise income!
In the final analysis, more research is needed. My website helps people by giving financial education, investment schools of thought and their analysis, and investment knowledge, as well as ideas on various ways of making lots of money and becoming rich. I have come to the conclusion of the series on how to survive a recession, because ultimately this is not the focus of my site, and my site is basically about how to make money and how to become rich, and is mainly about ideas and education in investment, financial education and other such stuff. Recessions are not my cup of tea, because as I've mentioned prevention is better than cure.
Thanks for reading, take care, and all the best. More to come on my website on finance and making money so as to become rich! Thanks.
Ideas on how to become rich!
Special series - how to survive a recession, part 3
Special series - how to survive a recession, part 3
Welcome back to my series on how to survive a recession here on my Ideas on how to become rich site. In the first post here on my site I wrote about the orgins of the 2008 financial crisis, which can be seen to have had long rooted causes and goes back many years. In the second post here on my site I wrote about the various past depressions (a depression is a longer and more series recession) and also on several key terms and key terminology for the current economic and financial crisis.
You can conveniently and quickly view the articles that I wrote earlier quickly using these convenient links here:
Special series - how to survive a recession, part 1
Special series - how to survive a recession, part 2
In this post, I will be writing about the various assets that you can put your money in - that is to say, while the world/ your local economy/ your regional economy is in recession, what should you do with your money? Basically I am asking the question "how do I survive a recession" and answering it with another further and related question: "where do I put my money during a recession and how do I survive it without losing any more of my funds?"
From the Straits Times, here are the 10 safest to most dangerous investments you can make - financial instruments that you may want to consider to take you through a recession. Note that I do not deal with psychology and with how to cope with losing money and psychological aspects of recessions and depressions, with emotions and all that. My goal is far more limited and has to do with looking at financial outcomes, financial reasons, financial causes of recessions and what I can do with money, what I can do with other people's money, what I can do while the world is reeling from the 2008 crisis and other questions of this nature. That is the fundamental reason why this article on how to survive a recession basically deals with giving 10 financial instruments/ means and investments for you to make a choice. Where should you put your money? That is the question. In future posts here on this site, the special series will also deal with (theoretically) things you can do to cope and survive a recession if you have been hard hit.
Safest to riskiest investments/ financial devices etc
1. Money
2. Bank deposits
3. Money market funds
4. Bonds
5. Unit trusts
6. Equities/ Shares
7. Complex structured products
8. Futures
9. Forex
10. Hedge funds
(Straits Times, 28th Sep 2008)
Safest to riskiest investments/ financial devices/ holdings
1. Money
This is the most liquid form to hold, and in a recession might be one of the best ideas since stock markets go down in a recession. This form is liquid and can be easily converted from asset to asset, and can tide you over rainy days. However, do bear in mind that money diminshes in value due to inflation and also there is no way that you can make money from money without interest or investment. Thus, money is liquid and useful in a recession but loses its value to inflation and does not earn you a return.
2. Bank deposits
This gives you peace of mind as well as some minute, low interest rate, so bank deposits basically are good for you in a recession. In Singapore as well as in many countries in the world, your bank deposits should be guaranteed, at least up to a certain sum of money. However, if there is a run on the banks in a recession, then you stand to lose your money - or part of your money if the money is not entirely guaranteed. Also, it is possible that inflation may be higher than the little bank deposit interest rate. So while in a recession bank deposits and cash are very safe and very liquid, they also do have their cons, but in a recession you might be safer holding these two very safe forms of money.
3. Money market funds
These rank a bit riskier than money and deposits in a recession, and while these are basically stable and low risk investments, there may be a risk of default when borrowers do not pay back the loans owed and hence the money market funds which lent those borrowers money might lose some money. A money market fund is basically an investment into short term instruments and debt securities, and sometimes government bonds. You can place your money in money market funds for some time and these should be overall quite safe in a recession.
4. Bonds
These are rather safe investments - bonds are basically fixed income instruments where governments and companies raise funds by borrowing money. These are basically debts.
The returns may not keep place with inflation in a recession, and also there is the risk of default, so do stand warned. This is more risky than money market funds which are diversified.
5. Unit trusts
Your investments will be managed by professionals, you can get high returns sometimes, there is diversification; however, in a recession, these are many risks and sometimes you may not get your capital back. Unit trusts (or mutual funds) are only good for new investors or people who have little knowledge of the stock market. In good times, a lot of money can be made, but in a recession lots of money can be lost and your capital and principal may not make it back.
6. Equities/ Shares
If you are Warren Buffett, or for that matter any savvy investor and wise man, this might be a very good option for you, in a recession or not. However, in a recession this may not necessarily be a very good idea unless you have an appetite for risk and you really know what you are doing.
7. Complex structured products
High risk products which give you potentially high returns, but they have complex underlying mechanisms which may not be fully understood by investors - therefore a very risky investment to place a lot of money in a recession.
8. Futures
There are low transaction costs, low outlay with the potential to make a lot of money and become rich, but just as there is potential in making a lot of money, there is a possibility of losing a lot of money as well. Derivatives are usually only for professionals or very savvy and intelligent investors, and even then, in a recession these are very unsafe.
9. Forex
You can generate and make a lot of money in good times and in also still make money in bad times with forex trading and there are many pros and cons discussed here: visit these links here to see what I have written on forex here (a summary page to access links to forex articles here on my finance and investment site).
However there is a need for intensive research, this may be rather dangerous, constant monitoring is needed, and forex is usually only for pros and savvy investors with an appetite for risk.
10. Hedge funds
You can make a lot of money here, but you can also lose a lot of money. You depend on the fund manager here and then again, in a recession this might not be a very good idea. This according to the Singapore news is the worst and most risky investment in a recession, and I must say that I agree. Only investors with a lot of money to risk should do this in a recession, and there must be a ability to wait for the economy to recover. This is the most risky investment when compared to the rest above.
That was a lot of analysis and it deserves a close attention and serious reading. Hope that gave you a better idea of what to expect in terms of investment and money during a recession. More to come on my site on this special series on how to survive a recession!
Thanks for reading, cheers.
Ideas on how to become rich!
Special series - how to survive a recession, part 2
Special series - how to survive a recession, part 2
Financial education here on Ideas on how to become rich!
This is my second instalment in my series on how to survive a recession, or more accurately, what can we learn from a recession and what can we do during one so that we can make money or prevent the loss of money. I do the research and present it on my site so that you can learn and benefit from financial education and so that your investments will be well informed such that you make money whenever you can and avoid losing money if possible. Here are some information and word definitions related to recessions - but in particular, these are about the great stock market crashes of the last 100 years and the words associated with the latest stock market crash in 2008.
(All investment/ stock market/ news information from the Straits Times in Singapore)
First and foremost, a recession is a period of falling economic growth, and a depression is a period of prolonged and powerful recession.
These were the great stock market crashes of the last 100 years:
1929 Great depression - which lasted until the Second World War
1973 The oil shock - which had to do with OPEC, the Yom Kippur War and much more which I will discuss in future posts in future here on my site
1987 Black Monday - a fall in the stock market when confidence plummeted
1997 the Asian Financial Crisis - the crisis caused by currency speculation, and spooked investors, and this was the particular stock market crisis I said earlier that caused American investors to criticise Asian markets - and Asians were even criticised about their political systems (but the problem is that there should be blaming here or there, because all economic systems have their own inherent pros and cons, their own inherent good parts and bad parts, financially speaking)
2001: 9/11 and the Dot Com bubble bursting - we all know this one because it was both a political crisis and also an economic crisis
2008 The current Credit Crisis which will surely go down in history - so in a sense here we are, and here I am, writing about future economic history.
The central question of "how to survive a recession" is rather simple to answer, if one takes a sufficiently long term view - all the recessions mentioned above and all the stock market crises ultimately recovered, because the business cycle operates in such a way that there will ultimately be recovery.
This second part relates to terms and words that you need to know if you wish to understand the global crisis further.
securitisation - banks securitise loans by making them into "investments" which are then sold to third parties, rather than the usual practice of banks holding mortgages
mortgage backed securities - the basis of the 2008 financial crisis, these repackaged home loans are the IOUs that third party investors bought (see earlier term for a better financial understanding)
credit default swaps - these are basically insurance policies that companies and investors bought to protect themselves from the default of the securities - the buyers of these swaps make regular payments to a swap seller, usually an insurer, in exchange for a payout when there is a default (the economic problem with AIG becomes very clear when you realise that it was such companies like AIG selling credit default swaps from banks and other investment banks so that the risks would be lower for those investment banks - but all the risks went to AIG instead)
collateralised debt obligations (CDOs/ or toxic debt) - these are like mortgaged backed securities, but instead of mortgages, these are made up of differnt types of assets, including commercial property and bons (CDOs and mortgage backed securities are some of the instruments that people call toxic debt, because of obvious reasons)
leveraging/ gearing (in Singapore we say gearing instead of leveraging, but the two terms are synonymous) - basically this is using OPM (other people's money) - the degree to which a company or an investor is using borrowed money, and the problem with gearing is that, while it is very useful on the upswing and can make you a lot of money, the converse is also true that it is not useful on the downswing and can lose you a lot of money since it works the other way as well
deleveraging - what is happening now (in 2008), as banks and companies have to put up more collateral and reduce their debt levels by selling their assets and raising capital
libor/ silbor - the london interbank overnight rate and the singapore interbank overnight rate respectively (basically, the rates that banks charge when they lend money to one another, be it in London or Singapore) - the process works the same way in the USA, in a similar manner
treasuries - treasury bonds, notes and bills - these are government bonds issued by the USA Treasury Department. These are seen as the ultimate safe haven investments because they are denominated in US dollars, backed by the US government and are very stable
derivatives - these are a class of investments that derive (hence derivatives) their value from another underlying asset, such as company stocks, allowing investors to profit from movements in the stock price without owning the stock - basically investors can take bets on anything from interest rates to stock prices
short selling - when an investor sells a financial instrument that he doesn't own, in the hope that he can buy it back later at a lower price and earning a profit - short sellers usually borrow stock to make good their promises - currently short selling has been banned in many countries because they are exacerbating the financial crisis by making it worse
hedge funds - these are private, barely regulated investment funds that manage assets using high risk high return strategies, and they often leverage / gear to get bigger returns, and they usually even engage in short selling - doing anything to make money.
In summary, here I've shown you a list of the several stock market crashes and important dates that you need to know in your financial education, and also you now know more words and ideas associated with the current stock market crashes worldwide and the recession worldwide, in 2008. One key idea is still that prevention is better than cure, and the thing about most of the financial instruments that have caused problems is that to prevent yourself from losing money, you should always be aware of the pitfalls of what you buy. Simply and beautifully put: "Rule No. 1: Don't lose money. Rule No. 2: Don't forget rule no. 1." Knowledge and more research is key and very important to surviving a recession and a stock market crash.
In my next post, I will share ideas on what to do with your cash and your money if you are afraid of the current economic crisis, by showing you options in which to place your money. The current recession caused by the financial crisis worldwide has not prevented Warren Buffett from investing in the stock market, because to him the prices of most companies has gone down and now he can acquire many good companies at cheap prices.
Ideas on how to become rich!
